<SUBMISSION>
<ACCESSION-NUMBER>0000950137-04-006634
<TYPE>S-1
<PUBLIC-DOCUMENT-COUNT>38
<FILING-DATE>20040812
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BUILD A BEAR WORKSHOP INC
<CIK>0001113809
<IRS-NUMBER>431883836
<STATE-OF-INCORPORATION>DE
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-1
<ACT>33
<FILE-NUMBER>333-118142
<FILM-NUMBER>04968508
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1954 INNERBELT BUSINESS CENTRE DRIVE
<CITY>ST LOUIS
<STATE>MO
<ZIP>63114
<PHONE>314-423-8000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1954 INNERBELT BUSINESS CENTRE DRIVE
<CITY>ST LOUIS
<STATE>MO
<ZIP>63114
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-1
<SEQUENCE>1
<FILENAME>c86750sv1.htm
<DESCRIPTION>REGISTRATION STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>sv1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">As filed with the Securities and Exchange
Commission on August&nbsp;12, 2004</FONT></B>
</DIV>

<DIV align="right">
<B><FONT size="2">Registration Statement
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B>
</DIV>

<DIV align="left">
<HR size="4" noshade color="#000000" style="margin-top: -5px">
</DIV>

<DIV align="left">
<HR size="1" noshade color="#000000" style="margin-top: -10px">
</DIV>

<P align="center">
<B><FONT size="4">UNITED STATES SECURITIES AND EXCHANGE
COMMISSION</FONT></B>

<DIV align="center">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

<P align="center">
<B><FONT size="5">Form&nbsp;S-1</FONT></B>

<P align="center">
<B>REGISTRATION STATEMENT</B>

<DIV align="center">
<B>UNDER</B>
</DIV>

<DIV align="center">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="6">Build-A-Bear Workshop, Inc.</FONT></B>

<DIV align="center">
<I><FONT size="2">(Exact name of registrant as specified in its
charter)</FONT></I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Delaware</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">5945</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">43-1883836</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <I><FONT size="2">(State or other jurisdiction of<BR>
    incorporation or organization)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(I.R.S. Employer<BR>
    Identification No.)</FONT></I></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">1954 Innerbelt Business Center Drive</FONT></B>

<DIV align="center">
<B><FONT size="2">St.&nbsp;Louis, Missouri 63114</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(314)&nbsp;423-8000</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address, including zip code, and telephone
number, including area code, of registrant&#146;s principal
executive offices)</FONT></I>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="2">Maxine Clark</FONT></B>

<DIV align="center">
<B><FONT size="2">Chief Executive Bear</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Build-A-Bear Workshop, Inc.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">1954 Innerbelt Business Center Drive</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">St.&nbsp;Louis, Missouri 63114</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(314)&nbsp;423-8000</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Name, address, including zip code, and
telephone number, including area code, of agent for
service)</FONT></I>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><I><FONT size="2">Copies to:</FONT></I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">James H. Erlinger&nbsp;III,&nbsp;Esq.<BR>
    R. Randall Wang,&nbsp;Esq.<BR>
    Bryan Cave LLP<BR>
    One Metropolitan Square<BR>
    211 North Broadway, Suite&nbsp;3600<BR>
    St.&nbsp;Louis, Missouri 63102-2750<BR>
    (314) 259-2000<BR>
    (314) 259-2020 (fax)</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">Rohan S. Weerasinghe,&nbsp;Esq.<BR>
    Shearman&nbsp;&#38; Sterling LLP<BR>
    599 Lexington Avenue<BR>
    New York, New York 10022<BR>
    (212) 848-4000<BR>
    (212) 848-7179 (fax)</FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Approximate date of commencement of proposed
sale to public:</FONT></B><FONT size="2"> As soon as practicable
after the effective date of this registration statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any of the securities being registered on this
form are to be offered on a delayed or continuous basis pursuant
to Rule&nbsp;415 under the Securities Act of 1933, check the
following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this form is filed to register additional
securities for an offering pursuant to Rule&nbsp;462(b) under
the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering.&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this form is a post-effective amendment filed
pursuant to Rule&nbsp;462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this form is a post-effective amendment filed
pursuant to Rule&nbsp;462(d) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If delivery of the prospectus is expected to be
made pursuant to Rule&nbsp;434, please check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="center">
<B><FONT size="2">CALCULATION OF REGISTRATION FEE</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
</TR>

<TR>
    <TD colspan="5" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
</TR>

<TR>
    <TD colspan="5" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum Aggregate</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Title of Each Class of Securities to be Registered</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offering Price(1)</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Registration Fee</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common Stock, $0.001&nbsp;par value per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$125,000,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$15,837.50
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD colspan="5" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Estimated solely for the purpose of calculating
    the registration fee pursuant to Rule&nbsp;457(o) under the
    Securities Act of 1933 and includes shares that may be purchased
    by the underwriters to cover over-allotments, if&nbsp;any.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section&nbsp;8(a) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section&nbsp;8(a), may
determine.</FONT></B>

<P align="left">
<HR size="1" noshade color="#000000" style="margin-top: -2px">

<DIV align="left">
<HR size="4" noshade color="#000000" style="margin-top: -10px">
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="1" cellpadding="5"><TR><TD>
<FONT size="2" color="#E8112D">The information in this
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and is not soliciting
any offer to buy these securities in any state where the offer
or sale is not permitted.</FONT><FONT size="2"> <BR>
</FONT>
</TD></TR></TABLE>

<P align="center">
<FONT size="2" color="#E8112D">SUBJECT TO COMPLETION,
DATED &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004
</FONT>

<DIV align="center">
<FONT size="4">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares
</FONT>
</DIV>

<P align="center">
<IMG src="c86750c8675061.gif" alt="(BUILD-A-BEAR WORKSHOP, INC. LOGO)">

<P align="center">
<FONT size="4">Common Stock
</FONT>

<P align="center">
<HR size="1" width="22%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are
offering &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock and the selling stockholders are
offering &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock. We will not receive any of the proceeds
from the sale of the shares by the selling stockholders. No
public market currently exists for our common stock. We expect
the public offering price to be between $&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to apply to have our common stock
approved for listing on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under
the symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters have a 30-day option to purchase
a maximum
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares of common stock from certain selling stockholders to
cover over-allotments of shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Investing in our common stock involves risks.
See &#147;Risk Factors&#148; beginning on page&nbsp;8.</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underwriting</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Proceeds to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Proceeds</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Discounts and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Build-A-Bear</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to Selling</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><FONT size="1">Price to Public</FONT></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Commissions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Workshop</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stockholders</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Per Share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Delivery of the shares of common stock will be
made on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
</FONT>

<P align="center">
<I><FONT size="2">Joint Book-Running Managers</FONT></I>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><B><FONT size="5">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit Suisse First Boston</FONT></B></TD>
    <TD align="right"><B><FONT size="5">Citigroup&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
</TR>

</TABLE>

<P align="center">
<HR size="1" width="45%" align="center" noshade>

<P align="center">
<B><FONT size="4">JPMorgan</FONT></B>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><B><FONT size="4">A.G. Edwards</FONT></B></TD>
    <TD align="right"><B><FONT size="4">Thomas Weisel Partners LLC</FONT></B></TD>
</TR>

</TABLE>

<P align="center">
<FONT size="2">The date of this prospectus
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004.
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">[Intentionally Omitted]</FONT></B>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV align="left">

</DIV>

<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#101'>PROSPECTUS SUMMARY</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#102'>RISK FACTORS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#122'>FORWARD-LOOKING
    STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#103'>USE OF PROCEEDS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#104'>DIVIDEND POLICY</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#105'>CAPITALIZATION</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#106'>DILUTION</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#107'>SELECTED CONSOLIDATED
    FINANCIAL AND OPERATING DATA</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#108'>MANAGEMENT&#146;S DISCUSSION
    AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#109'>BUSINESS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#110'>MANAGEMENT</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#111'>CERTAIN RELATIONSHIPS AND
    RELATED PARTY TRANSACTIONS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#112'>PRINCIPAL AND SELLING
    STOCKHOLDERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#113'>DESCRIPTION OF CAPITAL
    STOCK</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#114'>SHARES ELIGIBLE FOR FUTURE
    SALE</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#115'>UNDERWRITING</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#116'>NOTICE TO CANADIAN
    RESIDENTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#117'>LEGAL MATTERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#118'>EXPERTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#119'>CHANGE OF INDEPENDENT PUBLIC
    ACCOUNTANTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#120'>WHERE YOU CAN FIND MORE
    INFORMATION</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#121'>INDEX TO CONSOLIDATED
    FINANCIAL STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv2w1.txt">Agreement and Plan of Merger</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv3w1.txt">Amended and Restated Certificate of Incorporation</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv3w2.txt">Bylaws of the Registrant</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv3w3.txt">Form of Amended and Restated Certificate of Incorporation</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv3w4.txt">Form of Amended and Restated Bylaws of the Registrant</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv4w2.txt">Stock Purchase Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv4w3.txt">Stock Purchase Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv4w4.txt">Amended and Restated Stockholders' Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv4w5.txt">Amended and Restated Registration Rights Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w1.txt">2000 Stock Option Plan</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w2.txt">2002 Stock Incentive Plan</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w10.txt">Separation Agreement and General Release</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w11.txt">Form of Indemnification Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w12.txt">Third Amended and Restated Loan Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w13.txt">Second Amended and Restated Loan Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w14.txt">First Amended and Restated Revolving Credit Note</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w15.txt">First Amended and Restated Security Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w16.txt">Restricted Stock Purchase Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w17.txt">Secured Promissory Note</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w18.txt">Repayment and Stock Pledge Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w19.txt">Restricted Stock Purchase Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w20.txt">Secured Promissory Note</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w21.txt">Repayment and Stock Pledge Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w22.txt">Restricted Stock Purchase Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w23.txt">Secured Promissory Note</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w24.txt">Repayment and Stock Pledge Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w25.txt">Public Warehouse Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w26.txt">Agreement for Logistics Services</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w28.txt">Amendment and Restatement of Sublease</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w29.txt">Lease</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w30.txt">Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w31.txt">Construction Management Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv10w32.txt">Agreement</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv21w1.txt">List of Subsidiaries of the Registrant</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c86750exv23w1.txt">Consent of KPMG LLP</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">You should rely only on the information
contained in this prospectus or to which we have referred you.
We have not, and the underwriters have not, authorized anyone
else to provide you with different or additional information.
This prospectus may only be used where it is legal to sell these
securities. This prospectus is not an offer to sell or a
solicitation of an offer to buy securities in any circumstances
in which the offer or solicitation is unlawful. The information
in this prospectus may only be accurate on the date of this
prospectus and is subject to change after such date.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">BABW&#174;, Beararmoire&#174;, Bearemy&#174;,
Bearemy Bucks&#174;, Bearemy&#146;s Kennel Pals&#174;,
Bearyjane&#174;, Bearth Certificate&#174;, Beary
Newsworthy&#174;, Build-A-Bear Workshop&#174;,
Build-A-Party&#174;, Build-A-Sound&#174;, Build-A-Bear Workshop
Where Best Friends Are Made&#174;, Where Best Friends Are
Made&#174;, Buy Stuff Club&#174;, Bear Stuff&#174;, Choose Me,
Hear Me, Stuff Me, Stitch Me, Fluff Me, Name Me, Dress Me, Take
Me Home&#174;, Collectibear&#174;, Traveling Teddy&#174;, Cub
Condo&#174;, CubCase&#174;, Find-A-Bear&#174;, Bear Bunk
Trunk&#174;, Hibernities&#174;, UndiBear&#174;, Furton&#174;,
Comfy Stuff Fur-niture&#174;, Lil&#146; Cub&#174;,
Scootfur&#174;, Seal of Pawthenticity&#174;, Bear Bucks&#174;,
Honeycard&#174;, Bear University&#174;, Bear-A-Log&#174;, Hug
Freely&#174;, Love Stuff Headquarters&#174;, Stuffed With Hugs
and Good Wishes&#174;, Pawlette Coufur&#174;, and Kooky Spooky
Bear Bash&#174; are some of our registered trademarks. Bear
Builder<SUP>SM</SUP>, Bearism<SUP>TM</SUP>, Paw
Wear<SUP>TM</SUP>, Friends 2B Made<SUP>TM</SUP>, Nikki&#146;s
Bear<SUP>TM</SUP> and Lifetime Paw Pass<SUP>TM</SUP> are some of
our other trademarks and service marks. We also have a number of
other registered service marks and trademarks and service marks
and trademark applications related to our products, services and
concepts that we refer to throughout this prospectus. This
prospectus also refers to trademarks and trade names of other
organizations.
</FONT>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="2">Dealer Prospectus Delivery
Obligation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Until &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004 (the 25th day after commencement of this offering), all
dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers&#146; obligation
to deliver a prospectus when acting as an underwriter and with
respect to unsold allotments or subscriptions.</FONT></B>

<P align="center">

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left">
<A name='101'></A>
</DIV>

<!-- link1 "PROSPECTUS SUMMARY" -->

<P align="center">
<B><FONT size="2">PROSPECTUS SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This summary highlights information contained
elsewhere in this prospectus. This summary does not contain all
of the information that you should consider before deciding to
invest in our common stock. You should read this entire
prospectus carefully, especially the risks of investing in our
common stock that we discuss under &#147;Risk Factors.&#148; As
used in this prospectus, references to &#147;we,&#148;
&#147;our,&#148; &#147;us,&#148; the &#147;company&#148; and
&#147;Build-A-Bear Workshop&#148; refer to Build-A-Bear
Workshop, Inc. and its subsidiaries and Build-A-Bear Workshop,
L.L.C., our predecessor limited liability company, unless the
context requires otherwise.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Except as otherwise indicated, information in
this prospectus assumes the conversion of each outstanding share
of convertible preferred stock, into shares of common stock and
no exercise of the underwriters&#146; over-allotment option.
When we refer to average store sales and average net sales per
gross square foot for any period, we include in those
calculations only those stores that have been open for the
entire such period.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">When we refer to &#147;store
contribution,&#148; we mean net income before income tax
expense, interest, depreciation and amortization, store
pre-opening and general and administrative expense and excluding
franchise fees, license revenues and contribution from our
webstore and seasonal and event-based locations.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Throughout this prospectus, we refer to our
fiscal years ended January&nbsp;1, 2000, December&nbsp;30, 2000,
December&nbsp;29, 2001, December&nbsp;28, 2002 and
January&nbsp;3, 2004 as fiscal years 1999, 2000, 2001, 2002 and
2003, respectively. Our fiscal year consists of 52 or
53&nbsp;weeks, reported in four 13-week periods, and ends on the
Saturday nearest December&nbsp;31 in each year. Fiscal years
1999, 2000, 2001 and 2002 included 52&nbsp;weeks and fiscal year
2003 included 53&nbsp;weeks. When we refer to the first half of
fiscal 2003 and 2004, we are referring to the 26-week periods
ended June&nbsp;28, 2003 and July&nbsp;3, 2004. When we refer to
our fiscal quarters, or any three month periods ending as of a
specified date, we are referring to the 13-week period prior to
that date. All of our fiscal quarters presented in this
prospectus included 13&nbsp;weeks, except for the quarter ended
January&nbsp;3, 2004, which had 14&nbsp;weeks.</FONT></I>

<P align="center">
<B><FONT size="2">Our Business</FONT></B>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are the leading, and only national, company
providing a &#147;make your own stuffed animal&#148; interactive
&#147;retail-tainment&#148; experience. As of July&nbsp;3, 2004,
we operated 157&nbsp;stores in 37&nbsp;states and Canada and had
five franchised stores internationally under the Build-A-Bear
Workshop brand. We offer an extensive and coordinated selection
of merchandise, including over 30&nbsp;different styles of
animals to be stuffed and a wide variety of clothing, shoes and
accessories for the stuffed animals. Our stores, which are
primarily located in major malls, capitalize on what we believe
is the relatively untapped demand for experience-based shopping
as well as the widespread appeal of stuffed animals. In addition
to our stores, we market our products and build our brand
through our website and in event-based locations and sports
venues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Build-A-Bear Workshop stores are designed around
a distinctive and entertaining &#147;animal-making&#148; process
that provides our customers, or &#147;Guests,&#148; with the
opportunity to participate actively in the creation,
personalization and customization of their own stuffed animal.
Unlike traditional mall-based stores, our interactive retail
concept includes not only a fun merchandise selection, but also
a dynamic and hands-on shopping experience. Our stores average
approximately 3,100&nbsp;square feet in size and have a highly
visual and colorful appearance, including custom-designed
fixtures featuring teddy bears and other themes relating to the
Build-A-Bear Workshop experience. Our concept appeals to a broad
range of age groups and demographics, including children, teens,
parents and grandparents. We believe our stores are destination
locations and draw customers from a large geographic reach,
resulting in high volume stores that generated average net sales
per gross square foot of $502 for fiscal 2003 and $287 for the
first half of fiscal 2004.
</FONT>
</DIV>

<P align="center"><FONT size="2">1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2003, we developed and tested a
targeted, integrated, multi-media marketing program designed to
increase our brand awareness and store traffic, thereby
attracting more first-time and more repeat customers. We
initiated a national rollout of this program in February 2004
and have experienced an increase in our comparable store sales
in every month since the rollout.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since opening our first store in St.&nbsp;Louis,
Missouri in October 1997, we have sold over 20&nbsp;million
stuffed animals. We have grown our store base from
14&nbsp;stores at the end of fiscal 1999 to 157 as of
July&nbsp;3, 2004 and increased our revenues from
$106.6&nbsp;million in fiscal 2001 to $213.4&nbsp;million in
fiscal 2003, for a compound annual revenue growth rate of 41.6%,
and increased net income from $1.9&nbsp;million in fiscal 2001
to $8.0&nbsp;million in fiscal 2003, for a compound annual net
income growth rate of 104.6%.
</FONT>

<P align="left">
<B><FONT size="2">Competitive Strengths</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We offer an exciting interactive shopping
    experience.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unlike most other mall-based retail stores, the
Build-A-Bear Workshop experience is not exclusively product
driven but rather integrates the stuffed animal-making process
with our creative merchandise selection. Our highly visual and
colorful stores feature a teddy bear theme, displays of
numerous, fully-dressed stuffed animals, selective use of
&#147;Bearisms&#148; and custom-designed fixtures intended to
energize our Guests and add excitement to the shopping
experience. We offer our Guests an opportunity to actively
participate in the creation, customization and personalization
of their own stuffed animal by selecting the amount of stuffing,
making a special wish before placing the distinctive fabric
heart inside the animal; selecting a pre-recorded message or
creating a personalized voice message for the animal; dressing
the animal in selected clothing and accessories; and creating
the animal&#146;s birth certificate. When finished, our Guests
carry their purchases from our stores in our signature
packaging, including our &#147;Cub Condo&#148; carrying case,
&#147;Beararmoire&#148; clothing carrier, &#147;CubCase&#148;
suitcase or &#147;Bear Bunk Trunk,&#148; which also are intended
to raise awareness of our brand.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have a broad and loyal Guest
    base.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our distinctive retail entertainment
shopping experience has made Build-A-Bear Workshop a destination
retailer with a broad and loyal customer base that enjoys our
concept and therefore returns to make additional purchases. Our
major customer segments include families with children,
primarily age three to twelve; their grandparents, aunts and
uncles; teen girls who occasionally bring along their
boyfriends; and child-centric organizations looking for
interactive entertainment options. Our active store environment
also makes our stores an attractive location for birthday and
other parties, which we believe introduces new Guests to our
stores. During the first half of fiscal 2004, 90% of Guests who
completed our Guest satisfaction survey gave their overall
experience the highest or second highest rating, with 74% giving
the highest rating of &#147;Beary Best.&#148; Approximately 80%
of returning Guests who responded to our surveys in 2003
indicated that they pre-planned their visit to our stores.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have strong merchandising
    expertise.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our in-house design and product
development team, we have developed a coordinated, creative and
broad merchandise assortment, the vast majority of which is
primarily designed by us. Our exclusive products, which include
a variety of animals, clothing, shoes and accessories, are
branded with the Build-A-Bear Workshop mark. Through Guest
feedback and monitoring the fashion and entertainment markets,
we are able to offer current fashions that drive clothing and
accessory sales as well as respond to other market influences
that generate product line and animal additions. We typically
carry approximately 450&nbsp;stock-keeping units, or
&#147;SKUs,&#148; in our stores, as we intend for each item to
be highly productive. We believe this merchandising strategy,
along with the Build-A-Bear Workshop experience, has created a
strong value proposition for our Guests that allows us to
emphasize the product and the experience rather than the price,
avoiding the need to discount our products to drive sales.
</FONT>
</DIV>

<P align="center"><FONT size="2">2
</FONT>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We provide a high level of Guest service
    through consistent execution.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because our strategy since inception has been to
provide a dynamic, interactive &#147;retail-tainment&#148;
experience for our Guests, we have devoted significant resources
and attention to Guest service. We carefully select and train
our store employees to promote a friendly and personable store
environment and to provide a high level of Guest service. Our
above average employee retention rates, based on 2003 industry
data, contribute to the consistency and quality of the Guest
experience. Following store visits, we remain in contact with
our Guests through direct mail and email. We provide additional
value to our Guests through many events that we plan around
holidays, birthdays and other Build-A-Bear Workshop product
launches.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have an attractive store economic
    model.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we have developed an appealing
retail store model that is profitable and operates successfully
in a variety of geographies, malls and non-mall locations. We
have a site selection process that utilizes a number of
criteria, including economic and demographic variables and our
internal sales forecasting tools. For fiscal 2003, our stores
open for the entire year averaged $502 in net retail sales per
gross square foot and $1.6&nbsp;million in net retail sales per
store. For fiscal 2003, store contribution as a percentage of
net retail sales, excluding revenue from our webstore and
seasonal and event-based locations, was 22.8% and total company
net income as a percentage of total revenues was 3.7%. For the
first half of fiscal 2004, our stores open for the entire period
averaged $287 in net retail sales per gross square foot and
$879&nbsp;thousand in net retail sales per store. For the first
half of fiscal 2004, store contribution as a percentage of net
retail sales, excluding revenue from our webstore and seasonal
and event-based locations, was 26.4% and total company net
income as a percentage of total revenues was 7.5%. For a
reconciliation of store contribution to net income, see
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&nbsp;&#151; Non-GAAP
Financial Measures.&#148; Since our inception, our new stores
have generated strong customer traffic and the majority are
profitable in the first twelve months of operation. Through
value engineering our store development and construction
processes, we have reduced the average investment for our new
stores. For stores opened in fiscal 2003, our investment per
store, which includes the cost of leasehold improvements (net of
tenant allowances), fixtures and equipment, inventory (net of
trade payables), and pre-opening expenses, averaged $485
thousand, a decrease of 19% from the average investment for
stores opened in fiscal 2002.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have a highly experienced and
    disciplined management team.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our senior management team, led by our Chief
Executive Bear, Maxine Clark, has extensive experience in a
variety of retail sectors and in corporate management. As we
have continued to build our company, we have added key leaders
in selected areas of our business. We believe we have attracted
a highly talented and experienced team to continue to grow the
Build-A-Bear Workshop brand and our company. We believe we
employ a deliberative and disciplined management process that is
brand driven and balances careful measurement and analysis of
our business with experienced merchandising and Guest insight.
</FONT>

<P align="left">
<B><FONT size="2">Growth Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our growth strategy is to develop and expand the
reach of the Build-A-Bear Workshop brand. We believe that the
strength of our brand will allow us to continue to attract
Guests, as well as to develop key strategic relationships. The
key elements of our strategy are:
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Continue to expand our store base in the
    United States and Canada.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since the end of fiscal 1999, we have increased
our store base from 14 to 157&nbsp;locations throughout the
United States and Canada as of July&nbsp;3, 2004. We plan to
open a total of 21&nbsp;Build-A-Bear Workshop stores in the
United States and Canada in fiscal 2004, eight of which were
open as of July&nbsp;3, 2004, and 25
</FONT>
</DIV>

<P align="center"><FONT size="2">3
</FONT>
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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left">
<FONT size="2">to 30&nbsp;new stores in fiscal 2005. We believe
that we could eventually open approximately
350&nbsp;Build-A-Bear Workshop stores in the United States and
Canada.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Continue to expand our retail concept
    outside the United States and Canada.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that there is continued opportunity to
expand our Build-A-Bear Workshop concept and brand outside of
the United States and Canada. Our franchisees have retail or
real estate experience and have opened five Build-A-Bear
Workshop stores in four foreign countries under master franchise
agreements on a country-by-country basis. We expect our
franchisees to open a total of eight&nbsp;to twelve stores in
fiscal 2004, four of which were open as of July&nbsp;3, 2004,
and between 15 and 20&nbsp;new stores in fiscal 2005 under
existing and future franchise agreements. We believe there is a
market potential for approximately 350&nbsp;stores outside the
United&nbsp;States and Canada.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Continue to expand non-mall
    locations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on our experience with non-mall based
stores in tourist locations, such as the Downtown Disney&#174;
District at the Disneyland&#174; Resort in Anaheim, California,
Navy Pier in Chicago, Illinois and Broadway at the Beach in
Myrtle Beach, South Carolina, as well as our location at
Citizens Bank Park, home of the Philadelphia Phillies baseball
club, we believe we have growth opportunities in additional
non-mall locations. These locations provide us with high-traffic
venues with captive audiences that are generally comprised of a
somewhat different demographic than typically visits the malls
in which we operate. We believe our presence in these
alternative venues enhances our brand awareness and introduces
new customers to our concept, which can lead to increased
customer traffic for our mall-based stores. While growth
opportunities in tourist locations and sports stadiums may be
limited, we believe the experience we are gaining from these
alternative retail arrangements can be expanded into other
non-mall locations, such as theme parks, cruise ships and other
tourist locations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Seek to expand into new lines of
    experiential retail.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that consumer demand for additional
experiential retail concepts is relatively untapped and that our
expertise in product development and providing a consistent
shopping experience can be applied to other experiential retail
brands and concepts. We expect to be able to leverage our
extensive Guest database to market these new brands and
concepts. In fiscal 2003, we began testing in certain markets
our initial brand expansion initiative, our proprietary
&#147;Friends 2B&nbsp;Made&#148; line of make-your-own dolls and
related products.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Pursue other non-retail
    opportunities.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have entered into a series of licensing
arrangements with leading manufacturers such as American
Greetings, Creative Imaginations, Elan-Polo, HarperCollins,
Hasbro&#174; and Springs to develop a collection of lifestyle
Build-A-Bear Workshop branded products, including greeting
cards, scrapbook supplies, shoes, books, toys and bedding,
fabric and bath accessories. For example, in Fall 2004 an
exclusive line of Build-A-Bear Workshop mini-plush toy kits and
accessories from Hasbro will be featured exclusively in
Target&#174; stores. We believe that these licensing initiatives
have the potential to expand the reach of our brand, raise brand
awareness, reach shoppers in non-mall locations and increase
revenues.
</FONT>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We were originally formed on September&nbsp;8,
1997 as Build-A-Bear Workshop, L.L.C., a Missouri limited
liability company. On April&nbsp;3, 2000, Build-A-Bear Workshop,
L.L.C. merged with and into Build-A-Bear Workshop, Inc., a
Delaware corporation, with Build-A-Bear Workshop, Inc. as the
surviving entity. Our principal executive offices are located at
1954 Innerbelt Business Center Drive, St.&nbsp;Louis, Missouri
63114. Our telephone number is (314)&nbsp;423-8000. Our website
is <I>www.buildabear.com.</I> The information contained on our
website is not incorporated by reference into and does not form
any part of this prospectus.
</FONT>
</DIV>

<P align="center"><FONT size="2">4
</FONT>
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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<P align="center">
<B><FONT size="2">The Offering</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Common stock offered by us
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Common stock offered by the selling stockholders
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Over-allotment option granted by certain selling
    stockholders
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Common stock to be outstanding after the offering
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Use of proceeds
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We estimate that the net proceeds to us from this
    offering will be approximately
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
    after deducting underwriting discounts and commissions and
    estimated offering expenses payable by us. We plan to use the
    net proceeds from this offering:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;to fund the opening of new stores; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#149;&nbsp;for working capital and general
    corporate purposes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Pending the application of the net proceeds from
    this offering, we intend to invest the proceeds in short-term,
    interest-bearing, investment-grade securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We will not receive any of the proceeds from the
    sale of shares by the selling stockholders. See &#147;Use of
    Proceeds.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Dividend policy
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We paid a special cash dividend in August 2004 of
    $10.0&nbsp;million to our stockholders. We do not expect to pay
    cash dividends in the foreseeable future. See &#147;Dividend
    Policy.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Risk factors
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">You should carefully consider all of the
    information in this prospectus and, in particular, you should
    evaluate the specific factors set forth under &#147;Risk
    Factors&#148; in deciding whether to invest in our common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Proposed &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Symbol
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The total number of shares of our common stock
referred to above that will be outstanding immediately after
completion of this offering is based on the number of shares of
our common stock outstanding as of July&nbsp;3, 2004, after
giving effect to the conversion of all of our outstanding shares
of preferred stock upon completion of this offering, and
excludes, as of that date:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">1,047,283&nbsp;shares of our common stock
    issuable upon exercise of options outstanding as of July&nbsp;3,
    2004 under our 2000 Stock Option Plan and our 2002 Stock
    Incentive Plan, at a weighted average exercise price of $6.52
    per share;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to 2,073,820&nbsp;additional shares of our
    common stock reserved for issuance under our 2004 Stock
    Incentive Plan; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">315,797&nbsp;restricted shares subject to
    promissory notes from the holders of such shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as otherwise stated in this prospectus, we
have assumed that the underwriters will not exercise their
over-allotment option.
</FONT>
</DIV>

<P align="center"><FONT size="2">5
</FONT>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<P align="center">
<B><FONT size="2">Summary Consolidated Financial and Operating
Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth summary financial
and certain operating data for our business as of and for the
periods indicated. Operating results for the first half of
fiscal 2004 are not necessarily indicative of the results for
the fiscal year ending January&nbsp;1, 2005 or for any future
fiscal period. You should read this Summary Consolidated
Financial and Operating Data in conjunction with our
&#147;Selected Consolidated Financial and Operating Data,&#148;
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; and our consolidated
financial statements and related notes included elsewhere in
this prospectus. See the notes to our consolidated financial
statements for an explanation of the method used to determine
the numbers of shares used in computing basic and diluted
earnings per common share.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Year Ended(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26 Weeks Ended(1)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Dollars in thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Statement of operations data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,727</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of merchandise sold
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store preopening
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other expense (income), net(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,192</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,849</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="23"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings per common share:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing per share amounts:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284,731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,101,143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,055,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,546,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,367,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,938,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="23"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other financial data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross margin ($)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,559</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross margin (%)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,624</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="23"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash flow data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows provided by (used in) operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,482</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,004</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,280</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,480</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,177</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,095</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows provided by (used in) financing
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(121</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
</DIV>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Year Ended(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26 Weeks Ended(1)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Dollars in thousands, except per gross square foot data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Store data(5):</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Number of stores at end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average net retail sales per store(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,605</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">879</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net retail sales per gross square foot(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comparable store sales<BR>
    change (%)(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">As of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjusted(9)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance sheet data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,813</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,656</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Redeemable convertible preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our fiscal year consists of 52 or 53&nbsp;weeks
    and ends on the Saturday nearest December&nbsp;31 in each year.
    Fiscal years ended December&nbsp;29, 2001 and December&nbsp;28,
    2002 included 52&nbsp;weeks and fiscal year ended
    January&nbsp;3, 2004 included 53&nbsp;weeks.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes impairment charges of $1,006 and
    litigation settlement expenses of $1,550 for the fiscal year
    ended December&nbsp;29, 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Basic earnings per common share gives effect to
    the allocation of net income available to common stockholders
    between common and participating preferred shares on a pro rata
    basis.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Gross margin represents net retail sales less
    cost of merchandise sold. Gross margin percentage represents
    gross margin divided by net retail sales.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Excludes our webstore and seasonal and
    event-based locations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Average net retail sales per store represents net
    retail sales from stores open throughout the entire period
    divided by the total number of such stores.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net retail sales per gross square foot represents
    net retail sales from stores open throughout the entire period
    divided by the total gross square footage of such stores.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comparable store sales percentage changes are
    based on net retail sales and stores are considered comparable
    beginning in their thirteenth full month of operation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">As adjusted to reflect the sale
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of common stock offered hereby at the assumed initial public
    offering price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share after deducting the underwriting discount and estimated
    offering expenses payable by us.
    </FONT></TD>
</TR>

</TABLE>
</DIV>

<P align="center"><FONT size="2">7
</FONT>

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<DIV align="left">
<A name='102'></A>
</DIV>

<!-- link1 "RISK FACTORS" -->

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">You should carefully consider each of the
following risks, as well as all of the other information
contained in this prospectus, before deciding to invest in our
common stock. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties
not presently known to us, or that we currently see as
immaterial, may also harm our business. If any of these risks or
uncertainties occurs, the trading price of our common stock
could decline, and you might lose part or all of your
investment.</FONT></I>

<P align="center">
<B><FONT size="2">Risks Related to Our Business</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may not be able to maintain our current
    comparable store sales growth.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our comparable store sales for the first half of
fiscal 2004 increased 13.8%. However, our comparable store sales
declined 6.7%, 9.7% and 15.9% in fiscal 2001, 2002 and 2003,
respectively. Historically, a majority of our stores have
generated a high level of sales immediately after opening,
followed by a decline in the following year. We believe the
principal factors that will affect comparable store results are
the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the continuing appeal of our concept;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the effectiveness of our marketing efforts to
    attract new and repeat Guests;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">consumer confidence and general economic
    conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to anticipate and to respond, in a
    timely manner, to consumer trends;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact of new stores that we open in existing
    markets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">mall traffic;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">competition;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the timing and frequency of national media
    appearances and other public relations events;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">weather conditions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of these and other factors, we may
not be able to maintain comparable stores sales growth in the
future. If we are unable to maintain comparable store sales
growth our results of operations could be significantly harmed.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our future growth and profitability will
    depend in large part upon the effectiveness of our
    marketing.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During late fiscal 2003, we developed and tested
a new targeted, integrated, multi-media marketing program that
included television advertising and online components and which
was designed to increase brand awareness and drive store
traffic. We initiated a national rollout of this program in
February 2004. Although we believe this program has been a
significant reason for our increase in comparable store sales in
the first half of fiscal 2004, we cannot assure you that it will
continue to be successful. Our future growth and profitability
will depend in large part upon the effectiveness and efficiency
of this marketing program and future marketing efforts that we
undertake, including our ability to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">create greater awareness of our brand name,
    interactive shopping experience and products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">identify the most effective and efficient level
    of spending in each market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">determine the appropriate creative message and
    media mix for marketing expenditures;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">effectively manage marketing costs (including
    creative and media) in order to maintain acceptable operating
    margins and return on marketing investment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">select the right markets in which to
    market;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">convert consumer awareness into actual store
    visits and product purchases.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">8
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our planned marketing expenditures may not result
in increased total or comparable store sales or generate
sufficient levels of product and brand name awareness. We may
not be able to manage our marketing expenditures on a
cost-effective basis.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our growth strategy requires us to open a
    significant number of new stores in the United States and Canada
    each year. If we are not able to open new stores or to
    effectively manage this growth, it could adversely affect our
    ability to grow and could significantly harm our financial
    performance.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our growth will largely depend on our ability to
open and operate new stores successfully in the United States
and Canada. We opened 37 stores in fiscal 2002 and
43&nbsp;stores in fiscal 2003. In fiscal 2004, we plan to open a
total of 21 new stores in the United States and Canada and
anticipate further store openings in subsequent years. Our
ability to identify and open new stores in desirable locations
and operate such new stores profitably is a key factor in our
ability to grow successfully. We cannot assure you as to when or
whether desirable locations will become available, the number of
Build-a-Bear Workshop stores that we can or will ultimately
open, or as to whether any such new stores can be profitably
operated. We have not always succeeded in identifying desirable
locations or in operating our stores successfully in those
locations. For example, as of July&nbsp;3, 2004, we have closed
two stores and have determined that one of our other stores may
be a candidate for future closure. We cannot assure you that we
will not have other stores in the future that we may have to
close. Our ability to open new stores and to manage our growth
also depends on our ability to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">negotiate acceptable lease terms, including
    desired tenant improvement allowances;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">finance the preopening costs, capital
    expenditures and working capital requirements of the stores;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">manage inventory to meet the needs of new and
    existing stores on a timely basis;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">hire, train and retain qualified store personnel;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">develop cooperative relationships with our
    landlords;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">successfully integrate new stores into our
    existing operations.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Increased demands on our operational, managerial
and administrative resources could cause us to operate our
business less effectively, which in turn could cause
deterioration in our financial performance.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our growth strategy also depends on our
    continued expansion outside of the United States and Canada,
    which we expect to effect through franchising, and which
    presents increased risk due to our unfamiliarity with
    franchising and international operations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to continue expanding outside of the
United States and Canada through franchising in several
countries over the next several years. In 2003, we began to
expand the Build-A-Bear Workshop brand outside of the United
States, opening our own stores in Canada and our first
franchised location in the United Kingdom. As of July&nbsp;3,
2004, there were five Build-A-Bear Workshop franchised stores
located in the United Kingdom, Japan, South Korea and Denmark.
We have limited experience in franchising, and we cannot assure
you that our franchisees will be successful in operating their
stores or that we will be successful in maintaining and
implementing our international franchising strategy. These
markets frequently have different demographic characteristics,
competitive conditions, consumer tastes and discretionary
spending patterns than our existing United States and Canadian
markets, which may cause these stores to be less successful than
those in our existing markets. Additionally, our franchisees may
experience merchandising and distribution challenges that are
different from those we currently encounter in our existing
markets. The operations and results of our franchisees could be
negatively impacted by the financial or political factors in the
countries in which they operate. These challenges, as well as
others, could have a material adverse effect on our business,
financial condition and results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The success of our franchising strategy will
depend upon our ability to attract qualified franchisees with
sufficient financial resources to develop and grow the franchise
operation and upon the ability of those franchisees to develop
and operate new franchised stores. Franchisees may not operate
stores in a manner
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<DIV align="left">
<FONT size="2">consistent with our standards and requirements,
may not hire and train qualified managers and other store
personnel and may not operate their stores profitably. As a
result, our franchising strategy may not be profitable to us
and, moreover, our image and reputation may suffer. For example,
the operations of our franchisee in South Korea have performed
below expectations and we are negotiating to transfer the
franchise to another party. Furthermore, even if our
international franchising strategy is successful, the interests
of franchisees might sometimes conflict with our interests. For
example, whereas franchisees are concerned with their individual
business strategies and objectives, we are responsible for
ensuring the success for the entire Build-A-Bear Workshop brand
and all of our stores.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The laws of the various foreign countries in
which our franchisees operate govern our relationships with our
franchisees. These laws, and any new laws that may be enacted,
may detrimentally affect the rights and obligations between us
and our franchisees and could expose us to additional liability.
</FONT>

<P align="left">
<B><I><FONT size="2">Our success depends on our ability to
generate interest in and demand for our interactive retail
experience, including being able to identify and respond to
consumer preferences in a timely manner.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our success depends in large part
upon our ability to continue to attract Guests with our
interactive shopping experience and our ability to anticipate,
gauge and respond in a timely manner to changing consumer
preferences and fashion trends. We cannot assure you that our
past success will be sustained or there will continue to be a
demand for our &#147;make your own stuffed animal&#148;
interactive experience, or for our stuffed animals, animal
apparel and accessories. A decline in demand for our interactive
shopping experience, our animals, animal apparel or accessories,
or a misjudgment of consumer preferences or fashion trends,
could have a negative impact on our business, financial
condition and results of operations. In addition, if we
miscalculate the market for our merchandise or the purchasing
preferences of our Guests, we may be required to sell a
significant amount of our inventory at discounted prices or even
below costs, thereby adversely affecting our financial condition
and profitability.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our ability to attract Guests to our stores
    depends heavily on the customer traffic generated by the
    shopping malls in which we are located.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While we invest heavily in integrated marketing
efforts and believe we are more of a destination location than
traditional retailers, we rely to a great extent on customer
traffic in the malls in which our stores are located. In order
to generate Guest traffic, we generally attempt to locate our
stores in prominent locations within high traffic shopping
malls. We rely on the ability of the malls&#146; anchor tenants,
generally large department stores, and on the continuing
popularity of malls as shopping destinations. We cannot control
the development of new shopping malls, the addition or loss of
anchors and co-tenants, the availability or cost of appropriate
locations within existing or new shopping malls or the
desirability, safety or success of shopping malls. If we are
unable to generate sufficient Guest traffic, our sales and
results of operations would be harmed. A significant decrease in
shopping mall traffic could have a material adverse effect on
our financial condition and profitability.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">A decline in general economic conditions
    could lead to reduced consumer demand for our
    products.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since purchases of our merchandise are dependent
upon discretionary spending by our Guests, our financial
performance is sensitive to changes in overall economic
conditions that affect consumer spending. Consumer spending
habits are affected by, among other things, prevailing economic
conditions, levels of employment, salaries and wage rates,
consumer confidence and consumer perception of economic
conditions. A general or perceived slowdown in the United States
or Canadian economy or uncertainty as to the economic outlook
could reduce discretionary spending or cause a shift in consumer
discretionary spending to other products, which would likely
cause us to delay or slow our expansion plans, result in lower
net sales and could also result in excess inventories, which
could, in turn, lead to increased merchandise markdowns and
related costs associated with higher levels of inventory and
adversely affect our liquidity and profitability.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our market share may be adversely impacted
    at any time by a significant number of
    competitors.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate in a highly competitive environment
characterized by low barriers to entry. We compete against a
diverse group of competitors. Because we are mall-based, we see
our competition as those mall-based retailers that compete for
prime mall locations, including various apparel, footwear and
specialty retailers. We also compete with toy retailers, such as
Wal-Mart, Toys&nbsp;&#147;R&#148;&nbsp;Us, Kmart and Target and
other discount chains, as well as with a number of manufacturers
that sell plush toys in the United States and Canada, including,
but not limited to, Ty, Fisher Price, Mattel, Russ Berrie,
Applause, Boyd&#146;s, Hasbro, Commonwealth, Gund and Vermont
Teddy Bear. Since we offer our Guests an experience as well as
merchandise, we also view our competition as any company that
competes for our Guests&#146; time and entertainment dollars,
such as movie theaters, restaurants, amusement parks and
arcades. In addition, there are several small companies that
operate &#147;create your own&#148; teddy bear and stuffed
animal experiences in retail stores and kiosks. Although we
believe that currently none of these companies offers the
breadth and depth of the Build-A-Bear Workshop products and
experience, we cannot assure you that they will not compete
directly with us in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of our competitors have longer operating
histories, significantly greater financial, marketing and other
resources, and greater name recognition. We cannot assure you
that we will be able to compete successfully with them in the
future, particularly in geographic locations that represent new
markets for us. If we fail to compete successfully, our market
share and results of operations could be materially and
adversely affected.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may not be able to operate successfully
    if we lose key personnel, are unable to hire qualified
    additional personnel, or experience turnover of our management
    team.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The success of our business depends upon our
senior management closely supervising all aspects of our
business, in particular the operation of our stores and the
design, procurement and allocation of our merchandise. Also,
because Guest service is a defining feature of the Build-A-Bear
Workshop corporate culture, we must be able to hire and train
qualified managers and Bear Builder associates to succeed. The
loss of certain key employees, including Maxine Clark, our
founder and Chief Executive Bear, Barry Erdos, our President and
Chief Operating Officer Bear, or other members of our senior
management, our inability to attract and retain other qualified
key employees or a labor shortage that reduces the pool of
qualified store associates could have a material adverse effect
on our business, financial condition and results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We rely on two vendors to supply
    substantially all of our merchandise, and our failure to
    maintain good relationships with either vendor could harm our
    ability to source products.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not own or operate any manufacturing
facilities. We purchased approximately 80% of our merchandise in
fiscal 2001, approximately 74% in fiscal 2002, and approximately
76% in fiscal 2003, from two vendors. Our relationships with our
vendors generally are on a purchase order basis and do not
provide a contractual obligation to provide adequate supply,
quality or acceptable pricing on a long-term basis. Our vendors
could discontinue selling to us at any time. If one or both of
our significant vendors were to discontinue their relationship
with us, we may be unable to obtain replacement products in a
timely manner, which could disrupt our store operations and have
an adverse effect on our business, financial condition and
results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our merchandise is manufactured by foreign
    manufacturers; therefore the availability and costs of our
    products may be negatively affected by risks associated with
    international manufacturing and trade.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We receive our merchandise through domestic
vendors from foreign sources, primarily in China. Any event
causing a disruption of imports, including the imposition of
import restrictions or labor strikes or lock-outs, could
adversely affect our business. For example, in fiscal 2002, we
experienced disruption to our import of merchandise as well as
increased shipping costs associated with a dock-worker labor
dispute. The flow of merchandise from our vendors could also be
adversely affected by financial or political instability in
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<DIV align="left">
<FONT size="2">any of the countries in which the goods we
purchase are manufactured, especially China, if the instability
affects the production or export of merchandise from those
countries. New outbreaks of highly infectious epidemics in Asia,
or elsewhere, such as SARS and avian influenza, or Asian bird
flu, and concerns over its spread could have a negative impact
on commerce and general economic conditions in Asia and could
result in quarantines or closures of our suppliers&#146;
facilities in Asia, including China, and adversely impact our
ability to purchase goods from our suppliers. Trade restrictions
in the form of tariffs or quotas, or both, applicable to the
products we sell could also affect the importation of those
products and could increase the cost and reduce the supply of
products available to us. In addition, decreases in the value of
the U.S.&nbsp;dollar against foreign currencies could increase
the cost of products we purchase from overseas vendors.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We rely on third parties to manage the
    warehousing and distribution aspects of our business. If these
    third parties do not adequately perform these functions, our
    business would be disrupted.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The efficient operation of our stores is
dependent on our ability to distribute merchandise to locations
throughout the United States in a timely manner. We depend on
third party distribution centers in St.&nbsp;Louis, Missouri,
Los Angeles, California and Toronto, Canada to receive and
warehouse substantially all of our merchandise and supplies. We
rely on additional third parties to ship all of our merchandise
and supplies from the distribution centers to our stores. Events
such as fires, tornadoes, earthquakes or other catastrophic
events, malfunctions of our third party distributors&#146;
distribution information systems, shipping problems or
termination of our distribution agreements by such distributors
would result in delays or disruptions in the timely distribution
of merchandise to our stores, which could have a material
adverse effect on our business, financial condition and results
of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Fluctuations in our quarterly results of
    operations could cause the price of our common stock to
    substantially decline.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Retailers generally are subject to fluctuations
in quarterly results. Our operating results for one period may
not be indicative of results for other periods, and may
fluctuate significantly due to a variety of factors, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the timing of new store openings and related
    expenses;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the profitability of our stores;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increases or decreases in comparable store sales;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the timing and frequency of our marketing
    initiatives;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in general economic conditions and
    consumer spending patterns;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in consumer preferences;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the effectiveness of our inventory management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">actions of competitors or mall anchors and
    co-tenants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">seasonal shopping patterns, including whether the
    Easter holiday occurs in the first or second quarter and other
    vacation schedules;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the timing and frequency of national media
    appearances and other public relations events; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">weather conditions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If our future quarterly results fail to meet the
expectations of research analysts, then the market price of our
common stock could decline substantially.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our failure to renew, register or otherwise
    protect our trademarks could have a negative impact on the value
    of our brand names and our ability to use those names in certain
    geographical areas.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our copyrights, service marks,
trademarks, trade secrets, patents and similar intellectual
property are critical to our success. We rely on trademark,
copyright and other intellectual property laws to protect our
proprietary rights. We also depend on trade secret protection
through confidentiality and license agreements with our
employees, customers, vendors, strategic partners, subsidiaries
and others. We may not have agreements containing adequate
protective provisions in every case, and the contractual
provisions that are in place may not provide us with adequate
protection in all circumstances. Any infringement of our
intellectual property rights or breach of our confidentiality or
license agreements could result in significant litigation costs,
and any failure to adequately protect our proprietary rights
could result in the loss of one or more competitive advantages
and decreased revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Despite our efforts to protect our intellectual
property rights, intellectual property laws afford us only
limited protection. A third party could copy or otherwise obtain
information from us without authorization. Accordingly, we may
not be able to prevent misappropriation of our intellectual
property or to deter others from developing similar products or
services. Further, monitoring the unauthorized use of our
intellectual property is difficult. Litigation has been and may
continue to be necessary to enforce our intellectual property
rights or to determine the validity and scope of the proprietary
rights of others. Litigation of this type has resulted in and
could result in further substantial costs and diversion of
resources, may result in counterclaims or other claims against
us and could significantly harm our results of operations. In
addition, the laws of some foreign countries do not protect our
proprietary rights to the same extent as do the laws of the
United States.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may have disputes with, or be sued by,
    third parties for infringement or misappropriation of their
    proprietary rights, which could have a negative impact on our
    business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other parties have asserted in the past, and may
assert in the future, trademark, patent, copyright or other
intellectual property rights that are important to our business.
We cannot assure you that others will not seek to block the use
of or seek monetary damages or other remedies for the prior use
of our brand names or other intellectual property or the sale of
our products or services as a violation of their trademark,
patent or other proprietary rights. Defending any claims, even
claims without merit, could be time-consuming, result in costly
settlements, litigation or restrictions on our business and
damage our reputation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, there may be prior registrations or
use of intellectual property in the U.S.&nbsp;or foreign
countries for similar or competing marks or other proprietary
rights of which we are not aware. In all such countries it may
be possible for any third party owner of a national trademark
registration or other proprietary right to enjoin or limit our
expansion into those countries or to seek damages for our use of
such intellectual property in such countries. In the event a
claim against us were successful and we could not obtain a
license to the relevant intellectual property or redesign or
rename our products or operations to avoid infringement, our
business, financial condition or results of operations could be
harmed. Securing registrations does not fully insulate us
against intellectual property claims, as another party may have
rights superior to our registration or our registration may be
vulnerable to attack on various grounds.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We are subject to a number of risks
    associated with leasing our stores.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We lease all of our store locations. The majority
of our store leases contain provisions for base rent plus
percentage rent based on sales in excess of an agreed upon
minimum annual sales level. A number of our leases include a
termination provision which applies if we do not meet certain
sales levels during a specified period, typically in the third
to fourth year of the lease. In addition, many of our leases
will expire within the next ten years. Most do not grant us any
rights to renew the lease. Furthermore, some of these leases
contain various restrictions relating to change of control of
our company. Our leases also subject us to risks relating to
compliance with changing mall rules and the exercise of
discretion by our landlords on various matters within the malls.
In addition, the lease for our store in the Downtown
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left">
<FONT size="2">Disney&#174; District at the Disneyland&#174;
Resort in Anaheim, California provides that the landlord may
terminate the lease at any time, subject to the payment of an
early termination fee. As a result, we cannot assure you that
the landlord will not exercise the right to terminate this lease.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We depend heavily on our communications and
    information systems, which are vulnerable to systems
    failures.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is highly dependent on
communications and information systems. Any failure or
interruption of our systems, including those associated with new
systems implementations or system upgrades, could significantly
harm our business, including our sales, distribution,
purchasing, inventory control, merchandising and financial
controls. We cannot assure you that we will not suffer any of
these systems failures or interruptions from power or
telecommunication failures, natural disasters or otherwise, or
that our back-up procedures and capabilities in the event of any
such failure or interruption will be adequate.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Terrorism and the uncertainty of future
    terrorist attacks or war may harm our operating
    results.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Terrorist acts or acts of war may cause damage or
disruption to our facilities, information systems, vendors,
employees and customers, which could significantly harm our
revenues and results of operations. In the future, fears of war
or additional acts of terrorism may adversely affect the economy
and may have a negative effect on mall traffic or consumer
discretionary spending patterns. This impact may be particularly
harmful to our business because we rely heavily on discretionary
consumer spending and consumer confidence levels.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We are subject to regulations that impact
    our employees.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Various labor laws, including federal, state and
Canadian laws, govern our relationship with our employees and
affect our operating costs. These laws include minimum wage
requirements, overtime pay, unemployment tax rates,
workers&#146; compensation rates, citizenship requirements and
sales taxes. A determination that we do not comply with these
laws could harm our profitability or business reputation.
Additional government-imposed increases in minimum wages,
overtime pay, paid leaves of absence or mandated health benefits
could also materially adversely affect us.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may suffer negative publicity or be sued
    if our manufacturers violate labor laws or engage in practices
    that our Guests believe are unethical, or if our products are
    recalled or cause injuries.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We rely on our sourcing personnel to select
manufacturers with legal and ethical labor practices, but we
cannot control their business and labor practices. If an
independent manufacturer violates labor laws or other applicable
regulations or is accused of violating these laws and
regulations, or if such a manufacturer engages in labor or other
practices that diverge from those typically acceptable in the
United States, we could in turn experience negative publicity or
be sued.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of our products are used by small children
and infants who may be injured from usage. We may decide or be
required to recall products or be subject to claims or lawsuits
resulting from injuries. For example, in January 2003, we
voluntarily recalled a product due to a possible safety issue,
for which a vendor reimbursed us for certain related expenses.
Negative publicity in the event of any recall or if any children
are injured from our products could have a material adverse
effect on sales of our products and our business, and related
recalls or lawsuits with respect to such injuries could have a
material adverse effect on our financial position. Although we
currently have liability insurance, we cannot assure you that it
would cover product recalls and we face the risk that claims or
liabilities will exceed our insurance coverage. Furthermore, we
may not be able to maintain adequate liability insurance in the
future.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Portions of our business are subject to
    privacy and security risks.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to serving as an online sales portal,
our website, <I>www.buildabear.com,</I> features children&#146;s
games, e-cards and printable party invitations and thank-you
notes, and provides an opportunity for
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left">
<FONT size="2">children under the age of 13 to sign up, with the
consent of their parent or guardian, to receive our online
newsletter. We currently obtain and retain personal information
about our website users. In addition, we obtain personal
information about our Guests as part of their registration in
our Find-A-Bear identification system. Federal, state and
foreign governments have enacted or may enact laws or
regulations regarding the collection and use of personal
information, with particular emphasis on the collection of
information regarding minors. Such regulations include or may
include requirements that companies establish procedures to:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">give adequate notice regarding information
    collection and disclosure practices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">allow consumers to have personal information
    deleted from a company&#146;s database;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide consumers with access to their personal
    information and the ability to rectify inaccurate information;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">obtain express parental consent prior to
    collecting and using personal information from children;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">comply with the Federal Children&#146;s Online
    Privacy Protection Act.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Such regulation may also include enforcement and
redress provisions. While we have implemented programs and
procedures designed to protect the privacy of people, including
children, from whom we collect information, and our website is
designed to be fully compliant with the Federal Children&#146;s
Online Privacy Protection Act, there can be no assurance that
such programs will conform to all applicable laws or regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a stringent privacy policy covering the
information we collect from our customers and have established
security features to protect our Guest database and website.
However, our security measures may not prevent security
breaches. We may need to expend significant resources to protect
against security breaches or to address problems caused by
breaches. If third persons were able to penetrate our network
security and gain access to, or otherwise misappropriate, our
Guests&#146; personal information, it could harm our reputation
and, therefore, our business and we could be subject to
liability. Such liability could include claims for misuse of
personal information or unauthorized use of credit cards. These
claims could result in litigation, our involvement in which,
regardless of the outcome, could require us to expend
significant financial resources. In addition, because our Guest
database primarily includes personal information of young
children and young children frequently interact with our
website, we are potentially vulnerable to charges from parents,
children&#146;s organizations, governmental entities, and the
media of engaging in inappropriate collection of data from
children. Such charges could adversely impact customer
relationships and ultimately cause a decrease in net sales and
also expose us to litigation and possible liability.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Evolving regulation of corporate governance
    and public disclosure may result in additional expenses and
    continuing uncertainty.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Changing laws, regulations and standards relating
to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002 and related rules and regulations,
are creating uncertainty for public companies. We are presently
evaluating and monitoring developments with respect to new and
proposed rules and cannot predict or estimate the amount of the
additional compliance costs we may incur or the timing of such
costs. These new or changed laws, regulations and standards are
subject to varying interpretations, in many cases due to their
lack of specificity, and as a result, their application in
practice may evolve over time as new guidance is provided by
courts and regulatory and governing bodies. This could result in
continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and
governance practices. Maintaining appropriate standards of
corporate governance and public disclosure may result in
increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities
to compliance activities. In addition, if we fail to comply with
new or changed laws, regulations and standards, regulatory
authorities may initiate legal proceedings against us and our
business and reputation may be harmed.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<P align="center">
<B><FONT size="2">Risks Related to Owning Our Common
Stock</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">There has not previously been any public
    market for our common stock.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there has been no public
market for our common stock. We expect that our common stock
will be listed on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;;
however, we cannot assure you that an active trading market will
develop for our common stock. The initial public offering price
of the common stock will be determined by negotiations among us,
the selling stockholders and the underwriters based on numerous
factors that we discuss in the &#147;Underwriting&#148; section
of this prospectus. This price may not be indicative of the
market price for our common stock after this initial public
offering.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The market price of our common stock may be
    materially adversely affected by market
    volatility.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market price of our common stock could be
subject to significant fluctuations after this offering, and may
decline below the initial public offering price. You may not be
able to resell your shares at or above the initial public
offering price. Among the factors that could affect our stock
price are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">actual or anticipated variations in comparable
    store sales or operating results;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in financial estimates by research
    analysts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">actual or anticipated changes in the United
    States economy or the retailing environment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in the market valuations of other
    specialty retail companies;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">announcements by us or our competitors of
    significant acquisitions, strategic partnerships, divestitures,
    joint ventures or other strategic initiatives.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stock markets in general have experienced
substantial volatility that has often been unrelated to the
operating performance of individual companies. These broad
market fluctuations may adversely affect the trading price of
our common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our principal stockholders will continue to
    own a large percentage of our voting stock after this offering,
    which will allow them to control substantially all matters
    requiring stockholder approval.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, our executive
officers, directors and principal stockholders and their
affiliates will own
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding
common stock, or &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the
underwriters exercise their over-allotment option in full. If
these stockholders act together, they would be able to elect our
board of directors and control all other matters requiring
approval by stockholders, including the approval of mergers,
going private transactions and other extraordinary transactions,
as well as the terms of any of these transactions. This
concentration of ownership could have the effect of delaying or
preventing a change in our control or otherwise discouraging a
potential acquirer from attempting to obtain control of us,
which could in turn have an adverse effect on the market price
of our common stock or prevent our stockholders from realizing a
premium over the then-prevailing market price for their shares
of common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The public sale of our common stock by
    existing stockholders could adversely affect the price of our
    common stock.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market price of our common stock could
decline as a result of sales by our existing stockholders after
this offering or the perception that these sales will occur.
These sales also might make it difficult for us to sell equity
securities in the future at a time and at a price that we deem
appropriate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, we will have a
total
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;fully
diluted shares of common stock outstanding, including shares
underlying currently outstanding options. Of
these &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
were not sold in this offering and are &#147;restricted
securities,&#148; which means the holder acquired these
securities from us or an affiliate in a transaction that did not
involve a public offering. These shares may be sold in the
public market only if they are registered or if they qualify for
an exemption from registration under Rule&nbsp;144 of the
Securities Act. At this time, following the lapse of
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">contractual restrictions imposed by the
underwriters, all restricted securities, whether or not held by
our affiliates, will be eligible to be sold, subject to certain
volume and other limitations under Rule&nbsp;144 under the
Securities Act. Shares sold in the offering to our affiliates
will also be subject to Rule&nbsp;144 of the Securities Act. In
addition, beginning six months after completion of this
offering, the holders of
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock have the right to require us to register the
sale of their shares of our common stock under the Securities
Act.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Purchasers of our common stock in this
    offering will be subject to immediate substantial dilution and
    may be subject to additional dilution in the
    future.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The public offering price is substantially higher
than the net tangible book value per share of our outstanding
common stock. As a result, purchasers of our common stock in
this offering will incur immediate, substantial dilution in the
amount of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share based on an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. In the past we have granted options to our key employees
to purchase our common stock, and we expect to continue to grant
a substantial number of options in the future. These grants of
options or other issuances could also result in dilution to
stockholders. In addition, if we issue preferred stock, the
rights of the holders of common stock will be subject to, and
may be harmed by, the rights of the holders of any preferred
stock. See &#147;Dilution.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our certificate of incorporation and bylaws
    and Delaware law contain provisions that could discourage a
    takeover.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our basic corporate documents and Delaware law
contain provisions that might enable our management to resist a
takeover. These provisions:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">restrict various types of business combinations
    with significant stockholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide for a classified board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit the right of stockholders to remove
    directors or change the size of the board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit the right of stockholders to fill vacancies
    on the board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit the right of stockholders to act by written
    consent and to call a special meeting of stockholders or propose
    other actions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">require a higher percentage of stockholders than
    would otherwise be required to amend, alter, change or repeal
    our bylaws and certain provisions of our certificate of
    incorporation;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">authorize the issuance of preferred stock with
    any voting rights, dividend rights, conversion privileges,
    redemption rights and liquidation rights and other rights,
    preferences, privileges, powers, qualifications, limitations or
    restrictions as may be specified by our board of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions may:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">discourage, delay or prevent a change in the
    control of our company or a change in our management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">adversely affect the voting power of holders of
    common stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit the price that investors might be willing
    to pay in the future for shares of our common stock.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Management will have significant discretion
    over the use of proceeds from this offering and may use the
    proceeds in a manner which is different from their current
    intent.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While we intend to use the net proceeds of the
offering to fund the opening of new stores and working capital
and for general corporate purposes, we will have broad
discretion to adjust the application and allocation of the net
proceeds in order to address changed circumstances and
opportunities. The success of our operations that are influenced
by working capital allocations will be substantially dependent
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">upon the discretion and judgment of our
management with respect to the application and allocation of the
net proceeds.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If our share price is volatile, we may be
    the target of securities litigation, which is costly and
    time-consuming to defend.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Market fluctuations, as well as general economic,
political and market conditions such as recessions or
international currency fluctuations, may adversely affect the
market price of our common stock. In the past, following periods
of volatility in the market price of a company&#146;s
securities, stockholders have often instituted class action
securities litigation against those companies. Such litigation,
if instituted, could result in substantial costs and a diversion
of management attention and resources, which would significantly
harm our profitability and reputation.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We do not anticipate paying cash dividends,
    and accordingly stockholders must rely on stock appreciation for
    any return on their investment in us.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We paid a special cash dividend in
August&nbsp;2004 of $10.0&nbsp;million to our stockholders. We
anticipate that we will retain our earnings for future growth
and therefore do not anticipate paying cash dividends in the
future. As a result, only appreciation of the price of the
common stock will provide a return to investors in this
offering. Investors seeking cash dividends should not invest in
our common stock.
</FONT>

<DIV align="left">
<A name='122'></A>
</DIV>

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<P align="center">
<B><FONT size="2">FORWARD-LOOKING STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus contains certain statements that
are, or may be considered to be, &#147;forward-looking
statements&#148; within the meaning of Section&nbsp;27A of the
Securities Act, and Section&nbsp;21E of the Securities Exchange
Act of 1934 (the &#147;Exchange Act&#148;). All statements that
are not historical facts, including statements about our beliefs
or expectations, are forward-looking statements. We generally
identify these statements by words or phrases such as
&#147;may,&#148; &#147;might,&#148; &#147;will,&#148;
&#147;should,&#148; &#147;expect,&#148; &#147;plan,&#148;
&#147;anticipate,&#148; &#147;believe,&#148;
&#147;estimate,&#148; &#147;intend,&#148; &#147;predict,&#148;
&#147;future,&#148; &#147;potential&#148; or
&#147;continue,&#148; the negative or any derivative of these
terms and other comparable terminology. These forward-looking
statements, which are subject to risks, uncertainties and
assumptions about us, may include, among other things,
projections or statements regarding:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our future financial performance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our anticipated operating and growth strategies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our anticipated rate of store openings;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our anticipated store opening costs;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our future capital expenditures.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These statements are only predictions based on
our current expectations and projections about future events.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our
actual results, level of activity, performance or achievements
to differ materially from the results, level of activity,
performance or achievements expressed or implied by these
forward-looking statements, including those factors discussed
under the caption entitled &#147;Risk Factors&#148; as well as
other places in this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate in a competitive and rapidly changing
environment. New risk factors emerge from time to time and it is
not possible for management to predict all the risk factors, nor
can it assess the impact of all the risk factors on our business
or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those
contained in any forward-looking statements. Given these risks
and uncertainties, you should not place undue reliance on
forward-looking statements, which speak only as of the date of
this prospectus, as a prediction of actual results.
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">You should read this prospectus completely and
with the understanding that our actual results may be materially
different from what we expect. Except as required by law, we
undertake no duty to update these forward-looking statements,
even though our situation may change in the future. We qualify
all of our forward-looking statements by these cautionary
statements.</FONT></B>

<DIV align="left">
<A name='103'></A>
</DIV>

<!-- link1 "USE OF PROCEEDS" -->

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that we will receive net proceeds
from this offering of approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
after deducting underwriting discounts and commissions and
estimated offering expenses payable by us. For the purpose of
estimating net proceeds, we are assuming that the public
offering price will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. We will not receive any proceeds from the sale of shares
by the selling stockholders, nor will we receive any proceeds
from the sale of additional shares relating to the
underwriters&#146; over-allotment option, if exercised.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal purpose of this offering is to
establish a public market for our common stock. We expect to use
the net proceeds of this offering to fund the opening of new
stores and for working capital and general corporate purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will retain broad discretion over the
allocation of the net proceeds of this offering. Pending the
uses listed above, we intend to invest the net proceeds of this
offering in short-term, interest-bearing, investment-grade
securities. We cannot predict whether the proceeds invested will
yield a favorable return.
</FONT>

<P align="left">
<A name='104'></A>

<!-- link1 "DIVIDEND POLICY" -->

<P align="center">
<B><FONT size="2">DIVIDEND POLICY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We paid a special cash dividend in
August&nbsp;2004 of $10.0&nbsp;million to our stockholders. We
anticipate that we will retain any earnings to support
operations and to finance the growth and development of our
business, and we do not expect to pay cash dividends in the
foreseeable future. Any future determination relating to our
dividend policy will be made at the discretion of our board of
directors and will depend on a number of factors, including
future earnings, capital requirements, financial conditions,
future prospects and other factors that the board of directors
may deem relevant. Additionally, under our credit agreement, we
are prohibited from declaring dividends without the prior
consent of our lender, subject to certain exceptions, as
described in &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations&nbsp;&#151;
Liquidity and Capital Resources.&#148;
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<DIV align="left">
<A name='105'></A>
</DIV>

<!-- link1 "CAPITALIZATION" -->

<P align="center">
<B><FONT size="2">CAPITALIZATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our capitalization
as of July&nbsp;3, 2004:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">on an actual consolidated basis;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">on a pro forma basis giving effect to the special
    $10.0&nbsp;million cash dividend paid in August&nbsp;2004 and
    the automatic conversion of all of our outstanding shares of
    preferred stock as of this date upon completion of this
    offering;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">on a pro forma as adjusted basis giving effect to
    the special $10.0&nbsp;million cash dividend paid in
    August&nbsp;2004, the automatic conversion of all of our
    outstanding shares of preferred stock as of this date upon
    completion of this offering, and the issuance and sale
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of common stock at an assumed public offering price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share, less underwriting discounts and commissions and estimated
    offering expenses.
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">As of July&nbsp;3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">as Adjusted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Redeemable convertible preferred stock:
    25,000,000&nbsp;shares authorized; 6,134,003&nbsp;shares issued
    and outstanding, actual; no shares issued and outstanding, pro
    forma and pro forma as adjusted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nonredeemable convertible preferred stock:
    25,000,000&nbsp;shares authorized; 9,433,518&nbsp;shares issued
    and outstanding, actual; no shares issued and outstanding, pro
    forma and pro forma as adjusted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock: 25,000,000&nbsp;shares authorized;
    419,156&nbsp;shares issued and outstanding,
    actual; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    issued and outstanding, pro
    forma; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    issued and outstanding, pro forma as adjusted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,603</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table above does not include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">1,047,283&nbsp;shares of our common stock
    issuable upon exercise of options outstanding as of July&nbsp;3,
    2004 under our 2000 Stock Option Plan and our 2002 Stock
    Incentive Plan, at a weighted average exercise price of $6.52
    per share;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to 2,073,820 additional shares of our common
    stock reserved for issuance under our 2004 Stock Incentive Plan;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">315,797 restricted shares subject to promissory
    notes from the holders of such shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should read this information in conjunction
with the information under &#147;Selected Consolidated Financial
and Operating Data,&#148; &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations&#148;
and our financial statements and related notes appearing
elsewhere in this prospectus.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='106'></A>
</DIV>

<!-- link1 "DILUTION" -->

<P align="center">
<B><FONT size="2">DILUTION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you invest in our common stock, your interest
will be immediately diluted to the extent of the difference
between the public offering price per share of our common stock
and the pro forma net tangible book value per share of our
common stock after this offering. Our net tangible book value as
of July&nbsp;3, 2004, was approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share of our common stock. Net tangible book value per share
represents the amount of our total tangible assets reduced by
the amount of our total liabilities and divided by the total
number of shares of common stock outstanding after giving effect
to the conversion of all outstanding shares of preferred stock
into common stock. Dilution in net tangible book value per share
represents the difference between the amount per share paid by
purchasers of shares of our common stock in this offering and
the net tangible book value per share of our common stock
immediately afterwards. After giving effect to our sale
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock offered by this prospectus at an assumed public
offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share and after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us, our
pro forma net tangible book value will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
or approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. This represents an immediate increase in pro forma net
tangible book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to existing stockholders and an immediate dilution in pro
forma net tangible book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to new investors purchasing shares of common stock in this
offering. The following table illustrates this per share
dilution:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assumed public offering price per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net tangible book value per share as of
    July&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase per share attributable to new investors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma net tangible book value per share after
    this offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dilution per share to new investors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, as of
July&nbsp;3, 2004, the differences between the number of shares
of common stock purchased from us, the total consideration paid
and average price per share paid by our officers, directors,
promoters and their affiliates and by the new investors, before
deducting expenses payable by us, assuming a public offering
price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Purchased</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Total Consideration</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Price</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Affiliated stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New investors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tables above exclude 1,047,283&nbsp;shares of
common stock issuable upon exercise of options outstanding as of
July&nbsp;3, 2004 having a weighted average exercise price of
$6.52 per share. Assuming exercise of all of outstanding stock
options held by our officers, directors, promoters and
affiliates, the pro forma net tangible book value would be
reduced and further dilute new investors an additional
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, to
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the underwriters exercise their over-allotment
option in full, the following will occur:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number of shares of common stock held by our
    affiliated stockholders will decrease to
    approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total
    number of shares of common stock outstanding;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number of shares held by new public investors
    will increase
    to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    or approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total
    number of shares of our common stock outstanding after this
    offering.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='107'></A>
</DIV>

<!-- link1 "SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA" -->

<P align="center">
<B><FONT size="2">SELECTED CONSOLIDATED FINANCIAL AND OPERATING
DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, for the periods
and dates indicated, our selected consolidated financial and
operating data. The balance sheet data as of December&nbsp;28,
2002 and January&nbsp;3, 2004 and the statement of operations
and other financial data for our fiscal years ended
December&nbsp;29, 2001, December&nbsp;28, 2002 and
January&nbsp;3, 2004 are derived from our audited financial
statements included elsewhere in this prospectus. The balance
sheet data as of January&nbsp;1, 2000, December&nbsp;30, 2000
and December&nbsp;29, 2001 and the statement of operations and
other financial data for our fiscal years ended January&nbsp;1,
2000 and December&nbsp;30, 2000 are derived from our audited
financial statements that are not included in this prospectus.
The balance sheet data as of July&nbsp;3, 2004 and the statement
of operations and other financial data for the first half of
fiscal 2003 and 2004 have been derived from the unaudited
interim financial statements included elsewhere in this
prospectus. In the opinion of management, our unaudited
financial statements have been prepared on a basis consistent
with our audited financial statements and include all
adjustments, which are only normal and recurring adjustments,
necessary for a fair presentation of the financial position and
results of operations for the unaudited periods. Operating
results for the first half of fiscal 2004 are not necessarily
indicative of the results for the fiscal year ending
January&nbsp;1, 2005 or for any future period. You should read
our selected consolidated financial and operating data in
conjunction with our consolidated financial statements and
related notes appearing elsewhere in this prospectus and
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See the notes to our consolidated financial
statements for an explanation of the method used to determine
the numbers of shares used in computing basic and diluted and
pro forma basic and diluted net earnings (loss) per common share.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Fiscal Year Ended(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma for</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma for the</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">the Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;1,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004(2)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="35" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Statement of operations data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,101</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">55,408</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">106,622</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">169,138</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">213,672</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">92,583</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">135,727</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cost of merchandise sold
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,256</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">29,090</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">56,708</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,848</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">116,515</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51,929</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">70,146</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,091</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">23,713</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">41,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65,628</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">81,091</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">36,084</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48,632</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Store preopening
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">908</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,292</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,124</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,091</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,045</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,491</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">580</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Litigation settlement
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,550</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">64</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,171</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">54,997</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">103,552</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">159,479</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">200,593</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">89,449</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">119,260</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss) before income taxes and minority
    interest(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,070</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">411</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,070</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,659</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,079</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,134</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,467</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Minority Interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">122</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss) before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,070</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">411</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,192</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,659</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,079</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,134</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,467</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income tax expense (benefit)(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,287</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,791</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,101</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,285</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,258</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,070</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">447</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,905</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,868</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,978</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,978</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,849</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,209</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,209</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cumulative dividends and accretion of redeemable
    preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">343</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">824</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,971</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,970</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">985</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">985</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cumulative dividends on nonredeemable preferred
    stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">342</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">455</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">455</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">455</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">228</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">227</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income (loss) attributable to common
    stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,070</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">626</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,442</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,553</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,978</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">636</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,996</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,209</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">22
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="18%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Fiscal Year Ended(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma for</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma for the</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">the Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;1,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004(2)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="35" align="center" nowrap><B><FONT size="1">(In thousands, except per share and per gross square foot data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings (loss) per common share(4):
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5.83</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.04</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.35</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.57</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.46</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.92</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.58</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5.83</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.03</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.32</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.45</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.44</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.57</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.57</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Shares used in computing per share amounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">183,487</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,534,052</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">284,731</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,601,264</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">183,487</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,543,672</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,101,143</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,055,458</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,546,348</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,006,473</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,367,692</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,938,328</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,031,756</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="21%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2147483647%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Other financial data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gross margin ($)(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,798</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">26,144</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">49,913</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">78,275</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">96,912</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40,559</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65,273</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gross margin (%)(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48.6%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47.2%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">46.8%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">46.3%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">45.4%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">43.9%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48.2%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,833</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14,860</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,624</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,718</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,362</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,338</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,438</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">870</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,185</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,588</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,775</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,939</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,030</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="38"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Cash flow data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash flows provided by (used in) operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(472</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,886</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14,482</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,664</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">25,215</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,004</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,809</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash flows used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(6,509</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(15,564</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(23,280</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(20,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(20,480</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(11,177</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5,095</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash flows provided by (used in) financing
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,587</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,874</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,256</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(121</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="38"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Store data(6):</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Number of stores at end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">71</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">150</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">123</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">157</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average net sales per store(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,109</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,205</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,904</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,605</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">791</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">879</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net sales per gross square foot(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">746</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">705</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">634</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">582</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">502</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">247</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">287</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comparable store sales change (%)(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18.2%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5.1%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(6.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(15.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(16.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13.8%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">As of(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As of(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma as of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;1,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;5,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004(2)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="35"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="35" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Balance sheet data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,901</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,098</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,555</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">15,866</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,601</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">26,315</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,861</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,418</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,983</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,813</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,724</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,656</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40,086</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">72,854</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">93,693</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">111,964</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">124,833</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">345</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,404</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Redeemable preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,116</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">33,964</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35,920</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">37,890</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">38,875</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,705</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,548</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,628</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">15,526</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,540</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30,728</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">69,603</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our fiscal year consists of 52 or 53 weeks and
    ends on the Saturday nearest December&nbsp;31 in each year.
    Fiscal years ended December&nbsp;29, 2001 and December&nbsp;28,
    2002 included 52&nbsp;weeks and fiscal year ended
    January&nbsp;3, 2004 included 53&nbsp;weeks.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The pro forma statement of operations data for
    the year ended January&nbsp;3, 2004 and the 26&nbsp;weeks ended
    July&nbsp;3, 2004 and the pro forma balance sheet data as of
    July&nbsp;3, 2004 reflect the pro forma effect of the mandatory
    conversion of all preferred stock into shares of common stock in
    connection with this offering. The conversion ratio assumes the
    number of shares to be issued upon the conversion of the
    outstanding preferred stock based upon our Amended and Restated
    Certificate of Incorporation effective on August&nbsp;10, 2004,
    or 17,316,533&nbsp;shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Before April&nbsp;3, 2000, we were organized as a
    limited liability company. During that period, we were
    classified for federal and state income tax purposes as a
    partnership and as a result paid no income taxes as a
    corporation. Since April&nbsp;3, 2000, we have been a
    C-corporation and have been liable for federal and state income
    taxes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Assumes for fiscal years ended January&nbsp;1,
    2000 and December&nbsp;30, 2000: (i)&nbsp;conversion of
    membership units for periods prior to our conversion to a
    C-corporation; and (ii)&nbsp;the tax effect as if we had
    converted to a C-corporation as of the beginning of 1999. Basic
    earnings (loss) per common share gives effect to the allocation
    of net income (loss) available to common stockholders between
    common and participating preferred shares on a pro rata basis.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Gross margin represents net retail sales less
    cost of merchandise sold. Gross margin percentage represents
    gross margin divided by net retail sales.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Excludes our webstore and seasonal and
    event-based locations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Average net retail sales per store represents net
    retail sales from stores open throughout the entire period
    divided by the total number of such stores.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net retail sales per gross square foot represents
    net retail sales from stores open throughout the entire period
    divided by the total gross square footage of such stores.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comparable store sales percentage changes are
    based on net retail sales and stores are considered comparable
    beginning in their thirteenth full month of operation.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='108'></A>
</DIV>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" -->

<P align="center">
<B><FONT size="2">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND</FONT></B>

<DIV align="center">
<B><FONT size="2">RESULTS OF OPERATIONS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from the
results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited
to, those discussed in &#147;Risk Factors&#148; and elsewhere in
this prospectus. The following section is qualified in its
entirety by the more detailed information, including our
financial statements and the notes thereto, which appears
elsewhere in this prospectus.</FONT></I>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are the leading, and only national, company
providing a &#147;make your own stuffed animal&#148; interactive
&#147;retail-tainment&#148; experience under the Build-A-Bear
Workshop brand, in which our customers, or Guests, stuff, fluff,
dress, accessorize and name their own teddy bears and other
stuffed animals. Our concept, which we developed for mall-based
retailing, capitalizes on what we believe is the relatively
untapped demand for experience-based shopping as well as the
widespread appeal of stuffed animals. The Build-A-Bear Workshop
experience appeals to a broad range of age groups and
demographics, including children, teens, their parents and
grandparents. As of July&nbsp;3, 2004, we operated 157 stores in
37&nbsp;states and Canada and had five franchised stores
internationally under the Build-A-Bear Workshop brand. In
addition to our stores, we market our products and build our
brand through our website, which simulates our interactive
shopping experience, as well as in event-based locations and
sports venues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate in three segments that share the same
infrastructure, including management, systems, merchandising and
marketing, and generate revenues as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">United States and Canadian retail stores, a
    webstore and seasonal, event-based locations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">International stores operated under franchise
    agreements;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">License arrangements with third parties which
    manufacture and sell to other retailers merchandise carrying the
    Build-A-Bear Workshop brand.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Selected financial data attributable to each
segment for fiscal 2001, 2002 and 2003 are set forth in
note&nbsp;17 of the notes to our consolidated financial
statements included elsewhere in this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we have developed an appealing
retail store concept that in fiscal 2003, for stores open for
the entire year, averaged $1.6&nbsp;million in net sales. For
fiscal 2003, store contribution, which consists of net income
before income tax expense, interest, depreciation and
amortization, store pre-opening and general and administrative
expense and excludes franchise fees, license revenues and
contribution from our webstore and seasonal event-based
locations, as a percentage of net retail sales, excluding
revenue from our webstore and seasonal and event-based
locations, was 22.8% and total company net income as a
percentage of total revenues was 3.7%. See
&#147;&#151;&nbsp;Non-GAAP Financial Measures&#148; for a
reconciliation of store contribution to net income. The
economics of our average store, coupled with the fact that we
have opened 120 stores since the beginning of fiscal 2001 and
improved expense management, have been the primary reasons for
our net income increasing during each of the last five fiscal
years. Strong comparable store sales for the first half of
fiscal 2004, along with the factors cited above, have been the
primary reason for our increase in net income in the first half
of fiscal 2004 as compared to the first half of fiscal 2003.
Additionally, as we have added stores and grown our sales
volume, the quantities of merchandise and supplies we purchase
have increased which has created economies of scale for our
vendors allowing us to obtain reduced costs for these items and
increase our profitability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The increase in total store contribution has been
partially offset by the increase in our central office general
and administrative expenses required to support an expanding
store base and international franchise operations. These
expenses have grown at a slower rate, in percentage terms, than
our number of stores and net retail sales. In addition, we
significantly increased our advertising expenditures in the
fourth
</FONT>

<P align="center"><FONT size="2">25
</FONT>
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<DIV align="left">
<FONT size="2">quarter of fiscal 2003 and the first half fiscal
2004 and expect these expenditures as a percentage of net retail
sales to be even greater in the second half of fiscal 2004
compared to the first half of fiscal 2004.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to grow our business primarily through
the continued opening of new stores. Further, we expect to grow
our net retail sales, including comparable store sales, as a
result of the addition of national television and online
advertising to our marketing mix in fiscal 2004. We also plan to
increase our revenues through increasing the number of
international franchised stores, as well as the addition of new
licensees and sales of licensed products for which we receive
license revenue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect the additional revenue contribution
from our increased marketing to be greater than the total costs
of the program. By improving our store productivity primarily as
a result of comparable store sales increases, we expect to
better leverage our store level operating expenses, primarily
occupancy expense. We also expect to leverage our overhead
expenses as we grow our revenues, despite some increases in
general and administrative expenses to support more stores and
some expenses to support our growing franchise and licensing
businesses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following is a description and discussion of the
major components of our statement of operations:
</FONT>

<P align="left">
<B><FONT size="2">Revenues</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net retail sales.</FONT></I><FONT size="2">
Net retail sales are revenues from retail sales (including our
web store and other non-mall locations), are net of discounts,
exclude sales tax, and are recognized at the time of sale.
Revenues from gift certificates are recognized at the time of
redemption. Our Guests use cash, checks and third party credit
cards to make purchases. We classify stores as new or comparable
stores and do not include our webstore or seasonal, event-based
locations in our store count or in our comparable store
calculations. Stores enter the comparable store calculation in
their thirteenth&nbsp;full month of operation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a frequent shopper program whereby
customers who purchase approximately $100 of merchandise receive
a card for $10 off a future purchase. An estimate of the
obligation related to this program, based on historical
redemption rates, is recorded as deferred revenue and a
reduction of net sales at the time of original purchase. The
deferred revenue obligation is reduced at the time of
customers&#146; redemption of the $10 discount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We use comparable store sales as a key
performance measure for our business. The percentage increase
(or decrease) in comparable store sales for the periods
presented below is as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29, 2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28, 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(6.7)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.7)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15.9)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16.5)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.8%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe the decrease in comparable store sales
from fiscal 2001 through fiscal 2003 was largely the result of
four factors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">A difficult economic environment, including lower
    consumer confidence levels and a weak retail climate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our inability to increase the number of
    transactions in comparable stores which we believe was the
    result of low brand awareness with potential new and repeat
    Guests.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The transfer to new stores of a portion of
    existing stores&#146; sales, as we opened new stores in markets
    where we already operated one or more stores, causing the
    existing stores&#146; sales to decline, even though total sales
    in those markets increased. We expect this factor to continue to
    affect us as we add new stores in markets where we have existing
    stores.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The large amount of initial trial sales in the
    first year a store is open, which we believe results from the
    distinctive nature of our concept and the publicity we normally
    receive when we open a new store, does not necessarily continue
    at that level after this period. We expect this factor to
    continue
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">to affect us, but it is difficult to predict to
    what degree, particularly if awareness of our brand continues to
    grow as a result of our change in marketing strategy.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Comparable store sales increased 13.8% for the
first half of fiscal 2004. We believe this change from the
previous trend can be attributed primarily to two factors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">A change in our marketing strategy. During the
    fourth quarter of fiscal 2003, we tested in a limited number of
    markets the use of television and online advertising and
    determined that it was successful in attracting a higher number
    of new and repeat customers. In the first quarter of fiscal
    2004, we implemented this marketing strategy on a national basis
    and quickly began achieving comparable store sales increases. We
    anticipate continuing this marketing approach for the
    foreseeable future.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">An improved economy with higher levels of
    consumer confidence and a better retail climate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Franchise fees:</FONT></I><FONT size="2"> We
receive an initial, one-time franchise fee per master franchise
which is amortized to revenue over the life of the respective
franchise agreement. Master franchises rights are typically
granted to a franchisee for an entire country. Continuing
franchise fees are based on a percentage of sales made by the
franchisees&#146; stores and are recognized as revenue at the
time of those sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of July&nbsp;3, 2004, we had five stores under
franchise arrangements in the United Kingdom, South Korea, Japan
and Denmark. Four of our franchised stores were opened in fiscal
2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">License revenue:</FONT></I><FONT size="2">
License revenue is based on a percentage of sales made by
licensees to third parties and is recognized at the time of
those sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have entered into a number of licensing
arrangements whereby third parties will manufacture and sell to
other retailers merchandise carrying the Build-A-Bear Workshop
mark. As of July&nbsp;3, 2004, no license revenue had been
recognized. We anticipate receiving license revenues in the
second half of fiscal 2004.
</FONT>

<P align="left">
<B><FONT size="2">Costs and Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of merchandise sold and gross
margin:</FONT></I><FONT size="2"> Cost of merchandise sold
includes the cost of the merchandise, freight costs from the
manufacturer to the store, cost of warehousing and distribution,
packaging, damages and shortages and store occupancy cost,
including store depreciation. Gross margin is defined as net
retail sales less the cost of merchandise sold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have been able to reduce the unit costs of our
merchandise and packaging through economies of scale realized as
our sales volume has grown. The increase in sales volume has
also allowed us to reduce our freight, cost of warehousing and
distribution costs as a percentage of net retail sales as a
result of the cost efficiencies of shipping higher volumes of
merchandise. We expect these efficiencies to continue in the
future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and administrative
expense:</FONT></I><FONT size="2"> These expenses include store
payroll and benefits, advertising, credit card fees, and store
supplies, as well as central office general and administrative
expenses, including management payroll, benefits, travel,
information systems, accounting, insurance, legal and public
relations. This line item also includes depreciation and
amortization of central office leasehold improvements,
furniture, fixtures and equipment as well as the amortization of
intellectual property costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Central office general and administrative
expenses have grown over time in order to support the increased
number of stores in operation and we believe will continue to
grow as we add stores, but we expect this increase to be at a
lower rate than the percentage increase in total revenues. Store
advertising has increased significantly with the introduction in
fiscal 2004 of our national television and online advertising
campaign and we anticipate increasing advertising expense as a
percentage of net retail sales in the second half of fiscal
2004. Increases in comparable store sales results beginning in
fiscal 2004 as well as improvements in store payroll
productivity standards in the latter half of fiscal 2003 have
resulted in lower store payroll as a percentage of net retail
sales for the first half of fiscal 2004. Other store expenses
</FONT>

<P align="center"><FONT size="2">27
</FONT>
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<DIV align="left">
<FONT size="2">such as credit card fees and supplies
historically have increased or decreased proportionately with
net retail sales.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Store preopening:</FONT></I><FONT size="2">
Preopening costs are expensed as incurred and include the
expenses related to training, recruiting, utilities and supplies
prior to a store&#146;s opening.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment charge:</FONT></I><FONT size="2">
This includes the provision to write down to estimated net
realizable value the long-lived assets of any store for which we
have determined the carrying value will not be recovered through
cash flows from future operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income taxes:</FONT></I><FONT size="2"> Prior
to April&nbsp;3, 2000, we were organized as a limited liability
company. During that period, we were classified for federal
income tax purposes as a partnership and accordingly paid no
income taxes as a corporation. Effective April&nbsp;3, 2000, we
were reorganized as a C-corporation under the Internal Revenue
Code and since then have been liable for federal and state
income taxes.
</FONT>

<P align="left">
<B><FONT size="2">Expansion and Growth Potential</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">U.S. and Canadian Stores:</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of Build-A-Bear Workshop stores in the
United States and Canada for the last three and one-half fiscal
years can be summarized as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Beginning of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opened
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Closed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">End of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the entire year of fiscal 2004, we anticipate
opening a total of 21&nbsp;Build-A-Bear Workshop stores and in
fiscal 2005, we anticipate opening between 25 and 30
Build-A-Bear Workshop stores in the United States and Canada and
closing one store. We believe there is a market potential for
approximately 350 Build-A-Bear Workshop stores in the United
States and Canada. In fiscal 2003, we began testing in certain
markets our initial brand expansion initiative, our proprietary
&#147;Friends 2B&nbsp;Made&#148; line of make-your-own dolls and
related products. Currently this merchandise is offered from a
separate display fixture in select Build-A-Bear Workshop stores.
Later in fiscal 2004, we will be opening two Friends 2B Made
stores which will be adjacent and connected to existing
Build-A-Bear Workshop stores. After a reasonable test period, we
will evaluate further expansion and alternative distribution
channels of this concept.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Non-Store Locations:</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2004 we began offering merchandise in
seasonal, event-based locations such as Citizens Bank Park, home
of the Philadelphia Phillies baseball club, as well as at
temporary locations such as at the NBA All-Star Jam Session. We
expect to expand our future presence at select seasonal,
event-based locations contingent on their availability, which
cannot reasonably be predicted at this time.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">International Franchise
    Revenue:</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our first franchisee location was opened in
November 2003. The number of international, franchised stores
opened since that time can be summarized as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">26&nbsp;Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Beginning of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opened
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Closed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">End of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We anticipate that our current six franchisees
will open a total of eight to twelve&nbsp;stores during fiscal
2004, of which four have already opened. Thereafter, we
anticipate signing additional master franchise agreements, which
typically grant franchise rights for a particular country. We
expect our current and future franchisees to open between 15 and
20&nbsp;stores in fiscal 2005. We believe there is a market
potential for approximately 350&nbsp;franchised stores outside
of the United States and Canada. To date, franchise revenue has
been minimal.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">License Revenue:</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2004, we began entering into license
agreements for which we will receive royalties on Build-A-Bear
Workshop brand products. Due to the recency of these agreements
and therefore the lack of historical data, it is impossible to
predict the revenue these agreements will produce in the future.
As of July&nbsp;3, 2004 we have had no license revenue.
</FONT>

<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, for the periods
indicated, selected income statement data expressed as a
percentage of total revenues, except where otherwise indicated.
Percentages may not total due to cost of merchandise sold being
expressed as a percentage of net retail sales and rounding:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26 Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net retail sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchise fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of merchandise sold
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store preopening
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Litigation settlement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross margin (%)(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Gross margin percentage represents gross margin
    divided by net retail sales.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">29
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">First Half of Fiscal 2004 (26&nbsp;weeks)
    Compared to First Half of Fiscal 2003 (26 weeks)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Total revenues.</FONT></I><FONT size="2"> Net
retail sales increased to $135.4&nbsp;million for the first half
of fiscal 2004 from $92.5&nbsp;million for the first half of
fiscal 2003, an increase of $42.9&nbsp;million, or 46.4%. Net
retail sales for new stores as well as our webstore and other
non-store locations contributed a $34.0&nbsp;million increase in
net retail sales. Comparable store sales increased
$8.9&nbsp;million, or 13.8%, which we believe was primarily the
result of the introduction of our new national television and
online marketing campaign, as well as an improved economy. We
also believe the results include the positive impact of being
featured in one segment of a nationally syndicated television
show in the first quarter of fiscal 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gross margin.</FONT></I><FONT size="2"> Gross
margin increased to $65.3&nbsp;million for the first half of
fiscal 2004 from $40.6&nbsp;million for the first half of fiscal
2003, an increase of $24.7&nbsp;million, or 60.9%. As a
percentage of net retail sales, gross margin increased to 48.2%
for the first half of fiscal 2004 from 43.9% for the first half
of fiscal 2003, an increase of 4.3%. This increase in gross
margin as a percentage of net retail sales was primarily due to
leverage on occupancy costs, as a result of comparable store
sales increases. Additionally, we experienced lower product,
supplies, warehousing and distribution costs, as a percentage of
net retail sales, due to buying efficiences related to higher
sales volumes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and
administrative.</FONT></I><FONT size="2"> Selling, general and
administrative expenses were $48.6&nbsp;million for the first
half of fiscal 2004 as compared to $36.1&nbsp;million for the
first half of fiscal 2003, an increase of $12.5&nbsp;million, or
34.8%. As a percentage of total revenues, selling, general and
administrative expenses decreased to 35.8% for the first half of
fiscal 2004 as compared to 39.0% for the first half of fiscal
2003, a decrease of 3.2%. The dollar increase was primarily due
to 34 more stores in operation at July&nbsp;3, 2004 as compared
to June&nbsp;28, 2003 as well as higher central office expenses,
primarily payroll, required to support a larger store base and
$5.5&nbsp;million in additional advertising expense related to
the national television and online marketing campaign which
began in fiscal 2004. The decrease as a percentage of total
revenues was primarily due to leveraging central office general
and administrative expenses over a higher sales base as well as
leveraging store payroll expenses in comparable stores due to
sales increases in these stores, partially offset by the higher
advertising expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Store preopening.</FONT></I><FONT size="2">
Store preopening expense was $0.6&nbsp;million for the first
half of fiscal 2004 as compared to $1.5&nbsp;million for the
first half of fiscal 2003. Eight fewer new stores were opened in
the first half of fiscal 2004 than in fiscal 2003 (eight in
fiscal 2004 as compared to 16 in fiscal 2003) and we expect that
14&nbsp;fewer stores will be opened during the remainder of
fiscal 2004 than in fiscal 2003. Preopening expenses include
expenses for stores that have opened as well as some expenses
incurred for stores that will be opened at a later date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest expense (income),
net.</FONT></I><FONT size="2"> Interest income, net of interest
expense, was $0.1&nbsp;million for both the first half of fiscal
2004 and fiscal 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Provision for income
taxes.</FONT></I><FONT size="2"> The provision for income taxes
was $6.3&nbsp;million for the first half of fiscal 2004 as
compared to $1.3&nbsp;million for the first half of fiscal 2003.
The effective tax rate was 38% for the first half of fiscal 2004
and 41% for the first half of fiscal 2003. The reduction in the
effective tax rate was due to a lower aggregate state tax rate
as a result of restructuring our legal entities to more
appropriately allocate central office general and administrative
expenses to our store operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Fiscal Year Ended January&nbsp;3, 2004
    (53&nbsp;weeks) Compared to Fiscal Year Ended December&nbsp;28,
    2002 (52&nbsp;weeks)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Total revenues.</FONT></I><FONT size="2"> Net
retail sales increased to $213.4&nbsp;million for fiscal 2003
from $169.1&nbsp;million for fiscal 2002, an increase of
$44.3&nbsp;million, or 26.2%. Net retail sales for new stores as
well as our webstore and other non-store locations contributed a
$61.1&nbsp;million increase in net retail sales. Comparable
store sales decreased $25.8&nbsp;million, or 15.9%. We believe
this decrease was primarily due to economic conditions, low
brand awareness with potential new and repeat Guests, a loss of
sales from existing stores
</FONT>

<P align="center"><FONT size="2">30
</FONT>
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<DIV align="left">
<FONT size="2">to new stores when we open new stores in existing
markets and a decrease in sales of stores in their second year
of operation due to a large amount of initial trial sales in the
first year which do not continue at that level after this
period. Fiscal 2003 had one more week than fiscal 2002 (the
53rd&nbsp;week) and net retail sales in that week were
$9.0&nbsp;million.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gross margin.</FONT></I><FONT size="2"> Gross
margin increased to $96.9&nbsp;million for fiscal 2003 from
$78.3&nbsp;million for fiscal 2002, an increase of
$18.6&nbsp;million, or 23.8%. As a percentage of net retail
sales, gross margin decreased to 45.4% for fiscal 2003 compared
to 46.3% for fiscal 2002, a decrease of 0.9%. This decrease as a
percentage of net retail sales was primarily due to the loss of
leverage on occupancy cost in comparable stores due to overall
sales decreases in these stores, partially offset by lower
product and supplies cost as a result of buying efficiencies
related to larger sales volumes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and
administrative.</FONT></I><FONT size="2"> Selling, general and
administrative expenses were $81.1&nbsp;million for fiscal 2003
as compared to $65.6&nbsp;million for fiscal 2002, an increase
of $15.5&nbsp;million, or 23.6%. As a percentage of total
revenues, selling, general and administrative expenses decreased
to 38.0% for fiscal 2003 as compared to 38.8% for fiscal 2002, a
decrease of 0.8%. The dollar increase was primarily due to 42
more stores in operation at the end of fiscal 2003 as compared
to the end of fiscal 2002, higher central office general and
administrative expenses required to support a larger store base
and $2.6&nbsp;million in incremental advertising expense
incurred in the fourth quarter of fiscal 2003 to develop and
test a television and online advertising campaign in selected
markets. The decrease as a percentage of total revenues was
primarily due to leveraging the central office general and
administrative expense over a higher sales base partially offset
by the loss of leverage on payroll expense in comparable stores
due to the sales decrease in these stores.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Store preopening.</FONT></I><FONT size="2">
Store preopening expense was $3.0&nbsp;million for fiscal 2003
as compared to $3.1&nbsp;million for fiscal 2002. Six more new
stores were opened in fiscal 2003 than in fiscal 2002 (43 as
compared to 37). The average preopening expense per store was
$71&nbsp;thousand in fiscal 2003 as compared to
$84&nbsp;thousand in fiscal 2002, a decrease of 15.2%. This
decrease in average preopening expense per store was largely the
result of reduced training related expenses by using regional
training locations versus one location previously as well as
reduced startup supplies expense as a result of improved
purchasing power due to the increases in sales volumes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest expense (income),
net.</FONT></I><FONT size="2"> Interest income, net of interest
expense, was $0.1&nbsp;million for both fiscal 2003 and 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Provision for income
taxes.</FONT></I><FONT size="2"> The provision for income taxes
was $5.1&nbsp;million for fiscal 2003 as compared to
$3.8&nbsp;million in fiscal 2002. The effective tax rate was 39%
in both fiscal 2003 and 2002.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Fiscal Year Ended December&nbsp;28, 2002
    (52&nbsp;weeks) Compared to Fiscal Year Ended December&nbsp;29,
    2001 (52&nbsp;weeks)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Total revenues.</FONT></I><FONT size="2"> Net
retail sales increased to $169.1&nbsp;million for fiscal 2002
from $106.6&nbsp;million for fiscal 2001, an increase of
$62.5&nbsp;million, or 58.6%. Net retail sales for new stores as
well as our webstore and other non-store locations contributed a
$72.3&nbsp;million increase in net retail sales. Comparable
store sales decreased $9.9&nbsp;million, or 9.7%. We believe
this decrease was due to economic conditions, low brand
awareness with potential new and repeat Guests, a loss of sales
from existing stores to new stores when we open new stores in
existing markets and a decrease in sales of stores in their
second year of operation due to a large amount of initial trial
sales in the first year which do not continue at that level
after this period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gross margin.</FONT></I><FONT size="2"> Gross
margin increased to $78.3&nbsp;million for fiscal 2002 from
$49.9&nbsp;million for fiscal 2001, an increase of
$28.4&nbsp;million, or 56.8%. As a percentage of net retail
sales, gross margin decreased to 46.3% for fiscal 2002 compared
to 46.8% for fiscal 2001, a decrease of 0.5%. This decrease as a
percentage of net retail sales was primarily due to the loss of
leverage on occupancy cost in comparable stores due to overall
sales decreases in these stores, partially offset by lower
product and supplies cost.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and
administrative.</FONT></I><FONT size="2"> Selling, general and
administrative expenses were $65.6&nbsp;million for fiscal 2002
as compared to $41.1&nbsp;million for fiscal 2001, an increase
of $24.5&nbsp;million, or 59.7%. As a
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">percentage of total revenues, selling, general
and administrative expenses increased to 38.8% for fiscal 2002
as compared to 38.5% for fiscal 2001, an increase of 0.3%. The
dollar increase was primarily due to 37 more stores in operation
at the end of fiscal 2002 as compared to the end of fiscal 2001
as well as higher central office general and administrative
expenses required to support a larger store base. The increase
as a percentage of total revenues was primarily due to the loss
of leverage on payroll expense in comparable stores due to the
sales decrease in these stores partially offset by leveraging
central office general and administrative expenses over a higher
sales base.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Store preopening.</FONT></I><FONT size="2">
Store preopening expense was $3.1&nbsp;million for fiscal 2002
as compared to $3.1&nbsp;million for fiscal 2001. Five more new
stores were opened in fiscal 2002 than in fiscal 2001 (37 as
compared to 32). The average expense per store was $84 thousand
in fiscal 2002 as compared to $98&nbsp;thousand in fiscal 2001,
a 14.4% decrease. This reduction in average preopening expense
per store was primarily the result of a reduction in the number
of weeks of training prior to store opening for store management
as well as reduced startup supplies expense as a result of
improved purchasing power due to the increases in sales volumes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Litigation
settlement.</FONT></I><FONT size="2"> We were a party to a
lawsuit in which a competitor alleged that we misappropriated
certain trade secrets and other intellectual property. During
fiscal 2001, the matter was resolved through a confidential
settlement agreement and an expense charge of $1.6&nbsp;million
was recorded. Our insurance carrier paid an additional
$0.7&nbsp;million towards the settlement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment charge.</FONT></I><FONT size="2">
During fiscal 2001, we identified three stores that were not
meeting operating objectives and determined those stores were
impaired. We recorded a provision for impairment of
$1.0&nbsp;million which included a write down for property,
equipment and other assets and accrued expenses to be incurred
in connection with the closing of these stores upon the exercise
of the early termination provisions contained in these leases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest expense (income),
net.</FONT></I><FONT size="2"> Interest income, net of interest
expense, was $0.1&nbsp;million for fiscal 2002. Interest
expense, net of interest income, was $0.1&nbsp;million for
fiscal 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Provision for income
taxes.</FONT></I><FONT size="2"> The provision for income taxes
was $3.8&nbsp;million for fiscal 2002 as compared to
$1.3&nbsp;million for fiscal 2001. The effective tax rate is 39%
in fiscal 2002 and 40% in fiscal 2001. The reduction in the
effective tax rate was due to the change in the aggregate state
income tax rate as a result of the mix of stores opening in
different states during these years.
</FONT>

<P align="left">
<B><FONT size="2">Non-GAAP Financial Measures</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We use the term &#147;store contribution&#148;
throughout this prospectus. Store contribution consists of net
income before income tax expense, interest, depreciation,
amortization, store preopening and general and administrative
expense and excludes franchise fees, license revenues and
contribution from our webstore and seasonal and event-based
locations. This term, as we define it, may not be comparable to
similarly titled measures used by other companies and is not a
measure of performance presented in accordance with GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We use store contribution as a measure of our
stores&#146; operating performance. Store contribution should
not be considered a substitute for net income, net income per
store, cash flows provided by operating activities, cash flows
provided by operating activities per store, or other income or
cash flow data prepared in accordance with GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe store contribution is useful to
investors in evaluating our operating performance because it,
along with the number of stores in operation, directly impacts
our profitability. Historically, central office general and
administrative expenses and preopening expenses have increased
at a rate less than our total net retail sales increases.
Therefore, as we have opened additional new stores and leveraged
our central office general and administrative and preopening
expenses over this larger store base and sales volume, we have
been able to increase our net income each year as well as for
the first half of fiscal 2004 as compared to the first half of
fiscal 2003.
</FONT>

<P align="center"><FONT size="2">32
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth a reconciliation
of store contribution to net income:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">26 Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January 3, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July 3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense (income)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,119</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store preopening expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,576</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-store activity contribution(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,622</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,195</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store contribution
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,727</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues from non-store activities(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,726</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,691</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store location net retail sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">208,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store contribution as a percentage of store
    location net retail sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total net income as a percentage of total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Non-store activities include our webstore,
    seasonal and event-based locations and franchising and licensing
    activities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Seasonality and Quarterly Results</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of certain unaudited
quarterly results of operations data for each of the last two
fiscal years and for the first half of fiscal 2004. Total
revenues, gross margin and net income are reported in millions
of dollars.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Fiscal Year Ended December&nbsp;28, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Fiscal Year Ended January&nbsp;3, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Fiscal 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gross margin
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Number of stores<BR>
    (end of quarter)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">73</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">87</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">109</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">123</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">143</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">150</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">151</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">157</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Results for the fourth quarter of fiscal 2003
    were impacted by the following:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The quarter contained 14&nbsp;weeks rather than
    the typical 13&nbsp;weeks. Total revenues for the extra week
    were $9.0&nbsp;million.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The deferred revenue balance was adjusted to
    reflect projected redemption rates in our frequent shopper
    program. This resulted in a reduction in the deferred revenue
    balance and a corresponding increase in total revenues and gross
    margin of $1.1&nbsp;million.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We incurred $2.6&nbsp;million in incremental
    selling, general and administrative expenses to develop and test
    a new television and online advertising campaign in selected
    markets.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">33
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We believe the results of this quarter include
    the positive impact of being featured in one segment of a
    nationally syndicated television show.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating results for one period may not be
indicative of results for other periods, and may fluctuate
significantly because of a variety of factors, including those
discussed under &#147;Risk Factors&nbsp;&#151; Fluctuations in
our quarterly results of operations could cause the price of our
common stock to substantially decline.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The timing of new store openings may result in
fluctuations in quarterly results as a result of the sales and
expenses associated with each new store location. We typically
incur most preopening costs for a new store in the three months
immediately preceding the store&#146;s opening. Our growth,
operating results and profitability will depend to some degree
on our ability to increase our number of stores.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, seasonality has not been a
significant factor in our results of operations, although we
cannot assure you that this will continue to be the case. In
addition, for accounting purposes, the quarters of each fiscal
year consist of 13&nbsp;weeks, although we will have a 14-week
quarter once every six years (including the fourth quarter of
fiscal 2003). Quarterly fluctuations and seasonality may cause
our operating results to fall below the expectations of
securities analysts and investors, which could cause our stock
price to fall.
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cash requirements are primarily for the
opening of new stores, information systems and working capital.
Historically, we have met these requirements through capital
generated from the sale and issuance of our securities to
private investors, cash flow provided by operations and our
revolving line of credit. From our inception to December 2001,
we raised at various times a total of $44.9&nbsp;million in
capital from several private investors. Since fiscal 2002, cash
flows provided by operating activities have exceeded cash flows
used in investing activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Operating
Activities.</FONT></I><FONT size="2"> Cash provided by (used in)
from operating activities were $14.5&nbsp;million in fiscal
2001, $18.7&nbsp;million in fiscal 2002 and $25.2&nbsp;million
in fiscal 2003, and were $(1.0)&nbsp;million in the first half
of fiscal 2003 compared to $10.8&nbsp;million for the first half
of fiscal 2004. Cash flow from operating activities increased
each period primarily due to increases in net income adjusted
for the impact of depreciation and amortization. Changes in
current assets and liabilities, excluding cash, provided (used)
cash of $6.7&nbsp;million in fiscal 2001, $3.4&nbsp;million in
fiscal 2002, $4.0&nbsp;million in fiscal 2003, and
$(8.5)&nbsp;million for the first half of fiscal 2003 compared
to $(5.2)&nbsp;million for the first half of fiscal 2004. The
increases in operating cash flows for changes in current assets
and liabilities, excluding cash, for the fiscal years 2001
through 2003 were primarily due to increases in gift
certificates and deposits, due to the significant sale of gift
certificates in December each year; increases in accounts
payable and accrued expenses due to the growth of the number of
stores in operation at each year-end; and increases in the
deferred revenue balance. The increases in operating cash flow
for the above reasons were partially offset by increases in
inventory due to the growth of the number of stores in
operation. For the first half of fiscal 2003, the primary reason
for the $(8.5)&nbsp;million change in current assets and
liabilities, excluding cash, was a decrease in accounts payable
and accrued expenses due to the paydown of these amounts from
the end of fiscal 2002. For the first half of fiscal 2004, the
primary reason for the $(5.2)&nbsp;million change in current
assets and liabilities, excluding cash, was an increase in
inventory to support the comparable store sales increases during
the period. We require an increase in working capital,
specifically inventory, during the year. Inventory typically
peaks during the third and fourth quarters of each year due to
the strong selling periods of summer and the month of December.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Investing
Activities.</FONT></I><FONT size="2"> Cash flows used in
investing activities were $23.3&nbsp;million in fiscal 2001,
$20.2&nbsp;million in fiscal 2002 and $20.5&nbsp;million in
fiscal 2003, and were $11.2&nbsp;million in the first half of
fiscal 2003 compared to $5.1&nbsp;million for the first half of
fiscal 2004. Cash used in investing activities relates primarily
to 32&nbsp;new stores opened in fiscal 2001, 37 in fiscal 2002,
43 in fiscal 2003, 16 in the first half of fiscal 2003 and eight
in the first half of fiscal 2004. The costs of registering our
intellectual property rights and certain costs related to the
designing and leasing of stores were $1.7&nbsp;million in fiscal
2001,
</FONT>

<P align="center"><FONT size="2">34
</FONT>

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<DIV align="left">
<FONT size="2">$1.6&nbsp;million in fiscal 2002 and
$1.9&nbsp;million in fiscal 2003, and $0.6&nbsp;million in the
first half of fiscal 2003 compared to $0.7&nbsp;million for the
first half of fiscal 2004.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Financing
Activities.</FONT></I><FONT size="2"> There were no cash flows
from financing activities in fiscal 2003 and for the first half
of fiscal 2004. Cash flows provided by (used in) financing
activities were $19.3&nbsp;million in fiscal 2001 and
$(0.1)&nbsp;million in fiscal 2002. We raised private equity of
$21.0&nbsp;million in fiscal 2001. We had debt repayments of
$1.8&nbsp;million in fiscal 2001 and $0.1&nbsp;million in fiscal
2002 and no debt repayments in fiscal 2003. Maximum borrowings
under our line of credit were $3.3&nbsp;million in fiscal 2003,
$2.0&nbsp;million in fiscal 2002 and $7.2&nbsp;million in fiscal
2001. No borrowings were made under our line of credit in the
first half of fiscal 2004 or the first half of fiscal 2003. We
paid a special cash dividend in August 2004 of
$10.0&nbsp;million to our stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capital Resources.</FONT></I><FONT size="2">
As of July&nbsp;3, 2004, we had a cash balance of
$26.3&nbsp;million. We also have a $15.0&nbsp;million line of
credit, which we use to finance capital expenditures and
seasonal working capital needs throughout the year. The credit
agreement is with U.S.&nbsp;Bank, National Association, is
secured by the assets of Build-A-Bear Workshop, Inc. and most of
our subsidiaries, and is guaranteed by our Canadian subsidiary.
The credit agreement expires on May&nbsp;31, 2005 and contains
various restrictions on indebtedness, liens, guarantees,
redemptions, mergers, acquisitions or sale of assets, loans,
transactions with affiliates, and investments. It also prohibits
us from declaring dividends without the bank&#146;s prior
consent, unless such payment of dividends would not violate any
terms of the loan agreement and so long as the difference
between the maximum amount that may be borrowed under the line
of credit and the amount outstanding under the line of credit is
greater than $5.0&nbsp;million. Borrowings bear interest at the
prime rate less 0.5%. Financial covenants include maintaining a
minimum tangible net worth and a maximum funded debt to EBITDA
ratio. As of July&nbsp;3, 2004, we were in compliance with these
covenants. The outstanding borrowings under our line of credit
were $0 as of January&nbsp;3, 2004 and July&nbsp;3, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Most of our retail stores are located within
shopping malls and all are operated under leases classified as
operating leases. These leases typically have a ten year term
and contain provisions for base rent plus percentage rent based
on defined sales levels. Many of the leases contain a provision
whereby either we or the landlord may terminate the lease after
a certain time, typically in the third to fourth year of the
lease, if a certain minimum sales volume is not achieved. In
addition, some of these leases contain various restrictions
relating to change of control of our company. Our leases also
subject us to risks relating to compliance with changing mall
rules and the exercise of discretion by our landlords on various
matters, including rights of termination in some cases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2004, we expect to spend a total of
approximately $12.0&nbsp;million on capital expenditures,
primarily for opening a total of 21 new stores, as well as for
the continued installation and upgrades of central office
information technology systems. In fiscal 2005, we expect to
spend a total of approximately $19.0&nbsp;million to
$21.0&nbsp;million on capital expenditures, primarily for
opening a total of 25 to 30&nbsp;new stores, as well as for the
continued installation and upgrades of central office
information technology systems. In fiscal 2003, the average
investment per new store, which includes leasehold improvements
(net of tenant allowances), fixtures and equipment, was
approximately $350&nbsp;thousand. We anticipate the investment
per store in fiscal 2004 and fiscal 2005 will be approximately
the same, excluding a flagship store we anticipate opening at a
cost of approximately $5.0&nbsp;million in fiscal 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of July&nbsp;3, 2004, there were no
merchandise or expense purchases made using letters of credit.
Subsequent to July&nbsp;3, 2004, we issued a $1.1&nbsp;million
standby letter of credit in connection with a new lease. We
believe that cash generated from operations and borrowings under
our credit agreement, together with the proceeds of this
offering, will be sufficient to fund our working capital and
other cash flow requirements through the end of fiscal 2005.
</FONT>

<P align="center"><FONT size="2">35
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Off-Balance Sheet
    Arrangements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not have any arrangements classified as
off-balance sheet arrangements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Contractual Obligations and Commercial
    Commitments</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our contractual obligations and commercial
commitments include future minimum obligations under operating
leases and purchase obligations associated with building out our
stores. The future minimum payments for these obligations as of
July&nbsp;3, 2004 for periods subsequent to this date are as
follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">Payments Due by Fiscal Period as of July&nbsp;3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2008</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beyond</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating lease obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">187,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">191,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Inflation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not believe that inflation has had a
material adverse impact on our business or operating results
during the periods presented. We cannot assure you, however,
that our business will not be affected by inflation in the
future.
</FONT>

<P align="left">
<B><FONT size="2">Critical Accounting Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with generally accepted accounting principles
requires the appropriate application of certain accounting
policies, many of which require us to make estimates and
assumptions about future events and their impact on amounts
reported in our financial statements and related notes. Since
future events and their impact cannot be determined with
certainty, the actual results will inevitably differ from our
estimates. Such differences could be material to the financial
statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe application of accounting policies,
and the estimates inherently required therein, are reasonable.
These accounting policies and estimates are periodically
reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, we have found our
application of accounting policies to be appropriate, and actual
results have not differed materially from those determined using
necessary estimates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our accounting policies are more fully described
in note&nbsp;1 to our consolidated financial statements, which
appear elsewhere in this prospectus. We have identified certain
critical accounting policies which are described below.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Inventory</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventory is stated at the lower of cost or
market, with cost determined on an average cost basis.
Historically, we have not conducted sales whereby we offer
significant discounts or markdowns, nor have we experienced
significant occurrences of obsolete or slow moving inventory.
However, future changes in circumstances, such as changes in
customer merchandise preference, could cause reclassification of
inventory as obsolete or slow-moving inventory. The effect of
this reclassification would be the recording of a reduction in
the value of inventory to realizable values.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Throughout the year we record an estimated cost
of shortage based on past historical results. Periodic physical
inventories are taken and any difference between the actual
physical count of merchandise and the recorded amount in our
records are adjusted and recorded as shortage. Historically, the
timing of the physical inventory has been near the end of the
fiscal year so that no material amount of shortage was
</FONT>

<P align="center"><FONT size="2">36
</FONT>

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<DIV align="left">
<FONT size="2">required to be estimated on activity between the
date of the physical count and year-end. However, future
physical counts of merchandise may not be at times at or near
the end of a fiscal quarter or fiscal year-end, and our estimate
of shortage for the intervening period may be material based on
the amount of time between the date of the physical inventory
and the date of the fiscal quarter or year-end.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Long-Lived Assets</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If facts and circumstances indicate that a
long-lived asset, including property and equipment, may be
impaired, the carrying value is reviewed. If this review
indicates that the carrying value of the asset will not be
recovered as determined based on projected undiscounted cash
flows related to the asset over its remaining life, the carrying
value of the asset is reduced to its estimated fair value.
During fiscal 2001, we recorded an asset impairment charge for
three stores totaling $1.0&nbsp;million. Impairment losses in
the future are dependent on a number of factors such as site
selection and general economic trends, and thus could be
significantly different than historical results. To the extent
our estimates for net sales, gross profit and store expenses are
not realized, future assessments of recoverability could result
in additional impairment charges.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Revenue Recognition</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from retail sales, net of discounts and
excluding sales tax, are recognized at the time of sale.
Customer returns have not been significant. Revenues from gift
certificates are recognized at the time of redemption.
Unredeemed gift certificates are reflected as an other liability
in the financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a frequent shopper program whereby Guests
who purchase approximately $100 of merchandise receive a card
for $10 off a future purchase. An estimate of the obligation
related to the program, based on historical redemption rates, is
recorded as deferred revenue and a reduction of net sales at the
time of original purchase. The deferred revenue obligation is
reduced at the time of customers&#146; redemption of the
$10&nbsp;discount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We evaluate the ultimate redemption rate under
this program through the use of frequent shopper cards which
have an expiration date after which the frequent purchase
discount would not have to be honored. The initial card had no
expiration date but has not been provided to our guests since
May 2002. Beginning in June 2002, cards were issued that had an
expiration date of December&nbsp;31, 2003. Beginning in June
2003, cards were issued with an expiration date of
December&nbsp;31, 2004. We track redemptions of these various
cards and use actual redemption rates by card series and
historical results to estimate how much revenue to defer. We
review these redemption rates and assess the adequacy of the
deferred revenue account at the end of each second quarter and
each fiscal year. Based on this assessment at the end of fiscal
2003, the deferred revenue account was adjusted downward by
$1.1&nbsp;million with a corresponding increase to net sales.
Additionally, the amount of revenue being deferred beginning in
fiscal 2004 was decreased from the previous deferral rate. Our
assessment of the deferred revenue balance as of July&nbsp;3,
2004 resulted in no adjustment to the balance of the deferred
revenue amount. However, the amount of revenue being deferred
beginning with the third quarter of fiscal 2004 was further
reduced. We believe that the newly introduced national
television and online advertising campaign introduced in fiscal
2004 is increasing the mix of new, non-frequent customers as
compared to the historical mix and is anticipated to result in a
lower overall redemption rate for the frequent buyer program. A
0.1% adjustment of the ultimate redemption rate at the end of
fiscal 2004 for the current card expiring December&nbsp;31, 2004
would have an approximate impact of $0.5&nbsp;million on the
deferred revenue balance and net sales.
</FONT>

<P align="left">
<B><FONT size="2">Recent Accounting Pronouncements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Statement of Financial Accounting Standards
(SFAS)&nbsp;150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity, was issued
in May 2003. This Statement establishes standards for how an
issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within
its scope as a liability (or an asset in some circumstances).
Many of those instruments were
</FONT>

<P align="center"><FONT size="2">37
</FONT>
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<DIV align="left">
<FONT size="2">previously classified as equity. In November
2003, the FASB issued Staff Position No.&nbsp;150-3, which
deferred the effective dates for applying certain provisions of
SFAS&nbsp;150 related to mandatorily redeemable interests for
public and nonpublic entities.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For public entities, SFAS&nbsp;150 is effective
for mandatorily redeemable financial instruments entered into or
modified after May&nbsp;31, 2003, and is effective for all other
financial instruments as of the first interim period beginning
after June&nbsp;15, 2003. The adoption of SFAS&nbsp;150 is not
expected to have an impact on our financial position, results of
operations or cash flows.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2004, the Emerging Issues Task Force
completed its discussion of and provided consensus guidance on
Issue No.&nbsp;03-6, <I>Participating Securities and The
Two-Class Method under FASB Statement&nbsp;No.&nbsp;128,
Earnings Per Share.</I> The consensus interpreted the definition
of a &#147;participating security,&#148; required the use of the
two-class method in the calculation and disclosure of basic
earnings per share, and provided guidance on the allocation of
earnings and losses for purposes of calculation of basic
earnings per share. Certain of our classes of preferred stock
are entitled to participate in cash dividends on common stock.
Accordingly, this consensus has been applied in the calculation
of basic earnings per share for all periods presented.
</FONT>

<P align="left">
<B><FONT size="2">Quantitative and Qualitative Disclosures About
Market Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our market risks relate primarily to changes in
interest rates. We bear this risk in two specific ways. First,
our revolving credit facility carries a variable interest rate
that is tied to market indices and, therefore, our statement of
income and our cash flows will be exposed to changes in interest
rates. As of July&nbsp;3, 2004, we had no borrowings.
Outstanding balances under our credit facility bear interest at
a rate of prime less 0.5%. Based on the weighted average
borrowings outstanding during fiscal 2003 of approximately
$0.3&nbsp;million, a 100&nbsp;basis point change in interest
rates would result in an no material change to our annual
interest expense. The second component of interest rate risk
involves the short term investment of excess cash in short term,
investment grade interest-bearing securities. These investments
are considered to be cash equivalents and are shown that way on
our balance sheet. If there are changes in interest rates, those
changes would affect the investment income we earn on these
investments and, therefore, impact our cash flows and results of
operations.
</FONT>

<P align="center"><FONT size="2">38
</FONT>
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<DIV align="left">
<A name='109'></A>
</DIV>

<!-- link1 "BUSINESS" -->

<P align="center">
<B><FONT size="2">BUSINESS</FONT></B>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are the leading, and only national, company
providing a &#147;make your own stuffed animal&#148; interactive
&#147;retail-tainment&#148; experience. As of July&nbsp;3, 2004,
we operated 157&nbsp;stores in 37&nbsp;states and Canada and had
five franchised stores internationally under the Build-A-Bear
Workshop brand. We offer an extensive and coordinated selection
of merchandise, including over 30&nbsp;different styles of
animals to be stuffed and a wide variety of clothing, shoes and
accessories for the stuffed animals. Our stores, which are
primarily located in major malls, capitalize on what we believe
is the relatively untapped demand for experience-based shopping
as well as the widespread appeal of stuffed animals. In addition
to our stores, we market our products and build our brand
through our website and at event-based locations and sports
venues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Build-A-Bear Workshop stores are designed around
a distinctive and entertaining &#147;animal-making&#148; process
that provides our customers, or &#147;Guests,&#148; with the
opportunity to participate actively in the creation,
personalization and customization of their own stuffed animal.
Unlike traditional mall-based stores, our interactive retail
concept includes not only a fun merchandise selection, but also
a dynamic and hands-on shopping experience. Our stores average
approximately 3,100&nbsp;square feet in size and have a highly
visual and colorful appearance, including custom-designed
fixtures featuring teddy bears and other themes relating to the
Build-A-Bear Workshop experience. Our concept appeals to a broad
range of age groups and demographics, including children, teens,
parents and grandparents. We believe our stores are destination
locations and draw customers from a large geographic reach,
resulting in high volume stores that generated average net sales
per gross square foot of $502 for fiscal 2003 and $287 for the
first half of fiscal 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2003, we developed and tested a
targeted, integrated, multi-media marketing program designed to
increase our brand awareness and store traffic, thereby
attracting more first-time and more repeat customers. Following
a successful test period in selected markets, we initiated a
national rollout of this program in February 2004 and have
experienced an increase in our comparable store sales in every
month since the rollout.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since opening our first store in St.&nbsp;Louis,
Missouri in October 1997, we have sold over 20&nbsp;million
stuffed animals. We have grown our store base from 14 stores at
the end of fiscal 1999 to 157 as of July&nbsp;3, 2004 and
increased our revenues from $106.6&nbsp;million in fiscal 2001
to $213.4&nbsp;million in fiscal 2003, for a compound annual
revenue growth rate of 41.6%, and increased net income from
$1.9&nbsp;million in fiscal 2001 to $8.0&nbsp;million in fiscal
2003, for a compound annual net income growth rate of 104.6%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have received several prestigious industry
awards, including &#147;2004 Hot Retailer Award&#148; from the
International Council of Shopping Centers, &#147;2003 Circle of
Excellence Award&#148; from BizRate.com, &#147;2003 Outstanding
Achievement: Quick Growth&#148; from Retail Info Systems News,
&#147;Retail Innovator of the Year&#148; from the National
Retail Federation in 2001, and Chain Store Age&#146;s &#147;Best
New Concept&#148; in 1998. In addition, in 1999,
Ernst&nbsp;&#38; Young named Maxine Clark, our Chief Executive
Bear, &#147;Entrepreneur of the Year&#148; in the St.&nbsp;Louis
region in the emerging business category.
</FONT>

<P align="left">
<B><FONT size="2">Our Mission</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Every Build-A-Bear Workshop employee receives a
copy of our mission statement when they join our company, which
reflects our philosophy, values and our customer-centric
organizational focus. Our mission statement generally provides:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;At Build-A-Bear Workshop, our mission is to
bring the teddy bear to life. An American icon, the teddy bear
brings to mind warm thoughts about our childhood, about
friendship, about trust and comfort, and also about love.
Build-A-Bear Workshop embodies those thoughts in how we run our
business everyday.
</FONT>

<P align="center"><FONT size="2">39
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;The Build-A-Bear Workshop experience is an
expression of our commitment to what we believe is the best of
retail <I>and</I> entertainment. Our concept is designed to
bring out the creative side of our Guest bear-makers, be they 3
or 103, and provides a multitude of possibilities for
personalization and customization that encourage their
imaginations. We are committed to providing our Guests
JOY....happy, memorable, and friendly experiences. Everything we
do is intended to create loyal customers that appreciate the
quality bear-making experience we provide. Our goal is to
provide products to our Guests that they believe are unique and
high quality...call them what you will; cute, huggable,
loveable, soft, cuddly, and always affordable&nbsp;&#151;
everyone HAS to have at least one.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Our goal is to have a business that will
always be fun for our Guests and for us. We intend to succeed by
maintaining our integrity, and meeting the needs of our Guests,
associates, business partners and stockholders. We believe we
can be a profitable business that provides fun and has fun.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Competitive Strengths</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD></TD>
    <TD>
    <B><I><FONT size="2">We offer an exciting interactive shopping
    experience.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unlike most other mall-based retail stores, the
Build-A-Bear Workshop experience is not exclusively product
driven but rather integrates the stuffed animal-making process
with our creative merchandise selection. Our highly visual and
colorful stores feature a teddy bear theme, displays of
numerous, fully-dressed stuffed animals, selective use of
&#147;Bearisms&#148; and custom-designed fixtures intended to
energize our Guests and add excitement to the shopping
experience. We offer our Guests an opportunity to actively
participate in the creation, customization and personalization
of their own stuffed animal and provide an environment in which
our Guests can become both physically and emotionally engaged in
an entertaining retail experience that is fun and exciting. This
experience, which can last from ten minutes to over an hour, and
we believe averages approximately 45&nbsp;minutes, allows our
Guests to individualize their chosen animals by:
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">selecting the amount of stuffing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">making a special wish on the distinctive,
    three-dimensional, fabric heart before placing it inside the
    animal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">selecting a pre-recorded message or creating a
    personalized voice message for the animal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">dressing the animal in selected clothing and
    accessories;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">creating the animal&#146;s birth certificate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When finished, our Guests carry their purchases
from our stores in our signature packaging, including our
&#147;Cub Condo&#148; carrying case, &#147;Beararmoire&#148;
clothing carrier, &#147;CubCase&#148; suitcase or &#147;Bear
Bunk Trunk,&#148; which also are intended to raise awareness and
recognition of our brand.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have a broad and loyal Guest
    base.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our distinctive retail entertainment
shopping experience has made Build-A-Bear Workshop a destination
retailer with a broad and loyal customer base that enjoys our
concept and therefore returns to make additional purchases. Our
major customer segments include:
</FONT>
<P>

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    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">families with children, primarily age three to
    twelve;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">their grandparents, aunts and uncles;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">teen girls who occasionally bring along their
    boyfriends;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">child-centric organizations, such as scouting
    organizations and schools, looking for interactive entertainment
    options.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our success in creating an exciting
and memorable shopping experience is reflected by our Guest
satisfaction scores. During the first half of fiscal 2004, 90%
of Guests who completed our Guest
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">satisfaction survey gave their overall experience
the highest or the second highest rating, with 74% giving the
highest rating of &#147;Beary Best.&#148; Approximately 80% of
returning Guests who responded to our surveys in 2003 indicated
that they pre-planned their visit to our stores. In addition, in
fiscal 2003, over 30% of our transactions did not include a
stuffed animal purchase but rather purchases of clothing and
other items which we believe were for previously purchased
animals.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our active store environment also makes our
stores an attractive location for birthday and other parties
which we believe introduce new Guests to our stores. In 2003,
Build-A-Bear Workshop hosted approximately one million children
at over 90,000&nbsp;pre-scheduled parties, further expanding
awareness of the Build-A-Bear Workshop brand as a
family-oriented &#147;retail-tainment&#148; destination concept.
</FONT>

<DIV>&nbsp;</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have strong merchandising
    expertise.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our in-house design and product
development team, we have developed a coordinated, creative and
broad merchandise assortment, the vast majority of which is
primarily designed by us. Our exclusive products, which include
a variety of animals, clothing, shoes and accessories, are
branded with the Build-A-Bear Workshop mark. Our merchandising
strategy emphasizes inventory flexibility, well-edited,
high-quality product selections, operating efficiencies and the
avoidance of merchandise markdowns and promotions in order to
maximize gross margins. Through Guest feedback and monitoring
the fashion and entertainment markets, we are able to offer
current fashions that drive clothing and accessory sales as well
as respond to other market influences that generate product line
and animal additions, including our exclusive line of shoes for
stuffed animals licensed from and designed by SKECHERS&#174; or
stuffed animal outfits licensed from Limited Too&#174; or
professional sports teams. Our experienced product development
team regularly evaluates new and innovative fashion styles and
trends and introduces new items and retires existing items in
order to maintain an exciting merchandise assortment for our
Guests. We also consult regularly with our Cub Advisory Board,
made up of children from 8 to 18&nbsp;years of age, which gives
us valuable input and feedback on our merchandise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We typically carry approximately
450&nbsp;stock-keeping units, or &#147;SKUs,&#148; in our
stores, as we intend for each item to be highly productive. Our
product line includes approximately 30 to 35 varieties of
animals to be stuffed as well as a wide variety of other items
which are displayed creatively throughout the store. We believe
this merchandising strategy, along with the Build-A-Bear
Workshop experience, has created a strong value proposition for
our Guests that allows us to emphasize the product and the
experience rather than the price, avoiding the need to discount
our products to drive sales.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We provide a high level of Guest service
    through consistent execution.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because our strategy since inception has been to
provide a dynamic, interactive &#147;retail-tainment&#148;
experience for our Guests, we have devoted significant resources
and attention to Guest service. In fiscal 2003, we hired less
than 2.5% of applicants for store manager positions. We
carefully select and train our store employees to promote a
friendly and personable store environment and to provide a high
level of Guest service. Our above average employee retention
rates, based on 2003 industry data, contribute to the
consistency and quality of the Guest experience. We give store
managers approximately 100&nbsp;hours of training at our
&#147;Bear University&#148; before they begin work in their
stores as well as ongoing training on topics such as our
corporate values, sales skill development and leadership. Our
Bear Builder associates complete a twenty hour in-store training
course including specific training on leading parties. We
receive ongoing feedback from our Guests through in-store
contact, emails and surveys regarding our products, experience
and Guest service. Research we conducted in 2003 indicated that
80% of Guests who have visited more than one store rate their
experience between stores as &#147;very similar,&#148;
indicating a high degree of consistency in store execution. The
same research indicated that such Guests, when asked what can be
done to improve their overall experience, indicated 76% of the
time that &#147;nothing&#148; could be done to improve their
store experience. Following their store visits, we remain in
contact with our Guests through direct mail and email. We
provide additional value to our Guests through many events that
we plan around holidays, birthdays and other Build-A-Bear
Workshop product launches.
</FONT>

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</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have an attractive store economic
    model.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we have developed an appealing
retail store model that is profitable and operates successfully
in a variety of geographies, malls and non-mall locations. We
have a site selection process that utilizes a number of
criteria, including economic and demographic variables and our
internal sales forecasting tools. For fiscal 2003, our stores
open for the entire year averaged $502 in net retail sales per
gross square foot and $1.6&nbsp;million in net retail sales per
store. For fiscal 2003, store contribution as a percentage of
net retail sales, excluding revenue from our webstore and
seasonal and event-based locations, was 22.8% and total company
net income as a percentage of total revenues was 3.7%. For the
first half of fiscal 2004, our stores open for the entire period
averaged $287 in net sales per gross square foot and
$879&nbsp;thousand in sales per store. For the first half of
fiscal 2004, total store contribution as a percentage of net
retail sales, excluding revenue from our webstore and seasonal
and event-based locations, was 26.4% and total company net
income as a percentage of total revenues was 7.5%. For a
reconciliation of store contribution to net income, see
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&nbsp;&#151; Non-GAAP
Financial Measures.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since our inception, our new stores have
generated strong customer traffic and the majority are
profitable in the first twelve months of operation. Through
value engineering our store development and construction
processes, we have reduced the average investment for our new
stores. For stores opened in fiscal 2003, our investment per
store, which includes the cost of leasehold improvements (net of
tenant allowances), fixtures and equipment, inventory (net of
trade payables), and pre-opening expenses, averaged
$485&nbsp;thousand, a decrease of 19% from the average
investment for stores opened in fiscal 2002. In addition, we
currently target a smaller sized store than we have opened in
the past. Currently, our new store target size is
2,800&nbsp;square feet, compared to an average store size of
approximately 3,100&nbsp;square feet for our existing mall-based
stores as of July&nbsp;3, 2004. We believe we can achieve
similar sales results, operate as efficiently, and serve our
Guests as effectively in this smaller store while improving our
overall profitability.
</FONT>

<DIV>&nbsp;</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have a highly experienced and
    disciplined management team.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our senior management team has extensive
experience in a variety of retail sectors and in corporate
management, averaging 25&nbsp;years of relevant experience. Our
management team is led by our Chief Executive Bear, Maxine
Clark, who founded our company and has over 32&nbsp;years of
experience in the retail industry. As we have continued to build
our company, we have added key leaders in selected areas of our
business, including the recent addition of Barry Erdos as
President and Chief Operating Officer Bear, who brings over
thirty years of experience with some of the leading retailers in
the United States. We believe we have attracted a highly
talented and experienced team to continue to grow the
Build-A-Bear Workshop brand and our company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe we employ a deliberative and
disciplined management process that is brand driven and balances
careful measurement and analysis of our business with
experienced merchandising and Guest insight. Despite our rapid
growth, we work to maintain a small-company feel that encourages
collaboration, creative thinking and interaction at all levels.
Our core values include teamwork, striving for breakthrough
results, including in our financial performance, open
communication, and a commitment to learning. We strive to be a
socially responsible citizen in the communities in which we
operate.
</FONT>

<P align="left">
<B><FONT size="2">Growth Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our growth strategy is to develop and expand the
reach of the Build-A-Bear Workshop brand. We believe our brand
will grow in awareness and recognition as we continue to add
additional locations domestically and internationally and pursue
our expanded marketing efforts. We believe that the strength
</FONT>

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<DIV align="left">
<FONT size="2">of our brand will allow us to continue to attract
Guests, as well as to develop key strategic relationships. The
key elements of our strategy are:
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Continue to expand our store base in the
    United States and Canada.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since the end of fiscal 1999, we have increased
our store base from 14 to 157 locations throughout the United
States and Canada as of July&nbsp;3, 2004. We plan to open a
total of 21 Build-A-Bear Workshop stores in the United States
and Canada in fiscal 2004, all of which have executed leases and
eight of which were opened as of July&nbsp;3, 2004. In addition,
we expect to open approximately 25 to 30&nbsp;new stores in
fiscal 2005 in new and existing markets in the United States and
Canada, most of which have already been identified. We believe
there is a market potential for approximately
350&nbsp;Build-A-Bear Workshop stores in the United States and
Canada.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Continue to expand our retail concept
    outside the United States and Canada.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that there is continued opportunity to
grow our Build-A-Bear Workshop concept and brand outside of the
United States and Canada. Our franchisees have retail or real
estate experience and have opened five Build-A-Bear Workshop
stores in several foreign countries under master franchise
agreements on a country-by-country basis. We have agreements
with franchisees in the United Kingdom, Japan, South Korea,
Denmark, Australia and France. In fiscal 2003, our first
franchised store opened in the United Kingdom. By the end of
fiscal 2004 we expect our franchisees to open a total of eight
to twelve&nbsp;stores under these agreements, four of which were
open as of July&nbsp;3, 2004. We expect that our franchisees
will open between 15 and 20 new stores in fiscal 2005 under
existing and anticipated franchise agreements. We believe there
is a market potential for approximately 350&nbsp;franchised
stores outside the United States and Canada.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Continue to expand non-mall
    locations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on our experience with non-mall based
stores in tourist locations at the Downtown Disney&#174;
District at the Disneyland&#174; Resort in Anaheim, California,
Navy Pier in Chicago, Illinois and Broadway at the Beach in
Myrtle Beach, South Carolina, we believe we have growth
opportunities in additional non-mall locations such as other
tourist venues and sports stadiums. These locations provide us
with high-traffic venues with captive audiences that are
generally comprised of a somewhat different demographic than
typically visits the malls in which we operate. We believe our
presence in these alternative venues enhances our brand
awareness and introduces new customers to our concept, which can
lead to increased customer traffic for our mall-based stores. On
April&nbsp;3, 2004, we opened an approximately 380&nbsp;square
foot, in-park store location at Citizens Bank Park, home of the
Philadelphia Phillies baseball club, where Guests can &#147;Make
Your Own Phanatic&#148; or make the Build-A-Bear Workshop mascot
Bearemy. This store has significantly exceeded our original
sales plan. We are in discussions with other professional sports
teams about opening similar locations. While growth
opportunities in sport stadiums and tourist locations may be
limited, we believe the experience we are gaining from these
alternative retail arrangements can be expanded into other
non-mall locations, such as theme parks, cruise ships and other
tourist locations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Seek to expand into new lines of
    experiential retail.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that consumer demand for additional
experiential retail concepts is relatively untapped and that our
expertise in product development and providing a consistent
shopping experience can be applied to other experiential retail
brands and concepts. We expect to be able to leverage our
extensive Guest database to market these new brands and concepts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2003, we began testing in certain
markets our initial brand expansion initiative, our proprietary
&#147;Friends 2B&nbsp;Made&#148; line of make-your-own dolls and
related products. We believe these stuffable, poseable, huggable
dolls, which are approximately fifteen inches tall with an
emphasis on fashion, hair and make-up, bring to dolls what
Build-A-Bear Workshop has brought to teddy bears&nbsp;&#151; an
opportunity to participate in the creation and customization of
the doll. Currently, these dolls are offered
</FONT>

<P align="center"><FONT size="2">43
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<DIV align="left">
<FONT size="2">from a separate display fixture in selected,
existing Build-A-Bear Workshop stores. This fall we plan to open
two freestanding Friends 2B Made stores adjacent to our
Build-A-Bear Workshop stores in Easton Town Center in Columbus,
Ohio and in Robinson Town Center in Pittsburgh, Pennsylvania.
After a reasonable test period, we will evaluate further
expansion and alternative distribution channels.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Pursue other non-retail
    opportunities.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have entered into a series of licensing
arrangements with leading manufacturers, such as American
Greetings, Creative Imaginations, Elan-Polo, HarperCollins,
Hasbro and Springs, to develop a collection of lifestyle
Build-A-Bear Workshop branded products including greeting cards,
scrapbook supplies, shoes, books, toys and bedding, fabric and
bath accessories. We believe those products have the potential
to integrate the Build-A-Bear Workshop brand into our
customers&#146; lifestyles and other play activities enhancing
our brand image and keeping our brand awareness top-of-mind with
our customers. In Fall 2004, an exclusive line of Build-A-Bear
Workshop mini-plush toy kits and accessories from Hasbro will be
featured exclusively in Target stores, a line of scrapbooking
papers and accessories from Creative Imaginations will be
distributed to premier scrapbooking stores and a line of
activity books by HarperCollins will be distributed to select
bookstores, including Amazon.com&#174;. We believe that these
licensing initiatives have the potential to expand the reach of
our brand, raise brand awareness, reach shoppers in non-mall
locations and increase revenues. We select partners that we
believe are leaders in their respective sectors and that
understand and share our strategic vision for offering customers
exciting and interactive merchandise. We have policies and
practices in place intended to ensure that the products
manufactured under the Build-A-Bear Workshop mark adhere to our
quality, value and usability standards.
</FONT>

<P align="left">
<B><FONT size="2">Industry and Guest Demographics</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While Build-A-Bear Workshop offers consumers an
interactive and personalized experience, our tangible product is
stuffed animals, including our flagship product, the teddy bear,
a widely adored stuffed animal for over 100&nbsp;years.
According to data published by the International Council of Toy
Industries, worldwide sales of retail plush and doll toys were
over $11&nbsp;billion in 2000, about 20% of the $55&nbsp;billion
worldwide toy industry (excluding video games) and, according to
a study conducted for the Toy Industry Association,
U.S.&nbsp;sales of retail plush and doll toys in 2003 were over
$4&nbsp;billion. In 2003, Playthings Magazine ranked us as the
20th largest toy retailer in the United States for 2002 based on
sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Guests are very diverse, spanning broad age
ranges and socio-economic categories. Major customer segments
include families with children, primarily ages&nbsp;3
to&nbsp;12, grandparents, aunts and uncles, teen girls who
occasionally bring along their boyfriends and child-centric
organizations looking for interactive entertainment options such
as scouting organizations and schools. Based on information
compiled from our Guest database for 2003, the average age of
the recipient of our stuffed animals at the time of purchase is
eleven years old and children aged one to fourteen are the
recipients of approximately 80% of our stuffed animals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">According to the United States Census Bureau, in
2002 there were over 60&nbsp;million children age&nbsp;14 and
under in the United States. While the size of this population
group is projected to remain relatively stable over the next
decade, the economic influence of this age group is expected to
increase. Based on a recent third-party publication, we believe
that children&#146;s spending has doubled every ten years for
the past three decades, tripling in the 1990s. Direct spending
by children aged four to twelve was estimated at
$2.2&nbsp;billion in 1968, $4.2&nbsp;billion in 1984 and
$17.1&nbsp;billion in 1994 and 2002 estimates placed spending by
this demographic at $40&nbsp;billion. By 2006, children are
expected to directly spend more than $50&nbsp;billion as well as
influence hundreds of billions of dollars in additional family
spending.
</FONT>

<P align="left">
<B><FONT size="2">The Build-A-Bear Workshop Experience</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our customers, from toddlers to
grandparents, associate a visit to Build-A-Bear Workshop with a
hands-on, entertaining experience, a focus on quality
merchandise and a fun store environment. Our stores are designed
to be open and inviting with an entryway that spans that
majority of our storefront with
</FONT>

<P align="center"><FONT size="2">44
</FONT>

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<DIV align="left">
<FONT size="2">wide aisles to accommodate families and groups.
Our highly visual and colorful stores feature a teddy bear
theme, displays of numerous, fully-dressed stuffed animals and
custom-designed fixtures that are intended to energize our
Guests and add to the overall shopping atmosphere.
&#147;Bearisms&#148; are used selectively in our store design,
such as &#147;Beauty is in the eye of the bearholder,&#148;
&#147;I never met a teddy I didn&#146;t like&#148; and &#147;It
doesn&#146;t hurt to let your stuffing show,&#148; in order to
convey the values and culture of the Build-A-Bear Workshop brand.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Guests who visit Build-A-Bear Workshop enter a
teddy-bear-themed environment consisting of eight stuffed
animal-making stations. Cheerful proprietary teddy bear music
plays, and the sign system is easy to read to distinguish each
station and direct the Guests through the animal-making process.
At each station a friendly and knowledgeable Bear Builder
associate is available to explain the process.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The animal-making process is comprised of the
following eight stations:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Choose Me:</FONT></I><FONT size="2"> Upon
    entering our stores, Guests are greeted by our First Impressions
    Bear who introduces our concept and our collection of furry
    stuffed animals. Depending on the season, we typically offer
    between 30 and 35 varieties of animals, including teddy bears,
    bunnies, dogs, kitties, a frog, a monkey, or a pony as well as a
    selection of limited edition Collectibear products. Fully
    stuffed versions of the animals are displayed along a wall so
    Guests can see and touch each animal before selecting an
    unstuffed animal, or skin, of their own.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Hear Me:</FONT></I><FONT size="2"> Guests may
    select from 16 sound choices to insert inside the animal,
    including our &#147;Build-A-Sound&#148; option which allows a
    Guest to record their own ten-second message to further
    personalize their animal. Pre-recorded sounds can also be
    selected, including giggles, barks, meows, and other animal
    sounds as well as songs or messages such as &#147;I love
    you.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Stuff Me:</FONT></I><FONT size="2"> With the
    assistance of a Bear Builder associate, the Guest pumps stuffing
    into the animal until it reaches the appropriate firmness and
    passes the Guest&#146;s own &#147;huggability&#148; test. After
    the Guest pumps the pedal of the stuffing machine, they
    participate in our signature &#147;heart ceremony&#148; in which
    they make a special wish before placing the distinctive,
    three-dimensional, fabric heart inside the animal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Stitch Me:</FONT></I><FONT size="2"> The Bear
    Builder associate sews up the back of the animal through an
    exclusively licensed, pre-laced system. Before closing the
    animal, the Bear Builder associate inserts a unique barcode into
    the animal. Our &#147;Find-A-Bear&#148; identification system
    allows us to reunite a missing stuffed animal with its
    registered owner if it is ever lost and returned to us at one of
    our stores.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Fluff Me:</FONT></I><FONT size="2"> Guests air
    wash and fluff the stuffed animal with air blowers and brushes
    at our &#147;bear bath.&#148; This step ensures the new animal
    is well-groomed and &#147;paw-fectly huggable.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Dress Me:</FONT></I><FONT size="2"> We carry a
    variety of clothing items, outfits, and accessories so our
    Guests can customize their stuffed animals. Clothing items
    include t-shirts with slogans such as &#147;Hug Freely&#148; to
    wear with jeans, or &#147;Hibernities,&#148; our exclusive
    sleepwear for stuffed animals. We also have more detailed,
    multi-piece outfits and authentic sports uniforms through our
    licensing partnerships with organizations such as the NBA or
    MLB<SUP>TM</SUP>. Our stores associates, also known as Pawsonal
    Shoppers, are trained in bear fashion coordination and are on
    hand to help select the &#147;pawfect&#148; accessories such as
    &#147;Bearyjane&#148; shoes, glasses, or hats. The popularity of
    our Dress Me station is evidenced by the large number of
    transactions made by Guests returning to purchase outfits and
    other items for what we believe to be a previously purchased
    animal; this category comprised over 30% of all transactions in
    fiscal 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Name Me:</FONT></I><FONT size="2"> Guests
    proceed to a computer terminal where they sit and are guided
    through a child-friendly program that allows them to name their
    animal and also register their personal information in our
    Find-A-Bear identification system. The animal&#146;s name will
    appear on its own personalized birth certificate or storybook.
    Since the majority of our registrants are children 12&nbsp;years
    of age and under, we are extremely sensitive to privacy issues
    and have a strict policy that governs our
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">45
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">database use and maintenance and do not share
    personally identifiable data with any third parties for
    marketing purposes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Take Me Home:</FONT></I><FONT size="2"> As the
    new stuffed animal friend is packaged for its trip home, along
    with its birth certificate or story, in its very own collectible
    &#147;Cub Condo,&#148; Guests can recite the &#147;Bear
    Promise&#148; to complete the experience. Clothing and
    accessories go home in our &#147;Beararmoire&#148; or &#147;Bear
    Bunk Trunk.&#148; Each animal receives a &#147;Lifetime Paw
    Pass&#148; so they can return and visit our stores to be
    restitched, restuffed or refluffed whenever their owner wishes.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The duration of a Guest&#146;s experience can
vary greatly depending on his or her desires. While most Guests
choose to participate in the assembly process described above,
which we believe takes an average of 45&nbsp;minutes to
complete, Guests can also visit a Build-A-Bear Workshop store
and purchase items such as clothing, accessories, our &#147;Bear
Bucks&#148; gift certificates or pre-made animals in only a few
minutes.
</FONT>

<P align="left">
<B><FONT size="2">Merchandising and Product
Development</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our in-house design and product
development team, we have developed a coordinated, creative and
broad merchandise assortment, including a variety of animals,
clothing, shoes and accessories. We believe our merchandise is
an integral part of our concept and that the proprietary design
of many of the products we offer is a critical element of our
success while the authentic and fashionable nature of our
products greatly enhances our brand&#146;s appeal to our
customers. Our product development team regularly monitors
current fashion and culture trends in order to create products
that we believe are most appealing to our Guests, often
reflecting similar styling to the clothes our customers wear
themselves. We test our products on an on-going basis to ensure
customer demand supports order quantities. We also consult
regularly with our Cub Advisory Board, which is made up of
children from 8 to 18&nbsp;years of age, which gives us valuable
input and feedback on our merchandise. Through our focused
vendor relationships, we are able to source our merchandise in a
manner that is cost-effective, maximizes our speed to market and
facilitates rapid reorder of our best-selling items.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are typically fewer than 450&nbsp;SKUs in
our store at any one time so we intend for each item to be
highly productive. Our product line typically includes
approximately 30 to 35&nbsp;varieties of animals to be stuffed,
as well as a wide variety of other items, such as athletic
uniforms, seasonal costumes and our exclusive Hibernities
sleepwear collection, fun accessories, such as glasses, hats,
Paw Wear, and sports equipment as well as other &#147;Bear
Stuff&#148; accessories including backpacks, Comfy Stuff
Fur-niture and camping equipment. We enhance the authentic
nature of a number of our products with strategic licensing
partnerships with brands that are in demand with our customers
such as officially sanctioned NBA team apparel, Limited Too
clothing or official Royal Canadian Mounted Police uniforms. Our
clothing is inspired by human fashion and includes authentic
details such as functional buttons, working pockets, belt loops,
and zippers and are customized for our animals with
child-friendly, easy-to-dress details such as an opening for the
stuffed animal&#146;s tail and adjustable closures to help fit
any size animal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Our clothing includes:</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">complete athletic uniforms, including NBA, NHL
    and MLB<SUP>TM</SUP> branded items
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">casual sportswear, including branded items from
    Limited&nbsp;Too
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">costumes (including various new items for
    holidays)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">dress up (bride, tuxedo, prom)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Hibernities (sleepwear)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">outerwear
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">T-shirts (including collegiate Tiny Tees)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">UndiBears (underwear)
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">46
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Our accessories include:</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">glasses and sunglasses
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;pet&#148; accessories for stuffed dogs
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">cell phones
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">hats, handbags, backpacks and totes
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Paw Wear (shoes and sandals)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">slippers
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">SKECHERS&#174; shoes (under exclusive license)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">socks
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Our other products include:</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">camping equipment
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sports equipment (including skateboards and
    snowboards)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Bear Care products
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sounds
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comfy Stuff Fur-niture
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We display examples of stuffed animals in various
outfits throughout the store to give Guests ideas on how to
personalize their own animal. Each animal has a Seal of
Pawthenticity indicating that the stuffed animal being purchased
is designed to meet our strict quality control standards. We
also introduce and retire animals to keep our selection current
and periodically introduce limited edition Collectibears which
appeal to children as well as more serious collectors. Other
collector series include &#147;Bearemy&#146;s Kennel Pals&#148;
in which a portion of the proceeds from the sale of each animal
are paid to local animal shelters and stray pet rescue
organizations across the country. Future animals to be
introduced in 2004 include Elmo by Sesame Street&#174; in
partnership with Sesame Workshop and Rudolph the Red-Nosed
Reindeer&#174; by Creative Media.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The skins for our animals are produced from high
quality acrylic materials, and the stuffing is made of a
high-grade polyester fiber. We believe all of our products meet
Consumer Product Safety Commission requirements for toys and
American Society for Testing and Materials specifications for
toy safety in all material respects. We periodically have
samples of all items sold in our stores tested at independent
laboratories for compliance with these requirements. Packaging
and labels are developed for each product to communicate age
grading and any special warnings which may be recommended by the
Consumer Product Safety Commission.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our products are offered at prices intended to
attract Guests across a broad cross-section of income levels,
with stuffed animals ranging from $10 for a cuddly 14-inch Lil
Cub to $25 for a 16-inch Beary Limited Edition Leopard and other
limited edition Collectibears. Outfits range in price from $8 to
$15, accessories range from $1.50 to $12, and Paw Wear shoes
range from $3 to $8. Our average transaction in fiscal 2003 was
approximately $31. Given the high value proposition we believe
we offer our Guests, we historically have not had seasonal or
advertised sales events or markdowns, but we selectively use
coupons and frequent shopper discounts for our most loyal
Guests, as well as gift-with-purchase promotions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2003, we began testing in certain
markets our initial brand expansion initiative, our proprietary
&#147;Friends 2B&nbsp;Made&#148; line of make-your-own dolls and
related products. We believe these stuffable, poseable, huggable
dolls, which are approximately fifteen inches tall with an
emphasis on fashion, hair and make-up, bring to dolls what
Build-A-Bear Workshop has brought to teddy bears&nbsp;&#151; an
opportunity for the child to participate in the creation and
customization of the doll. Currently 12 varieties
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">of these dolls are offered from a separate
display fixture in selected, existing Build-A-Bear Workshops,
along with approximately 25&nbsp;clothing and accessory options.
This Fall we plan to open two freestanding Friends&nbsp;2B Made
stores adjacent to Build-A-Bear Workshop stores in Easton Town
Center in Columbus, Ohio and in Robinson Town Center in
Pittsburgh, Pennsylvania. We will determine the future plans for
this brand after we receive comprehensive results from the test
stores.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Marketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that the strength of the Build-A-Bear
Workshop brand is a competitive advantage and an integral part
of our strategy. Our goal is to continue to build the awareness
of our brand and the recognition of our name as a destination
retailer that provides experience-based shopping across a broad
range of age groups and demographics.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, our marketing program relied
heavily on our retail store locations, word-of-mouth referrals,
public relations, and direct mail campaigns to our proprietary
Guest database in order to build our brand and attract new
customers. After conducting market research in 2003, we
concluded we had a significant opportunity to raise awareness of
our brand and began developing a more integrated marketing plan
that included national television advertising and online
components. Starting in November 2003, we tested our new
marketing program in selected, representative markets. Based on
the results of the test, in February 2004 we rolled the program
out on a national basis and realized an increase in every month
of the first half of fiscal 2004 since the rollout, resulting in
an increase of 13.8% in our comparable store sales for the
period. Our advertising expenditures were $3.5&nbsp;million
(3.3% of total revenues) in fiscal 2001, $6.0&nbsp;million (3.5%
of total revenues) in fiscal 2002, $10.9&nbsp;million (5.1% of
total revenues) in fiscal 2003 and $7.9&nbsp;million (5.8% of
total revenues) for the first half of fiscal 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We employ several different marketing programs to
drive traffic to our stores and grow awareness of our brand.
Because we have a relatively balanced quarterly business, we can
benefit from advertising campaigns that run in all four quarters
of the year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Television and Online
Advertising.</FONT></I><FONT size="2"> We feel that the
interactive product and experience that we offer is most
effectively communicated in media such as television that offers
high visual and sensory impact, particularly for new potential
Guests. When we rolled out our television advertising on a
national basis, we focused on a mix of children&#146;s cable
programming that has high co-viewing levels for adults,
particularly mothers. Online advertising supports the television
messaging and is featured on popular, family-oriented websites.
We believe that television and online advertising will continue
to be critical in our marketing mix, particularly in our current
brand building stage as we take steps to raise consumer
awareness of our products and services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Direct Mail and
Email.</FONT></I><FONT size="2"> We have over nine million
unique household addresses in our database and we have developed
a targeted direct mail program using purchasing history data for
each household. We mail more than 14&nbsp;million catalogs
annually to our best Guests, typically mailing seasonal
multi-page catalogs for Valentine&#146;s Day, Spring, Summer,
back-to-school and Holiday. These color catalogs are typically
12 to 16&nbsp;pages in length and are intended to drive traffic
to our stores by featuring new merchandise offerings and
announcing special events that are timely to that season. Store
displays support our direct mail materials and allow us to
capitalize on mall traffic while helping Guests find the
featured merchandise. Specialty targeted mailings include
sending a birthday card to selected Guests that includes a
$5&nbsp;gift certificate. Also integrated into our marketing
plan is an email program which is designed to bring Guests to
our stores for special events, new animal launches, new product
offerings, and new store openings. Generally, the messaging is
targeted to specific age groups or interest groups while
reaching over two million Guests per mailing. In addition to
greetings on their own birthdays, select Guests receive a
greeting via email on the anniversary of the creation of each
stuffed animal friend inviting them to visit the store and get a
birthday gift for their furry friend.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Parties.</FONT></I><FONT size="2"> In 2003 we
hosted over 90,000 parties in our stores with nearly one million
kids attending. We believe these parties typically introduce at
least two of every ten party Guests to our concept for the first
time. Each child receives an age appropriate &#147;goody
bag&#148; that includes a return visit coupon as well
</FONT>

<P align="center"><FONT size="2">48
</FONT>

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<DIV align="left">
<FONT size="2">as a rotating offering of gifts and sampling
opportunities from our partners such as Nestl&#233;. Parties can
be scheduled in our stores, online or through our Guest service
center and are promoted via in-store events, local parent and
family publications and direct mail to the parents of a birthday
child. Nearly a half million party mailers were sent last year.
Each store may also do local party promotion to schools, scout
troops, day care centers and other child-centric organizations
in their area.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Store Events.</FONT></I><FONT size="2"> We
have developed special in-store and in-mall events to enhance
the entertainment and memorable nature of our store visits. The
majority of our in-store events are created to tie into holidays
and new product launches. The events generally take place over a
three-day weekend and are promoted via in-store signage, Guest
invitations, the website and email solicitations. Many of our
returning Guests have come to anticipate these events, planning
them into their family weekend activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our in-store and in-mall event calendar has
scheduled an average of two events per store, per month,
including events such as &#147;Furry Fashion Shows,&#148;
&#147;Bearemy&#146;s Birthday Bash,&#148; &#147;Love Stuff
Headquarters&#148; for Valentine&#146;s Day, and the &#147;Kooky
Spooky Bear Bash&#148; at Halloween. Our life-sized mascots,
Bearemy and Pawlette Coufur are typically present at these
events to entertain our Guests and promote our brand. We believe
these events create a sense of community for our Guests, help
increase repeat visits, and appeal to collectors of our products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2004, we launched our party season in all of
our stores with our Ultimate Build-A-Party store event and
promotion which was tied to Leap Day. Special gifts were sent to
Leap Day birthday celebrants around the United States and
Canada. Each Guest with a February&nbsp;29th birthday was
offered a free bear and 40% of these promotional offers were
redeemed in our stores. In addition, all qualifying Guests
visiting our stores that weekend were given a t-shirt gift with
their purchase. In two days, we gave away nearly
60,000&nbsp;free t-shirts for children and adults. This
promotion extended to our web site as well by encouraging Guests
to vote on the components of the &#147;ultimate party.&#148;
Co-sponsored with our partners, this was our first national
sweepstakes and was entered by over 45,000&nbsp;Guests. We
expect to leverage our national store presence with large scale
events similar to the Ultimate Build-A-Party on a regular basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Website.</FONT></I><FONT size="2"> Our
website, <I>www.buildabear.com</I>, has averaged over
620,000&nbsp;unique visitors per week in the first half of
fiscal 2004, an increase of 160% over the same period in fiscal
2003. On our website, Guests can find store locations, learn
about new products, view the store event calendar, play games
and send e-cards. Guests can also use our online party scheduler
to schedule parties on a real-time basis. For fiscal 2003,
approximately 39% of our parties were booked using our online
party scheduler. Our website is managed by an internal staff
that keeps it current on a daily basis, maintains brand and
content consistency and minimizes costs and speed of execution.
We have implemented programs and policies designed to comply
with the standards under the Federal Children&#146;s Online
Privacy Protection Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Public Relations.</FONT></I><FONT size="2">
Public relations is an important aspect of our marketing and is
closely tied to our charitable programs like &#147;Nikki&#146;s
Bear&#148;, our global &#147;Stuffed With Hugs Day&#148; and
this year&#146;s &#147;Huggable Heroes&#148; writing contest. We
have also been featured in national and local business
publications and other media. Maxine Clark, our Chief Executive
Bear, has appeared in segments of the Today Show, CBS Morning
Show, and other local and national broadcasts telling the
Build-A-Bear Workshop story. In the twelve months ended
July&nbsp;31, 2004, we had over 117&nbsp;million audience
impressions as a result of unpaid publicity in the United States
and Canada, based on quantitative results provided by media
tracking companies. In 2002, to celebrate the 100th year of the
teddy bear, we were invited to participate in the Macy&#146;s
Thanksgiving Day Parade&#174; and we have sponsored floats in
the parade for the past two years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Tourism Marketing.</FONT></I><FONT size="2">
We also have high volume store locations in selected popular
tourist markets such as the Downtown Disney&#174; District at
the Disneyland&#174; Resort in Anaheim, California, Broadway at
the Beach in Myrtle Beach, South Carolina, Chicago&#146;s Navy
Pier and Las Vegas, Nevada. Although limited, we believe there
are additional location opportunities for large tourist stores
in the United States and Canada. We utilize billboards, local
tourist media and radio to increase visitor traffic and, by
tracking registrations in our Find-A-Bear identification
database, we believe we introduce our concept to many first-time
Guests through our tourist locations who then visit their local
Build-A-Bear stores when they return home.
</FONT>

<P align="center"><FONT size="2">49
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Mobile Marketing.</FONT></I><FONT size="2"> In
fiscal 2004, we created an 800&nbsp;square foot temporary store
that can provide the full Build-A-Bear Workshop experience,
while offering a more limited line of products, which we have
used selectively to promote our brand at events such as the 2004
NBA All-Star Jam Session and MLB<SUP>TM</SUP> All-Star FanFest
events. Our main objective with our mobile store operations is
to introduce more people to our brand in order to bring more
traffic to our traditional mall-based locations. Our initial
results for these events met our expectations and we plan to
construct a mobile store in order to allow us to attend
additional venues in fiscal 2005.
</FONT>

<P align="left">
<B><FONT size="2">Licensing and Strategic
Relationships</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have developed licensing and strategic
relationships with some of the leading retail and cultural
organizations in the United States and Canada. We believe that
our customer base and our position in our industry category
makes us an attractive partner and our customer research and
insight allows us to focus on strategic partners that we believe
are relevant to our Guests. We plan to continue to add strategic
relationships on a selective basis with companies who share our
vision for our brand and provide us with attractive
brand-awareness, marketing and merchandising opportunities.
These relationships for specific products are generally
reflected in contractual arrangements for limited terms that are
terminable by either party upon specified notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Product and Merchandise
Licensing.</FONT></I><FONT size="2"> We have key strategic
relationships with select companies, including World Wildlife
Fund&#174;, SKECHERS&#174;, the NBA, the WNBA&#174;,
MLB<SUP>TM</SUP>, Limited Too, Disney and First Book&#174; and,
in Canada, the NHL&#174;, Royal Canadian Mounted Police and
World Wildlife Fund Canada in which we use their brands on our
products sold in our stores. These strategic relationships allow
both parties to generate awareness around their brands. We have
relationships with groups that pursue socially responsible
causes, as well as companies that have strong consumer brands,
in order to respond to our Guests&#146; interests. For example,
in connection with our relationship with World Wildlife Fund, we
have introduced the Giant Panda, the Beary Limited Edition Lion,
Tiger, Leopard and soon, the Polar Bear. One dollar from the
sale of each of these animals is paid to World Wildlife Fund. We
also have an exclusive agreement with footwear retailer
SKECHERS&#174; to sell their branded shoes for our stuffed
animals. Through our licensing arrangements with Limited Too,
Guests can purchase outfits for their animals identical to their
own outfits from Limited Too. We also license a variety of
college and university logos that we sell on t-shirts for our
stuffed animals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Promotional
Arrangements.</FONT></I><FONT size="2"> We have also developed
promotional arrangements with selected organizations. Our
arrangements with the New York Mets, the Chicago Cubs, and the
St.&nbsp;Louis Cardinals feature stuffed animal giveaways at
each club&#146;s ballpark on a day in which our brand is highly
promoted within the stadium. Player appearances by these clubs
as well as the New York Liberty WNBA team draw large crowds to
select store locations. We also have arrangements featuring
product sampling, cross promotions and shared media with
partners such as Baskin-Robbins, Macy&#146;s, Nestl&#233;,
Proctor&nbsp;&#38; Gamble, and The Picture People, as well as
targeted promotions with key media brands like <I>Nickelodeon
Magazine, </I>Radio Disney and ABC Family.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Third Party
Licensing.</FONT></I><FONT size="2"> We have entered into a
series of licensing arrangements with leading manufacturers to
develop a collection of lifestyle Build-A-Bear Workshop branded
products including greeting cards, scrapbook supplies, shoes,
books, toys and bedding, fabric and bath accessories. We believe
that each of these initiatives has the potential to enhance our
brand, raise brand awareness, and drive increased revenues. We
select partners that we believe are leaders in their respective
sectors and that understand and share our strategic vision for
offering customers exciting and interactive merchandise. We have
policies and practices in place intended to ensure that the
products manufactured under the Build-A-Bear Workshop brand
adhere to our quality, value and usability standards. We have
entered into licensing arrangements for our branded products
with leading manufacturers including American Greetings,
Creative Imaginations, Elan-Polo, HarperCollins, Hasbro and
Springs. In Fall 2004, an exclusive line of Build-A-Bear
Workshop mini-plush toy kits and accessories from Hasbro will be
featured exclusively in Target stores, a line of scrapbooking
papers and accessories from Creative Imaginations will be
distributed
</FONT>

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<DIV align="left">
<FONT size="2">to premier scrapbooking stores and a line of
activity books by HarperCollins will be distributed to select
bookstores throughout the country.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Employees and Training</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are committed to providing a great experience
for our diverse team of associates as well as our Guests. We
have a distinctive culture that we believe encourages
contribution and collaboration. We take great pride in our
culture and feel it is critical in encouraging creativity,
communication, and strong store performance. All store managers
receive comprehensive training through our Bear University
program, which is designed to promote a friendly and personable
environment in our stores and a consistent experience across our
stores. In fiscal 2003, we hired less than 2.5% of applicants
for store manager positions. We focus on employing and retaining
people who are friendly and focused on customer service. Our
above average employee retention rates, based on 2003 industry
data, contribute to the consistency and quality of the Guest
experience. Our store teams are evaluated and compensated not
only on sales results but also the results from our regular
Guest satisfaction surveys. Each store has a recognition fund so
that exceptional Guest service can be immediately recognized and
rewarded. We are committed to providing compensation structures
that recognize individual accomplishments as well as overall
team success.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of June&nbsp;30, 2004, we employed
approximately 660&nbsp;full-time and 3,800&nbsp;part-time
employees. We divide our United States and Canadian store base
into two geographic regions, which are supervised by our Chief
Workshop Bear and two Regional Workshop Directors. Bearitory
Leaders are responsible for each of our 19&nbsp;bearitories
consisting of between six and twelve stores. Each of our stores
generally has a full-time Chief Workshop Manager and two
full-time Assistant Workshop Managers in addition to hourly Bear
Builder associates, most of whom work part-time. The number of
part-time employees fluctuates depending on our seasonal needs.
In addition to the approximately 4,260&nbsp;employees at our
store locations, we employ approximately 200 associates in
general administrative functions at our World Bearquarters in
St.&nbsp;Louis, Missouri. We are committed to innovation and
invention and generally have confidentiality agreements with our
employees and consultants. Store managers and Bearquarters
associates pass specific profile assessments. None of our
employees are represented by a labor union, and we believe our
relationship with our employees is good.
</FONT>

<P align="left">
<B><FONT size="2">Stores</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of July&nbsp;3, 2004, we operated 157 retail
stores located primarily in major malls throughout the United
States and Canada. Our mall-based stores generally range in size
from 2,000 to 4,000&nbsp;square feet and average approximately
3,100&nbsp;square feet while our tourist location stores
currently range up to 6,000&nbsp;square feet. Our stores are
designed to be open and inviting for Guests of all ages with an
entryway that spans the majority of our storefront with wide
aisles to accommodate families or groups. Our typical store has
an oversized &#147;sentry bear&#148; at the front entry and
features two stuffing machines, five Name-Me computer stations,
display units and flooring to enhance the customer traffic flow
through the store. We select malls and make site selections
within the mall based upon demographic analysis, market
research, site visits and mall dynamics as well as a forecasting
model that projects a potential location&#146;s first year
sales. We have identified a significant number of target sites
that meet our criteria for new stores in malls and tourist
locations. We seek to locate our mall-based stores near major
customer entrances to or in the center of malls and adjacent to
other children, teen and family retailers. After we approve a
site, it typically takes approximately 23&nbsp;weeks to finalize
the lease, design the layout, build out the site, hire and train
associates, and stock the store for opening.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We lease all of our store locations. Due to our
attraction as a family-oriented &#147;retail-tainment&#148;
destination concept with average net sales per gross square foot
that, in fiscal 2003, generally exceeded the average for the
malls in which we operated, we have received numerous requests
from mall owners and developers to locate a Build-A-Bear
Workshop store in their malls. We believe that we generally have
negotiated favorable exclusivity provisions in our leases.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Most of our leases have an initial term of ten
years. A number of our leases provide a lease termination or
&#147;kick out&#148; option to either party in a pre-determined
year, typically the third or fourth year of the lease, if we do
not meet certain agreed upon minimum sales levels. In addition,
our leases typically require us to pay personal property taxes,
our pro rata share of real property taxes of the shopping mall,
our own utilities, repairs and maintenance in our store, a pro
rata share of the malls&#146; common area maintenance and, in
some instances, merchant association fees and media fund
contributions. Most of our leases also require the payment of a
fixed minimum rent as well as percentage rent based on sales in
excess of agreed upon minimum annual sales levels.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following is a list of our 157&nbsp;stores in the
United States and Canada by state and province as of
July&nbsp;3, 2004:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">State</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stores</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alabama
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Arizona
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Arkansas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">California
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Colorado
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Connecticut
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Delaware
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Florida
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Georgia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Illinois
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Indiana
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iowa
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Kansas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Kentucky
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Louisiana
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maryland
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Massachusetts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michigan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minnesota
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Missouri
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nebraska
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nevada
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New Hampshire
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New Jersey
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New York
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">North Carolina
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ohio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Oklahoma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Oregon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pennsylvania
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">South Carolina
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tennessee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Texas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Utah
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Virginia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Washington
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wisconsin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Province</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">British Columbia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alberta
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ontario
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">International Franchises</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2003, we began to expand the Build-A-Bear
Workshop brand outside of the United States, opening our own
stores in Canada and our first franchised location in the United
Kingdom. Currently we intend to only franchise locations outside
the United States and Canada. As of July&nbsp;3, 2004, there
were five Build-A-Bear Workshop franchised stores located in the
United Kingdom, Japan, South Korea and Denmark. All of our
non-U.S. and Canadian stores are operated by third party
franchisees under master franchise agreements covering each
country. All such franchised stores have similar signage, store
layout and merchandise characteristics to our stores in the
United States and Canada. Our goal is to partner with
well-capitalized franchisees that have expertise in retail
operations and real estate in their respective country. We
approve all franchisees&#146; orders for merchandise and have
oversight of their operational and business practices in an
effort to ensure they are in compliance with our standards. We
intend to open additional franchised stores in the countries
where we currently operate as well as several additional
countries, including France and Australia.
</FONT>

<P align="center"><FONT size="2">52
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Sourcing and Inventory Management</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not own or operate any manufacturing
facilities. Our animal skins, stuffing, clothing and accessories
are produced by companies located primarily in China. We
purchased approximately 80% of our inventory in fiscal 2001,
approximately 74% in fiscal 2002 and approximately 76% in fiscal
2003 from two vendors. After specifying the details and
requirements for our products, our vendors contract orders with
manufacturing companies in Asia that are approved by us based on
our quality control and labor standards. Our relationships with
our vendors generally are on a purchase order basis and do not
provide a contractual obligation to provide adequate supply,
quality or acceptable pricing on a long-term basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since our inception, we have significantly
increased our inventory and supply chain management
efficiencies. The average time from the beginning of production
to arrival of the products into our stores is approximately 90
to 120&nbsp;days. Our weekly tracking and reporting tools give
us the capabilities to promptly adjust to shifts in demand and
help us to negotiate prices with our vendors. Through a regular
analysis of selling trends, we periodically update our product
assortment by increasing productive styles and eliminating less
productive SKUs. Our distribution centers provide further
logistical efficiencies for delivering merchandise to our stores.
</FONT>

<P align="left">
<B><FONT size="2">Distribution and Logistics</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A third-party provider warehouses a large portion
of our merchandise at a 200,000&nbsp;square foot distribution
center in St.&nbsp;Louis, Missouri under an agreement that
expires on March&nbsp;31, 2005. We also have smaller third-party
distribution centers in Toronto, Canada under a lease that
expires on March&nbsp;31, 2005 and Los Angeles, California under
a lease that expires on February&nbsp;24, 2005. All items in our
assortment are eligible for distribution, depending on
allocation and fulfillment requirements, and we typically
distribute merchandise and supplies to each store once per week
on a regular schedule which allows us to consolidate shipments
in order to reduce distribution and shipping costs. Store
shipments from our third-party distribution centers are
scheduled throughout the week in order to smooth workflow and
are grouped in a way to reduce freight expense by distributing
to stores that are part of the same shipping route at the same
time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distribution from the warehouses to the stores is
managed by several third-party logistics providers. Merchandise
is ground-shipped to one of 55 third-party pool points which
then deliver merchandise to the stores on a pre-arranged
schedule. Back-up supplies, such as Cub Condo carrying cases and
stuffing for the animals, are often stored in limited amounts at
these local pool points.
</FONT>

<P align="left">
<B><FONT size="2">Management Information Systems and
Technology</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management information systems are a key
component of our business strategy and we are committed to
utilizing technology to enhance our competitive position. Our
information and operational systems utilize a broad range of
both purchased and internally developed applications which
support our Guest relationships, marketing, financial, retail
operations, real estate, merchandising, and inventory management
processes. The systems are accessed over a company-wide network
providing our employees with access to our key business
applications. Sales and daily deposit information is collected
from the stores&#146; point-of-sale terminals on a daily basis
as well as customer information from our Name-Me system and is
used to support key decisions in all areas including
merchandising, allocation, and operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have developed and maintain proprietary
software including domestic and international versions of our
Name Me kiosk, Find-A-Bear identification, and our party
scheduling systems. We have also filed an application for patent
protection in the U.S. and Canada for the party scheduling
system. Over the next several years we are improving our
operations by installing an integrated point-of-sale system and
new e-commerce software for our website, enhancing our intranet
and extranet and implementing a new merchandise planning
application. We regularly evaluate both tactical and strategic
information technology initiatives to help support our growth
and develop our business. Over the next several years, we also
plan to replace or modify certain other systems. Our critical
systems are reviewed on a regular basis to evaluate disaster
recovery plans and the security of our systems.
</FONT>

<P align="center"><FONT size="2">53
</FONT>

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<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We view our Build-A-Bear Workshop experience as a
distinctive combination of entertainment and retail. Because we
are mall-based, we see our competition as those mall-based
retailers that vie for prime mall locations, including various
apparel, footwear and specialty retailers. We also compete with
toy retailers, such as Wal-Mart, Toys &#147;R&#148; Us, Kmart
and Target and other discount chains, as well as with a number
of companies that sell teddy bears in the United States,
including, but not limited to, Ty, Fisher Price, Mattel, Russ
Berrie, Applause, Boyd&#146;s, Hasbro, Commonwealth, Gund and
Vermont Teddy Bear. Since we sell a product that integrates
merchandise and experience, we also view our competition as any
company that competes for our Guests&#146; time and
entertainment dollars, such as movie theaters, amusement parks
and arcades, and other mall-based entertainment venues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are aware of several small companies that
operate &#147;create your own&#148; teddy bear and stuffed
animal stores or kiosks in retail locations, but we believe none
offers the breadth and depth of the Build-A-Bear Workshop
experience or operates as a national retail company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe one of our competitive advantages is
our ability to provide high-quality products to our Guests in a
fun, family-friendly, service-oriented environment and that we
compete on the following bases:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">offering a highly satisfying overall shopping
    experience;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">store environment and ambiance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Guest service;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">location;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product presentation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product quality and selection, including licensed
    products from brands such as Limited Too, the NBA, the
    NHL&#174;, MLB<SUP>TM</SUP>, SKECHERS&#174; and Disney;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of our competitors have longer operating
histories, significantly greater financial, marketing and other
resources, and greater name recognition than we do. We cannot
assure you that we will be able to compete successfully with
them in the future, particularly in geographic locations that
represent new markets for us.
</FONT>

<P align="left">
<B><FONT size="2">Non-Store Properties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to leasing all of our store
locations, we lease approximately 23,500&nbsp;square feet for
our Bearquarters in St.&nbsp;Louis, Missouri under a lease and a
separate sublease. The lease, which covers approximately
8,500&nbsp;square feet, has approximately four years remaining,
which we can extend for an additional five years. The sublease,
which covers approximately 15,000&nbsp;square feet, also has
four years remaining, which we can extend for an additional five
years. We also lease approximately 8,000&nbsp;square feet in
St.&nbsp;Louis, Missouri for our web fulfillment site. This
lease has approximately one year remaining. We are currently
negotiating a new lease to replace the lease and sublease.
</FONT>

<P align="left">
<B><FONT size="2">Intellectual Property and Trademarks</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of July&nbsp;3, 2004, we had obtained over
140&nbsp;U.S.&nbsp;trademark registrations, including
Build-A-Bear Workshop&#174; for stuffed animals and accessories
for the animals, retail store services and other goods and
services, over 30 issued U.S.&nbsp;patents and over
100&nbsp;copyright registrations. In addition, we have over 100
U.S.&nbsp;trademark and eight U.S.&nbsp;patent applications
pending.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our copyrights, service marks,
trademarks, trade secrets, patents and similar intellectual
property are critical to our success, and we intend, directly or
indirectly, to maintain and protect these marks and, where
applicable, license the intellectual property and the
registrations for the intellectual property. We rely on
trademark, copyright and other intellectual property law to
protect our proprietary
</FONT>

<P align="center"><FONT size="2">54
</FONT>

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<DIV align="left">
<FONT size="2">rights to the extent available in any relevant
jurisdiction. We also depend on trade secret protection through
confidentiality and license agreements with our employees,
customers, partners, subsidiaries and others. We may not have
agreements containing adequate protective provisions in every
case, and the contractual provisions that are in place may not
provide us with adequate protection in all circumstances. Any
infringement or misappropriation of our intellectual property
rights or breach of our confidentiality or license agreements
could result in significant litigation costs, and any failure to
adequately protect our proprietary rights could result in our
competitors offering similar products, potentially resulting in
loss of one or more competitive advantages and decreased
revenues. In addition, intellectual property litigation or
claims could force us to do one or more of the following: cease
selling or using any of our products that incorporate the
challenged intellectual property, which would adversely affect
our revenue; obtain a license from the holder of the
intellectual property right alleged to have been infringed,
which license may not be available on reasonable terms, if at
all; and redesign or, in the case of trademark claims, rename
our products to avoid infringing the intellectual property
rights of third parties, which may not be possible and
time-consuming if it is possible to do so.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Despite our efforts to protect our intellectual
property rights, intellectual property laws afford us only
limited protection. A third party could copy or otherwise obtain
information from us without authorization. Accordingly, we may
not be able to prevent misappropriation of our intellectual
property or to deter others from developing similar products or
services. Further, monitoring the unauthorized use of our
intellectual property is difficult. Litigation has been and may
continue to be necessary to enforce our intellectual property
rights or to determine the validity and scope of the proprietary
rights of others. Litigation of this type could result in
substantial costs and diversion of resources, may result in
counterclaims or other claims against us and could significantly
harm our results of operations. In addition, the laws of some
foreign countries do not protect our proprietary rights to the
same extent as do the laws of the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also conduct business in foreign countries to
the extent our merchandise is manufactured or sold outside the
United States and have opened stores outside the United States
in the past two years, either directly or indirectly through
franchisees. We filed, obtained or plan to file for registration
of marks in foreign countries to the degree necessary to protect
these marks, although our efforts may not be successful and
further there may be restrictions on the use of these marks in
some jurisdictions.
</FONT>

<P align="left">
<B><FONT size="2">Legal Proceedings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time we are involved in ordinary
routine litigation common to companies engaged in our line of
business. We are involved in several court actions seeking to
enforce our intellectual property rights or to determine the
validity and scope of the proprietary rights of others. As of
the date of this prospectus, we are not involved in any pending
legal proceedings that we believe would be likely to have a
material adverse effect on our financial condition or results of
operations.
</FONT>

<P align="center"><FONT size="2">55
</FONT>

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<DIV align="left">
<A name='110'></A>
</DIV>

<!-- link1 "MANAGEMENT" -->

<P align="center">
<B><FONT size="2">MANAGEMENT</FONT></B>

<P align="left">
<B><FONT size="2">Executive Officers, Directors and Key
Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is the name, age, position and a
brief account of the business experience of each of our
executive officers, directors and key employees as of
July&nbsp;3, 2004. All of our directors were elected pursuant to
the terms of a stockholders&#146; agreement. The
stockholders&#146; agreement will terminate upon the closing of
the offering. See &#147;Certain Relationships and Related Party
Transactions&nbsp;&#151; Agreements with Investors.&#148;
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position(s)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maxine Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Executive Bear and Chairman of the Board
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Barry Erdos
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">President and Chief Operating Officer Bear
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John Burtelow
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Banker Bear
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tina Klocke
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Financial Bear, Treasurer and Secretary
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Teresa Kroll
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Marketing Bear
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott Seay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chief Workshop Bear
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Barney Ebsworth
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James Gould
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William Reisler
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frank Vest,&nbsp;Jr.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Maxine Clark </FONT></I><FONT size="2">has
been our Chief Executive Bear since our inception in 1997, our
President from our inception in 1997 to April 2004 and has
served as Chairman of our board of directors since our
conversion to a corporation in April 2000. From November 1992
until January 1996, Ms.&nbsp;Clark was the President of Payless
ShoeSource, Inc. Prior to joining Payless, Ms.&nbsp;Clark spent
over 19&nbsp;years in various divisions of The May Department
Stores Company in areas including merchandise development,
merchandise planning, merchandise research, marketing and
product development. Ms.&nbsp;Clark is a member of the Board of
Directors of The J.C.&nbsp;Penney Company, Inc. She also serves
on the Board of Trustees of the International Council of
Shopping Centers and Washington University in St.&nbsp;Louis and
on the Board of Directors of BJC Healthcare. Ms.&nbsp;Clark is
also a member of the Committee of 200, a leading organization
for women entrepreneurs around the world.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Barry Erdos </FONT></I><FONT size="2">has been
our President and Chief Operating Officer Bear since April 2004.
Prior to joining us, Mr.&nbsp;Erdos was the Chief Operating
Officer and a director of Ann Taylor Stores Corporation and Ann
Taylor Inc., a women&#146;s apparel retailer, from November 2001
to April 2004. He was Executive Vice President, Chief Financial
Officer and Treasurer of Ann Taylor Stores Corporation and Ann
Taylor Inc. from 1999 to 2001. Prior to that, he was Chief
Operating Officer of J.&nbsp;Crew Group, Inc., a specialty
retailer of apparel, shoes and accessories, from 1998 to 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">John Burtelow </FONT></I><FONT size="2">has
been our Chief Banker Bear since July 2001. Prior to joining us,
Mr.&nbsp;Burtelow was the Chief Financial Officer, Executive
Vice President and Chief Administrative Officer for Edison
Brothers Stores, Inc. from January 1998 to September 1999.
Edison Brothers Stores, Inc. filed a petition for reorganization
under Chapter&nbsp;11 of the Federal bankruptcy laws on
November&nbsp;3, 1995 and emerged from bankruptcy protection in
September 1997. Edison Brothers refiled for bankruptcy on
March&nbsp;9, 1999 and immediately commenced a liquidation of
all its assets. Mr.&nbsp;Burtelow also served as Executive Vice
President-Chief Financial Officer for Ames Department Stores,
Inc. from August 1994 to January 1998, for Venture Stores, Inc.
from 1989 to 1994, and for several divisions of The May
Department Stores Company from 1987 to 1989.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Tina Klocke </FONT></I><FONT size="2">has been
our Chief Financial Bear, since November 1997 our Treasurer
since April 2000, and Secretary since February 2004. Prior to
joining us, she was the Controller for Clayton Corporation, a
manufacturing company, where she supervised all accounting and
finance functions as well as human resources. Prior to joining
Clayton in 1990, she was the controller for Love Real Estate
Company, a
</FONT>

<P align="center"><FONT size="2">56
</FONT>

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<DIV align="left">
<FONT size="2">diversified investment management and development
firm. She began her career in 1982 with Ernst&nbsp;&#38; Young
LLP.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Teresa Kroll </FONT></I><FONT size="2">has
been our Chief Marketing Bear since September 2001. Prior to
joining us Ms.&nbsp;Kroll was Vice President&#150;Advertising
for The WIZ, a unit of Cablevision, from 1999 to 2001. From 1995
to 1999, Ms.&nbsp;Kroll was Director of Marketing for Montgomery
Ward Holding Corp., a department store retailer. From 1980 to
1994 Ms.&nbsp;Kroll held various administrative and marketing
positions for Venture Stores, Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Scott Seay </FONT></I><FONT size="2">has been
our Chief Workshop Bear since May 2002. Prior to joining us,
Mr.&nbsp;Seay was Chief of Field Operations for Kinko&#146;s
Inc., a national chain of copy centers, from April 1999 to May
2002. From April 1991 to April 1999, Mr.&nbsp;Seay held several
operational roles including Senior Vice President of Operations
West for CompUSA Inc., a computer retailer. From April 1983 to
April 1991, Mr.&nbsp;Seay held several operational positions for
The Home Depot, Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Barney Ebsworth </FONT></I><FONT size="2">has
served on our board of directors since our conversion to a
corporation in April, 2000 and served on an advisory board to
our predecessor entity prior to that time. Mr.&nbsp;Ebsworth is
the founder, Chairman, President and CEO of Windsor, Inc.,
formed in 1979 for the purpose of providing financing for
venture capital, real estate and other investments.
Mr.&nbsp;Ebsworth was the founder, Chairman, President and CEO
of INTRAV, a general agency formed in 1959 for the purpose of
selling travel to individuals and businesses, until the company
was sold in 1999. Mr.&nbsp;Ebsworth also founded Royal Cruise
Line and Clipper Cruise Line in 1972 and 1981, respectively. He
was the Chairman, President and CEO of those companies from
inception to the time they were sold in 1986 and 1997,
respectively. Mr.&nbsp;Ebsworth is also a Trustee of the
St.&nbsp;Louis Art Museum and the Seattle Art Museum, a
Commissioner of The American Art Museum and Smithsonian
Institute and a member of the Trustees Council and Co-Chairman
of Collectors Committee of the National Gallery of Art,
Washington D.C.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">James Gould </FONT></I><FONT size="2">has
served on our board of directors since our conversion to a
corporation in April 2000, and served on an advisory board to
our predecessor entity prior to that time. Mr.&nbsp;Gould is a
Managing General Partner of The Walnut Group, a group of
affiliated venture capital funds, and has held that position
since 1994. He is also the Managing Member of Gould Venture
Group&nbsp;V, LLC, a diversified financial concern, and Managing
Member and Principal Owner of Management One LLC, a firm he
founded that represents professional athletes. Mr.&nbsp;Gould
has served on numerous boards including Prevent Child Abuse
America, Camp BrightLight in partnership with the YMCA and the
Cincinnati Ballet Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">William Reisler </FONT></I><FONT size="2">has
served on our board of directors since our conversion to a
corporation in April 2000, and served on an advisory board to
our predecessor entity prior to that time. Mr.&nbsp;Reisler is a
Co-Founder and has been a Managing Partner of Kansas City Equity
Partners, a private equity firm, since 1993. His investment
focus is primarily in consumer and retail sectors. His corporate
experience includes development of new products for Hallmark
Cards, Inc. He is a former Chairman of the National Association
of Small Business Investment Companies, a venture capital trade
association. He is currently a member of the Board of Directors
of Organized Living, Inc. and Three Dog Bakery, Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Frank Vest,&nbsp;Jr.</FONT></I><FONT size="2">
has served on our board of directors since our conversion to a
corporation in April 2000. Mr.&nbsp;Vest has been a Partner and
Managing Director of Catterton Partners&nbsp;IV Management
Company, L.L.C., Catterton Partners Management Company, L.L.C.
and Catterton Partners Corporation since 1993; President of The
Catterton Group, Inc. since 1984; and a Manager/ General Partner
of Catterton Capital Management, L.L.C., Odyssey Limited
Partnership and Anthony Woods, L.L.C. since 1990. Mr.&nbsp;Vest
is also currently a member of the Board of Directors of Tabi
International, Inc. (Canada).
</FONT>

<P align="center"><FONT size="2">57
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Directors&#146; Terms</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Currently, we have authorized a seven member
board of directors. The following six individuals serve on the
board pursuant to a stockholders&#146; agreement that will
terminate upon the completion of this offering:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">one director who has been selected by the Barney
    A. Ebsworth Revocable Trust dated July&nbsp;23, 1986 so long as
    it owns at least 50% of its originally acquired preferred stock
    of the company and so long as it elects either Barney A.
    Ebsworth or his daughter, Christiane Ebsworth Ladd, currently
    Barney Ebsworth;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">one director who has been selected by Walnut
    Capital Partners, L.P. and Walnut Investment Partners, L.P. so
    long as they own at least 50% of their originally acquired
    preferred stock of the company, currently James Gould;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">one director who has been selected by KCEP
    Ventures&nbsp;II, L.P. so long as it owns at least 50% of its
    originally acquired preferred stock of the company, currently
    William Reisler;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">one director who has been selected by Catterton
    Partners&nbsp;IV, L.P., Catterton Partners&nbsp;IV-A, L.P.,
    Catterton Partners&nbsp;IV-B, L.P., Catterton Partners&nbsp;IV
    Offshore, L.P. and Catterton Partners&nbsp;IV Special Purpose,
    L.P. (collectively, &#147;Catterton Partners&#148;) so long as
    they own at least 50% of their originally acquired preferred
    stock of the company, currently Frank Vest,&nbsp;Jr.;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">two directors who have been selected by Smart
    Stuff, Inc. so long as one such director will be Maxine Clark.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our amended and restated certificate of
incorporation to be effective upon completion of this offering
provides that, as of the first annual meeting of stockholders,
our board of directors will be divided into three classes, each
with staggered three-year terms. As a result, only one class of
directors will be elected at each annual meeting of our
stockholders, with the other classes continuing for the
remainder of their respective three-year terms. Maxine Clark has
been designated as a Class&nbsp;I director, and her term will
expire at the 2005 annual meeting of stockholders; Messrs.
Barney Ebsworth and William Reisler have been designated as
Class&nbsp;II directors, and their terms will expire at the 2006
annual meeting of stockholders; and Messrs. James Gould and
Frank Vest have been designated as Class&nbsp;III directors, and
their terms will expire at the 2007 annual meeting of
stockholders. Currently, all our directors hold office until the
next annual meeting of stockholders or until their successors
are duly qualified.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Director Fees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We pay our non-management directors not
affiliated with significant stockholders $2,500&nbsp;per meeting
of the board of directors and $1,000&nbsp;per committee meeting
and are granted an option to purchase 2,500&nbsp;shares upon
joining our board and are annually granted an option to
purchase&nbsp;5,000&nbsp;shares under our 2002 Stock Incentive
Plan. Additionally, in May 2004, we paid a $68,250&nbsp;bonus to
one of our former directors, who was neither an officer nor
affiliated with a significant stockholder. We do not pay any
fees to our directors affiliated with significant stockholders
or who serve as officers of the company. In the future, we
intend to compensate our non-employee directors in an amount
which we believe is consistent with amounts paid by comparable
public companies. There are no family relationships among our
directors and officers. We reimburse our directors for
reasonable travel expenses related to board matters.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Board Committees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have established an audit committee consisting
of Frank Vest,&nbsp;Jr., who chairs the committee, James Gould
and William Reisler. The audit committee is governed by a
written charter which will be reviewed, and amended if
necessary, on an annual basis. Under the charter, the audit
committee will meet at least four times a year and will be
responsible for reviewing the independence, qualifications and
quality control procedures of our independent auditors, and will
be responsible for recommending the initial or continued
retention, or a change in, our independent auditors. In
addition, the audit committee will be
</FONT>

<P align="center"><FONT size="2">58
</FONT>

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<DIV align="left">
<FONT size="2">required to review and discuss with our
management and independent auditors our financial statements,
our annual and quarterly reports and the auditor&#146;s
attestation of management&#146;s evaluation of our internal
controls, as well as the quality and effectiveness of our
internal control procedures and critical accounting policies and
significant regulatory or accounting initiatives and prepare the
audit committee report required to be included in our annual
proxy statement. The committee will be required to discuss with
management earnings press releases, information provided to
rating agencies and our major financial risk exposures. The
audit committee&#146;s charter also will require the audit
committee to establish procedures for the receipt, retention and
treatment of complaints regarding accounting, internal control
or auditing matters, approve the audit plan and staffing of the
internal audit department, report regularly to the board
regarding its activities and perform an annual self-evaluation
of committee performance. The audit committee will be required
to have at least one member who qualifies as an audit committee
financial expert, as defined by the rules of the Securities and
Exchange Commission.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have also established a compensation committee
consisting of Mr.&nbsp;William Reisler, who serves as chairman,
and Messrs.&nbsp;Gould and Vest. The compensation committee will
be responsible for making recommendations to the board of
directors regarding compensation arrangements for our executive
officers, including goals and annual bonus compensation, and
consults with our management regarding compensation policies and
practices. The compensation committee will also make
recommendations concerning the adoption of any compensation
plans in which management is eligible to participate, including
the granting of stock options or other benefits under those
plans. The committee will be also required to oversee management
succession, prepare the committee&#146;s report to be included
in our proxy statement, report regularly to the board regarding
its activities, review and reassess the adequacy of its charter
on an annual basis and conduct an annual self-evaluation of
committee performance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have also established a nominating and
corporate governance committee consisting of Mr.&nbsp;Gould, who
serves as chairman, and Messrs.&nbsp;Reisler and Vest. The
nominating and corporate governance committee will submit to the
board of directors a proposed slate of directors for submission
to the stockholders at our annual meeting, recommend director
candidates in view of pending additions, resignations or
retirements, develop criteria for the selection of directors,
review suggested nominees received from stockholders and other
and review corporate governance policies and recommend changes
to the full board of directors. In addition, the committee will
be required to oversee the structure and operations of the
board, oversee director orientation and training, oversee and
periodically review our corporate governance rules and policies
and ethics codes, oversee the annual board and committee
self-evaluation process, report regularly to the board regarding
its activities, review and reassess the adequacy of its charter
on an annual basis and conduct an annual self-evaluation of
committee performance.
</FONT>

<P align="center"><FONT size="2">59
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">EXECUTIVE COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information concerning the compensation of our Chief Executive
Bear and President and each of our other four most highly
compensated current executive officers during the fiscal year
ended January&nbsp;3, 2004. We have also included information
for our fifth most highly compensated executive officer. We
refer to these persons as the &#147;named executive
officers&#148; elsewhere in this prospectus.
</FONT>

<P align="center">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Long-Term Compensation Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Long-Term</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options/</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Incentive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">SARs</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Payouts</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation(1)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Maxine Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">309,222</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">36,234</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,295</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Chief Executive Bear
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">John Burtelow
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">193,242</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,622</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Chief Banker Bear
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Tina Klocke
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">182,307</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">25,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,546</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Chief Financial Bear, Treasurer and Secretary
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Teresa Kroll
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">204,273</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,686</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Chief Marketing Bear
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Scott Seay
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">295,974</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,833</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Chief Workshop Bear
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Harold Brooks
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">251,189</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Former Chief International Bear(2)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Brian Vent
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">246,006</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,295</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Former Chief Operating Bear and Secretary(3)
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consists of company contributions to our 401(k)
    plan (Clark&nbsp;&#151; $2,500; Burtelow&nbsp;&#151; $2,500;
    Klocke&nbsp;&#151; $2,500; Kroll&nbsp;&#151; $2,500;
    Seay&nbsp;&#151; $38; and Vent&nbsp;&#151; $2,500) and premiums
    paid for long-term disability insurance (Clark&nbsp;&#151;
    $1,795; Burtelow&nbsp;&#151; $1,122; Klocke&nbsp;&#151; $1,046;
    Kroll&nbsp;&#151; $1,186; Seay&nbsp;&#151; $1,795; and
    Vent&nbsp;&#151; $1,795).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Brooks resigned as Chief International
    Bear effective December&nbsp;5, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Vent resigned as Chief Operating Bear
    and Secretary effective January&nbsp;31, 2004. See
    &#147;&#151;&nbsp;Employment and Separation Agreements.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">60
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Stock Option Awards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information with respect to stock options granted to each of our
named executive officers during the fiscal year ended
January&nbsp;3, 2004.
</FONT>

<P align="center">
<B><FONT size="2">Option Grants in Fiscal 2003</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Potential Realizable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Individual Grants</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value at Assumed Annual</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Rates of Stock Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Appreciation</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">for Option Term</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted in Fiscal</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Base Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options Granted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003 (%)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($/Sh)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">10%</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maxine Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">525,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John Burtelow
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tina Klocke
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">143,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">362,576</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Teresa Kroll
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott Seay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Harold Brooks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian Vent
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/24/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">143,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435,092</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All options to these executive officers in fiscal
2003 were granted under our 2002 Stock Incentive Plan. The
percentage of total options is based on an aggregate of
271,484&nbsp;shares granted to employees in fiscal 2003. Shares
vest at the rate of 25%&nbsp;per year over a four year period
from the date of grant. Vesting of the options is accelerated
upon the optionee&#146;s disability or death and upon a change
of control of the company (as defined in the option agreement)
or upon a public offering of our common stock. Accordingly, all
outstanding options will vest and become exercisable upon
completion of this offering. All option grants have a term of
ten years but may terminate before their expiration dates if the
optionee&#146;s status as an employee is terminated. The option
grants contain restrictions on transfer of the stock purchased
upon exercise of the options, but such restrictions lapse upon a
public offering of our common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exercise price on the date of each grant was
equal to at least 100% of the fair market value on the date of
grant, as determined by our compensation committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to the amounts disclosed in the
column captioned &#147;Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation for Option Term,&#148;
the 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and
Exchange Commission for illustrative purposes only and do not
represent our estimate or projection of our future common stock
prices. The dollar amounts under the columns represent the
potential realizable value of each grant assuming that the
market price of the underlying security at the grant date
appreciates at the indicated rate for the entire term of the
option, and that the option is exercised at the exercise price
and sold on the last day of the option term at the appreciated
price. Actual gains, if any, on stock option exercises are
dependent on the future performance of our common stock and
overall stock market conditions. The amounts reflected in the
table may not necessarily be achieved.
</FONT>

<P align="left">
<B><FONT size="2">Stock Option Exercises and Holdings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information with
respect to each of our named executive officers concerning their
unexercised options held on January&nbsp;3, 2004. No options
were exercised during fiscal 2003. All options listed become
fully exercisable upon the completion of this offering.
</FONT>

<P align="center"><FONT size="2">61
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The value of &#147;in-the-money&#148; stock
options represents the positive spread between the exercise
price of stock options and the fair market value of the options,
based upon an assumed public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share minus the exercise price per share.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of Unexercised,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options Exercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Underlying Unexercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">In-the-Money</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options Held at January&nbsp;3, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options at January&nbsp;3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maxine Clark
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">209,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">176,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John Burtelow
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tina Klocke
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Teresa Kroll
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott Seay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Harold Brooks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian Vent
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">246,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Compensation Committee Interlocks and
    Insider Participation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our compensation committee currently consists of
Messrs.&nbsp;Reisler, Gould and Vest. No member of the
compensation committee has served as one of our officers or
employees at any time. Mr.&nbsp;Reisler, one of our directors,
serves on the board of directors and as the Chairman of Three
Dog Bakery, Inc. Mr.&nbsp;Reisler and Maxine Clark, our founder
and Chief Executive Bear, each serve on the compensation
committee of this entity. Other than the relationship described
in the preceding sentence, none of our executive officer serves
as a member of the board of directors or compensation committee
of any other company that has one or more executive officers
serving as a member of our board of directors or compensation
committee. Messrs.&nbsp;Reisler, Gould and Vest and a former
member, Mr.&nbsp;Ebsworth, were participants in various
financing transactions with us, as described under &#147;Certain
Relationships and Related Party Transactions.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Limitations on Liability and
Indemnification</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amended and restated bylaws which will be in
effect upon completion of this offering provide that we will
indemnify our directors and officers, and may indemnify our
employees and other agents, to the fullest extent permitted by
the General Corporation Law of the State of Delaware. We
currently have a directors&#146; and officers&#146; liability
insurance policy that insures such persons against the costs of
defense, settlement or payment of a judgment under certain
circumstances. We believe that these indemnification and
liability provisions are essential to attracting and retaining
qualified persons as officers and directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to enter into indemnification
agreements with our directors and executive officers. Under
these agreements, we would be required to indemnify them against
all expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred, in connection with any actual,
or any threatened, proceeding if any of them may be made a party
because he or she is or was one of our directors or officers. We
are obligated to pay these amounts only if the officer or
director acted in good faith and in a manner that he or she
reasonably believed to be in or not opposed to our best
interests. With respect to any criminal proceeding, we are
obligated to pay these amounts only if the officer or director
had no reasonable cause to believe that his or her conduct was
unlawful. The indemnification agreements also set forth
procedures that will apply in the event of a claim for
indemnification thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the amended and restated certificate
of incorporation which will be in effect upon completion of this
offering provides that the liability of our directors for
monetary damages will be eliminated to the fullest extent
permissible under the General Corporation Law of the State of
Delaware. This provision in our amended and restated certificate
of incorporation does not eliminate a director&#146;s duty of
care, and, in appropriate circumstances, equitable remedies such
as an injunction or other forms of non-monetary relief would
remain available. Each director will continue to be subject to
liability for any breach of the director&#146;s duty of loyalty
to us, for acts or omissions not in good faith or involving
intentional
</FONT>

<P align="center"><FONT size="2">62
</FONT>

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<DIV align="left">
<FONT size="2">misconduct or knowing violations of law, for acts
or omissions that the director believes to be contrary to our
best interests or our stockholders, for any transaction from
which the director derived an improper personal benefit, for
improper transactions between the director and us, and for
improper distributions to stockholders and loans to directors
and officers. This provision also does not affect a
director&#146;s responsibilities under any other laws, such as
the federal securities laws or state or federal environmental
laws.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Employment and Separation Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Employment
agreements.</FONT></I><FONT size="2"> We have employment
agreements with Maxine Clark, our Chief Executive Bear, Barry
Erdos, our President and Chief Operating Officer Bear and our
named other executive officers, as follows: Scott Seay, Tina
Klocke, Teresa Kroll and John Burtelow.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ms.&nbsp;Clark&#146;s agreement has an initial
term of five years from May&nbsp;1, 2004 and renews from
year-to-year thereafter. The agreement may be terminated by us
prior to the end of the term upon death, disability, for cause
(as defined in the agreement) or, following the initial term,
without cause. Ms.&nbsp;Clark may terminate the agreement in the
event we materially breach the agreement and fail to cure such
breach within 30&nbsp;days after notice thereof. If
Ms.&nbsp;Clark terminates her employment for good reason (as
defined in the agreement), or if we terminate her employment
without cause after the initial term, we are obligated to
continue her base salary for a period
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;months
after her termination, such payments to be reduced by any amount
received from a subsequent employer. As compensation for her
services, Ms.&nbsp;Clark will receive an annual base salary of
not less
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
which will be reviewed annually and be commensurate with
similarly situated executives with firms similarly situated to
us. Ms.&nbsp;Clark&#146;s salary must be increased annually by
no less than the average percentage increase given to all of our
other executive employees during the year preceding the
increase. If we exceed certain performance objectives agreed
upon annually by Ms.&nbsp;Clark and our board of directors,
Ms.&nbsp;Clark will receive an annual bonus of up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of
her annual salary for the current fiscal year, payable in either
cash, stock options or a combination thereof. For subsequent
fiscal years, Ms.&nbsp;Clark will be eligible for bonuses which,
if achieved, will cause her to be our highest paid employee. The
compensation committee of our board of directors will determine
the amount and form of the bonuses. Ms.&nbsp;Clark&#146;s
agreement also provides for an award of 36,234&nbsp;shares of
our stock pursuant to our 2000 Stock Option Plan or our 2002
Stock Incentive Plan (or any successor plan). Ms.&nbsp;Clark
will also receive an automobile allowance and such other
perquisites and benefits as we may award her from time to time.
The agreement also requires us to maintain life insurance on
Ms.&nbsp;Clark in the amount of $2&nbsp;million under which we
are the beneficiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Erdos&#146; agreement has an initial
term of three years from April&nbsp;26, 2004 and renews from
year-to-year thereafter. The agreement may be terminated by us
prior to the end of the term upon death, disability, for cause
(as defined in the agreement) or without cause. Mr.&nbsp;Erdos
may terminate the agreement in the event we materially breach
the agreement, the nature and scope of his authority, power,
function or duty is significantly diminished, or he is relocated
more than 100&nbsp;miles from St.&nbsp;Louis without consent;
provided we do not cure the breach after 30&nbsp;days&#146;
notice thereof. If Mr.&nbsp;Erdos terminates his employment for
good reason (as defined in the agreement), we are obligated to
continue his base salary for a period
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;months
after termination (unless termination occurs during the first
twelve months of the agreement, in which case we will continue
to pay his base salary
for &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;months
after termination), such payments to be reduced by any amounts
received from a subsequent employer. As compensation for his
services, Mr.&nbsp;Erdos will receive an annual base salary of
not less
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
which rate will be reviewed annually by the compensation
committee of our board of directors and will be commensurate for
similarly situated executives with firms similarly situated to
us. If Mr.&nbsp;Erdos&#146; individualized performance targets
are achieved, his salary will be increased annually by no less
than the average percentage increase given to all of our other
executive employees during that fiscal year. If we exceed
certain performance objectives for any fiscal year,
Mr.&nbsp;Erdos will receive an annual bonus of up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of
his annual base pay for such fiscal year, payable in either
cash, stock, stock options or a combination thereof; provided
that Mr.&nbsp;Erdos&#146; bonus for fiscal 2004 will not be less
than
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
We also paid $150,000 to Mr.&nbsp;Erdos as a relocation
allowance.
</FONT>

<P align="center"><FONT size="2">63
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also entered into an Incentive Stock Option
Agreement with Mr.&nbsp;Erdos pursuant to our 2002 Stock Option
Plan. Under the agreement, we granted Mr.&nbsp;Erdos the option
to purchase up to 100,000&nbsp;shares of our common stock for a
period of 10&nbsp;years, at the purchase price of $8.78&nbsp;per
share, subject to certain restrictions. However, these
restrictions do not apply in the event we undergo a change of
control or a public offering (as such terms are defined in the
agreement). In the event Mr.&nbsp;Erdos desires to transfer his
shares pursuant to a bona fide purchase offer, we have a right
of first refusal to purchase any and all such shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ms.&nbsp;Klocke&#146;s agreement has an initial
term of three years from March, 2004 and renews from
year-to-year thereafter. The agreement may be terminated by us
prior to the end of the term upon death, disability, for cause
(as defined in the agreement) or without cause. Ms.&nbsp;Klocke
may terminate the agreement in the event we materially breach
the agreement or we relocate Ms.&nbsp;Klocke to a location more
than 100&nbsp;miles from St.&nbsp;Louis and fail to cure such
breach after notice thereof. If Ms.&nbsp;Klocke terminates her
employment for good reason (as defined in the agreement), we are
obligated to continue her base salary for a period
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;months
after her termination, such payments to be reduced by any
amounts received from a subsequent employer. As compensation for
her services, Ms.&nbsp;Klocke will receive an annual base salary
at a rate not less
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;which
rate will be reviewed annually and be commensurate with
similarly situated executives with firms similarly situated to
us. If Ms.&nbsp;Klocke&#146;s individualized performance targets
are achieved, her salary must be increased annually by no less
than the average percentage increase given to all of our other
executive employees during that fiscal year. If we exceed
certain performance objectives agreed upon annually by
Ms.&nbsp;Klocke and our board of directors, Ms.&nbsp;Klocke will
receive an annual bonus of up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of
her annual base salary, payable in either cash, stock, stock
options or a combination thereof. Ms.&nbsp;Klocke&#146;s
agreement also provides for an award of options to purchase
163,000&nbsp;shares of our stock pursuant to our 2000 Stock
Option Plan and any option agreements used in connection with
the plan. For 2004, Ms.&nbsp;Klocke also has options to purchase
an additional 25,000&nbsp;shares pursuant to our 2002 Stock
Option Plan and any applicable option agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ms.&nbsp;Kroll&#146;s agreement has an initial
term of one year from September&nbsp;10, 2003 and renews from
year-to-year thereafter. The agreement may be terminated by us
prior to the end of the term upon death, disability, or for
cause (as defined in the agreement) or without cause.
Ms.&nbsp;Kroll may terminate the agreement in the event we
materially breach the agreement and fail to cure such breach
within thirty days after notice thereof. As compensation for her
services, Ms.&nbsp;Kroll will receive an annual base salary at a
rate not less
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
which rate will be reviewed annually by the compensation
committee of our board of directors and will be commensurate
with similarly situated executives with firms similarly situated
to us. If Ms.&nbsp;Kroll meets her individualized performance
targets, Ms.&nbsp;Kroll&#146;s salary must be increased annually
by no less than the average percentage increase given to all of
our other executive employees during the year preceding the
increase. If we exceed certain performance objectives,
Ms.&nbsp;Kroll will receive an annual bonus of up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of
her annual salary, payable in either cash, stock options or a
combination thereof. Ms.&nbsp;Kroll and our board of directors
will determine the amount and form of the bonus. Under the
agreement, we also paid Ms.&nbsp;Kroll a $10,000 signing bonus.
Ms.&nbsp;Kroll&#146;s agreement also provides for an award of
options to purchase&nbsp;20,000&nbsp;shares of our stock
pursuant to our 2000 Stock Option Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Seay&#146;s agreement has an initial
term of three years from March, 2004 and renews from
year-to-year thereafter. The agreement may be terminated by us
prior to the end of the term upon Mr.&nbsp;Seay&#146;s death,
upon 30&nbsp;days&#146; prior written notice for disability, or
for cause (as defined in the agreement) or without cause.
Mr.&nbsp;Seay may terminate the agreement in the event we
materially breach the agreement, provided we do not cure the
breach after notice thereof. If we terminate
Mr.&nbsp;Seay&#146;s employment for any reason other than for
death, disability or for cause, we are obligated to continue his
salary for a period
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;months
after termination, such payments to be reduced by any amounts
received from a subsequent employer. As compensation for his
services, Mr.&nbsp;Seay will receive an annual base salary of
not less than
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
which rate will be reviewed annually by the compensation
committee of our board of directors and will be commensurate for
similarly situated executives with firms similarly situated to
us. If Mr.&nbsp;Seay&#146;s individualized performance targets
are achieved, his salary will be increased annually by no less
than the average percentage increase given to all of our other
executive employees during that fiscal year.
</FONT>

<P align="center"><FONT size="2">64
</FONT>

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<DIV align="left">
<FONT size="2">If we exceed certain performance objectives for
any fiscal year, Mr.&nbsp;Seay will receive an annual bonus of
up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of his annual base pay for
such fiscal year, payable in either cash, stock, stock options
or a combination thereof. Mr.&nbsp;Seay was also granted options
to purchase&nbsp;45,000&nbsp;shares of our common stock pursuant
to our 2000 Stock Option Plan. For fiscal 2004, Mr.&nbsp;Seay
was also granted options to purchase an additional
20,000&nbsp;shares pursuant to our 2002 Stock Option Plan.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Burtelow&#146;s agreement has an initial
term of one year from July&nbsp;9, 2004 and renews from
year-to-year thereafter. The agreement may be terminated upon
death, disability, for cause (as defined in the agreement) or
without cause. Mr.&nbsp;Burtelow may terminate the agreement in
the event we materially breach the agreement and fail to cure
such breach after notice thereof. If we terminate
Mr.&nbsp;Burtelow&#146;s employment for any reason other than
death, disability or for cause, we are obligated to continue his
base salary after termination for the shorter of
(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;months
or (2)&nbsp;the date on which Mr.&nbsp;Burtelow has obtained
other employment. As compensation for his services,
Mr.&nbsp;Burtelow will receive an annual base salary at a rate
not less than
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
which rate will be reviewed annually by the compensation
committee of our board of directors and will be commensurate
with similarly situated executives with firms similarly situated
to us. If Mr.&nbsp;Burtelow meets his individualized performance
targets, Mr.&nbsp;Burtelow&#146;s salary must be increased
annually by no less than the average percentage increase given
to all of our other executive employees during the year
preceding the increase. If we exceed certain performance
objectives agreed upon annually by Mr.&nbsp;Burtelow and our
board of directors, Mr.&nbsp;Burtelow will receive an annual
bonus of up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of his annual
salary, payable in either cash, stock options or a combination
thereof. Mr.&nbsp;Burtelow and our board of directors will
determine the amount and form of the bonus.
Mr.&nbsp;Burtelow&#146;s agreement also provides for an award of
options to purchase&nbsp;20,000&nbsp;shares of our stock
pursuant to our 2000 Stock Option Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The agreements for each of our named executive
officers provide that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for the term of the agreement and for three years
    thereafter, the employee may not become employed by or
    interested directly or indirectly in or associated with our
    competitors who are located within the United States or within
    any country where we have established a retail presence (except
    for Mr.&nbsp;Burtelow&#146;s and Ms.&nbsp;Kroll&#146;s
    agreements, which provides that they may not become employed by
    or interested directly or indirectly in or associated with our
    competitors who are located within 100&nbsp;miles of any of our
    retail stores);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the event of the employee&#146;s termination
    due to death, disability or his or her right to terminate due to
    our breach as provided in the agreement, he or she, or his or
    her beneficiaries or estate, will still be entitled to a bonus
    for such year prorated based on the number of full weeks the
    employee was employed during the year.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Separation
agreement.</FONT></I><FONT size="2"> Pursuant to his departure
from us, which was effective January&nbsp;31, 2004, we entered
into a separation agreement and general release (the
&#147;Separation Agreement&#148;) with Brian Vent, our former
Chief Operating Bear and Secretary. Under the Separation
Agreement, we were obligated to pay Mr.&nbsp;Vent his base
monthly salary of $19,833 for a period of six months following
his separation date. Mr.&nbsp;Vent was also eligible to
participate in our group health plans for a period of six months
following the separation date. Pursuant to the Separation
Agreement, the Company accelerated the vesting of 9,400 options
held by Mr.&nbsp;Vent with an exercise price of $6.04&nbsp;per
share which otherwise would not have vested until the end of the
first quarter of fiscal 2004. Mr.&nbsp;Vent exercised all of his
outstanding and vested stock options shortly after his
departure. In accordance with the terms of the Separation
Agreement, Mr.&nbsp;Vent released us from all claims other than
those rights which are continuing and related to
Mr.&nbsp;Vent&#146;s stock ownership. Mr.&nbsp;Vent also agreed
that he will not compete with us for a period of three years;
provided, however, that Mr.&nbsp;Vent is entitled to obtain
employment with another company so long as (i)&nbsp;the sale of
stuffed animals is not the principal business of such employer,
(ii)&nbsp;Mr.&nbsp;Vent has no direct or personal involvement in
the sale of stuffed animals, and (iii)&nbsp;neither
Mr.&nbsp;Vent nor his relatives or affiliates own more than 1%
of the company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Separation Agreement also provides that
notwithstanding the provisions of the loan agreement between us
and Mr.&nbsp;Vent, which requires that the loan become payable
in the event of his termination, the
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">payment of the loan shall not be accelerated as a
result of his termination. Instead, the principal amount of the
loan shall be due and payable in accordance with the terms of
the note as if Mr.&nbsp;Vent had not been terminated by us. See
&#147;Certain Relationships and Related Party
Transactions&nbsp;&#151; Officer Loans.&#148;
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Employee Stock Plans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of July&nbsp;3, 2004, options to
purchase&nbsp;1,047,283&nbsp;shares of common stock were
outstanding at a weighted average exercise price of
$6.52&nbsp;per share under our 2000 and 2002 stock plans. All
outstanding options will vest and become exercisable upon
completion of this offering. We have also adopted a 2004 stock
plan under which no awards have been granted as of
August&nbsp;9, 2004.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">2000 Stock Option Plan</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our 2000 stock option plan provided for the
granting to employees of incentive stock options and for the
granting to other individuals as selected by the compensation
committee of non-qualified stock options. The plan, as amended,
authorizes 2,200,000&nbsp;shares of our common stock to be
issued under the plan. We are no longer granting options under
our 2000 plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For incentive stock options, the purchase price
of the common stock under each incentive stock option must equal
at least 100% of the fair market value, or at least 110% of the
fair market value with respect to optionees who own more than
10% of the total combined voting power of all classes of our
stock. Our compensation committee determines the fair market
value in good faith and in a manner consistent with applicable
law. For non-qualified stock options, the compensation committee
determines the purchase price of the common stock under each
option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Options granted under the plan are generally not
transferable by the optionee except by will or the laws of
descent and distribution, and each option is exercisable, during
the lifetime of the optionee, only by the optionee. Options
generally must be exercised during the optionee&#146;s
continuing status as an employee or, in the discretion of the
administrators, within three months after termination other than
for cause. If the optionee dies with three months after
termination other than for cause or becomes disabled, the
options may be exercised within 12&nbsp;months after the
optionee&#146;s death or termination by disability. However, in
no event may an option be exercised later than the earlier of
the expiration of the term of the option or ten years from the
date of the grant of the option or, where an optionee owns stock
representing more than 10% of the total combined voting power of
all classes of stock, five years from the date of the grant of
the option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The plan may be amended, altered, suspended or
terminated by the administrator at any time. We may not alter
the rights and obligations under any option granted before
amendment of the plan without the written consent of the
affected optionee. Unless terminated sooner, the plan will
terminate automatically in April 2010.
</FONT>

<DIV>&nbsp;</DIV>

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<TR>
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<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">2002 and 2004 Stock Incentive
    Plans</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our 2002 stock incentive plan was adopted by our
board of directors and approved by our stockholders in April
2003. Our 2004 stock incentive plan was adopted by our board of
directors and approved by our stockholders in August 2004. The
2002 plan provides for the granting to employees of incentive
stock options and for the granting to any individual selected by
our compensation committee of non-qualified stock options, stock
appreciation rights and other cash or stock-based awards. The
2004 plan permits such awards to any employee, director or
consultant of ours or any of our affiliates, or any other entity
designated by our board of directors in which we have an
interest, who is selected by our compensation committee to
receive an award. The 2002 plan authorizes 2,200,000&nbsp;shares
of our common stock to be issued under the plan, less the shares
previously issued under the 2000 plan (net of forfeitures) and
any shares issued under restricted stock agreements. The 2004
plan authorizes 3,700,000&nbsp;shares of our common stock to be
issued under the plan, less the shares previously issued under
the 2000 or 2002 stock plans (net of forfeitures) and any shares
issued under restricted stock agreements. Our compensation
committee administers the 2002 and 2004 plans. As of
July&nbsp;3, 2004, options to purchase 1,047,283 shares
</FONT>

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<DIV align="left">
<FONT size="2">were outstanding under our 2002 plan. We are no
longer granting awards under our 2002 plan. As of August&nbsp;9,
2004, we had not granted any awards under our 2004 plan.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the date of the grant, the exercise price of
incentive stock options must equal at least 100% of the fair
market value, or 110% of the fair market value with respect to
optionees who own more than 10% of the total combined voting
power of all classes of stock. The fair market value is
determined by computing the arithmetic mean of our high and low
stock prices on a given determination date if our stock is
publicly traded or, if our stock is not publicly traded, by the
administrator in good faith. The exercise price on the date of
grant is determined by the compensation committee in the case of
non-qualified stock options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Options generally must be exercised during the
optionee&#146;s continuing status as an employee or within three
months after the optionee&#146;s termination of employment. If
an optionee&#146;s employment is terminated because the optionee
becomes disabled, the options may be exercised within one year
after the optionee&#146;s termination. If an optionee dies while
under our employ or within three months after termination of
employment, the options immediately vest and the optionee&#146;s
legatees or personal representatives may exercise the options
for a period of up to one year after the optionee&#146;s death,
but not after ten years from the grant of the option.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stock appreciation rights granted under each plan
are subject to the same terms and restrictions as the option
grants and may be granted independent of, or in connection with,
the grant of options. The compensation committee determines the
exercise price of stock appreciation rights. A stock
appreciation right granted independent of an option entitles the
participant to payment in an amount equal to the excess of the
fair market value of a share of our common stock on the exercise
date over the exercise price per share, times the number of
stock appreciation rights exercised. A stock appreciation right
granted in connection with an option entitles the participant to
surrender an unexercised option and to receive in exchange an
amount equal to the excess of the fair market value on the
exercise date of a share of our common stock over the exercise
price per share for the option, times the number of shares
covered by the option which is surrendered. Fair market value is
determined in the same manner as it is determined for options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee may also grant awards
of stock, restricted stock and other awards valued in whole or
in part by reference to the fair market value of our common
stock. These stock-based awards, in the discretion of the
compensation committee, may be, among other things, subject to
completion of a specified period of service, the occurrence of
an event or the attainment of performance objectives.
Additionally, the compensation committee may grant awards of
cash, in values to be determined by the compensation committee.
If any awards are intended to be deductible under
Section&nbsp;162(m) of the Internal Revenue Code, the committee
must choose from certain performance measures for the awards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Awards granted under either plan are generally
not transferable by the participant except by will or the laws
of descent and distribution, and each award is exercisable,
during the lifetime of the participant, only by the participant
or his or her guardian or legal representative, unless permitted
by the committee. Additionally, any shares of our common stock
received pursuant to an award granted under the plan, are
subject to our right of first refusal prior to certain transfers
by the participant and our buy-back rights upon termination of
the participant&#146;s employment. The right of first refusal
and buy-back rights terminate upon consummation of an initial
public offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee may provide for
accelerated vesting or termination in exchange for cash of any
outstanding awards or the issuance of substitute awards upon
consummation of a change in control, as defined in the plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Either plan may be amended, altered, suspended or
terminated by the administrator at any time. We may not alter
the rights and obligations under any award granted before
amendment of the plan without the consent of the affected
participant. Unless terminated sooner, the 2002 plan will
terminate automatically in August 2012 and the 2004 plan in
August 2014.
</FONT>

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</FONT>

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<DIV align="left">
<A name='111'></A>
</DIV>

<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS" -->

<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to establish procedures for the review
and pre-approval of all transactions between us and any of our
directors or executive officers. Pursuant to our code of ethics
and the charter of our nominating and corporate governance
committee, any director or executive officer intending to enter
into a transaction with us must provide the chair of our
corporate governance and nominating committee with all relevant
details of the transaction. The transaction will then be
evaluated by the corporate governance and nominating committee
to determine if the transaction is in our best interests and
whether, in the committee&#146;s judgment, the terms of such
transaction are at least as beneficial to us as the terms we
could obtain in a similar transaction with an independent third
party.
</FONT>

<P align="left">
<B><FONT size="2">Formation and Conversion to
Corporation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 1997 we began operating as a limited
liability company under the laws of the state of Missouri. On
April&nbsp;3, 2000, we converted into a Delaware corporation by
merging Build-A-Bear Workshop, L.L.C. into Build-A-Bear
Workshop, Inc. In connection with this merger, we issued to each
member of the limited liability company shares of one or more
series of preferred stock having dividend rights, conversion
rights, voting rights, terms of redemption and liquidation
preferences that were substantially the same as their
corresponding limited liability company interests, as follows:
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">3,418,306&nbsp;shares of series&nbsp;C-1
    preferred stock were issued to Smart Stuff, Inc., a corporation
    which is wholly-owned by Maxine Clark, our Chief Executive Bear;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">1,137,898&nbsp;shares of series&nbsp;A-1
    preferred stock and 911,383&nbsp;shares of series&nbsp;C-2
    preferred stock were issued to Windsor Capital, Inc., a
    corporation formed by Barney Ebsworth, one of our directors, and
    another individual, and 474,124&nbsp;shares of series&nbsp;C-2
    preferred stock were issued to an affiliate of Windsor;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">23,527&nbsp;shares of common stock,
    139,981&nbsp;shares of series&nbsp;A-2 preferred stock and
    275,352&nbsp;shares of series&nbsp;B-1 preferred stock were
    issued to Hycel Partners&nbsp;V, L.L.C., an affiliate of Hycel
    Properties Co., the entity from which we leased our Richmond
    Heights, Missouri store until June 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">98,804&nbsp;shares of common stock,
    961,263&nbsp;shares of series&nbsp;A-3 preferred stock and
    1,453,072&nbsp;shares of series&nbsp;B-2 preferred stock were
    issued to Walnut Capital Partners, with which James Gould, one
    of our directors, is affiliated;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">10,352&nbsp;shares of common stock,
    205,824&nbsp;shares of series&nbsp;A-4 preferred stock and
    311,003&nbsp;shares of series&nbsp;B-3 preferred stock were
    issued to Kansas City Equity Partners, with which William
    Reisler, one of our directors, is affiliated;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">64,500&nbsp;shares of series&nbsp;C-3 preferred
    stock were issued to Brian Vent, our former Chief Operating Bear
    and Secretary, and 65,276&nbsp;shares of series&nbsp;C-3
    preferred stock were issued to Adrienne Weiss.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also in connection with this merger and
conversion into a corporation, we issued 707,992&nbsp;shares of
series&nbsp;A-5 preferred stock to entities affiliated with
Catterton Partners, with which Frank Vest,&nbsp;Jr., one of our
directors, is affiliated, at a purchase price of
$5.649780&nbsp;per share for an aggregate of $4&nbsp;million and
1,069,786&nbsp;shares of series&nbsp;B-4 preferred stock at a
purchase price of $3.739067&nbsp;per share for an aggregate of
$4&nbsp;million. In addition, we issued more than $60,000 of
these securities to the following officers, directors and
holders of more than 5% of our common stock and their affiliates:
</FONT>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an entity affiliated with Kansas City Equity
    Partners purchased 25,884&nbsp;shares of series&nbsp;A-5
    preferred and 39,112&nbsp;shares of series&nbsp;B-4 preferred;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Barney Ebsworth, one of our directors, purchased
    126,380&nbsp;shares of series&nbsp;A-5 preferred and
    190,963&nbsp;shares of series&nbsp;B-4 preferred;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">68
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an entity affiliated with Ms.&nbsp;Clark
    purchased 171,200&nbsp;shares of series&nbsp;A-5 preferred and
    258,686&nbsp;shares of series&nbsp;B-4 preferred;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Brian Vent, our Chief Operating Bear and
    Secretary, purchased 3,230&nbsp;shares of series&nbsp;A-5
    preferred and 4,881&nbsp;shares of series&nbsp;B-4 preferred.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, through a purchase of membership
interests in Clark/Fox, L.L.C., which purchased shares of our
series&nbsp;A-5 and series&nbsp;B-4 preferred stock, one of our
two largest vendors acquired beneficial ownership of
11,246&nbsp;shares of our series&nbsp;A-5 preferred and
13,038&nbsp;shares of our series&nbsp;B-4 preferred stock.
</FONT>

<P align="left">
<B><FONT size="2">Series&nbsp;D Financing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September, November and December 2001, we sold
3,467,337&nbsp;shares of our series&nbsp;D preferred stock at a
price per share of $6.10. We sold the shares pursuant to a
preferred stock purchase agreement, a stockholders&#146;
agreement and a registration rights agreement under which we
made customary representations and warranties and agreed to
customary operating and other covenants, and provided the
purchasers with registration rights. The registration rights are
the only rights that survive beyond this offering. See
&#147;&#151;&nbsp;Agreements with Investors&#148; below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchasers of more than $60,000 of these
securities included, among others, the following officers,
directors and holders of more than 5% of our common stock
including their affiliates:
</FONT>
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    <TD width="1%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">entities affiliated with Catterton Partners
    purchased 1,361,066&nbsp;shares of series&nbsp;D preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">entities affiliated with Ms.&nbsp;Clark purchased
    815,575&nbsp;shares of series&nbsp;D preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an entity affiliated with Walnut purchased
    677,869&nbsp;shares of series&nbsp;D preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an entity affiliated with Kansas City Equity
    Partners purchased 426,230&nbsp;shares of series&nbsp;D
    preferred stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Vent purchased 18,409&nbsp;shares of
    series&nbsp;D preferred stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, through a purchase of membership
interests in Clark/ Fox&nbsp;II, L.L.C. and Clark/ Fox&nbsp;III,
L.L.C., which purchased shares of our series&nbsp;D preferred
stock:
</FONT>
<P>

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    <TD width="1%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ms.&nbsp;Klocke acquired beneficial ownership of
    14,582&nbsp;shares of our series&nbsp;D preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Brooks acquired beneficial ownership of
    29,307&nbsp;shares of our series&nbsp;D preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our two largest vendors acquired beneficial
    ownership of 146,185 and 27,074&nbsp;shares of our series&nbsp;D
    preferred stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">three of our other vendors acquired beneficial
    ownership of a total of 24,342&nbsp;shares of our series&nbsp;D
    preferred stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Agreements with Investors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;21, 2001, we entered into an
amended and restated registration rights agreement and an
amended and restated stockholders&#146; agreement with our
stockholders in connection with our series&nbsp;D financing. The
registration rights agreement provides registration rights to
the holders of our preferred and common stock. For more
information on these registration rights, see &#147;Description
of Capital Stock&nbsp;&#151; Registration Rights.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the stockholders&#146; agreement, each of
the stockholders has agreed to take all action necessary, so as
to cause our authorized number of directors to be seven, with:
</FONT>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">one member designated by each of Catterton
    Partners, Walnut, Kansas City Equity Partners, and a trust
    established by Mr.&nbsp;Ebsworth, in each case so long as each
    stockholder holds 50% or more of such stockholder&#146;s
    originally acquired preferred stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">two members designated by Smart Stuff, one of
    whom must be Ms.&nbsp;Clark.
    </FONT></TD>
</TR>

</TABLE>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stockholders&#146; agreement also provides
for:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a right of first offer in favor of the other
    parties to the agreement and to us if a party desires to
    transfer our securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;drag-along&#148; rights in favor of Walnut,
    Windsor and Catterton Partners if all three of such entities
    desire to transfer their shares to a third party and
    Ms.&nbsp;Clark is no longer employed by us or has disposed of
    her beneficial interest in our stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">preemptive rights in favor of the parties to the
    agreement in the event we issue new securities, subject to
    certain exceptions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stockholders&#146; agreement will terminate
on the closing of this offering.
</FONT>

<P align="left">
<B><FONT size="2">Officer Loans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to a restricted stock purchase agreement
dated April&nbsp;3, 2000, between us and Maxine Clark, our Chief
Executive Bear and President, Ms.&nbsp;Clark purchased
274,815&nbsp;shares of our common stock at $4.50&nbsp;per share
for a total purchase price of $1,236,667. Ms.&nbsp;Clark paid
for the common stock with the proceeds of a loan from us
evidenced by a secured promissory note which is supported by a
pledge of the shares purchased. The loan bears interest at
6.60%&nbsp;per annum, and all principal and interest is payable
on the maturity date. The largest aggregate amount of
indebtedness outstanding at any time under this loan was
$1,584,837, which was also the amount of indebtedness
outstanding as of July&nbsp;3, 2004. Recourse to
Ms.&nbsp;Clark&#146;s assets (other than the pledged shares) is
limited. The loan is due on the earlier of April 2005 or 90 days
following the termination of Ms.&nbsp;Clark&#146;s employment
with us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to two restricted stock purchase
agreements, each dated September&nbsp;19, 2001, between us and
each of Brian Vent, our former Chief Operating Bear and
Secretary, and Tina Klocke, our Chief Financial Bear, Treasurer
and Secretary, each of Mr.&nbsp;Vent and Ms.&nbsp;Klocke
purchased 20,491&nbsp;shares of our common stock at
$6.10&nbsp;per share for a total purchase price of $124,995
each. Mr.&nbsp;Vent and Ms.&nbsp;Klocke each paid for the common
stock with the proceeds of a loan from us evidenced by a secured
promissory note which is supported by a pledge of the shares
purchased. Each of the loans bears interest at 4.82%&nbsp;per
annum, and all principal and interest is payable on the maturity
date. The largest aggregate amount of indebtedness outstanding
at any time under each loan was $141,747, which was also the
amount of indebtedness outstanding under each loan as of
July&nbsp;3, 2004. Our recourse under the notes is limited in
each case to the pledged shares. The loans are each due on
September 2006 or, in the case of Ms.&nbsp;Klocke, 90&nbsp;days
following the termination of her employment with us, if earlier.
</FONT>

<P align="left">
<B><FONT size="2">Store Fixtures and Furniture</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We purchased fixtures for new stores and
furniture for our corporate offices from NewSpace, Inc. Robert
Fox, the husband of Ms.&nbsp;Clark, our Chief Executive Bear,
owns 100% of NewSpace. The total cost of these fixtures and
furniture amounted to $3,015,900 in fiscal 2001, $2,839,900 in
fiscal 2002, $2,705,900 in fiscal 2003 and $821,600 in the first
half of fiscal 2004. We expect to continue to purchase store
fixtures from NewSpace.
</FONT>

<P align="left">
<B><FONT size="2">Leases</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently sublet a portion of the space for
our corporate headquarters and adjacent web fulfillment site
from NewSpace under a separate sublease agreement. Our sublease
is subject to the terms and conditions of the prime lease
between NewSpace and First Industrial Realty Trust. The sublease
and the lease to which it relates are being renegotiated and we
expect to lease these spaces directly from First Industrial
Realty Trust after January&nbsp;1, 2005. Lease payments under
this sublease amounted to $187,000 in fiscal 2001, $212,300 in
fiscal 2002, $215,300 in fiscal 2003 and $98,800 in the first
half of fiscal 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until June 2003, we leased our retail store in
Richmond Heights, Missouri from Hycel Properties Co., an
affiliate of Hycel Partners&nbsp;V, which at the time of our
conversion to a corporation owned greater than
</FONT>

<P align="center"><FONT size="2">70
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">5% of our series&nbsp;A-2 and B-1 preferred
stock. The mall in which our Richmond Heights, Missouri store is
located was sold by Hycel Properties Co. in June 2003 to General
Growth Properties, Inc. Pursuant to the sale, our lease was
assigned to General Growth. Lease payments under this lease
agreement amounted to $199,000 in fiscal 2001, $193,400 in
fiscal 2002, $78,400 in fiscal 2003 and none in the first half
of fiscal 2004.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Real Estate Management</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also have contracts for real estate consulting
services, construction management services and facilities
management services with Hycel Properties. The real estate
consulting contract expires on December&nbsp;31, 2005 and the
construction management services contract expires on
December&nbsp;31, 2004. The real estate consulting services
contract contains a mutual exclusivity clause with regard to
real estate consulting services and provides for payment of
monthly fees, plus a success fee for each lease we enter into in
the United States and Canada. The construction management
services agreement provides for a fixed fee for up to eighteen
stores, including one store in Manhattan, New York, which counts
as three stores and additional fixed fees for each additional
store. The facility management contract expires on
December&nbsp;31, 2004 and provides for payment of fixed monthly
fees. We paid $930,200 in fiscal 2001, $1,041,000 in fiscal
2002, $960,300 in fiscal 2003 and $281,700 in the first half of
fiscal 2004 under these contracts.
</FONT>

<P align="left">
<B><FONT size="2">Design Services</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We paid $257,600 in fiscal 2001, $127,000 in
fiscal 2002, $230,100 in fiscal 2003 and $127,500 in the first
half of fiscal 2004 for design and other creative services to
Adrienne Weiss Company, which is owned by Adrienne Weiss, who at
the time of our conversion to a corporation held greater than 5%
of our series&nbsp;C-3 preferred stock. We have a copyright
assignment agreement with Ms.&nbsp;Weiss to secure our ownership
rights in the works she creates on our behalf. We expect to
continue to utilize Ms.&nbsp;Weiss&#146; services in fiscal 2004.
</FONT>

<DIV align="left">
<A name='112'></A>
</DIV>

<!-- link1 "PRINCIPAL AND SELLING STOCKHOLDERS" -->

<P align="center">
<B><FONT size="2">PRINCIPAL AND SELLING STOCKHOLDERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information known to us with respect to beneficial ownership of
our common stock as of July&nbsp;3, 2004, as adjusted to reflect
the sale of the shares offered, and as adjusted to reflect the
sale of the shares offered, assuming the exercise of the
underwriters&#146; over-allotment option, by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each person known by us to own beneficially more
    than 5% of our outstanding common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each of our directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each named executive officer;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all of our directors and executive officers as a
    group;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the selling stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission. Such
rules provide that in calculating the number of shares
beneficially owned by a person and the percentage ownership of
that person, shares of common stock subject to options or
warrants held by that person that are currently exercisable or
will become exercisable within 60&nbsp;days after July&nbsp;3,
2004 are deemed outstanding. However, for each person listed
below we have included all options held by such person even if
they were not exercisable within 60&nbsp;days of July&nbsp;3,
2004 because all outstanding options will vest and become
exercisable upon the consummation of this offering. For purposes
of calculating beneficial ownership percentages, shares of
common stock subject to options and warrants are considered
outstanding and beneficially owned by the person holding the
options or warrants but are not treated as outstanding for
purposes of computing the percentage ownership of any other
person. As of July&nbsp;3, 2004, there were 419,156&nbsp;shares
of common stock outstanding. Immediately following this offering
and the mandatory
</FONT>

<P align="center"><FONT size="2">71
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">conversion of our preferred stock into common
stock, 18,051,486&nbsp;shares of common stock will be
outstanding. This table assumes no exercise of the
underwriters&#146; over-allotment option. To our knowledge,
except as set forth in the footnotes to this table and subject
to applicable community property laws where applicable, each
person named in the table has sole voting and investment power
with respect to the shares set forth opposite such person&#146;s
name. Except as otherwise indicated, the address of each of the
persons in this table is as follows: c/o&nbsp;Build-A-Bear
Workshop, Inc., 1954 Innerbelt Business Center Drive,
St.&nbsp;Louis, Missouri 63114.
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Beneficially</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Beneficially</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Owned Prior</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Owned After</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Over-</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Owned After</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">to the Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">the Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Allotment</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Over-Allotment(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares Being</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Offered(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Offered(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maxine Clark(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5,568,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">29.4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CP4 Principals, L.L.C.(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,624,897</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">19.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Walnut Capital and affiliates(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,477,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">18.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Barney Ebsworth(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,309,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">17.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">KCEP Ventures&nbsp;II, L.P.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1,173,941</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frank Vest,&nbsp;Jr.(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,624,897</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">19.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James Gould(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,477,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">18.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William Reisler(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1,173,941</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John Burtelow(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Barry Erdos(10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tina Klocke(11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">208,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Teresa Kroll(12)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott Seay(13)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">65,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Harold Brooks(14)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian Vent(15)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">261,346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors and executive officers as a group
    (10&nbsp;persons)(16)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">94.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1.0%.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Certain stockholders are obligated to sell
    additional shares of common stock to the underwriters if the
    underwriters exercise their over-allotment option.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">274,815&nbsp;restricted shares and options to
    purchase&nbsp;422,283&nbsp;shares, which are exercisable or will
    become exercisable immediately upon completion of this offering,
    held by Maxine Clark;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">3,418,306&nbsp;shares held by Smart Stuff, Inc.,
    assuming conversion of our Series&nbsp;C-1 convertible preferred
    stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">651,846&nbsp;shares held by Clark/ Fox, L.L.C.,
    assuming conversion of our Series&nbsp;A-5 convertible preferred
    stock, Series&nbsp;B-4 convertible preferred stock and
    Series&nbsp;D convertible preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">670,411&nbsp;shares held by Clark/ Fox&nbsp;II,
    L.L.C., assuming conversion of our Series&nbsp;D convertible
    preferred stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">130,921&nbsp;shares held by Clark/ Fox&nbsp;III,
    L.L.C., assuming conversion of our Series&nbsp;D convertible
    preferred stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">72
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Ms.&nbsp;Clark controls the voting and/or
    investment power for the shares held by Smart Stuff, Inc. as its
    president and sole shareholder. Ms.&nbsp;Clark exercises voting
    and/or investment powers for the shares held by Clark/ Fox,
    L.L.C., Clark/ Fox&nbsp;II, L.L.C. and Clark/ Fox&nbsp;III,
    L.L.C. as the manager of each of the Clark/ Fox entities.
    Although Ms.&nbsp;Clark may be deemed to be the beneficial
    owner, Ms.&nbsp;Clark disclaims beneficial ownership of the
    shares owned by the Clark/ Fox entities except to the extent of
    her pecuniary interest therein, which consists of
    69,498&nbsp;shares of Clark/ Fox, L.L.C., 57,372&nbsp;shares of
    Clark/ Fox&nbsp;II, L.L.C., and 18&nbsp;shares of Clark/
    Fox&nbsp;III, L.L.C.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">1,612,468&nbsp;shares held by Catterton
    Partners&nbsp;IV, L.P., assuming conversion of our
    Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock and Series&nbsp;D convertible
    preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">565,317&nbsp;shares held by Catterton
    Partners&nbsp;IV-A, L.P., assuming conversion of our
    Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock and Series&nbsp;D convertible
    preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">39,408&nbsp;shares held by Catterton
    Partners&nbsp;IV-B, L.P., assuming conversion of our
    Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock and Series&nbsp;D convertible
    preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">48,353&nbsp;shares held by Catterton
    Partners&nbsp;IV Special Purpose, L.P., assuming conversion of
    our Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock and Series&nbsp;D convertible
    preferred stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">1,359,350&nbsp;shares held by Catterton
    Partners&nbsp;IV Offshore, L.P., assuming conversion of our
    Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock and Series&nbsp;D convertible
    preferred stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Catterton Managing Partner&nbsp;IV, L.L.C. is the
    general partner of Catterton Partners&nbsp;IV, L.P., Catterton
    Partners&nbsp;IV-A, L.P. and Catterton Partners&nbsp;IV-B, L.P.
    and the managing general partner of Catterton Partners&nbsp;IV
    Special Purpose, L.P. and Catterton Partners&nbsp;IV Offshore,
    L.P. CP4 Principals, L.L.C. is the Managing Member of Catterton
    Managing Partner&nbsp;IV, L.L.C. The address for Catterton
    Partners is 7&nbsp;Greenwich Office Park, 599&nbsp;West Putnam
    Avenue, Suite&nbsp;200, Greenwich, Connecticut 06830.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">2,664,485&nbsp;shares held by Walnut Capital
    Partners, L.P., assuming conversion of our Series&nbsp;A-3
    convertible preferred stock and Series&nbsp;B-2 convertible
    preferred stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">813,451&nbsp;shares held by Walnut Investment
    Partners, L.P., assuming conversion of our Series&nbsp;D
    convertible preferred stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Gould exercises voting and/or investment
    powers for the shares held by Walnut Capital Partners, L.P. as a
    manager of Walnut Capital Management Group, LLC, the general
    partner of Walnut Capital Partners, L.P. Mr.&nbsp;Gould
    exercises voting and/or investment powers for the shares held by
    Walnut Investment Partners, L.P. as a manager of Walnut
    Investments Holding Company, LLC, the general partner of Walnut
    Investment Partners, L.P. Although Mr.&nbsp;Vest may be deemed
    to be the beneficial owner, Mr.&nbsp;Gould disclaims beneficial
    ownership of the shares owned by the above entities except to
    the extent of his pecuniary interest therein. The address for
    Walnut is 312&nbsp;Walnut Street, Suite&nbsp;1151, Cincinnati,
    Ohio&nbsp;45202.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">2,834,912&nbsp;shares held by The Barney A.
    Ebsworth Living Trust dated July&nbsp;23, 1986, assuming
    conversion of our Series&nbsp;A-1 convertible preferred stock,
    Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock and Series&nbsp;C-2 convertible
    preferred stock;&nbsp;and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">73
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">474,124&nbsp;shares held by Christiane Ebsworth
    Ladd, the daughter of Mr.&nbsp;Ebsworth, assuming conversion of
    our Series&nbsp;C-2 convertible preferred stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Ebsworth exercises voting and/or
    investment powers for the shares held by The Barney A. Ebsworth
    Living Trust dated July&nbsp;23, 1986 as trustee<B> </B>of the
    Trust.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Vest may be deemed to beneficially own
    the shares beneficially owned by CP4 Principals, L.L.C. through
    his membership in the managing board of CP4 Principals, L.L.C.
    Mr.&nbsp;Vest disclaims beneficial ownership of these shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Gould exercises voting and/or investment
    powers for the shares held by Walnut Capital Partners, L.P. as a
    manager of Walnut Capital Management Group, LLC, the general
    partner of Walnut Capital Partners, L.P. Mr.&nbsp;Gould
    exercises voting and/or investment powers for the shares held by
    Walnut Investment Partners, L.P. as a manager of Walnut
    Investments Holding Company, LLC, the general partner of Walnut
    Investment Partners, L.P. Although Mr.&nbsp;Vest may be deemed
    to be the beneficial owner, Mr.&nbsp;Gould disclaims beneficial
    ownership of the shares owned by the above entities except to
    the extent of his pecuniary interest therein. The address for
    Mr.&nbsp;Gould is 312 Walnut Street, Suite&nbsp;1151,
    Cincinnati, Ohio 45202.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Reisler exercises voting and/or
    investment powers for the shares held by KCEP Ventures&nbsp;II,
    L.P. as Managing Director of KCEP&nbsp;II, L.C., the general
    partner of KCEP Ventures&nbsp;II, L.P. Although Mr.&nbsp;Reisler
    may be deemed to be the beneficial owner, Mr.&nbsp;Reisler
    disclaims beneficial ownership of the shares owned by KCEP
    Ventures except to the extent of his pecuniary interest therein.
    The address for KCEP Ventures is 233 West 47th Street, Kansas
    City, MO 64112.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes options to
    purchase&nbsp;60,000&nbsp;shares of our common stock.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes options to
    purchase&nbsp;100,000&nbsp;shares of our common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 20,491 restricted shares and options to
    purchase&nbsp;188,000&nbsp;shares of our common stock. Does not
    include an indirect interest in 14,653&nbsp;shares of our common
    stock beneficially owned by Ms.&nbsp;Klocke through her
    investment in Clark/ Fox&nbsp;II, L.L.C.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes options to
    purchase&nbsp;60,000&nbsp;shares of our common stock. Does not
    include an indirect interest in 12,136&nbsp;shares of our common
    stock beneficially owned by Ms.&nbsp;Kroll through her
    investment in Clark/ Fox, L.L.C.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes options to
    purchase&nbsp;65,000&nbsp;shares of our common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(14)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Does not include 29,307&nbsp;shares of our common
    stock beneficially owned by Mr. Brooks through his investment in
    Clark/Fox II L.L.C.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(15)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Vent individually owns
    261,346&nbsp;shares of our common stock, assuming conversion of
    our Series&nbsp;A-5 convertible preferred stock, Series&nbsp;B-4
    convertible preferred stock, Series&nbsp;C-3 convertible
    preferred stock and Series&nbsp;D convertible preferred stock,
    and 20,491&nbsp;restricted shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(16)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These 10 individuals include all directors and
    executive officers detailed in the &#147;Management&#148;
    section above. Includes 315,797&nbsp;restricted shares and
    options to purchase 895,283&nbsp;shares of our common stock. See
    note&nbsp;2 and notes&nbsp;5 through 14 above.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='113'></A>
</DIV>

<!-- link1 "DESCRIPTION OF CAPITAL STOCK" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following information describes our common
stock and preferred stock, as well as options to purchase our
common stock, and provisions of our certificate of incorporation
and our bylaws, all as will be in effect upon completion of this
offering. This description is only a summary. You should also
refer to our amended and restated certificate of incorporation
and bylaws which have been filed with the Securities and
Exchange Commission as exhibits to our registration statement,
of which this prospectus forms a part.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, we will be
authorized to issue up to 65,000,000&nbsp;shares of capital
stock, par value $0.001&nbsp;per share, to be divided into two
classes to be designated, respectively, &#147;common stock&#148;
and &#147;preferred stock.&#148; Of such shares authorized,
50,000,000&nbsp;shares will be designated as common stock, and
15,000,000&nbsp;shares will be designated as preferred stock.
</FONT>

<P align="center"><FONT size="2">74
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of August&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004, there were 18,051,486&nbsp;shares of common stock
outstanding that were held of record by 23 stockholders,
assuming conversion of all currently outstanding shares of
preferred stock outstanding into 17,316,533&nbsp;shares of
common stock. There will
be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock outstanding, assuming no exercise of outstanding
options, after giving effect to the sale of common stock offered
in this offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The holders of common stock are entitled to one
vote for each share held of record on all matters submitted to a
vote of the stockholders. Our stockholders do not have
cumulative voting rights in the election of directors.
Accordingly, holders of a majority of the shares voting are able
to elect all of the directors. Subject to preferences that may
be granted to any then outstanding preferred stock, holders of
common stock are entitled to receive ratably only those
dividends as may be declared by the board of directors out of
funds legally available therefor, as well as any distributions
to the stockholders. See &#147;Dividend Policy.&#148; In the
event of our liquidation, dissolution or winding up, holders of
common stock are entitled to share ratably in all of our assets
remaining after we pay our liabilities and distribute the
liquidation preference of any then outstanding preferred stock.
Holders of our common stock have no preemptive or other
subscription or conversion rights. There are no redemption or
sinking fund provisions applicable to the common stock. The
rights, preferences and privileges of holders of common stock
are subject to the right of holders of shares of any series of
preferred stock that may be issued in the future.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, our board of
directors will have the authority, without further action by the
stockholders, to issue up to 15,000,000&nbsp;shares of preferred
stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof. These rights, preferences
and privileges include dividend rights, conversion rights,
voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any
series or the designation of such series, any or all of which
may be greater than the rights of common stock. The issuance of
preferred stock could adversely affect the voting power of
holders of common stock and the likelihood that such holders
will receive dividend payments and payments upon liquidation. In
addition, the issuance of preferred stock could have the effect
of delaying, deferring or preventing a change in control of
Build-A-Bear Workshop. Currently we have no plan to issue any
shares of preferred stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the completion of this offering, we have
outstanding various series of class&nbsp;A, B, C and D preferred
stock. Each class has various dividend, redemption, and
liquidation rights.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to
August&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004, the
Series&nbsp;A-5 and Series&nbsp;D preferred stock accrued a
dividend. Cumulative unpaid dividends on such preferred stock
totaled $7,776,795 at July&nbsp;3, 2004. Effective
August&nbsp;10, 2004, we amended our Articles of Incorporation
to eliminate the dividend preference on our preferred stock and
add the accrued and unpaid dividends as of July&nbsp;31, 2004 to
the conversion base amount used in calculating the amount of
common stock into which the preferred shares will be converted
to common shares under certain circumstances, such as an initial
public offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, dividend preferences or
restrictions on all series of preferred stock were removed and
all series of preferred stock now participate ratably on an as
converted basis with common stock for any declared dividends
subsequent to August&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004.
This amendment also establishes the redemption price
</FONT>

<P align="center"><FONT size="2">75
</FONT>

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<DIV align="left">
<FONT size="2">and liquidation preference for the redeemable
preferred stock. Currently, each class of preferred stock has
the following dividend, redemption and liquidation rights:
</FONT>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;C</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;D</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Number of series of class issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Entitled to cumulative dividends
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Entitled to participate in cash dividends on
    common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior liquidation preference
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="7" align="center" valign="bottom">
    <FONT size="2">Second as a group
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">First</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Junior liquidation preference
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Liquidation preference at July&nbsp;31, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,298,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,715,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,813,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,331,706</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of the series&nbsp;A-5, B-4 and D
preferred stock may force us to redeem their shares for cash or
notes on April&nbsp;3, 2006. The series&nbsp;D preferred stock
has redemption preference over the series&nbsp;A-5 and B-4,
which rank on a parity with each other for redemption. The
redemption price is equal to $7,819,985 for the series A-5
preferred stock, $6,000,006 for the series B-4 preferred stock,
and $25,331,706 for the series&nbsp;D preferred stock. Each
share of preferred stock converts automatically into common
stock in the event of an initial public offering of our common
stock with proceeds of at least $25&nbsp;million and a per share
offering price of at least $15.00. Accordingly, all shares of
outstanding preferred stock will convert into common stock upon
completion of this offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The class&nbsp;C preferred stock votes on all
matters with the common stock on an as-if converted basis. The
class&nbsp;A, B and D preferred stock votes together as a class
with respect to certain actions.
</FONT>

<P align="left">
<B><FONT size="2">Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of July&nbsp;3, 2004, we had outstanding
options to purchase a total of 1,047,283&nbsp;shares of common
stock at a weighted average exercise price of $6.52&nbsp;per
share under our 2000 and 2002 Stock Option Plans, and we are
authorized to award additional options to purchase a total of
2,073,820&nbsp;shares under our 2004 Stock Incentive Plan. As a
result of the adoption of the 2004 Stock Incentive Plan, no
further grants of options will be made under our 2000 Stock
Option Plan or our 2002 Stock Incentive Plan. We are also
considering the adoption an employee stock purchase plan prior
to the completion of this offering, under which we will be
authorized to issue additional shares of our common stock. Any
shares issued upon exercise of these options will be immediately
available for sale in the public market upon our filing, after
the offering, of a registration statement relating to the
options, subject to the terms of lock-up agreements entered into
between certain of our option holders and the underwriters.
</FONT>

<P align="left">
<B><FONT size="2">Registration Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the closing of this offering, the holders
of
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock will be entitled to certain rights with
respect to the registration of such shares under the Securities
Act. In the event that we propose to register any of our
securities under the Securities Act, either for our own account
or for the account of other stockholders, these holders are
entitled to notice of such registration and are entitled to
include their common stock in such registration, subject to
certain marketing and other limitations. Beginning six months
after completion of this offering, the holders of at least 10%
of these securities have the right to require us to file a
registration statement under the Securities Act in order to
register their shares of our common stock. We may, in certain
circumstances, defer such registrations and the underwriters
have the right, subject to certain limitations, to limit the
number of shares included in such registrations. We are not
obligated to effect more than two demand registrations following
completion of this offering, other than registrations on
Form&nbsp;S-3. We will bear all costs, other than underwriting
discounts and commissions, related to the demand registrations
of these shares.
</FONT>

<P align="center"><FONT size="2">76
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Registration of shares of our common stock upon
the exercise of registration rights would result in the covered
shares becoming freely tradable without restriction under the
Securities Act immediately upon the effectiveness of the
registration of those shares.
</FONT>

<P align="left">
<B><FONT size="2">Anti-Takeover Provisions of Delaware Law and
Charter Provisions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of the provisions of Delaware law and our
amended and restated certificate of incorporation and bylaws,
summarized in the following paragraphs, may have an
anti-takeover effect and delay, deter or prevent a tender offer,
proxy contest or other takeover attempt that stockholders might
consider to be in their best interests, including such an
attempt that might result in payment of a premium over the
market price for their shares of our common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interested stockholder
transactions.</FONT></I><FONT size="2"> We are subject to
Section&nbsp;203 of the General Corporation Law of the State of
Delaware, which, subject to certain exceptions specified
therein, prohibits a Delaware corporation from engaging in any
&#147;business combination&#148; with any &#147;interested
stockholder&#148; for a period of three years after the date
that such stockholder became an interested stockholder, unless:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">before such date, the board of directors of the
    corporation approved either the business combination or the
    transaction that resulted in the stockholder becoming an
    interested holder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">upon consummation of the transaction that
    resulted in the stockholder becoming an interested stockholder,
    the interested stockholder owned at least 85% of the voting
    stock of the corporation outstanding at the time the transaction
    began, excluding certain shares;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">on or after such date, the business combination
    is approved by the board of directors and authorized at an
    annual or special meeting of the stockholders, and not by
    written consent, by the affirmative vote of at least
    66&nbsp;2/3% of the outstanding voting stock that is not owned
    by the interested stockholder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;203 defines &#147;business
combination&#148; to include the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any merger or consolidation involving the
    corporation and the interested stockholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any sale, transfer, pledge or other disposition
    of 10% or more of the assets of the corporation involving the
    interested stockholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">subject to certain exceptions, any transaction
    that results in the issuance or transfer by the corporation of
    any stock of the corporation to the interested stockholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any transaction involving the corporation that
    has the effect of increasing the proportionate share of the
    stock or any class or series of the corporation beneficially
    owned by the interested stockholder;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the receipt by the interested stockholder of the
    benefit of any loans, advances, guarantees, pledges or other
    financial benefits by or through the corporation.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as otherwise specified in Section&nbsp;203
of the Delaware General Corporation Law, an interested
stockholder is generally defined to include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any person that owns or did own, 15% or more of
    the outstanding voting stock of the corporation, or is an
    affiliate or associate of the corporation and was the owner of
    15% or more of the outstanding voting stock of the corporation
    at any time within three years immediately before the date of
    determination; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the affiliates and associates of any such person.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under certain circumstances, Section&nbsp;203 of
the Delaware General Corporation Law makes it more difficult for
a person who would be an interested stockholder to effect
various business combinations with a corporation for a
three-year period. We have not elected to be exempt from the
restrictions imposed under Section&nbsp;203 of the Delaware
General Corporation Law. However, Ms.&nbsp;Clark, Catterton
Partners, Walnut
</FONT>

<P align="center"><FONT size="2">77
</FONT>

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<DIV align="left">
<FONT size="2">Capital and the Ebsworth trust and their
affiliates and associates are excluded from the definition of
&#147;interested stockholder&#148; pursuant to the terms of
Section&nbsp;203 of the Delaware General Corporation Law. The
provisions of Section&nbsp;203 of the Delaware General
Corporation Law may encourage persons interested in acquiring us
to negotiate in advance with the board, since the stockholder
approval requirement would be avoided if a majority of the
directors then in office approves either the business
combination or the transaction which results in any such person
becoming an interested stockholder. Such provisions also may
have the effect of preventing changes in our management. It is
possible that such provisions could make it more difficult to
accomplish transactions that our stockholders may otherwise deem
to be in their best interests.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cumulative Voting.</FONT></I><FONT size="2">
Our amended and restated certificate of incorporation expressly
denies stockholders the right to cumulative voting in the
election of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Classified Board of
Directors.</FONT></I><FONT size="2"> Our board of directors is
divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the
board of directors are elected each year, which has the effect
of requiring at least two annual stockholder meetings, instead
of one, to replace a majority of the members of the board. These
provisions, when coupled with the provision of our amended and
restated certificate of incorporation authorizing only the board
of directors to fill vacant directorships or increase the size
of the board of directors, may deter a stockholder from removing
incumbent directors and simultaneously gaining control of the
board of directors by filling the vacancies created by such
removal with its own nominees. The certificate of incorporation
also provides that directors may be removed by stockholders only
for cause. Since the board of directors has the power to retain
and discharge our officers, these provisions could also make it
more difficult for existing stockholders or another party to
effect a change in management.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stockholder Action; Special Meeting of
Stockholders.</FONT></I><FONT size="2"> Our amended and restated
certificate of incorporation eliminates the ability of
stockholders to act by written consent, provided that holders of
preferred stock may vote by written consent to the extent
expressly provided in any certificate of designation authorizing
issuance of a particular series of preferred stock. It also
provides that special meetings of our stockholders may be called
only by the chairman of our board of directors, our chief
executive officer, our president or a majority of our directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Advance Notice Requirements for Stockholder
Proposals and Directors Nominations.</FONT></I><FONT size="2">
Our amended and restated bylaws provides that stockholders
seeking to bring business before an annual meeting of
stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide
timely notice in writing. To be timely, a stockholder&#146;s
notice must be delivered to or mailed and received at our
principal executive offices not more than 120&nbsp;days or less
than 90&nbsp;days prior to the anniversary date of the
immediately preceding annual meeting of stockholders or between
December&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2004 and
January&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2005 in the case of
the 2005 annual meeting. However, in the event that no annual
meeting was held in the previous year or the annual meeting is
called for a date that is not within 30&nbsp;days before or
after such anniversary date, notice by the stockholder in order
to be timely must be received not later than the close of
business on the 10th&nbsp;day following the date on which notice
of the date of the annual meeting was mailed to stockholders or
made public, whichever first occurs. Our amended and restated
bylaws also specify requirements as to the form and content of a
stockholder&#146;s notice. These provisions may preclude
stockholders from bringing matters before an annual meeting of
stockholders or from making nominations for directors at an
annual meeting of stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Authorized But Unissued
Shares.</FONT></I><FONT size="2"> Our authorized but unissued
shares of common stock and preferred stock are available for
future issuance without stockholder approval. These additional
shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence
of authorized but unissued shares of common stock and preferred
stock could render more difficult or discourage an attempt to
obtain control of Build-A-Bear by means of a proxy contest,
tender offer, merger or otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Amendments; Supermajority Vote
Requirements.</FONT></I><FONT size="2"> The Delaware General
Corporation Law provides generally that the affirmative vote of
a majority of the shares entitled to vote on any matter is
required to
</FONT>

<P align="center"><FONT size="2">78
</FONT>

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<DIV align="left">
<FONT size="2">amend a corporation&#146;s certificate of
incorporation or bylaws, unless either a corporation&#146;s
certificate of incorporation or bylaws require a greater
percentage. Our amended and restated certificate of
incorporation requires the affirmative vote of more than 80% of
our capital stock in connection with the amendment of certain
provisions, including those relating to (1)&nbsp;the classified
board of directors and related director matters, (2)&nbsp;the
ability of stockholders to act by written consent or call
special meetings, (3)&nbsp;limitations of liability of
directors, (4)&nbsp;indemnification of our directors, officers,
employees and agents and (5)&nbsp;the amendment of our amended
and restated bylaws.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stockholder Rights
Plan.</FONT></I><FONT size="2"> We are considering the adoption
of a stockholder rights plan. Such a plan would allow for the
issuance of a dividend to stockholders of rights to acquire our
shares or, under certain circumstances, an acquiring
corporation, at less than their fair market value. These rights
would have certain anti-takeover effects by potentially causing
substantial dilution to a person or group that attempts to
acquire us.
</FONT>

<P align="left">
<B><FONT size="2">Listing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to apply for the listing of our common
stock on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under
the symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Transfer Agent and Registrar</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The transfer agent and registrar for our common
stock will
be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
Its address
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
and its telephone number
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="center"><FONT size="2">79
</FONT>

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<DIV align="left">
<A name='114'></A>
</DIV>

<!-- link1 "SHARES ELIGIBLE FOR FUTURE SALE" -->

<P align="center">
<B><FONT size="2">SHARES ELIGIBLE FOR FUTURE SALE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, we will
have &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock outstanding based on shares outstanding as
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004. Of these shares,
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
sold in this offering will be freely transferable without
restriction under the Securities Act, unless they are held by
our &#147;affiliates&#148; as that term is used under the
Securities Act and the regulations promulgated thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Of these shares, the
remaining &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
were sold by us in reliance on exemptions from the registration
requirements of the Securities Act, are restricted securities
within the meaning of Rule&nbsp;144 under the Securities Act and
become eligible for sale in the public market as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">beginning 90&nbsp;days after the effective
    date, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    will become eligible for sale subject to the provisions of
    Rules&nbsp;144 and 701;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">beginning 180&nbsp;days after the date of this
    prospectus, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
    shares will become eligible for sale, subject to the provisions
    of Rule&nbsp;144, Rule&nbsp;144(k) or Rule&nbsp;701, upon the
    expiration of agreements not to sell such shares entered into
    between the underwriters and such stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the offering, the holders
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock will be entitled to rights with respect to
the registration of their shares under the Securities Act.
Registration of these shares under the Securities Act would
result in these shares becoming freely tradeable without
restriction under the Securities Act, except for shares
purchased by affiliates, immediately upon the effectiveness of
this registration. For more information on these registration
rights, see &#147;Description of Capital Stock&nbsp;&#151;
Registration Rights.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to certain exceptions, beginning
180&nbsp;days after the date of this
prospectus, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares subject to vested options as of the date of completion of
this offering will be available for sale subject to compliance
with Rule&nbsp;701 and upon the expiration of agreements not to
sell such shares entered into between the underwriters and such
stockholders. Any shares subject to lock-up agreements may be
released at any time without notice by the underwriters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, under Rule&nbsp;144 as currently in
effect, a person, or persons whose shares are aggregated,
including an affiliate, who has beneficially owned restricted
shares for at least one year is entitled to sell, within any
three-month period commencing 90&nbsp;days after the date of
completion of this offering, a number of shares that does not
exceed the greater of 1% of the then outstanding shares of
common stock,
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
immediately after this offering, or the average weekly trading
volume in the common stock during the four calendar weeks
preceding such sale, subject to the filing of a Form&nbsp;144
with respect to such sale and certain other limitations and
restrictions. In addition, a person who is not deemed to have
been an affiliate of our company at any time during the
90&nbsp;days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years, would be
entitled to sell such shares under Rule&nbsp;144(k) without
regard to the requirements described above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any of our employees, officers, directors or
consultants who purchased his or her shares before the date of
completion of this offering or who holds vested options as of
that date pursuant to a written compensatory plan or contract is
entitled to rely on the resale provisions of Rule&nbsp;701,
which permits non-affiliates to sell their
Rule&nbsp;701&nbsp;shares without having to comply with the
public-information, holding-period, volume-limitation or notice
provisions of Rule&nbsp;144 and permits affiliates to sell their
Rule&nbsp;701&nbsp;shares without having to comply with
Rule&nbsp;144&#146;s holding-period restrictions, in each case
commencing 90&nbsp;days after the date of completion of this
offering. However, we and certain officers, directors and other
stockholders have agreed not to sell or otherwise dispose of any
shares of our common stock for the 180-day period after the date
of this prospectus, subject to extension in certain
circumstances without the prior written consent of the
underwriters. See &#147;Underwriting.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to file a registration statement on
Form&nbsp;S-8 under the Securities Act to register shares of
common stock reserved for issuance under our 2000 Stock Option
Plan, our 2002 Stock Incentive Plan and our 2004 Stock Incentive
Plan, thus permitting the resale of such shares by
non-affiliates in the public
</FONT>

<P align="center"><FONT size="2">80
</FONT>

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<DIV align="left">
<FONT size="2">market without restriction under the Securities
Act. Such registration statements will become effective
immediately upon filing.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Before this offering, there has been no public
market for our common stock, and any sale of substantial amounts
in the open market may adversely affect the market price of our
common stock offered hereby.
</FONT>

<P align="center"><FONT size="2">81
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='115'></A>
</DIV>

<!-- link1 "UNDERWRITING" -->

<P align="center">
<B><FONT size="2">UNDERWRITING</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms and subject to the conditions
contained in an underwriting agreement
dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
we and the selling stockholders have agreed to sell to the
underwriters named below, for whom Credit Suisse First Boston
LLC and Citigroup Global Markets Inc. are acting as
representatives the following respective numbers of shares of
common stock:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap>&nbsp;<B><FONT size="1">Underwriter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Credit Suisse First Boston LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Citigroup Global Markets Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">J.P.&nbsp;Morgan Securities Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">A.G. Edwards&nbsp;&#38; Sons, Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas Weisel Partners LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriting agreement provides that the
underwriters are obligated to purchase all the shares of common
stock in the offering if any are purchased, other than those
shares covered by the over-allotment option described below. The
underwriting agreement also provides that if an underwriter
defaults the purchase commitments of non-defaulting underwriters
may be increased or the offering may be terminated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain selling stockholders have granted to the
underwriters a 30-day option to purchase up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares from the selling stockholders at the initial public
offering price less the underwriting discounts and commissions.
The option may be exercised only to cover any over-allotments of
common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters propose to offer the shares of
common stock initially at the public offering price on the cover
page of this prospectus and to selling group members at that
price less a selling concession of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. The underwriters and selling group members may allow a
discount of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share on sales to other broker/ dealers. After the initial
public offering the representatives may change the public
offering price and concession and discount to broker/ dealers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the compensation
and estimated expenses we will pay:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Without</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">With</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Without</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">With</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Over-allotment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Over-allotment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Over-allotment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Over-allotment</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting Discounts and Commissions paid by us
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expenses payable by us
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting Discounts and Commissions paid by
    selling stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expenses payable by the selling stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The representatives have informed us and the
selling stockholders that they do not expect sales to accounts
over which the underwriters have discretionary authority to
exceed 5% of the shares of common stock being offered. The
underwriters will not confirm sales to any accounts over which
they exercise discretionary authority without first receiving a
written consent from those accounts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed that we will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Securities and Exchange Commission
a registration statement under the Securities Act relating to,
any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock,
or publicly disclose the intention to make any offer, sale,
pledge, disposition or filing, without the prior written consent
of the representatives for a period of
</FONT>

<P align="center"><FONT size="2">82
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">180&nbsp;days after the date of this prospectus,
except issuances pursuant to the exercise of employee stock
options outstanding on the date hereof.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our officers and directors and the selling
stockholders have agreed that they will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or
indirectly, any shares of our common stock or securities
convertible into or exchangeable or exercisable for any shares
of our common stock, enter into a transaction that would have
the same effect, or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of our common stock, whether
any of these transactions are to be settled by delivery of our
common stock or other securities, in cash or otherwise, or
publicly disclose, unless required by law, the intention to make
any offer, sale, pledge or disposition, or to enter into any
transaction, swap, hedge or other arrangement, without, in each
case, the prior written consent of the representatives for a
period of 180&nbsp;days after the date of this prospectus.
Notwithstanding the foregoing, our officers, directors and
selling stockholders may pledge shares of our common stock in
connection with a bona fide loan transaction in which the pledge
acknowledges in writing to be bound by the foregoing obligations
and which pledge does not permit the pledgee to offer, sell
contract to sell, pledge or otherwise dispose of, directly or
indirectly, any shares of our common stock, enter into a
transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of the
common stock. However, in the event that either (1)&nbsp;during
the last 17&nbsp;days of the &#147;lock-up&#148; period, we
release earnings results or material news or a material event
relating to us occurs, or (2)&nbsp;prior to the expiration of
the &#147;lock-up&#148; period, we announce that we will release
earnings during the 16-day period beginning on the last day of
the lock-up period, in either case, the expiration of the
&#147;lock-up&#148; period will be extended until the expiration
of the 18-day period beginning on the date of the release of the
earnings reports or the occurrence of the material news or
events, as applicable, unless the representatives waive, in
writing, such an extension.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and the selling stockholders have agreed to
indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments that the underwriters
may be required to make in that respect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to apply to list the shares of common
stock on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under
the symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the listing of the common
stock on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
the underwriters will undertake to sell round lots of
100&nbsp;shares or more to a minimum
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;beneficial
owners.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the future, the underwriters may provide
investment banking services to us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there has been no public
market for the common stock. The initial public offering price
will be determined by negotiations among us, the selling
stockholders and the representatives. Among the factors to be
considered in determining the initial public offering price will
be the future prospects of our company and our industry in
general, sales, earnings and certain other financial and
operating information of our company in recent periods, and the
price-earnings ratios, comparable sales, market prices of our
securities and certain financial and operating information of
companies engaged in activities similar to those of our company.
The estimated initial public offering price range set forth on
the cover page of this preliminary prospectus is subject to
change as a result of market conditions and other factors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the offering the underwriters
may engage in stabilizing transactions, over-allotment
transactions, syndicate covering transactions, penalty bids and
passive market making in accordance with Regulation&nbsp;M under
the Exchange Act.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Stabilizing transactions permit bids to purchase
    the underlying security so long as the stabilizing bids do not
    exceed a specified maximum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Over-allotment involves sales by the underwriters
    of shares in excess of the number of shares the underwriters are
    obligated to purchase, which creates a syndicate short position.
    The short position may be either a covered short position or a
    naked short position. In a covered short position, the number of
    shares over-allotted by the underwriters is not greater than the
    number of shares that
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">83
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">they may purchase in the over-allotment option.
    In a naked short position, the number of shares involved is
    greater than the number of shares in the over-allotment option.
    The underwriters may close out any covered short position by
    either exercising their over-allotment option and/or purchasing
    shares in the open market.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Syndicate covering transactions involve purchases
    of the common stock in the open market after the distribution
    has been completed in order to cover syndicate short positions.
    In determining the source of shares to close out the short
    position, the underwriters will consider, among other things,
    the price of shares available for purchase in the open market as
    compared to the price at which they may purchase shares through
    the over-allotment option. If the underwriters sell more shares
    than could be covered by the over- allotment option, a naked
    short position, the position can only be closed out by buying
    shares in the open market. A naked short position is more likely
    to be created if the underwriters are concerned that there could
    be downward pressure on the price of the shares in the open
    market after pricing that could adversely affect investors who
    purchase in the offering.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Penalty bids permit the representatives to
    reclaim a selling concession from a syndicate member when the
    common stock originally sold by the syndicate member is
    purchased in a stabilizing or syndicate covering transaction to
    cover syndicate short positions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In passive market making, market makers in the
    common stock who are underwriters or prospective underwriters
    may, subject to limitations, make bids for or purchases of our
    common stock until the time, if any, at which a stabilizing bid
    is made.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These stabilizing transactions, syndicate
covering transactions and penalty bids may have the effect of
raising or maintaining the market price of our common stock or
preventing or retarding a decline in the market price of the
common stock. As a result the price of our common stock may be
higher than the price that might otherwise exist in the open
market. These transactions may be effected on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or
otherwise and, if commenced, may be discontinued at any time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A prospectus in electronic format will be made
available on the websites maintained by one or more of the
underwriters, or selling group members, if any, participating in
this offering and one or more of the underwriters participating
in this offering may distribute prospectuses electronically. The
representatives may agree to allocate a number of shares to
underwriters and selling group members for sale to their online
brokerage account holders. Internet distributions will be
allocated by the underwriters and selling group members that
will make internet distributions on the same basis as other
allocations.
</FONT>

<P align="center"><FONT size="2">84
</FONT>

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<DIV align="left">
<A name='116'></A>
</DIV>

<!-- link1 "NOTICE TO CANADIAN RESIDENTS" -->

<P align="center">
<B><FONT size="2">NOTICE TO CANADIAN RESIDENTS</FONT></B>

<P align="left">
<B><FONT size="2">Resale Restrictions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The distribution of the shares of our common
stock in Canada is being made only on a private placement basis
exempt from the requirement that we and the selling stockholders
prepare and file a prospectus with the securities regulatory
authorities in each province where trades of common stock are
made. Any resale of the shares of our common stock in Canada
must be made under applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require
resales to be made under available statutory exemptions or under
a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek
legal advice prior to any resale of the shares of our common
stock.
</FONT>

<P align="left">
<B><FONT size="2">Representations of Purchasers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">By purchasing shares of our common stock in
Canada and accepting a purchase confirmation a purchaser is
representing to us, the selling stockholders and the dealer from
whom the purchase confirmation is received that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the purchaser is entitled under applicable
    provincial securities laws to purchase the common stock without
    the benefit of a prospectus qualified under those securities
    laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">where required by law, that the purchaser is
    purchasing as principal and not as agent;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the purchaser has reviewed the text above under
    Resale Restrictions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Rights of Action&nbsp;&#151; Ontario
Purchasers Only</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Ontario securities legislation, a purchaser
who purchases a security offered by this prospectus during the
period of distribution will have a statutory right of action for
damages, or while still the owner of the shares of our common
stock, for rescission against us and the selling stockholders in
the event that this prospectus contains a misrepresentation. A
purchaser will be deemed to have relied on the
misrepresentation. The right of action for damages is
exercisable not later than the earlier of 180&nbsp;days from the
date the purchaser first had knowledge of the facts giving rise
to the cause of action and three years from the date on which
payment is made for the shares of our common stock. The right of
action for rescission is exercisable not later than
180&nbsp;days from the date on which payment is made for the
shares of our common stock. If a purchaser elects to exercise
the right of action for rescission, the purchaser will have no
right of action for damages against us or the selling
stockholders. In no case will the amount recoverable in any
action exceed the price at which the shares of our common stock
were offered to the purchaser and if the purchaser is shown to
have purchased the securities with knowledge of the
misrepresentation, we and the selling stockholders, will have no
liability. In the case of an action for damages, we and the
selling stockholders, will not be liable for all or any portion
of the damages that are proven to not represent the depreciation
in value of the shares of our common stock as a result of the
misrepresentation relied upon. These rights are in addition to,
and without derogation from, any other rights or remedies
available at law to an Ontario purchaser. The foregoing is a
summary of the rights available to an Ontario purchaser. Ontario
purchasers should refer to the complete text of the relevant
statutory provisions.
</FONT>

<P align="left">
<B><FONT size="2">Enforcement of Legal Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of our directors and officers as well as the
experts named herein and the selling stockholders may be located
outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada
upon us or those persons. All or a substantial portion of our
assets and the assets of those persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a
judgment against us or those persons in Canada or to enforce a
judgment obtained in Canadian courts against us or those persons
outside of Canada.
</FONT>

<P align="center"><FONT size="2">85
</FONT>

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<P align="left">
<B><FONT size="2">Taxation and Eligibility for
Investment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Canadian purchasers of share of our common stock
should consult their own legal and tax advisors with respect to
the tax consequences of an investment in the common stock in
their particular circumstances and about the eligibility of the
shares of our common stock for investment by the purchaser under
relevant Canadian legislation.
</FONT>

<DIV align="left">
<A name='117'></A>
</DIV>

<!-- link1 "LEGAL MATTERS" -->

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bryan Cave LLP, St.&nbsp;Louis, Missouri, is
counsel for Build-A-Bear Workshop, Inc. in connection with the
offering. Certain partners of Bryan Cave LLP own interests in
investment funds that own shares of our preferred stock.
Shearman&nbsp;&#38; Sterling LLP, New York, New York, is counsel
for the underwriters in connection with the offering.
</FONT>

<DIV align="left">
<A name='118'></A>
</DIV>

<!-- link1 "EXPERTS" -->

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements of
Build-A-Bear Workshop, Inc. as of December&nbsp;28, 2002 and
January&nbsp;3, 2004, and for each of the years in the
three-year period ended January&nbsp;3, 2004, have been included
herein and in the registration statement in reliance upon the
report of KPMG, LLP, independent registered public accountants,
appearing elsewhere herein, and upon the authorization of said
firm as experts in accounting and auditing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;2(q) to the
consolidated financial statements, the Company adopted
<I>Emerging Issues Task Force Issue No.&nbsp;03-6, Participating
Securities and the Two-Class Method under FASB Statement
No.&nbsp;128, Earnings Per Share.</I>
</FONT>

<DIV align="left">
<A name='119'></A>
</DIV>

<!-- link1 "CHANGE OF INDEPENDENT PUBLIC ACCOUNTANTS" -->

<P align="center">
<B><FONT size="2">CHANGE OF INDEPENDENT PUBLIC
ACCOUNTANTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2002, we dismissed our independent public
accountants, Arthur Andersen LLP, and retained KPMG LLP to act
as our independent auditors. Arthur Andersen LLP had been our
independent public accountants since 2000. In connection with
Arthur Andersen LLP&#146;s audit of the consolidated financial
statements for the fiscal years 1999, 2000, and 2001 (not
included herein), and in connection with the subsequent period
up to their dismissal, there were no disagreements with Arthur
Andersen LLP on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or
procedures which, if not resolved to Arthur Andersen LLP&#146;s
satisfaction, would have caused them to make reference to the
subject matter in connection with their report on our
consolidated financial statements for such years; and there were
no reportable events as set forth in applicable SEC regulations.
Arthur Andersen LLP&#146;s report on our consolidated financial
statements for the two fiscal years in the period ended
December&nbsp;29, 2001 contained no adverse opinion or
disclaimer of opinion and was not modified or qualified as to
uncertainty, audit scope or accounting principles. The decision
to change auditors was unanimously approved by our board of
directors, including all of the members of our audit committee.
Prior to the dismissal of Arthur Andersen LLP, we had not
consulted with KPMG LLP on any accounting matters. Because
Arthur Andersen is no longer operating, we cannot obtain a
letter from them regarding their agreement with the above
statements.
</FONT>

<DIV align="left">
<A name='120'></A>
</DIV>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed with the SEC a registration
statement on Form&nbsp;S-1 (including exhibits, schedules and
amendments) under the Securities Act with respect to the shares
of common stock to be sold in this offering. This prospectus
does not contain all the information set forth in the
registration statement. For further information with respect to
us and the shares of common stock to be sold in this offering,
please refer to the registration statement. Statements contained
in this prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete.
Whenever a reference is made in this prospectus to any contract
or other document of ours, the reference may not be complete,
</FONT>

<P align="center"><FONT size="2">86
</FONT>

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<DIV align="left">
<FONT size="2">and you should refer to the exhibits that are a
part of the registration statement for a copy of the contract or
document.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may read and copy all or any portion of the
registration statement or any other information that
Build-A-Bear Workshop, Inc. files at the SEC&#146;s public
reference room at 450&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549. You can request copies of these
documents, upon payment of a duplicating fee, by writing to the
SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Our
SEC filings, including the registration statement, are also
available to you on the SEC&#146;s website at <I>www.sec.gov</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of this offering, we will become
subject to the information and reporting requirements of the
Exchange Act, and, in accordance with those requirements, will
file periodic reports, proxy statements and other information
with the SEC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus includes statistical data that
were obtained from industry publications. These industry
publications generally indicate that the authors of these
publications have obtained information from sources believed to
be reliable, but do not guarantee the accuracy and completeness
of their information. While we believe these industry
publications to be reliable, we have not independently verified
their data.
</FONT>

<P align="center"><FONT size="2">87
</FONT>

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<P align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>

<P align="left">
<A name='121'></A>

<!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center">
<B><FONT size="2">INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Report of Independent Registered Public
    Accounting Firm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Balance Sheets as of
    December&nbsp;28, 2002, January&nbsp;3, 2004, and July&nbsp;3,
    2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Operations for the
    years ended December&nbsp;29, 2001, December&nbsp;28, 2002, and
    January&nbsp;3, 2004, and the twenty-six weeks ended
    June&nbsp;28, 2003 (unaudited) and July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Stockholders&#146;
    Equity for the years ended December&nbsp;29, 2001,
    December&nbsp;28, 2002, and January&nbsp;3, 2004, and for the
    twenty-six weeks ended July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Cash Flows for the
    years ended December&nbsp;29, 2001, December&nbsp;28, 2002, and
    January&nbsp;3, 2004, and for the twenty-six weeks ended
    June&nbsp;28, 2003 (unaudited) and July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Consolidated Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-1
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</FONT></B>

<P align="left">
<FONT size="2">The Board of Directors
</FONT>

<DIV align="left">
<FONT size="2">Build-A-Bear Workshop, Inc.:
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheets of Build-A-Bear Workshop, Inc. and subsidiaries
(the Company) as of December&nbsp;28, 2002 and January&nbsp;3,
2004, and the related consolidated statements of operations,
stockholders&#146; equity and cash flows for each of the years
in the three-year period ended January&nbsp;3, 2004. These
consolidated financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Build-A-Bear Workshop, Inc.
and subsidiaries as of December&nbsp;28, 2002 and
January&nbsp;3, 2004, and the results of their operations and
their cash flows for each of the years in the three-year period
ended January&nbsp;3, 2004, in conformity with accounting
principles generally accepted in the United States of America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;2(q) to the
consolidated financial statements, the Company adopted
<I>Emerging Issues Task Force Issue No.&nbsp;03-6, Participating
Securities and the Two-Class Method under FASB
Statement&nbsp;No. 128, Earnings Per Share.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="20%"></TD>
    <TD width="80%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I><FONT size="2">/s/ KPMG LLP</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">St.&nbsp;Louis, Missouri</FONT></I>

<DIV align="left">
<I><FONT size="2">March&nbsp;5, 2004, except as to</FONT></I>
</DIV>

<DIV align="left">
<I><FONT size="2">&nbsp;&nbsp;Note&nbsp;2(q) and Note 11
which</FONT></I>
</DIV>

<DIV align="left">
<I><FONT size="2">&nbsp;&nbsp;are as of August&nbsp;10,
2004</FONT></I>
</DIV>

<P align="center"><FONT size="2">F-2
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January 3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July 3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July 3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note 2)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="21" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,865,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,600,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,314,553</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,570,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,572,627</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,948,342</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivable for tenant allowances
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,664,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,678,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,329,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,602,841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,261,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,135,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,703,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,113,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,728,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,071,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,358,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,535,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,918,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,492,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,569,928</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total Assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,693,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,964,258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,833,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="21" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND STOCKHOLDERS&#146;
    EQUITY</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,704,138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,187,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,456,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,277,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,769,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,940,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,909,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,432,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,675,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,890,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,388,770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,072,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">984,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,957,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,863,681</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">876,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">803,356</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,367,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,311,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,491,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock, par value $0.01. Authorized
    25,000,000, 25,000,000, and 25,000,000 shares, respectively;
    issuable in series:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Redeemable preferred stock, at redemption price:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A convertible, issued and outstanding
    1,061,986 shares (liquidation value of $7,154,986, $7,574,986,
    and $7,784,986, respectively)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,093,339</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,532,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,751,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;B convertible, issued and outstanding
    1,604,680 shares (liquidation value of $6,000,006)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,938,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,957,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,966,806</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;D convertible, issued and outstanding
    3,467,337 shares (liquidation value of $22,990,634, $24,471,187,
    and $25,211,445, respectively)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,888,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,400,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,156,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,919,822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,889,849</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,874,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock, par value $0.01. Authorized
    25,000,000, 25,000,000, and 25,000,000 shares, respectively;
    issuable in series:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nonredeemable preferred stock, at par value:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A convertible, issued and outstanding
    2,444,966 shares
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;B convertible, issued and outstanding
    2,039,427 shares
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;C convertible, issued and outstanding
    4,998,089, 4,998,089, and 4,949,125&nbsp;shares, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock, par value $0.01. Authorized
    25,000,000, 25,000,000, and 25,000,000 shares, respectively;
    issued and outstanding 217,519, 217,519, and 419,156 shares,
    respectively and 17,735,689 (pro&nbsp;forma)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177,356</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,094,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,099,751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,062,464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,858,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,334,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,342,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,567,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,567,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,526,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,539,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,728,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,602,941</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total Liabilities and Stockholder&#146;s equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,693,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,964,258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,833,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,833,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro forma for</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma for</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">the Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">the 26 weeks</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26 weeks ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January 3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January 3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June 28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July 3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July 3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center"><B><FONT size="1">(Unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center"><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note 2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note 2)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Revenues:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net retail sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">106,621,737</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">169,122,692</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">213,427,099</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">92,487,983</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">135,419,739</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Franchise fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">15,625</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">244,447</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">95,337</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">306,979</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">106,621,737</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">169,138,317</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">213,671,546</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">92,583,320</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">135,726,718</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Costs of merchandise sold
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">56,708,261</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">90,848,059</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">116,514,872</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51,928,954</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">70,146,290</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Selling, general, and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">41,099,646</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65,628,680</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">81,090,890</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">36,084,130</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48,632,406</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Store preopening
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,123,601</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,090,667</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,044,745</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,491,077</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">579,976</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,006,220</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Litigation settlement
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,550,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">207,128</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">77,091</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,119</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest income
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(142,822</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(165,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(71,462</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(54,533</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(98,501</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">103,552,034</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">159,479,321</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">200,592,164</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">89,449,628</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">119,260,171</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income before minority interest and income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,069,703</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,658,996</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,079,382</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,133,692</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,466,547</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">122,500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,192,203</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,658,996</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,079,382</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,133,692</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,466,547</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,286,789</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,790,456</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,100,958</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,284,814</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,257,288</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,905,414</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,868,540</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,978,424</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,978,424</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,848,878</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,209,259</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,209,259</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cumulative dividends and accretion of redeemable
    preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">824,307</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,970,871</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,970,027</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">985,018</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">985,018</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cumulative dividends of nonredeemable preferred
    stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">455,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">455,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">455,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">227,675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">227,675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income available to common stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">625,757</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,442,319</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,553,047</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,978,424</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">636,185</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,996,566</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,209,259</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Earnings per common share:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.35</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.57</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.46</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.92</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.58</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.32</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.45</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.44</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.57</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.57</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Shares used in computing common per share amounts:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,534,052</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">217,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">284,731</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,601,264</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,101,143</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,055,458</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,546,348</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,006,473</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,367,692</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,938,328</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,031,756</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146;
EQUITY</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Nonredeemable preferred</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Additional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">paid-in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Retained</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class C</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">capital</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">earnings</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;30, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,094,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,355,673</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,547,524</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Record cumulative dividends and accretion of
    redeemable preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(824,307</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(824,307</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,905,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,905,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;29, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,094,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,436,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,628,631</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Record cumulative dividends and accretion of
    redeemable preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,970,871</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,970,871</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,868,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,868,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,094,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,334,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,526,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Record cumulative dividends and accretion of
    redeemable preferred stock (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,970,027</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,970,027</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, January&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,099,751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,342,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,539,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Record cumulative dividends and accretion of
    redeemable preferred stock (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(985,018</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(985,018</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercise of stock options in exchange for
    outstanding shares, net of tax benefit (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(490</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(37,287</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(35,761</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,062,464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,567,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,728,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">26 weeks ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December 28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January 3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June 28, 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July 3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows from operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,905,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,868,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,848,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net income to net cash
    from operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,588,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,775,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,065,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,938,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,030,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">431,699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,607,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,619,419</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">628,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(525,676</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on disposal of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,006,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(122,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stock-based compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in current assets and liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,937,679</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,037,918</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,002,303</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42,271</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,375,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">504,177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(632,402</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,333,258</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">230,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(374,354</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,201,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,748,466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,483,212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,235,948</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(730,463</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued expenses and other liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,904,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,334,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,864,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,435,971</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,322,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by (used in) operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,482,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,663,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,214,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,003,745</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,808,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows from investing activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,624,454</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,718,286</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,362,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,338,465</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,437,951</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,721,936</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,574,631</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,917,808</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(638,997</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(657,312</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of minority interest in subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(200,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(200,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,280,240</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,231,667</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,480,038</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,177,462</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,095,263</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows from financing activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payments of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,768,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(106,077</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net proceeds (costs)&nbsp;from sale of redeemable
    preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,024,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,187</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by (used in) financing
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,255,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(121,264</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net increase (decrease) in cash and cash
    equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,457,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,689,349</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,734,902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,181,207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,713,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,097,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,555,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,865,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,865,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,600,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,555,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,865,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,600,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,684,754</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,314,553</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Supplemental disclosure of cash flow information:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash paid during the year for:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,119</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,125,367</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,336,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,249,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,234,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,852,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Noncash transaction:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative dividends and accretion of redeemable
    preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">824,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,970,871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,970,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">985,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">985,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(1)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Description of Business</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Build-A-Bear Workshop, Inc. (the Company) is a
specialty retailer of plush animals and related products. At
January&nbsp;3, 2004, the Company operated 150 stores
(unaudited)&nbsp;located in the United States and Canada and an
Internet store. The Company was formed in September 1997 and
began operations in October 1997. The Company changed to a
Delaware C Corporation on April&nbsp;3, 2000. The Company
previously operated as a Missouri Limited Liability Company
(LLC).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company and a third party formed
Build-A-Bear Entertainment, LLC (BABE)&nbsp;for the purpose of
promoting the Build-A-Bear brand and characters of the Company
through certain entertainment media. Prior to February 2003, the
Company owned 51% and was the managing member. On
February&nbsp;10, 2003, the Company purchased for $200,000 the
49% minority interest in BABE, which then became a wholly owned
subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the Company formed Build-A-Bear
Workshop Franchise Holdings, Inc. (Holdings) for the purpose of
entering into franchise agreements with companies in foreign
countries other than Canada. Holdings is a wholly owned
subsidiary of the Company. In 2002 and 2003, Holdings signed
franchise agreements with third parties to open Build-A-Bear
Workshop stores in Japan, the United Kingdom, Korea, Denmark,
and France. For each of the franchise agreements, Holdings
received a one-time, nonrefundable fee that has been deferred
and is being amortized over the life of the respective franchise
agreement. Holdings will also receive a percentage of all sales
by the franchisees. As of January&nbsp;3, 2004, one Build-A-Bear
Workshop store had been opened in the United Kingdom.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the Company formed Build-A-Bear
Workshop Canada Ltd. (BAB Canada) for the purpose of operating
Build-A-Bear Workshop stores in Canada. BAB Canada is a wholly
owned subsidiary of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003, the Company formed Build-A-Bear
Retail Management, Inc. (BABRM)&nbsp;for the purpose of
providing purchasing, legal, information technology, accounting,
and other general management services for Build-A-Bear Workshop
stores. BABRM is a wholly owned subsidiary of the Company.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(2)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Summary of Significant Accounting
    Policies</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of the Company&#146;s significant
accounting policies applied in the preparation of the
accompanying consolidated financial statements follows:
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(a)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Principles of Consolidation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying consolidated financial
statements include the accounts of Build-A-Bear Workshop, Inc.
and its wholly owned subsidiaries, Shirts Illustrated, L.L.C.,
Holdings, BAB Canada, BABE, and BABRM. All significant
intercompany accounts are eliminated in consolidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain reclassifications were made to prior
years&#146; financial statements to be consistent with the
fiscal year 2003 presentation.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(b)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Pro Forma Presentation
    (unaudited)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated balance sheet as of July&nbsp;3,
2004 reflects the pro forma effect of the mandatory conversion
of all outstanding preferred stock into shares of common stock.
The consolidated statements of operations for the year ended
January&nbsp;3, 2004 and the 26&nbsp;weeks ended July&nbsp;3,
2004 reflect the pro forma effect of the mandatory conversion of
all the outstanding preferred stock into shares of common stock
upon
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">the consummation of a qualified initial public
offering as if such conversion had occurred as of
December&nbsp;29, 2002 and January&nbsp;4, 2004 respectively.
The conversion ratio assumes the number of shares to be issued
upon the conversion of the outstanding preferred stock based
upon our Amended and Restated Certificate of Incorporation
effective on August&nbsp;10, 2004, or 17,316,533 shares (see
note&nbsp;18).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pro forma basic earnings per common share is
computed by dividing net income by the weighted average number
of shares of common stock outstanding during each period
presented plus the maximum number of shares to be issued upon
the conversion of the preferred stock. Pro forma diluted
earnings per share is computed similarly to pro forma basic
earnings per share, except that the denominator is increased for
the assumed conversion of dilutive stock options using the
treasury stock method.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(c)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Fiscal Year</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company operates on a 52- or 53-week fiscal
year ending on the Saturday closest to December&nbsp;31. Fiscal
years 2001, 2002, and 2003 ended on December&nbsp;29, 2001,
December&nbsp;28, 2002, and January&nbsp;3, 2004, respectively.
Fiscal years 2001 and 2002 included 52&nbsp;weeks and fiscal
year 2003 included 53&nbsp;weeks. References to years in these
financial statements relate to fiscal years or year ends rather
than calendar years.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(d)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Cash and Cash Equivalents</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash and cash equivalents include cash and
short-term highly liquid investments with original maturities of
three months or less.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The majority of the Company&#146;s cash and cash
equivalents exceed federal deposit insurance limits. The Company
has not experienced any losses in such accounts and management
believes that the Company is not exposed to any significant
credit risk on cash and cash equivalents.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(e)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Inventories</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventories are stated at the lower of cost or
market, with cost determined on an average-cost basis.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(f)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Property and Equipment</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment consist of leasehold
improvements, furniture and fixtures, and computer equipment and
are stated at cost. Leasehold improvements are depreciated using
the straight-line method over the life of the lease or the
useful life of the assets, whichever is shorter. Furniture and
fixtures and computer equipment are depreciated using the
straight-line method over the estimated service lives ranging
from three to seven years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of its lease agreements, the Company
receives certain tenant allowances. Tenant allowances to be
received have been recorded as a receivable for tenant
allowances and as a reduction in property and equipment on the
consolidated balance sheets.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(g)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Other Assets</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other assets consist primarily of costs related
to trademarks and other intellectual property and deferred
leasing fees. Trademarks and other intellectual property
represent third-party costs that are capitalized and amortized
over their estimated lives of three years using the
straight-line method. Deferred
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">leasing fees are initial, direct costs related to
the Company&#146;s operating leases and are amortized over the
useful life of the lease.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(h)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Long-lived Assets</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If facts and circumstances indicate that a
long-lived asset may be impaired, the carrying value is
reviewed. If this review indicates that the carrying value of
the asset will not be recovered, as determined based on
projected undiscounted cash flows related to the asset over its
remaining life, the carrying value of the asset is reduced to
its estimated fair value.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(i)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Accrued Rent</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain of the Company&#146;s operating leases
contain predetermined fixed escalations of minimum rentals
during the original lease terms. For these leases, the Company
recognizes the related rental expense on a straight-line basis
over the life of the lease and records the difference between
the amounts charged to operations and amounts paid as accrued
rent.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(j)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Franchises</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company defers initial, one-time
nonrefundable franchise fees and amortizes them over the life of
the respective franchise agreements. Continuing franchise fees
are recognized as revenue as the fees are earned. The Company
defers direct and incremental costs incurred with third parties
when entering into franchise agreements and amortizes them over
the life of the respective franchise agreements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(k)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Retail Revenue Recognition</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net retail sales are net of discounts, exclude
sales tax, and are recognized at the time of sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from the sale of gift certificates are
recognized at the time of redemption. Unredeemed gift
certificates are included in accrued expenses on the
consolidated balance sheets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a frequent shopper program for
its U.S.&nbsp;stores whereby customers who purchase $100 of
merchandise receive a card for $10 off a future purchase. An
estimate, based on historical redemption rates, of the amount of
revenue to be deferred related to this program is recorded at
the time of each purchase as a reduction of net retail sales.
The deferred revenue is included in other current liabilities on
the consolidated balance sheets and is recognized as net retail
sales at the time the card is presented for redemption.
Management evaluates the redemption rate under this program
through the use of frequent shopper cards which have an
expiration date after which the frequent purchase discount would
not have to be honored. Management reviews these redemption
rates and assesses the adequacy of the deferred revenue account
at the end of each second quarter and each fiscal year. Based on
this assessment at the end of fiscal 2003, the deferred revenue
account was determined to be overstated and was adjusted
downward by $1.1&nbsp;million with a corresponding increase to
net retail sales, an increase in net income of
$0.7&nbsp;million, and an increase in basic earnings per share
of $0.07 for the year ended January&nbsp;3, 2004. Additionally,
the amount of revenue being deferred beginning in fiscal 2004
was decreased by 0.2% to give effect to the change in redemption
experience resulting in an increase in net retail sales of
$275,000, an increase in net income of $173,000 and an increase
in basic earnings per share of $0.02 for the twenty-six weeks
ended July&nbsp;3, 2004.
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(l)</I></FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Costs of Merchandise Sold</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs of merchandise sold include the cost of the
merchandise, store occupancy cost, including store depreciation,
freight costs from the manufacturer to the store, cost of
warehousing and distribution, packaging, and damages and
shortages.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Selling, General, and Administrative
    Expenses</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Selling, general, and administrative expenses
include store payroll and benefits, advertising, credit card
fees, and store supplies, as well as central office management
payroll, benefits, travel, information systems, accounting,
insurance, legal, and public relations. It also includes
depreciation and amortization of central office leasehold
improvements, furniture, fixtures, and equipment, as well as
amortization of trademarks and intellectual property.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Store Preopening Expenses</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Store preopening expenses, including store set-up
and certain labor and hiring costs, are expensed as incurred.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Advertising</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising costs are expensed when the
advertising takes place. Advertising expense was $3,493,000,
$6,002,000, and $10,883,000 for the years ended
December&nbsp;29, 2001 December&nbsp;28, 2002, and
January&nbsp;3, 2004, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Income Taxes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income taxes are accounted for using a balance
sheet approach known as the asset and liability method. The
liability method accounts for deferred income taxes by applying
the statutory tax rates in effect at the date of the
consolidated balance sheets to differences between the book
basis and the tax basis of assets and liabilities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Earnings Per Share</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2004, the Company adopted Emerging Issues
Task Force (EITF) No.&nbsp;03-06, <I>Participating Securities
and the Two-Class Method under FASB Statement No.&nbsp;128,
Earnings per Share.</I> The consensus required the use of the
two-class method in the calculation and disclosure of basic
earnings per share and provided guidance on the allocation of
earnings and losses for purposes of calculating basic earnings
per share. Accordingly, all periods presented have been
retroactively adjusted to give effect to such guidance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain classes of preferred stock are entitled
to participate in cash dividends on common stock. For purposes
of calculating basic earnings per share, undistributed earnings
are allocated to common and participating preferred shares on a
pro rata basis. Basic earnings per share is determined by
dividing net income available to common and participating
stockholders by the weighted average number of common and
participating shares outstanding during the period. Diluted
earnings per share reflects the potential dilution that could
occur if options to issue common stock or conversion rights of
preferred stocks were exercised. In periods in which the
inclusion of such instruments is anti-dilutive, the effect of
such securities is not given consideration.
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Stock-Based Compensation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company accounts for stock-based compensation
in accordance with Accounting Principles Board
(APB)&nbsp;Opinion No.&nbsp;25, <I>Accounting for Stock Issued
to Employees. </I>Compensation expense for stock options is
measured as the excess, if any, of the quoted market price of
the Company&#146;s common stock at the date of the grant over
the amount an employee must pay to acquire the common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS)&nbsp;No.&nbsp;148, <I>Accounting for
Stock-Based Compensation&nbsp;&#151; Transition and Disclosure,
an Amendment of FASB Statement&nbsp;123</I>, to require
prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based
employee compensation and the effect of the method used on
reported results. The Company previously adopted the
disclosure-only provisions of SFAS&nbsp;No.&nbsp;123. For 2001,
2002, and 2003, no compensation cost was recognized at the date
of the grant under APB No.&nbsp;25 for the Company&#146;s stock
option plans as options have been issued at fair value. The
following table illustrates the effect on net earnings and net
earnings per share if the Company had applied the fair value
recognition provisions of SFAS&nbsp;No.&nbsp;123 to stock-based
employee compensation for the years ended December&nbsp;29,
2001, December&nbsp;28, 2002, January&nbsp;3, 2004, and the
twenty-six weeks ended June&nbsp;28, 2003 (unaudited)&nbsp;and
July&nbsp;3, 2004 (unaudited).
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Years Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Twenty-Six Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,905,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,868,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,848,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add stock-based compensation recorded, net of
    related tax effect
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deduct stock-based employee compensation expense
    under fair value-based method, net of related tax effects
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(116,388</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(118,187</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(243,345</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(106,265</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(126,137</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,789,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,750,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,735,079</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,742,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,142,341</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic earnings per common share:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted earnings per common share:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of each option is estimated on the
date of grant using the Black<I>-</I>Scholes option pricing
model with the following weighted average assumptions:
(a)&nbsp;dividend yield of 0%; (b)&nbsp;expected volatility of
0%; (c)&nbsp;risk-free interest rate ranging from 2.8% to 6.3%;
and (d)&nbsp;an expected life of nine, ten, and nine years for
2001, 2002, and 2003, respectively, and nine years for each of
the twenty-six week periods
</FONT>

<P align="center"><FONT size="2">F-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">ended June&nbsp;28, 2003 and July&nbsp;3, 2004,
respectively. The weighted average fair value of the options at
the grant date was $2.16, $2.87, and $2.70&nbsp;per share for
grants in fiscal 2001, 2002, and 2003, respectively, and $2.70
and $2.43 for the twenty-six weeks ended June&nbsp;28, 2003 and
July&nbsp;3, 2004, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Fair Value of Financial
    Instruments</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of financial reporting, management
has determined that the fair value of financial instruments,
including cash and cash equivalents, receivable for tenant
allowances, accounts payable, and accrued expenses, approximates
book value at December&nbsp;28, 2002 and January&nbsp;3, 2004.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Use of Estimates</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of the consolidated financial
statements requires management of the Company to make a number
of estimates and assumptions relating to the reported amount of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses
during the reporting period. Significant items subject to such
estimates and assumptions include the carrying amount of
property and equipment and intangibles, inventories, and
deferred income tax assets and the determination of our deferred
revenue under our frequent shopper program.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Recent Accounting
    Pronouncements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2003, the FASB issued
SFAS&nbsp;No.&nbsp;150, <I>Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and
Equity.</I> This statement establishes standards for how an
issuer classifies and measures in its statements of financial
position certain financial instruments of both liabilities and
equity. SFAS&nbsp;No.&nbsp;150 requires issuers to classify as
liabilities (or assets in some circumstances) three classes of
freestanding instruments entered into or modified after
May&nbsp;31, 2003, at the beginning of the first interim period
beginning after June&nbsp;15, 2003 for all existing financial
instruments. As of July&nbsp;3, 2004, the Company did not have
financial instruments within the scope of SFAS&nbsp;No.&nbsp;150.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2004, the Emerging Issues Task Force
completed its discussion of and provided consensus guidance on
Issue No.&nbsp;03-6, <I>Participating Securities and the
Two-Class Method under FASB Statement No&nbsp;128, Earning per
Share</I>. The consensus interpreted the definition of a
&#147;participating security&#148;, required the use of the
two-class method in the calculation and disclosure of basic
earnings per share, and provided guidance on the allocation of
earnings and losses for purposes of calculating basic earnings
per share. Certain of our classes of preferred stock are
entitled to participate in cash dividends on common stock.
Accordingly, this consensus has been applied in the calculation
of basic earnings per share for all periods presented.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Interim Financial Data
    (Unaudited)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying consolidated balance sheet as of
July&nbsp;3, 2004 and the accompanying consolidated statements
of operations, stockholders&#146; equity and cash flows for the
26&nbsp;weeks ended July&nbsp;3, 2004 and June&nbsp;28, 2003
have been prepared by the Company without an audit. In the
opinion of management, all adjustments, consisting only of
normal recurring adjustments, considered necessary for a fair
presentation for such periods have been made. Results for
interim periods should not be considered as indicative of
results for a full year.
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Footnote disclosures normally included in annual
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
have been omitted herein with respect to the interim financial
data. The interim information herein should be read in
conjunction with the annual financial information presented
herein.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(3)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Impairment Charge</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company identified three stores
that were not meeting operating objectives and determined the
stores were impaired. The Company recorded a provision for
impairment totaling $1,006,220 which included $519,119 related
to the write down of property and equipment and other assets and
$487,101 of accrued expenses to be incurred in the closing of
the stores at the exercise of the early termination provision.
During 2003, the Company closed one of the stores that was
included in the 2001 provision for impairment. As of
January&nbsp;3, 2004, accrued expenses includes $447,107 related
to these stores. The following table presents activity related
to the provision for impairment discussed above during fiscal
years 2001, 2002, and 2003:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fixed asset</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other cash</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">impairments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">costs</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at December&nbsp;30, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">519,119</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,006,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Write-off of impaired assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(519,119</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(519,119</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at December&nbsp;29, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Activity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at December&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store closing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,994</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,994</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at January&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">447,107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">447,107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store closing costs (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(191,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(191,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(4)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Property and Equipment</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment consist of the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Leasehold improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,023,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,308,151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,010,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,087,759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer hardware
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,164,387</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,006,592</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer software
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,075,994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,971,151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New store construction deposits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">697,948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,066,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,972,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79,440,029</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,901,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,081,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,071,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,358,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For 2001, 2002, and 2003, depreciation expense
was $3,864,416, $6,886,275, and $9,721,591, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(5)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Other Assets</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other assets, net of accumulated amortization,
consist of the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademarks and other intellectual property
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,320,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,493,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred leasing fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,298,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,424,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred franchise costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">448,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,918,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,492,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For 2001, 2002, and 2003, amortization expense
was $723,908, $889,173, and $1,343,626, respectively. Total
accumulated amortization was $2,301,110 and $3,292,856 at
December&nbsp;28, 2002 and January&nbsp;3, 2004, respectively.
Accumulated amortization related to goodwill was $20,987 at
December&nbsp;28, 2002 and January&nbsp;3, 2004. Included in
other assets are amortized intangible assets, which consist of
the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trademarks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,819,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,626,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intellectual property
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">378,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">636,654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,198,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,263,284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,878,251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,770,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,320,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,493,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Trademarks and intellectual property are
amortized over three years. Amortization expense related to
trademarks and intellectual property was $578,689, $721,762, and
$873,760 for 2001, 2002, and 2003, respectively. Estimated
amortization expense for 2004, 2005, and 2006 is $766,448,
$503,084, and $223,639, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The changes in the carrying amount of goodwill
for the year ended January&nbsp;3, 2004 are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of December&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of minority interest in BABE
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(200,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of January&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;10, 2003, the Company purchased
the 49% minority interest in BABE for $200,000, which was
allocated to goodwill due to the insignificance of the fair
value of the identifiable net assets. A goodwill impairment loss
of $200,000 was recognized in the BABE investment since the
carrying amount of the investment was greater than the fair
value (as determined using the expected present value of future
cash flows) and the carrying amount of the goodwill exceeded the
implied fair value of that goodwill. The goodwill impairment
loss is included in selling, general, and administrative
expenses in the consolidated statements of operations.
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(6)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Accrued Expenses</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Accrued expenses consist of the following:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued wages and related expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,690,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,853,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued rent and related expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,545,636</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,774,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales tax payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,846,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,842,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current income taxes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,298,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,277,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,769,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(7)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Other Liabilities</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Other liabilities consist of the following:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gift certificates and customer deposits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,962,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,345,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,946,369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,086,524</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,909,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,432,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(8)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Income Taxes</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">The components of the provision for income taxes
    are as follows:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">753,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,531,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,754,747</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">551,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">626,792</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">333,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,487,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,332,627</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">98,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">286,792</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286,789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,790,456</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,100,958</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The income tax expense is different from the
amount computed by applying the U.S.&nbsp;statutory Federal
income tax rates to income before income taxes. The reasons for
these differences are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,192,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,658,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,079,382</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S.&nbsp;statutory Federal income tax rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computed income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,085,349</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,284,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,446,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State income taxes, net of Federal tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">443,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">602,965</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286,789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,790,456</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,100,958</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effective tax rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Temporary differences that gave rise to deferred
income tax assets and liabilities are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued rents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">663,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,031,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,513,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,893,706</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">308,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">308,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">474,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">697,113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Store impairment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">387,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179,154</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total deferred income tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,479,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,260,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,608,322</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,010,568</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(952</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total deferred income tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,609,274</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,010,568</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred income tax liability
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,130,231</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,750,143</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-term deferred income tax liabilities of
$3,367,014 and $5,311,862 are included in deferred tax
liabilities as of December&nbsp;28, 2002 and January&nbsp;3,
2004, respectively. Current deferred income tax assets of
$2,236,783 and $2,561,719 are included in prepaid expenses and
other as of December&nbsp;28, 2002 and January&nbsp;3, 2004,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A valuation allowance would be provided on
deferred tax assets when it is more likely than not that some
portion of the assets will not be realized. The Company has not
established a valuation allowance at December&nbsp;28, 2002 and
January&nbsp;3, 2004.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(9)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Long-Term Debt</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;30, 2003, the Company amended its
secured line of credit with a bank maintaining their borrowing
capacity at $15,000,000. This line of credit matured on
May&nbsp;31, 2004 and renewed with substantially the same terms
and a maturity date of May&nbsp;31, 2005. Borrowings are secured
by essentially all of the assets of the Company. Availability
under the agreement is based on the levels of accounts
</FONT>

<P align="center"><FONT size="2">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">receivable, inventory, and property and
equipment. The credit agreement requires the Company to comply
with certain financial covenants, including maintaining a
minimum tangible net worth and funded debt to Earnings before
interest, depreciation and amortization ratio. As of
January&nbsp;3, 2004 and July&nbsp;3, 2004, the Company was in
compliance with the amended and restated loan agreement&#146;s
covenants. The outstanding balance at January&nbsp;3, 2004,
December&nbsp;28, 2002, July&nbsp;3, 2004, was $0. The interest
rate for the line of credit is the prime rate less 0.5%.
Subsequent to July&nbsp;3, 2004, the Company issued a
$1.1&nbsp;million standby line of credit under its agreement.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(10)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Commitments and Contingencies</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Operating Leases</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company leases its retail stores, internet
store, and corporate offices under agreements which expire at
various dates through 2014. Each store lease contains provisions
for base rent plus contingent payments based on defined sales.
Total office and retail store base rent expense was $6,956,000,
$11,770,000, and $16,546,000 and contingent rents were $525,000,
$763,000, and $670,000 for 2001, 2002, and 2003, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Future minimum lease payments at January&nbsp;3,
2004, were as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3, 2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,879,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,228,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,549,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,797,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,932,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Subsequent to 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,018,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151,403,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subsequent to January&nbsp;3, 2004, the Company
has continued to expand its number of operating locations
resulting in an increase in its commitments to future minimum
lease payments. As of July&nbsp;3, 2004, the Company has
outstanding future minimum lease payments of $187,940,000.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Litigation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company was a party to a lawsuit in which a
competitor alleged that the Company misappropriated certain
trade secrets and other intellectual property. The Company
denied those claims and believes that the allegations in the
lawsuit were without merit. Nevertheless, in order to avoid the
diversion of management time in dealing with this matter, as
well as to avoid additional costs associated with the
litigation, the Company elected to resolve this matter without
further intervention of the court. During 2001, the matter was
resolved to the mutual satisfaction of the parties through a
confidential settlement agreement. Pursuant to the settlement
agreement, the lawsuit was dismissed with prejudice and the
parties agreed to mutual releases of their respective claims.
The total amount of the settlement was $2,250,000, of which the
Company paid $1,550,000 and the Company&#146;s insurance carrier
paid the balance of $700,000. The settlement agreement also
includes agreements relating to trademarks, store location
restrictions, and certain other terms that the Company does not
believe are or will be material to the Company&#146;s operations.
</FONT>

<P align="center"><FONT size="2">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the normal course of business, the Company is
subject to certain claims or lawsuits. Management is not aware
of any claims or lawsuits that will have a material adverse
effect on the consolidated financial position or results of
operations of the Company.
</FONT>

<P align="center"><FONT size="2">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(11)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Earnings Per Share</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the computation of
basic and diluted earnings per share:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Fiscal Years Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Twenty-Six Weeks Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;29,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">July&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,905,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,868,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,848,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative dividends and accretion of redeemable
    preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">824,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,970,871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,970,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">985,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">985,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative dividends of nonredeemable preferred
    stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227,675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227,675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income available to common and participating
    preferred stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">625,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,442,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,553,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">636,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,996,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends and accretion related to dilutive
    preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">474,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,425,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,212,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">644,726</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,916,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,978,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">645,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income allocated to common stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">261,064</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income allocated to participating preferred
    stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">606,641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,365,482</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,429,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">621,985</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,735,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average number of common shares
    outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284,731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average number of participating
    preferred shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,902,954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,527,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,527,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,527,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,527,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average number of common shares
    outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284,731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of dilutive securities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stock options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">237,580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310,305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">387,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">327,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restricted stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,779</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Convertible preferred shares
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,642,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,479,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,856,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,642,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,223,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average number of common
    shares&nbsp;&#151; dilutive
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,101,143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,055,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,546,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,367,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,938,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings per share:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Per participating preferred share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In calculating diluted earnings per share for the
years ended December&nbsp;29, 2001, December&nbsp;28, 2002,
January&nbsp;3, 2004, and the for the six months ended
June&nbsp;28, 2003 and July&nbsp;3, 2004 options, restricted
stock, and convertible preferred shares of 7,659,441, 5,093,723,
and 237,734, 8,193,869, and 494,468, respectively, were
outstanding as of the end of the periods, but were not included
in the computation of diluted earnings per share due to their
anti-dilutive effect.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(12)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Stock Option Plan</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1997, the members of Build-A-Bear
Workshop L.L.C. (LLC)&nbsp;adopted the Build-A-Bear Workshop
L.L.C. Employee Option Plan. This plan authorized the LLC
members to issue options to purchase LLC Class&nbsp;A member
interests. The vesting, exercise prices, and other terms of the
options were determined by the LLC members. During 1998, the LLC
members granted options for a total of three units to two
employees. At the grant dates, each unit represented
1%&nbsp;ownership in LLC and was subject to adjustments to
maintain such interest in the event of future equity
transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When LLC reorganized to a corporation on
April&nbsp;3, 2000, the Company adopted the 2000 Stock Option
Plan (the Plan). Under the Plan, the Company granted 300,000
vested options to replace the three unit options that were
granted during 1998. The exercise price for these options is
$0.465&nbsp;per share. Compensation expense of $500,000 and
$300,000 for these options was recorded in 1999 and 2000,
respectively. In 2003, the Company adopted the Build-A-Bear
Workshop, Inc. 2002 Stock Incentive Plan (collectively, the
Plans).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Plans, as amended, up to
2,200,000&nbsp;shares of common stock were reserved and may be
granted to employees and nonemployees of the Company. The Plan
allows for the grant of incentive stock options, nonqualified
stock options, and restricted stock (see note&nbsp;13b). Options
granted under the Plan expire no later than 10&nbsp;years from
the date of the grant. The exercise price of each incentive
stock option shall not be less than 100% of the fair value of
the stock subject to the option on the date the option is
granted. The exercise price of the nonqualified options shall be
determined from time to time by the compensation committee of
the board of directors (the Committee). The vesting provision of
individual options is at the discretion of the Committee.
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of the balances and activity for the
Plans follow:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Range of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding, December&nbsp;29, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">804,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-6.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercisable, December&nbsp;29, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">346,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-6.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Forfeited
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding, December&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">859,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-8.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercisable, December&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">446,963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-6.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">271,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Forfeited
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.42-9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding, January&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,067,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercisable, January&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">609,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-8.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">263,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Forfeited (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.10-9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding, July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,047,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercisable, July&nbsp;3, 2004 (unaudited)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">526,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47-9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shares available for future options and
restricted stock grants were 1,024,388 and 816,654 at the end of
2002 and 2003, respectively, and 2,073,820 after giving effect
to the Amended and Restated Certificate of Incorporation (see
Note&nbsp;18).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes information about
stock options outstanding at July&nbsp;3, 2004 (unaudited):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="14"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="14" align="center" nowrap><B><FONT size="1">Options Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="14" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options Exercisable</FONT></B></TD>
</TR>

<TR>
    <TD colspan="6"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Range of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Exercise Prices</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual Life</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$0.47
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.50
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.04-6.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.42
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.78
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,746</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">0.47-9.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,047,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">526,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-21
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(13)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Stockholders&#146; Equity</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Reorganization and Preferred Stock
    Sales</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective April&nbsp;3, 2000, the Company
reorganized from an LLC to a C Corporation. The existing LLC
members received a total of 9,482,482&nbsp;shares of
Series&nbsp;A, B, and C convertible nonredeemable preferred
stock and 217,519&nbsp;shares of common stock in exchange for
their member units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;5, 2000, the Company issued a total
of 2,666,666&nbsp;shares of Series&nbsp;A and B convertible
redeemable preferred stock in exchange for $9,837,876 in cash
and $1,934,485 in a promissory note from a related party. The
note was subsequently collected in full within 30&nbsp;days of
issuance. The proceeds are net of the costs associated with the
preferred stock sales of $227,632.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From September through December 2001, the Company
issued a total of 3,467,337&nbsp;shares of Series&nbsp;D
convertible redeemable preferred stock in exchange for
$21,024,016 in cash. The cash proceeds are net of the costs
associated with the preferred stock sales of $141,911.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Restricted Stock</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;3, 2000, the Company issued
274,815&nbsp;shares of restricted common stock to an officer of
the Company in exchange for a promissory note of $1,236,667 that
bears interest at 6.60%&nbsp;per annum. Both principal and
interest are due April 2005. The shares were issued subject to a
restriction of continued employment. As of January&nbsp;3, 2004,
100% of the shares were transferable by the officer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;19, 2001, the Company issued
40,982&nbsp;shares of restricted common stock to two officers of
the Company in exchange for promissory notes totaling $249,990
that bear interest at 4.82%&nbsp;per annum. Both principal and
interest are due September 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the limited-recourse nature of these
promissory notes, the restricted stock is treated as outstanding
stock options for accounting purposes with no effect on the
presentation of stockholders&#146; equity. The shares of
unvested restricted stock are included in the calculation of
diluted earnings per share using the treasury stock method.
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT></I></B></TD>
    <TD>
    <B><I><FONT size="2">Preferred Stock</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;28, 2002 and January&nbsp;3,
2004, 25,000,000&nbsp;shares of preferred stock were authorized.
Preferred stock consists of various series of Class&nbsp;A, B,
C, and D preferred stock. Each class has various dividend,
liquidation, and redemption rights as summarized below:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Entitled to</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Issued and</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Participate in</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Outstanding as of</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Liquidation Preference as of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Series of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Defined</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Defined</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash Dividends</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Preferred</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Liquidation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">on Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;28,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">January&nbsp;3,</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dividends</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">A-1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.451890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.171632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,137,898</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,137,898</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,327,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,522,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">A-2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.556556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.248959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139,981</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">593,686</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">628,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">A-3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.600746</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.182052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">961,263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">961,263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,981,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,156,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">A-4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.484283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.243900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">855,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">905,401</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">A-5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.649780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.395485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,061,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,061,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,154,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,574,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">B-1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.808051</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">275,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">275,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">497,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">497,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">B-2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.720493</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">B-3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.305925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">311,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">311,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">717,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">717,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">B-4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.739067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">No</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,604,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,604,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,000,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,000,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">C-1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.105315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,418,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,418,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">359,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">359,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">C-2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.973290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,385,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,385,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,348,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,348,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">C-3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.720934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.000000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,060</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,060</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">D
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.100000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.427000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,467,337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,467,337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,990,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,471,187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,616,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,616,485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,466,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,822,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Series&nbsp;D preferred stock has senior
liquidation preference over all other series of preferred stock.
As a group, series&nbsp;A-1, A-2, A-3, A-4, A-5, B-1, B-2, B-3,
and B-4 preferred stock have senior liquidation preference after
series&nbsp;D preferred stock. Series&nbsp;C-1, C-2, and C-3
preferred stock have junior liquidation preference. All series
of A, B, and D&nbsp;preferred stock also have certain voting
rights as a combined class.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of January&nbsp;3, 2004, no common or
preferred dividends have been declared or paid by the Company.
The Series&nbsp;A-5, B-4, and D&nbsp;shareholders may force the
Company to redeem those shares for cash or notes on
April&nbsp;3, 2006. Series&nbsp;D shares have redemption
preference over Series&nbsp;A-5 and B-4. The redemption price is
equal to the price paid for the stock plus all accrued and
unpaid dividends. During 2002 and 2003, $1,970,871 and
$1,970,027, respectively, was recorded to increase the carrying
value of the Series&nbsp;A-5, B-4, and D&nbsp;redeemable
preferred stock to its redemption value. This includes
cumulative dividends of $1,900,553 and $1,900,553 and accretion
of equity issuance costs of $70,318 and $69,474 for 2002 and
2003, respectively, for the redeemable preferred stock.
Cumulative dividends in arrears for the nonredeemable preferred
stock totaled $1,252,212 and $1,707,562 at December&nbsp;28,
2002 and January&nbsp;3, 2004, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each share of preferred stock, including shares
of preferred stock issuable in exchange for accrued but unpaid
dividends, is convertible into common stock on a one-for-one
basis at anytime at the option of the holder. Conversion of the
preferred stock is automatic based on certain events, such as an
initial public offering under certain conditions.
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(14)</FONT></B></TD>
    <TD>
    <B><FONT size="2">401(k) Plan</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2000, the Company established a defined
contribution plan that conforms to IRS provisions for 401(k)
plans. The Build-A-Bear Workshop, Inc. Employees Savings Trust
covers associates who work 1,000&nbsp;hours or more in a year
and have attained age&nbsp;21. The Company, at the discretion of
its board of directors, can provide for a Company match on the
first 6% of employee deferrals. For 2001, 2002, and 2003, the
Company provided a 25% match on the first 6% of employee
deferrals totaling $72,200, $139,600, and $136,600,
respectively. The Company match vests over a five-year period.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(15)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Related-Party Purchases and
    Contracts</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company bought fixtures for new stores and
furniture for the corporate offices from a related party. The
total cost of these fixtures and furniture amounted to
$3,015,900, $2,839,900, and $2,705,900 in 2001, 2002, and 2003,
respectively. The Company leases its corporate office from the
same related party. Rent under this lease amounted to $187,000,
$212,300, and $215,300 in 2001, 2002, and 2003, respectively.
The lease expires in 2008. The total due to this related party
as of December&nbsp;28, 2002 and January&nbsp;3, 2004 was
$22,700 and $82,500, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company paid $930,200, $1,041,400, and
$960,300 in 2001, 2002, and 2003, respectively, for construction
management services, pursuant to a contract that extended
through December&nbsp;31, 2003, to an entity controlled by a
related party. As of January&nbsp;3, 2004, the Company has a
commitment to this same related party for $252,000 relating to a
construction management agreement for the period from
January&nbsp;1, 2004 through December&nbsp;31, 2004. The Company
leased one of its retail stores from this same related party. In
2001, 2002, and 2003, the Company paid rent totaling $199,000,
$193,400, and $78,400, respectively, under this lease agreement.
The total due to this related party as of December&nbsp;28, 2002
and January&nbsp;3, 2004 was $35,850 and $6,500, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company paid $257,600, $127,000, and $230,100
in 2001, 2002, and 2003, respectively, for design and other
creative services to a stockholder. The total due to this
related party as of December&nbsp;28, 2002 and January&nbsp;3,
2004 was $0.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(16)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Major Vendors</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Two vendors accounted for approximately 80%, 74%,
and 76% of inventory purchases in 2001, 2002, and 2003,
respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(17)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Segment Information</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating segments represent components of the
Company&#146;s business that are evaluated regularly by key
management in assessing performance and resource allocation. The
Company has determined that its reportable segments consist of
retail operations, international, and licensing and
entertainment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reporting segments follow the same accounting
policies used for the Company&#146;s consolidated financial
statements as described in the summary of significant accounting
policies:
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Licensing&nbsp;&#38;</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Retail</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">International</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Entertainment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;29, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106,621,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106,621,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss) before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,442,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(250,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,192,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,778,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,854,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,624,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,624,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,588,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,588,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,122,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,138,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss) before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,902,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,243,412</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,658,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92,076,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,606,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,693,254</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,718,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,718,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,774,856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">592</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,775,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended January&nbsp;3, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213,427,099</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213,671,546</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,524,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,524,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,847,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,768,285</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,079,382</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,884,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,919,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,964,258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,284,244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,362,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,016,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,065,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Twenty-six weeks ended June&nbsp;28, 2003
    (unaudited):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92,487,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95,337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92,583,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,255,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,120,437</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(975</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,133,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85,875,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,587,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,471,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,338,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,338,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,919,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,938,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Twenty-six weeks ended July&nbsp;3, 2004
    (unaudited):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,419,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">306,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,726,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,900,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(433,494</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(140</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,466,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121,547,580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,908,064</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124,833,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,431,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,437,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,994,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,030,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-25
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended December&nbsp;29, 2001,
December&nbsp;28, 2002 and January&nbsp;3, 2004</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and the twenty-six weeks ended June&nbsp;28,
2003 (unaudited)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">and July&nbsp;3, 2004 (unaudited)&nbsp;&#151;
(Continued)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">(18)</FONT></B></TD>
    <TD>
    <B><FONT size="2">Subsequent Events</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of August&nbsp;10, 2004, the Articles of
Incorporation were amended primarily with respect to the
liquidation and redemption preferences of the Series&nbsp;A and
Series&nbsp;D Preferred stock as well as the dividend rights for
all series of preferred stock. Previously, Series&nbsp;A and
Series&nbsp;D preferred stock accrued a dividend and any accrued
and unpaid dividends were added to the original liquidation
preference and redemption amounts for these series.
Additionally, these series had certain dividend preference
rights over other classes of stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amended Articles of Incorporation effectively
set the liquidation preference and redemption amounts for the
Series&nbsp;A and Series&nbsp;D stock to be equal to the
original amounts plus the amounts of accrued and unpaid
dividends as of July&nbsp;31, 2004. Additionally, any dividend
preference or restrictions on all series of preferred stock were
removed and all series of preferred stock participate on an as
converted basis ratably with common stock for any declared
dividends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2004, following the amendment of the
Articles of Incorporation, the Company paid a cash dividend of
$10.0&nbsp;million to the common and preferred stockholders.
</FONT>

<P align="center"><FONT size="2">F-26
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">

</DIV>

<P align="left">


<DIV align="center">
<IMG src="c86750c8675060.gif" alt="(BUILD-A-BEAR WORKSHOP, INC. LOGO)">
</DIV>

<DIV>&nbsp;</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">PART&nbsp;II</FONT></B>

<P align="center">
<B><FONT size="2">INFORMATION NOT REQUIRED IN
PROSPECTUS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;13.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Other Expenses of Issuance and
    Distribution</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the costs and
expenses, other than underwriting discounts and commissions,
payable by Build-A-Bear in connection with the sale of the
common stock being registered hereby, other than underwriting
commissions and discounts. All amounts are estimates except the
SEC registration fee, the NASD filing fee and
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;listing/quotation
fee.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Registration fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,837.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NASD filing fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,000.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">listing
    fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Blue Sky fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Printing and engraving expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transfer agent and registrar fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Miscellaneous
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><B><FONT size="2">$</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to pay all expenses of registration,
issuance and distribution.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;14.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Indemnification of Directors and
    Officers</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation provides that
our directors shall not be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability for: (i)&nbsp;any breach of
the director&#146;s duty of loyalty to us or our stockholders;
(ii)&nbsp;acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(iii)&nbsp;liability for payments of dividends or stock
purchases or redemptions in violation of Section&nbsp;174 of the
Delaware General Corporation Law; or (iv)&nbsp;any transaction
from which the director derived an improper personal benefit. In
addition, our certificate of incorporation provides that we
will, to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that
such amendment permits us to provide broader indemnification
rights than such law permitted us to provide prior to such
amendment), indemnify and hold harmless any person who was or is
a party, or is threatened to be made a party to or is otherwise
involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that such person is or was
our director or officer, or is or was serving at our request as
a director, officer, employee or agent of another corporation,
or as our representative in a partnership, joint venture, trust
or other entity, (an &#147;indemnitee&#148;) against expenses,
liabilities, and losses (including attorneys&#146; fees,
judgments, fines, and amounts paid in settlement) reasonably
incurred or suffered by such indemnitee in connection therewith.
We have also entered into separate indemnification agreements
with our directors that require us, among other things, to
indemnify each of them against certain liabilities that may
arise by reason of their status or service other than
liabilities unless it is determined that he or she did not act
in good faith and in a manner he or she reasonably believed to
be in or not opposed to our best interests, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The right to indemnification set forth above
includes the right for us to pay the expenses (including
attorneys&#146; fees) incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if
the Delaware General Corporation Law requires an advancement of
expenses incurred by an indemnitee in his capacity as a director
or officer (and not in any other capacity in which service was
or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall
</FONT>

<P align="center"><FONT size="2">II-1
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">be made only upon delivery to us of an
undertaking, by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by
final judicial decision from which there is not further right to
appeal that such indemnitee is not entitled to be indemnified
for such expenses under this section or otherwise. The rights to
indemnification and to the advancement of expenses conferred
herewith are contract rights and continue as to an indemnitee
who has ceased to be a director, officer, employee or agent and
inures to the benefit of the indemnitee&#146;s heirs, executors,
and administrators.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Delaware General Corporation Law provides
that indemnification is permissible only when the director,
officer, employee, or agent acted in good faith and in a manner
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the
conduct was unlawful. The Delaware General Corporation Law also
precludes indemnification in respect of any claim, issue, or
matter as to which an officer, director, employee, or agent
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery of the State
of Delaware or the court in which such action or suit was
brought shall determine that, despite such adjudication of
liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court
deems proper.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selling stockholders and we have agreed to
indemnify the underwriters and their controlling persons, and
the underwriters have agreed to indemnify the selling
stockholders, us and our controlling persons, against certain
liabilities, including liabilities under the Securities Act.
Reference is made to the Underwriting Agreement filed as part of
the exhibits hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Item&nbsp;17 for our undertaking to submit to
adjudication the issue of indemnification for violation of the
securities laws.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;15.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Recent Sales of Unregistered
    Securities</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The registrant has issued and sold the following
securities:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;From August&nbsp;1, 2001 through
    July&nbsp;3, 2004, the registrant granted options to purchase
    195,000&nbsp;shares of its common stock to employees,
    consultants and directors pursuant to its 2000 Stock Option
    Plan, as amended. Options to purchase an aggregate of
    42,000&nbsp;shares have been canceled without being exercised
    and options to purchase an aggregate of 18,000&nbsp;shares have
    been exercised.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;In September, November and December 2001,
    the registrant issued and sold to 14 private investors
    3,467,337&nbsp;shares of Series&nbsp;D preferred stock for an
    aggregate consideration of $21,150,756 pursuant to a Stock
    Purchase Agreement dated as of September&nbsp;21, 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;In September 2001, the registrant issued
    20,491&nbsp;shares of its common stock for an aggregate
    consideration of $124,995 to Brian Vent pursuant to a Restricted
    Stock Purchase Agreement dated as of September&nbsp;19, 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">4.&nbsp;In September 2001, the registrant issued
    20,491&nbsp;shares of its common stock for an aggregate
    consideration of $124,995 to Tina Klocke pursuant to a
    Restricted Stock Purchase Agreement dated as of
    September&nbsp;19, 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">5.&nbsp;From May&nbsp;1, 2003 through
    July&nbsp;3, 2004, the registrant granted options to purchase
    573,718&nbsp;shares of its common stock to employees,
    consultants and directors pursuant to its 2002&nbsp;Stock Option
    Plan. Options to purchase an aggregate of 71,750&nbsp;shares
    have been canceled without being exercised and options to
    purchase an aggregate of 7,500&nbsp;shares have been exercised.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sales and issuances of securities described
in items&nbsp;1, 3 and 4 above were deemed to be exempt from
registration under the Securities Act by virtue of Rule&nbsp;701
of the Securities Act in that they were offered and sold either
pursuant to a written compensatory benefit plan or pursuant to a
written contract relating to compensation, as provided by
Rule&nbsp;701 or by virtue of Section&nbsp;4(2) of the
Securities Act, or Regulation&nbsp;D promulgated thereunder. The
sales of the securities described in item&nbsp;2 above were
deemed to be exempt from registration under the Securities Act
in reliance on Section&nbsp;4(2) of the Securities Act,
</FONT>

<P align="center"><FONT size="2">II-2
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">or Regulation&nbsp;D promulgated thereunder. With
respect to the grant of options described in item&nbsp;1, an
exemption from registration was unnecessary in that none of the
transactions involved a &#147;sale&#148; of securities as such
term is used in Section&nbsp;2(3) of the Securities Act.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The recipients of securities in each such
transaction represented their intention to acquire the
securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the share certificates and warrants
issued in such transactions. All recipients had adequate access,
through their relationships with the Company, to information
about the registrant.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;16.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Exhibits and Financial Statement
    Schedules</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;The following is a list of exhibits
filed as a part of this Registration Statement:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Underwriting Agreement
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement and Plan of Merger dated April&nbsp;3,
    2000 between Build-A-Bear Workshop, L.L.C. and the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Certificate of Incorporation
    of the Registrant dated August&nbsp;10, 2004
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Bylaws of the Registrant as currently in effect
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Second Amended and Restated Certificate
    of Incorporation of the Registrant, to be effective upon the
    closing of this offering
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Amended and Restated Bylaws of the
    Registrant, to be effective upon the closing of this offering
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Specimen Stock Certificate
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Purchase Agreement by and among the
    Registrant, Catterton Partners IV, L.P., Catterton
    Partners&nbsp;IV Offshore, L.P. and Catterton Partners&nbsp;IV
    Special Purpose, L.P. and the Purchasers named therein dated as
    of April&nbsp;3, 2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stock Purchase Agreement by and among the
    Registrant and the other Purchasers named therein dated as of
    September&nbsp;21, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Stockholders&#146;
    Agreement, dated as of September&nbsp;21, 2001 by and among the
    Registrant and certain stockholders
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Registration Rights
    Agreement, dated September&nbsp;21, 2001 by and among Registrant
    and certain stockholders named therein
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Bryan Cave LLP
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2000 Stock Option Plan, as amended
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2002 Stock Incentive Plan, as amended
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2004 Stock Incentive Plan
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.4*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment, Confidentiality and Noncompete
    Agreement
    dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2004 between Maxine Clark and the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.5*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment, Confidentiality and Noncompete
    Agreement dated April&nbsp;13, 2004 between Barry Erdos and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.6*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment, Confidentiality and Noncompete
    Agreement
    dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2004 between Tina Klocke and the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.7*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment, Confidentiality and Noncompete
    Agreement dated July&nbsp;9, 2001 between John Burtelow and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.8*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment, Confidentiality and Noncompete
    Agreement dated as of March&nbsp;&nbsp;&nbsp;, 2004 between
    Scott Seay and the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.9*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment, Confidentiality and Noncompete
    Agreement dated September&nbsp;10, 2001 between Teresa Kroll and
    the Registrant
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-3
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Separation Agreement and General Release dated
    January&nbsp;31, 2004 by and between Brian C. Vent and
    Build-A-Bear Workshop, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Indemnification Agreement between the
    Registrant and its directors and executive officers
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Third Amendment to Loan Documents among the
    Registrant, Shirts Illustrated, LLC, Build-A-Bear Workshop
    Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC,
    Build-A-Bear Retail Management, LLC
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amended and Restated Loan Agreement dated
    February, 2002 among U.S.&nbsp;Bank National Association, the
    Registrant and Shirts Illustrated, LLC
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amended and Restated Revolving Credit Note
    dated February, 2002 by the Registrant and Shirts Illustrated,
    LLC in favor of U.S.&nbsp;Bank National Association
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amended and Restated Security Agreement
    dated February, 2002 among the Registrant, Shirts Illustrated,
    LLC and U.S.&nbsp;Bank National Association
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Restricted Stock Purchase Agreement dated
    April&nbsp;3, 2000 by and between Maxine Clark and the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Secured Promissory Note of Maxine Clark in favor
    of the Registrant, dated April&nbsp;3, 2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Repayment and Stock Pledge Agreement dated
    April&nbsp;3, 2000 by and between Maxine Clark and the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Restricted Stock Purchase Agreement dated
    September&nbsp;19, 2001 by and between Brian C. Vent and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Secured Promissory Note of Brian C. Vent in favor
    of the Registrant, dated September&nbsp;19, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Repayment and Stock Pledge Agreement dated
    September&nbsp;19, 2001 by and between Brian C. Vent and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Restricted Stock Purchase Agreement dated
    September&nbsp;19, 2001 by and between Tina Klocke and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Secured Promissory Note of Tina Klocke in favor
    of the Registrant, dated September&nbsp;19, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Repayment and Stock Pledge Agreement dated
    September&nbsp;19, 2001 by and between Tina Klocke and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Public Warehouse Agreement dated April&nbsp;5,
    2002 between the Registrant and JS Logistics, Inc., as amended
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement for Logistics Services dated as of
    February&nbsp;24, 2002 by and among the Registrant and HA
    Logistics, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.27*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Lease Agreement dated as of June&nbsp;21, 2001
    between the Registrant and Walt Disney World Co.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment and Restatement of Sublease dated as of
    June&nbsp;14, 2000 by and between NewSpace, Inc. and the
    Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Lease dated May&nbsp;5, 1997 between Smart Stuff,
    Inc. and Hycel Partners&nbsp;I, L.P.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement dated October&nbsp;16, 2002 between the
    Registrant and Hycel Properties Co., as amended
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Construction Management Agreement dated
    November&nbsp;10, 2003 by and between the Registrant and Hycel
    Properties Co.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement dated July&nbsp;19, 2001 between the
    Registrant and Adrienne Weiss Company
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">List of Subsidiaries of the Registrant
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of KPMG LLP
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Bryan Cave LLP (included in the
    opinion filed as Exhibit&nbsp;5.1)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">24</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Powers of Attorney (see signature page)
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be filed by amendment to this registration
    statement
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="5%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Financial Statement Schedules</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Schedules not listed above have been omitted
because they are inapplicable or the requested information is
shown in the financial statements of the Registrant or notes
thereto.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;17.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Undertakings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The undersigned registrant hereby undertakes to
provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The undersigned registrant hereby undertakes that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;For purposes of determining any
    liability under the Securities Act of 1933, the information
    omitted from the form of prospectus filed as a part of this
    registration statement in reliance upon 430A and contained in a
    form of prospectus filed by the registrant pursuant to
    Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities
    Act shall be deemed to be part of this registration statement as
    of the time it was declared effective.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;For the purpose of determining any
    liability under the Securities Act of 1933, each post-effective
    amendment that contains a form of prospectus shall be deemed to
    be a new registration statement relating to the securities
    offered therein, and the offering of such securities at that
    time shall be deemed to be the initial bona fide offering
    thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers, and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
</FONT>

<P align="center"><FONT size="2">II-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act, the registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of St.&nbsp;Louis, State of Missouri, on
the 12th&nbsp;day of August, 2004.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">BUILD-A-BEAR WORKSHOP, INC.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ MAXINE CLARK
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;Maxine Clark
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Title:&nbsp;&nbsp;&nbsp;<I>Chief Executive
    Bear</I>
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below hereby constitutes and
appoints Maxine Clark, Barry Erdos, Tina Klocke and John
Burtelow, and each of them (with full power of each to act
alone), severally, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and her and to execute in his or her
name, place and stead (individually and in any capacity stated
below) any and all amendments to this Registration Statement
(including post-effective amendments), and any additional
registration statement filed pursuant to Rule&nbsp;462(b) under
the Securities Act of 1933, as amended, for the same offering
contemplated by this Registration Statement, and all documents
and instruments necessary or advisable in connection therewith,
and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange
Commission (or any other governmental regulatory authority),
each of said attorneys-in-fact and agents to have power to act
with or without the others and to have full power and authority
to do and to perform in the name and on behalf of each of the
undersigned every act whatsoever necessary or advisable to be
done in the premises as fully and to all intents and purposes as
any of the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents and/or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the dates indicated:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signatures</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ MAXINE CLARK<BR>
    <HR size="1" noshade>Maxine Clark
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">Chief Executive Bear and<BR>
    Chairman of the Board<BR>
    (Principal Executive Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">August&nbsp;12, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ BARNEY A. EBSWORTH<BR>
    <HR size="1" noshade>Barney A. Ebsworth
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">August&nbsp;12, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JAMES M. GOULD<BR>
    <HR size="1" noshade>James M. Gould
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">August&nbsp;12, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ WILLIAM REISLER<BR>
    <HR size="1" noshade>William Reisler
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">August&nbsp;12, 2004
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-6
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signatures</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ FRANK M. VEST,&nbsp;JR.<BR>
    <HR size="1" noshade>Frank M. Vest,&nbsp;Jr.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">August&nbsp;12, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ TINA KLOCKE<BR>
    <HR size="1" noshade>Tina Klocke
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">Chief Financial Bear, Treasurer and Secretary
    (Principal Financial and Accounting Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">August&nbsp;12, 2004
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-7
</FONT>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>c86750exv2w1.txt
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>
<PAGE>
                                                                     EXHIBIT 2.1













                          AGREEMENT AND PLAN OF MERGER



                              DATED APRIL 3, 2000


                                    between



                         BUILD-A-BEAR WORKSHOP, L.L.C.

                                      and

                          BUILD-A-BEAR WORKSHOP, INC.




<PAGE>





                               TABLE OF CONTENTS

<TABLE>
<S>               <C>                                                                                             <C>
ARTICLE I - THE MERGER............................................................................................1

   SECTION 1.01.  THE MERGER......................................................................................1
   SECTION 1.02.  EFFECTIVE TIME..................................................................................1
   SECTION 1.03.  CERTAIN EFFECTS OF THE MERGER...................................................................1
   SECTION 1.04.  CERTIFICATE OF INCORPORATION AND BY-LAWS........................................................2
   SECTION 1.05.  DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY..................................................2

ARTICLE II - EFFECT OF MERGER ON CAPITAL STOCK OF THE CONSTITUENT ENTITIES........................................2

   SECTION 2.01.  CONVERSION OF MEMBER INTERESTS OF THE LLC.......................................................2

ARTICLE III - MISCELLANEOUS.......................................................................................3

   SECTION 3.01.  AMENDMENT.......................................................................................3

SECTION 3.02.  VALIDITY...........................................................................................3

   SECTION 3.03.  NOTICES.........................................................................................3
   SECTION 3.04.  GOVERNING LAW...................................................................................3
   SECTION 3.05.  DESCRIPTIVE HEADINGS............................................................................3
   SECTION 3.06.  COUNTERPARTS....................................................................................3
   SECTION 3.07.  PARTIES IN INTEREST.............................................................................3
</TABLE>



<PAGE>
                          AGREEMENT AND PLAN OF MERGER


         AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated April 3, 2000,
between BUILD-A-BEAR WORKSHOP, L.L.C., a Missouri limited liability company
("LLC"), and BUILD-A-BEAR WORKSHOP, INC., a Delaware corporation
("Corporation").

         WHEREAS, the LLC intends to convert to the form of a corporation for
purposes of conducting its business;

         WHEREAS, the Members and the Manager of the LLC and the Board of
Directors of the Corporation deem it advisable and in the best interests of the
LLC and the Corporation respectively that the LLC merge with and into the
Corporation (the "Merger"), in accordance with the General Corporation Law of
the State of Delaware ("DGCL") and the Limited Liability Company Act of the
State of Missouri (the "LLC Act"), upon the terms and subject to the conditions
of this Agreement, and have approved and adopted this Agreement; and

         WHEREAS, for accounting purposes this Merger shall be effective as of
April 2, 2000 at 12:01 a.m.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereby agree, subject to
the terms and conditions hereinafter set forth, as follows:

                                    ARTICLE I
                                   THE MERGER

         SECTION 1.01. THE MERGER. Upon the terms and conditions hereof, and in
accordance with the DGCL and the LLC Act, the LLC shall be merged with and into
the Corporation and the Corporation shall be the surviving entity in the Merger
(in this capacity, the "Surviving Entity").

         SECTION 1.02. EFFECTIVE TIME. As soon as practicable after approval of
the Merger, a Certificate of Merger with respect to the Merger shall be filed
with (i) the Secretary of State of Delaware in accordance with the provisions of
Sections 251(c) and 264(c) of the DGCL and (ii) the Secretary of the State of
Missouri in accordance with Sections 347.715 of the LLC Act. The Merger shall be
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware in accordance with Section 103 of
the DGCL and the Secretary of State of the State of Missouri in accordance with
Section 347.725 of the LLC Act or at such later time as is specified in the
Certificate of Merger (the "Effective Time").

         SECTION 1.03. CERTAIN EFFECTS OF THE MERGER. After the Effective Time
of the Merger (i) the separate existence of the LLC shall cease and the LLC
shall be merged with and into the Corporation and (ii) the Merger shall have all
the effects set forth in Sections 259, 260 and 261 of the DGCL and Section
347.730 of the LLC Act.

<PAGE>



      SECTION 1.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and By-Laws of the Corporation as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation and By-Laws of the
Surviving Entity until further amended or supplemented in accordance with their
respective terms and the provisions of the DGCL.

      SECTION 1.05. DIRECTORS AND OFFICERS OF THE SURVIVING ENTITY. The
directors and officers of the Corporation immediately prior to the Effective
Time shall be the directors and officers of the Surviving Entity, until their
respective successors shall have been duly elected and qualified or until their
earlier death, resignation or removal.


                                   ARTICLE II
                        EFFECT OF MERGER ON CAPITAL STOCK
                         OF THE CONSTITUENT CORPORATIONS

      SECTION 2.01. CONVERSION OF MEMBER INTERESTS OF THE LLC. At the Effective
Time, all of the Class A, Class B and Class C Member Interests of the LLC which
shall be outstanding immediately prior to the Effective Time, shall, by virtue
of the Merger and without any action on the part of the holder thereof be
converted as follows:

                  (a) Each one-ten thousandth (1/10,000th) of one percent of
         Class A Member Interest in the LLC, assuming all Member Interests are
         fully converted to Class A Member Interests, outstanding immediately
         prior to the Effective Time shall be converted into and become ten
         shares of $0.01 par value Class C Preferred Stock of the Surviving
         Entity as set forth on Exhibit A.

                  (b) Each one-ten thousandth (1/10,000th) of one percent of the
         Class A Member Interest into which the Class B Member Interests of the
         LLC are convertible, assuming all Member Interests are fully converted
         to Class A Member Interests, outstanding immediately prior to the
         Effective Time shall be converted into and become ten shares of $0.01
         par value of the Class A Preferred Stock of the Surviving Entity, and
         further subdivided into the respective Series of Class A Preferred
         Stock as set forth on Exhibit A.

                  (c) Each one-ten thousandth (1/10,000th) of one percent of the
         Class A Member Interest into which the Class C Member Interest in the
         LLC are convertible, assuming all Member Interests are fully converted
         to Class A Member Interests, outstanding immediately prior to the
         Effective Time shall be converted into and become
<PAGE>
         ten shares of $0.01 par value of the Class B Preferred Stock of the
         Surviving Entity, and further subdivided into the respective Series of
         Class B Preferred Stock as set forth on Exhibit A.

                  (d) The accrued but unpaid distributions with respect to the
         Class B Member Interests immediately prior to the Effective Time shall
         be converted into and become the number of shares of $0.01 par value
         Common Stock of the Surviving Entity and shall be issued to the persons
         as set forth on Exhibit A.

                                   ARTICLE III
                                  MISCELLANEOUS

         SECTION 3.01. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of both parties.

         SECTION 3.02. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, all of which shall remain in full force
and effect.

         SECTION 3.03. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given to the respective parties when delivered in person, by cable,
telegram, telex or telecopy, or when received by registered or certified mail
(postage prepaid, return receipt requested), at their respective principal
executive offices or at such other address as the person to whom notice is given
may have previously furnished to the other in writing in the manner set forth
above (provided that notice of any change of address shall be effective only
upon receipt thereof).

         SECTION 3.04. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Missouri, without
regard to its conflict of laws principles.

         SECTION 3.05. DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

         SECTION 3.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.

         SECTION 3.07. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure to the benefit of each party hereto and their respective successors,
and nothing in this Agreement, express or implied, is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.



<PAGE>
         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.

                                             BUILD-A-BEAR WORKSHOP, L.L.C.


                                             By:      /s/  Maxine Clark
                                                 -------------------------------
                                                      Maxine Clark
                                                      Title: Manager

                                             BUILD-A-BEAR WORKSHOP, INC.


                                             By:      /s/ Maxine Clark
                                                 -------------------------------
                                                      Name: Maxine Clark
                                                      Title: President
Attest:

   /s/ Brian Vent
----------------------------
Name:
Title: Secretary


<PAGE>



                                                                      EXHIBIT A
<TABLE>
<CAPTION>
                                            Preferred Stock
                                       --------------------------
                     Common Stock
       Name            (shares)        Series         Shares (#)
       ----            --------        ------         -----------
<S>                  <C>               <C>            <C>
SSI                                      C-1           3,418,306
--------------       ------------      ------         -----------
Windsor                   84,791         C-2             911,383
                                         A-1           1,137,898
--------------       ------------      ------         -----------
C. Ebsworth                              C-2             474,124
--------------       ------------      ------         -----------
Vent                                     C-3              64,500
--------------       ------------      ------         -----------
Smith                                    C-3              64,500
--------------       ------------      ------         -----------
Weiss                                    C-3              65,276
--------------       ------------      ------         -----------
Hycel                     23,572         A-2             139,981
                                         B-1             275,352
--------------       ------------      ------         -----------
Walnut                    98,804         A-3             961,263
                                         B-2           1,453,072
--------------       ------------      ------         -----------
KCEP                      10,352         A-4             205,824
                                         B-3             311,003
--------------       ------------      ------         -----------
Total:                   217,520                       9,482,480
--------------       ------------      ------         -----------
</TABLE>



<PAGE>



                             CERTIFICATE OF MANAGER
                                       OF
                          BUILD-A-BEAR WORKSHOP, L.L.C.


         I, Maxine Clark, Manager of the Build-a-Bear Workshop, L.L.C., a
Missouri limited liability company ("the LLC"), hereby certify that the
Agreement and Plan of Merger to which this certificate is attached, after having
been first duly signed on behalf of the LLC by its Manager, was duly submitted
to the Members of the LLC and was approved by the written consent of the Members
of the LLC on April 3, 2000.

         WITNESS my hand this 3rd day of April, 2000.


                                                    /s/ Maxine Clark
                                                -------------------------------
                                                Manager




                            CERTIFICATE OF SECRETARY
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.

         I, Brian Vent, the Secretary of Build-A-Bear Workshop, Inc., a
Delaware corporation (the "Corporation"), hereby certify that the Agreement and
Plan of Merger to which this certificate is attached, after having been first
duly signed on behalf of the Corporation by its President and attested by its
Secretary under the corporate seal of the Corporation.

         WITNESS my hand this 3rd day of April, 2000.


                                                    /s/ Brian Vent
                                                ------------------------------
                                                Secretary


<PAGE>



         The foregoing Agreement and Plan of Merger having been executed on
behalf of each of the parties thereto and having been adopted by the members of
each of Build-A-Bear Workshop, L.L.C., a limited liability company organized and
existing under the laws of the State of Missouri, and the stockholders of
Build-A-Bear Workshop, Inc., a corporation organized and existing under the laws
of the State of Delaware, in accordance with the provisions of the General
Corporation Law of the State of Delaware and that fact having been certified on
said Agreement and Plan of Merger by the Manager of the LLC and the Secretary of
the Corporation, the President of said corporation does hereby execute said
Agreement and Plan of Merger and the Secretary of the Corporation does hereby
attest said Agreement and Plan of Merger, by authority of the directors and
members thereof and as the respective act, deed and agreement of each of said
corporation and limited liability company on the 3rd day of April, 2000.

                                          BUILD-A-BEAR WORKSHOP, L.L.C.


                                          By:    /s/ Maxine Clark
                                              -----------------------------
                                                 Maxine Clark
                                                 Title: Manager




                                          BUILD-A-BEAR WORKSHOP, INC.


                                          By:    /s/ Maxine Clark
                                              ----------------------------
                                                 Name: Maxine Clark
                                                 Title: President


Attest:

   /s/ Brian Vent
-----------------------------
Name:
Title: Secretary



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>3
<FILENAME>c86750exv3w1.txt
<DESCRIPTION>AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>

                                                                    EXHIBIT 3.1
                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.

         It is hereby certified that:

         1. The present name of the corporation (herein called the
"Corporation") is BUILD-A-BEAR WORKSHOP, INC., which is the name under which the
Corporation was originally incorporated; and the date of filing the original
Certificate of Incorporation of the Corporation with the Secretary of State of
Delaware is March 31, 2000.

         2. The Certificate of Incorporation is hereby amended in its entirety
as set forth in the Amended and Restated Certificate of Incorporation herein
provided for.

         3. The provisions of the Certificate of Incorporation of the
Corporation as heretofore amended and/or supplemented, including, without
limitation, by that certain Resolution of the Board of Directors of the
Corporation dated April 3, 2000 designating the preferences and rights of
certain series of the Corporation's preferred stock, and as herein amended, are
hereby restated and integrated into the single instrument which is hereinafter
set forth, and which is entitled Amended and Restated Certificate of
Incorporation of BUILD-A-BEAR WORKSHOP, INC. without any further amendments
other than the amendments herein certified and without any discrepancy between
the provisions of the Certificate of Incorporation as heretofore amended and
supplemented and the provisions of the said single instrument hereinafter set
forth.

         4. The amendments and the restatement of the Amended and Restated
Certificate of Incorporation herein certified have been duly adopted by the
stockholders in accordance with the provisions of Sections 228, 242 and 245 of
the General Corporation law of the State of Delaware.

         5. The Certificate of Incorporation of the Corporation, as amended and
restated herein, shall at the effective time of this Amended and Restated
Certificate of Incorporation, read as follows:

                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.

                                  ARTICLE FIRST
           The name of the corporation is BUILD-A-BEAR WORKSHOP, INC.

                                 ARTICLE SECOND

The address of the registered office of the Corporation in the State of Delaware
is located

<PAGE>




at 2711 Centerville Road, Suite 400, Wilmington, Delaware, New Castle County,
19808 The name and address of its registered agent is Corporation Service
Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware, New Castle
County, 19808.

                                  ARTICLE THIRD

         The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

                                 ARTICLE FOURTH

         The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 50,000,000 shares, consisting of
(i) 25,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock") and (ii) 25,000,000 shares of Preferred Stock, par value $.01 per share
(issuable in one or more classes or series) (the "Preferred Stock").

         The designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitation or restrictions of each
class of stock are as follows:

         (a) Preferred Stock. (i) The Board of Directors of this Corporation is
expressly authorized to provide for the issuance of any or all shares of the
Preferred Stock in one or more classes or series and to fix each such class or
series such voting power, full or limited, or no voting powers and such
distinctive designations, preferences, and relative, participating, optional or
other special rights and such qualifications, limitations, or restrictions
thereof, as shall be stated and expressed in a resolution or resolutions adopted
by the Board of Directors providing for the issuance of such class or series and
as may be permitted by the laws of the State of Delaware.

             (ii) The Corporation hereby designates thirteen (13) series of
preferred stock as follows:



<TABLE>
<CAPTION>



                  No. of                        No. of                      No. of                       No. of
Series A         Shares         Series B        Shares        Series C      Shares        Series D      Shares
--------         ------         --------        ------        --------      ------        --------      ------
<S>              <C>            <C>             <C>           <C>            <C>          <C>            <C>
  A-1             1,137,898        B-1            275,352        C-1        3,418,306         D          up to
                                                                                                         3,629,219
  A-2               139,981        B-2          1,453,072        C-2        1,385,507
  A-3               961,263        B-3            311,003        C-3          194,276
  A-4               205,824        B-4          1,604,680
  A-5             1,061,986
</TABLE>


The voting powers, preferences and relative, participating, optional and other
special rights of the shares of each such series of Preferred Stock, and the
qualifications, limitations and restrictions thereof, as are set forth in
Exhibit A, attached hereto.

         (b) Common Stock. Each holder of Common Stock shall be entitled to one
vote for each shares of Common Stock held. There shall be no cumulative voting.
Each share of




                                       2

<PAGE>




Common Stock issued and outstanding shall be identical in all respects one with
the other, and no dividends shall be paid on any shares of Common Stock unless
the same dividend is paid on all shares of Common Stock outstanding at the time
of such payment. Except for and subject to those rights expressly granted to the
holders of the Preferred Stock or except as may be provided by the laws of the
State of Delaware, the holders of Common Stock shall have exclusively all other
rights of stockholders, including, but not by way of limitation, (i) the right
to receive dividends, when and as declared by the Board of Directors out of
assets lawfully available therefor and (ii) in the event of any distribution of
assets upon liquidation, dissolution or winding up of the Corporation or
otherwise, the right to receive ratably and equally all the assets and funds of
the Corporation remaining upon liquidation, dissolution or winding up of the
Corporation as herein provided, subject to any preferential rights of any then
outstanding securities of the Corporation.

                                  ARTICLE FIFTH

         For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation, and regulation of the
powers of the Corporation and of its directors and stockholders, it is further
provided:

         (a) The number of directors of the Corporation shall be such as from
time to time shall be fixed in the manner provided in the By-laws of the
Corporation. The election of directors of the Corporation need not be by ballot
unless the By-laws so require.

         (b) In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
and empowered:

                  (i) To make, alter, amend or repeal the By-laws in any manner
         not inconsistent with the laws of the State of Delaware or this
         Certificate of Incorporation.

                  (ii) Without the assent or vote of the stockholders, to
         authorize and issue obligations of the Corporation, secured or
         unsecured, and to include therein such provisions as to redemption,
         conversion or other terms thereof as the Board of Directors may
         determine, and to authorize the mortgaging or pledging, as security
         therefor, of any property of the Corporation, real or personal,
         including after-acquired property.

                  (iii) To determine whether any, and if any, what part, of the
         net profits of the Corporation or of its surplus shall be declared in
         dividends and paid to the stockholders, and to direct and determine the
         use and disposition of any such net profits or such surplus.

                  (iv) To fix from time to time the amount of net profits of the
         Corporation or of its surplus to be reserved as working capital or for
         any other lawful purpose.

                  (v) To determine the extent, if any, to which and the time and
         place at which, and the conditions under which, any stockholder of the
         Corporation may examine the books and records of the Corporation, other
         than the books and records now or hereafter required by statute to be
         kept open for inspection by the stockholders of the Corporation.



                                        3
<PAGE>




         In addition to the powers and authorities herein or by statute
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware,
of this Certificate of Incorporation and of the By-laws of the Corporation.

         (c) Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time for good
cause in the manner as shall be provided in the By-laws of the Corporation.

         (d) From time to time any of the provisions of this Certificate of
Incorporation may be altered, amended or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner and at the time prescribed by said laws and by
the provisions of this Certificate of Incorporation, and all rights at any time
conferred upon the stockholders of the Corporation by this Certificate of
Incorporation are granted subject to the provisions of this paragraph (d).


                                  ARTICLE SIXTH

         Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application of any
receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.

                                 ARTICLE SEVENTH

         The Corporation may purchase directly or indirectly its own shares to
the extent money or other property paid therefor does not (i) render the
Corporation unable to pay its debts as they become due in the ordinary course of
business or (ii) exceed the surplus of the Corporation, as defined under the
Delaware General Corporation Law.

         Notwithstanding the foregoing, the Corporation may purchase any of its
own shares for the following purposes, provided that the net assets are not less
than the amount of money or other property paid or issued therefor: (i) to
eliminate fractional shares; (ii) to collect or compromise indebtedness owed by
or to the Corporation; (iii) to pay dissenting shareholders entitled to payment
for their shares under the Delaware General Corporation Law; and (iv) to


                                       4
<PAGE>




effect the purchase or redemption of redeemable shares in accordance with the
Delaware General Corporation Law.


                                 ARTICLE EIGHTH

         (a) Every person who was or is a party or is threatened to be made a
party to or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person or a person of whom such person is a legal
representative is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation or for its benefit as a director,
officer, employee or agent of any other corporation, or as the representative of
the Corporation in a partnership, joint venture, trust or other entity, shall be
indemnified and held harmless by the Corporation to the fullest extent legally
permissible under the Delaware General Corporation Law, as amended from time to
time, against all expenses, liabilities and losses (including attorneys' fees,
judgments, fines and amounts paid or to be paid in settlement) reasonably paid
or incurred by such person in connection therewith. Such right of
indemnification shall be a contract right that may be enforced in any manner
desired by such person. Such right of indemnification shall include the right to
be paid by the Corporation the expenses incurred in defending any such action,
suit or proceeding in advance of its final disposition upon receipt of an
undertaking by or on behalf of such person to repay such amount if ultimately it
should be determined that such person is not entitled to be indemnified by the
Corporation under the Delaware General Corporation Law. Such right of
indemnification shall not be exclusive of any other right which such directors,
officers or representatives may have or hereafter acquire and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any By-law, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under this Article
Eighth.

         (b) The Board of Directors may adopt By-laws from time to time with
respect to indemnification to provide at all times the fullest indemnification
permitted by the Delaware General Corporation Law, as amended from time to time,
and may cause the Corporation to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation or for its
benefit as a director, officer, employee or agent of any other corporation, or
as the representative of the Corporation in a partnership, joint venture, trust
or other entity, against any expense, liability or loss asserted against or
incurred by any such person in any such capacity or arising out of any such
status, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss.


                                  ARTICLE NINTH

         No director of the Corporation or any person acting at the direction of
the Board of Directors shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director; provided,

                                       5

<PAGE>
however, that the foregoing shall not be deemed to eliminate or limit the
liability of a director to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. This provision is not intended to eliminate or narrow
any defenses to or protection against liability otherwise available to directors
of the Corporation. No amendment to or repeal of this Article Ninth shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment. Any person or persons who, pursuant to any
provision of this Certificate of Incorporation, exercises or performs any of the
powers or duties conferred or imposed upon a director of the Corporation shall
be treated as a director for purposes of this Article Ninth and shall be
entitled to the limitation of liability set forth in this Article Ninth.

         6. The stockholders of the Corporation approved the adoption of the
amendment and restatement in accordance with the provisions of Section 228 of
the General Corporation Law of the State of Delaware; and

         7. Said amendment and restatement was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware, and that the capital of the Corporation will not be reduced under or
by reason of the amendment and restatement.

         IN WITNESS WHEREOF, the undersigned, being the President of the
Corporation, does make this amended and restated certificate on the 21st day of
September, 2001.


                                          /s/ Maxine Clark
                                          -------------------------------------
                                          Maxine Clark, President

                                       6

<PAGE>




                          CERTIFICATE OF CORRECTION OF
                        AMENDED AND RESTATED CERTIFICATE
                                OF INCORPORATION
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.


It is hereby certified that:

                  1. The name of the corporation (hereinafter called the
"corporation") is Build-A-Bear Workshop, Inc.


                  2. The amended and restated certificate of incorporation of
the corporation, which was filed by the Secretary of State of Delaware on
September 21, 2001 is hereby corrected.

                  3. The inaccuracy to be corrected in said instrument is as
follows:

                  The registered agent is Corporation Service Company. The
registered address is 2711 Centerville Road, Suite 400, Wilmington, DE 19808.

                  4. The portion of the instrument in corrected form is as
follows:

                  The registered agent is The Corporation Trust Company, the
registered address is 1209 Orange St., Wilmington, DE 19801.





Signed on October 30, 2001



                                          /s/ Maxine Clark
                                          -------------------------------------
                                          Maxine Clark, President

<PAGE>
                                    EXHIBIT A

INTRODUCTION. The Corporation hereby establishes thirteen (13) series of
preferred stock as follows:

<Table>
<Caption>
Series A      No. of Shares      Series B      No. of Shares     Series C       No. of Shares     Series D         No. of Shares
-----------   --------------   ------------   ---------------   -----------   ---------------   ---------------   ---------------
<S>           <C>              <C>            <C>               <C>           <C>               <C>               <C>
   A-1             1,137,898        B-1               275,352           C-1         3,418,306         D           up to 3,629,219
   A-2               139,981        B-2             1,453,072           C-2         1,385,507
   A-3               961,263        B-3               311,003           C-3           194,276
   A-4               205,824        B-4             1,604,680
   A-5             1,061,986
</Table>

The Series A-1, A-2, A-3, A-4 and A-5 Preferred Stock is the "Series A
Preferred" and is deemed to be one class of stock, the Series B-1, B-2, B-3 and
B-4 Preferred Stock is the "Series B Preferred" and is deemed to be one class of
stock, the Series C-1, C-2 and C-3 Preferred Stock is the "Series C Preferred"
and is deemed to be one class of stock, and the Series D Preferred Stock is the
"Series D Preferred" and is deemed to be one class of stock. As used herein, the
term "Senior Preferred" shall refer collectively to the Series A Preferred, the
Series B Preferred and the Series D Preferred. As used herein, the term
"Preferred Stock" shall refer collectively to the Senior Preferred and the
Series C Preferred. The preferences and relative, participating, optional and
other special rights of the Preferred Stock, and the qualifications, limitations
and restrictions thereof, are as follows:

1. DIVIDENDS.

           In addition to any dividends provided for herein, the holders of the
Preferred Stock shall be entitled to participate in cash dividends with the
Company's common stock, par value $.01 per share ("Common Stock"), for cash
dividends declared on the Common Stock; provided, that holders of the Preferred
Stock shall share such dividends pro rata with (i) the holders of the Common
Stock in accordance with the number of shares of Common Stock held by such
holders and (ii) other holders of the Preferred Stock in accordance with the
number of shares of Common Stock receivable upon conversion of the Preferred
Stock held by such holders."

2. REDEMPTION.

         (a) On the date set forth in a notice joined in by Holders of at least
75% of the Senior Preferred given on or after April 3, 2006 (the "Redemption
Date"), the Corporation shall redeem the shares of Series A-5 Preferred, Series
B-4 Preferred, and Series D Preferred then outstanding (the "Redemption
Preferred") at an amount equal to the respective Liquidation Preference Amounts
(as hereinafter defined) for such Redemption Preferred provided for in Section
3(a) (such amount referred to as the "Redemption Price").

         (b) Procedure for Redemption. (i) At least 20 days (and not more than
60 days) prior to the Redemption Date, written notice (a "Redemption Notice")
shall be sent to the holders of the



<PAGE>



Redemption Preferred, at its notice address last shown on the records of the
transfer agent of the Redemption Preferred (or for the records of the
Corporation, if it serves as its own transfer agent), by (A) first class
certified or registered mail, postage prepaid, (B) nationally recognized
overnight courier service, or (C) personal delivery, notifying such holder of
the Redemption Date, the Redemption Price, the total number of shares to be
redeemed and the number of shares to be redeemed from such holder, and calling
upon such holder to surrender to the Corporation, in the manner and at the place
designated, her, his or its certificate or certificates representing the shares
to be redeemed. In order to facilitate the redemption of the Redemption
Preferred, the Board of Directors may fix a record date for the determination of
holders of the Redemption Preferred, not more than 60 days nor less than 10 days
prior to the Redemption Date.

         (ii) On or prior to any Redemption Date, each such holders of the
Redemption Preferred shall surrender her, his or its certificates representing
such shares to the Corporation, in the manner and at the place designated in the
Redemption Notice, and against such surrender the Redemption Price of such
shares shall be paid on the Redemption Date to the order of the person whose
name appears on each such certificate as the owner thereof. Each surrendered
certificate shall be canceled. From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of the shares of Redemption Preferred (except the right to receive the
Redemption Price without interest against surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.

         (iii) If the funds of the Corporation legally available for redemption
of Redemption Preferred on the Redemption Date are insufficient to redeem the
full number of shares of Redemption Preferred required by this to be redeemed on
such date, those funds which are legally available and not subject to such
restrictions shall be used to redeem the maximum possible number of shares of
such Redemption Preferred from each class of Holders whose shares are otherwise
required to be redeemed in order of priority as follows: (A) first, the Series D
Preferred, ratably among the Series D Holders based upon the amount such Series
D Holders would receive in full redemption of their shares; and (B) second, the
Series A-5 Preferred and Series B-4 Preferred, considered together as one class,
ratably among the Holders of the Series A-5 Preferred and Series B-4 Preferred
based upon the amount such Holders would receive in full redemption of their
shares; provided, however, that in no event shall Holders of Series A-5
Preferred and Series B-4 Preferred receive any proceeds in redemption until all
Series D Holders required to be redeemed have been paid in full. At any time
thereafter when additional funds of the Corporation not subject to such
restrictions become legally available for the redemption of Redemption
Preferred, such funds will be used promptly to redeem the balance of the
Redemption Preferred shares which the Corporation was theretofore obligated to
redeem, ratably on the basis set forth in the preceding sentence.

3. LIQUIDATION RIGHTS.

         (a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities and obligations of the Corporation
(excluding any liabilities or obligations payable with respect to shares of
capital stock of the Corporation) the holders of shares Series D



<PAGE>



Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of any of the Series A Preferred, Series B Preferred or Junior Capital
Stock (as defined below, and including any Series C Preferred), by reason of
their ownership thereof, in the amount per share as set forth below (as adjusted
for any stock dividends, combinations or splits with respect to such shares)
(the "Series D Liquidation Preference Amount"):

<Table>
<Caption>
           Series                                                       Liquidation Preference
           ------                                                       ----------------------
<S>                                                                     <C>
           D Shares Issues on September 21, 2001                                $7.320508
           D Shares Issues on November 19, 2001                                 $7.251833
           D Shares Issues on December 19, 2001                                 $7.216961
</Table>


If upon the occurrence of such event, the assets and funds to be distributed
among the holders of the Series D Preferred shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series D Preferred in
proportion to the preferential amount each such holder is otherwise entitled to
receive relative to the preferential amount all such holders are otherwise
entitled to receive. As used herein, the term "Junior Capital Stock" means any
shares of capital stock of the Corporation (including, without limitation, the
Corporation's Common Stock) other than shares of the Corporation's capital stock
permitted to rank on a parity with or senior to the Series A Preferred.

         (b) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities and obligations of the Corporation
(excluding any liabilities or obligations payable with respect to shares of
capital stock of the Corporation) and subject to the payment in full of the
Series D Liquidation Preference Amount as provided in paragraph (a) of this
Section 3, the holders of shares of Series A Preferred and Series B Preferred
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of any Junior
Capital Stock (including any Series C Preferred), by reason of their ownership
thereof, in the amount per share as set forth below (as adjusted for any stock
dividends, combinations or splits with respect to such shares) (the "Series A
and B Liquidation Preference Amount"; collectively with the Series D Liquidation
Preference Amount, the "Liquidation Preference Amounts"):


<PAGE>



<Table>
<Caption>
                    Series                                     Liquidation Preference
                    ------                                     ----------------------
<S>                                                            <C>
                     A-1                                                $3.195629
                     A-2                                                $4.635378
                     A-3                                                $3.389638
                     A-4                                                $4.541183
                     A-5                                                $7.363548
                     B-1                                                $1.808051
                     B-2                                                $1.720493
                     B-3                                                $2.305925
                     B-4                                                $3.739067
</Table>


If upon the occurrence of such event, the assets and funds to be distributed
among the holders of the Series A Preferred and the Series B Preferred shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A Preferred and Series B Preferred in proportion to the preferential
amount each such holder is otherwise entitled to receive relative to the
preferential amount all such holders are otherwise entitled to receive.

           (c) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities and obligations of the Corporation
(excluding any liabilities or obligations payable with respect to shares of
capital stock of the Corporation) and subject to the payment in full of the
liquidation preferences with respect to the Senior Preferred as provided in
paragraphs (a) and (b) of this Section 3, the holders of the Series C Preferred
shall be entitled to receive, prior and in preference to any further
distribution of any of the assets or surplus funds of the Corporation to the
holders of any other Junior Capital Stock, by reason of their ownership thereof,
the amount per share as set forth below (as adjusted for any stock dividends,
combinations or splits with respect to such shares) for each share held by them:

<Table>
<Caption>
                    Series                                        Liquidation Preference
                    ------                                        ----------------------
<S>                                                               <C>
                     C-1                                                $0.105315
                     C-2                                                $0.97329
                     C-3                                                $0.720934
</Table>


If upon the occurrence of such event, the assets and funds to be distributed
among the holders of the Series C Preferred shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series C Preferred in
proportion to the preferential amount each such holder is otherwise entitled to
receive relative to the preferential amount all such holders are otherwise
entitled to receive.

         (d) After payment to the holders of the Senior Preferred and the Series
C Preferred of the amounts set forth in paragraphs (a), (b) and (c) of this
Section 3, respectively, the remaining



<PAGE>



assets and funds of the Corporation legally available for distribution, if any,
shall be distributed among the holders of the Preferred Stock and the Common
Stock ratably in proportion to the number of shares of Common Stock which the
holders of the Preferred Stock then have the right to acquire upon conversion of
the shares of Preferred Stock then held by them and the number of shares of
Common Stock then held by the holders of the Common Stock, respectively.

         (e) Whenever the distribution provided for in this Section 3 shall be
payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.

         (f) The following events shall be considered a liquidation under this
Section 3:

                  (i) any consolidation or merger of the Corporation with or
into any other Corporation or other entity or person, or any other corporate
reorganization in which the Corporation shall not be the continuing or surviving
entity of such consolidation, merger or reorganization or any transaction or
series of related transactions by the Corporation in which in excess of 50% of
the Corporation's voting securities are transferred; or

                  (ii) a sale, lease, license or other disposition of all or
substantially all of the assets of the Corporation.

4. CONVERSION. The holders of the Preferred Stock shall have conversion rights
as follows (the "Conversion Rights"):

         (a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the Corporation or any transfer agent
for such stock, into such number of shares of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Liquidation Preference
Amount by the Preferred Conversion Price applicable to such share. The
"Preferred Conversion Price" shall initially be as set forth below, and as
adjusted hereinafter, in effect on the date the certificate is surrendered for
conversion in accordance with Section 4(c):

<Table>
<Caption>
                    Series                                     Preferred Conversion Price
                    ------                                     --------------------------
<S>                                                            <C>
                     A-1                                                $2.451890
                     A-2                                                $3.556556
                     A-3                                                $2.600746
                     A-4                                                $3.484283
                     A-5                                                $5.649780
                     B-1                                                $1.808051
                     B-2                                                $1.720493
                     B-3                                                $2.305925
                     B-4                                                $3.739067
</Table>


<PAGE>


<Table>
<S>                                                            <C>
                     C-1                                                $0.105315
                     C-2                                                $0.973290
                     C-3                                                $0.720934
                     D                                                  $6.10
</Table>


         (b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into such number of shares of fully paid and
nonassessable shares of Common Stock as is determined by dividing the
Liquidation Preference Amount by the Preferred Conversion Price applicable to
such share upon the closing of the sale of the Corporation's Common Stock
pursuant to a public offering, underwritten on a firm commitment basis pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act") of shares of the Common Stock the aggregate gross
proceeds to the Corporation and any selling shareholders (prior to underwriting
discounts and commissions and other expenses of issuance) of which equal or
exceed $25,000,000 and (i) at any time prior to September 21, 2004, the offering
is managed by a nationally recognized underwriter, (ii) between September 22,
2004 and September 21, 2005, the price per share is at least $15 (appropriately
adjusted for stock splits, recapitalizations and the like), or (iii) thereafter
the price per share is at least $20 (appropriately adjusted for stock splits,
recapitalizations and the like).

         (c) Mechanics of Conversion.

                  (i) Before any holder of Preferred Stock shall be entitled to
convert the same into shares of Common Stock pursuant to paragraph (a) of this
Section 4, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for
such stock, and shall give written notice to the Corporation at such office that
such holder elects to convert the same and shall state therein the name or names
in which such holder wishes the certificate or certificates for such shares of
Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver to such holder of Preferred Stock, a certificate
or certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of surrender of the
shares of Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.

                  (ii) In the event of an automatic conversion pursuant to
paragraph (b) of this Section 4, the conversion may, at the option of any holder
tendering shares of Preferred Stock for conversion, be conditioned upon the
closing with the underwriters of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock upon
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such sale of
securities. No holder of shares of Preferred Stock shall receive certificates
for shares of Common Stock upon such conversion unless and until such holder
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for such stock and shall give
written direction to the Corporation of the name or names in which such holder
wishes the certificate or certificates for such shares of Common Stock to be
issued.



<PAGE>



         (d) Adjustments to Preferred Conversion Price for Certain Diluting
Issues.

                  (I) Special Definitions. For purposes of paragraph (d) of this
Section 4, the following definitions apply:

                           (1) "Options" shall mean rights, options and warrants
to subscribe for, purchase or otherwise acquire Common Stock, Preferred Stock or
Convertible Securities (defined below) other than the options pursuant to
(d)(I)(4)(B) below (the "Employee Options").

                           (2) "Original Issue Date" shall mean, with respect to
the Series A Preferred, Series B Preferred and Series C Preferred, April 3, 2000
and, with respect to the Series D Preferred, the date on which a share of Series
D Preferred was first issued.

                           (3) "Convertible Securities" shall mean any evidences
of indebtedness, shares or other securities convertible into or exchangeable for
Common Stock.

                           (4) "Additional Shares" shall mean all shares of
Common Stock issued (or, pursuant to subparagraph (d)(III) of this Section 4,
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock issued (or, pursuant to subparagraph (d)(III) of
this Section 4, deemed to be issued) or issuable in any of the following
transactions:

                                    (A) upon conversion of shares of Preferred
Stock;

                                    (B) up to 3,700,000 shares of Common Stock
or other securities, or rights, options or warrants to purchase said shares of
Common Stock or other securities of the Corporation, securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
shares of Common Stock sold or granted to employees, officers, directors,
consultants, or advisors of the Corporation pursuant to an Employee Stock Plan
approved by the Board of Directors of the Corporation; or

                                    (C) any shares of Series D Preferred issued
within ninety (90) days after the Original Issue Date so long as such shares
were issued at a price equal to the Series D Liquidation Preference Amount in
effect as of the Original Issue Date for the Series D Preferred.

                  (II) No Adjustment of Conversion Price. Any provision herein
to the contrary notwithstanding, no adjustment in the Preferred Conversion Price
shall be made in respect of the issuance of Additional Shares of Common Stock
unless the consideration per share (determined pursuant to subparagraph (d)(V)
of this Section 4) for an Additional Share of Common Stock issued or deemed to
be issued by the Corporation is less than the Preferred Conversion Price in
effect on the date of, and immediately prior to, such issue.

                  (III) Deemed Issue of Additional Shares. In the event the
Corporation at any time or from time to time on or after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of



<PAGE>



securities then entitled to receive any such Options or Convertible Securities,
then the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein designed to protect
against dilution) of Common Stock issuable upon the exercise of such Options or,
in the case of Convertible Securities and Options for Convertible Securities,
the conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date, provided that in any such case in which Additional Shares of
Common Stock are deemed to be issued:

                           (1) no further adjustments in the Preferred
Conversion Price shall be made upon the subsequent issue of such Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;

                           (2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Preferred Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities (provided, however, that no such
adjustment of the Preferred Conversion Price shall affect Common Stock
previously issued upon conversion of the Senior Preferred);

                           (3) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Preferred Conversion Price computed upon the
original issuance thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:

                                    (A) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such exercise or for
the issue of all such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually received by the
Corporation upon such conversion or exchange, and

                                    (B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
(determined pursuant to



<PAGE>



subparagraph (d)(V) of this Section 4) upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;

                           (4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Preferred Conversion Price to an
amount which exceeds the lower of (a) the Preferred Conversion Price on the
original adjustment date, or (b) the Preferred Conversion Price that would have
resulted from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date;

                           (5) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Preferred Conversion Price shall be made until the expiration or exercise of
all such Options, whereupon such adjustment shall be made in the same manner
provided in clause (3) above; and

                           (6) in the event that any adjustment described in
this subparagraph (d)(III) is made to any Additional Shares of Common Stock that
were originally issued (or deemed issued) for a consideration per share equal to
or in excess of the Preferred Conversion Price then in effect that, had such
adjustment been made prior to such original issue date (or deemed original issue
date) would have caused such Additional Shares of Common Stock to be issued for
a consideration per share less than the Preferred Conversion Price then in
effect, then such Additional Shares of Common Stock shall be deemed to have been
issued as of the date of any such adjustment.

                  (IV) Adjustment of Preferred Conversion Price. (1) In the
event this Corporation, at any time on or after the Original Issue Date, shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to subparagraph (d)(III) of this Section 4)
without consideration or for a consideration per share less than the Preferred
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, the Preferred Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying the Preferred Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the Preferred
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For the purpose of the above calculation, the number of
shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all outstanding shares of Preferred
Stock and all Convertible Securities had been fully converted into shares of
Common Stock immediately prior to such issuance and all outstanding Options,
other than Employee Options, had been fully exercised immediately prior to such
issuance (and the resulting securities fully converted into shares of Common
Stock, if so convertible) as of such date, but not including in such calculation
any additional shares of Common Stock issuable with respect to outstanding
shares of Preferred Stock, Convertible Securities or Options solely as a result
of the adjustment of the respective



<PAGE>



conversion prices (or other conversion ratios) resulting from the issuance of
the Additional Shares of Common Stock causing the adjustment in question.

                  (V) Determination of Consideration. For purposes of paragraph
(d) of this Section 4, the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:

                           (1) Cash and Property. Such consideration shall:

                                    (A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Corporation excluding
amounts paid or payable for accrued interest or accrued dividends;

                                    (B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and

                                    (C) in the event Additional Shares are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.

                           (2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares deemed
to have been issued pursuant to subparagraph (d)(III) of this Section 4,
relating to Options and Convertible Securities shall be determined by dividing:

                                    (A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against dilution) payable
to the Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities by

                                    (B) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against dilution) issuable upon
the exercise of such Options or conversion or exchange of such Convertible
Securities.

         (e) Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
at any time or from time to time on or after the Original Issue Date shall
declare or pay, without consideration, any dividend on the Common Stock payable
in shares of Common Stock or in any right to acquire shares of



<PAGE>



Common Stock for no consideration, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by payment of a
dividend in shares of Common Stock or in any right to acquire shares of Common
Stock), or in the event the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Common Stock, then the Preferred Conversion Price in effect
immediately prior to such event shall, concurrently with the effectiveness of
such event, be proportionately decreased or increased, as appropriate. In the
event that the Corporation shall declare or pay, without consideration, any
dividend on the Common Stock payable in any right to acquire shares of Common
Stock for no consideration, then the Corporation shall be deemed to have made a
dividend payable in shares of Common Stock in an amount equal to the maximum
number of shares issuable upon exercise of such rights to acquire Common Stock.

         (f) Adjustments for Reclassification and Reorganization. If the Common
Stock issuable upon conversion of the Preferred Stock shall be changed into the
same or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for in paragraph (e) of this
Section 4 above or a merger or other reorganization referred to in paragraph (f)
of Section 3 above), the Preferred Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Preferred Stock shall thereafter be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been received by the holders upon conversion of the
Senior Preferred immediately before that change.

         (g) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance of performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Preferred Conversion Price against
impairment.

         (h) Certificates as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Preferred Conversion Price pursuant to this
Section 4, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Preferred Stock a certificate executed by the Corporation's
President or Chief Financial Officer setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Senior Preferred, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Preferred Conversion Price at the time in effect, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of the Senior Preferred.



<PAGE>



           (i) Notices of Record Date. In the event that the Corporation shall
propose at any time prior to the conversion of all outstanding shares of the
Preferred Stock: (I) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus; (II)
to offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights;
(III) to effect any reclassification or recapitalization of its Common Stock
outstanding involving a change in the Common Stock; or (IV) to merge or
consolidate with or into any other corporation, or sell, lease or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up; then, in
connection with each such event, the Corporation shall send to the holders of
Preferred Stock:

                  (1) at least twenty (20) days' prior written notice of the
date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote, if any, in
respect of the matters referred to in clauses (III) and (IV) above; and

                  (2) in the case of the matters referred to in clauses (III)
and (IV) above, at least twenty (20) days' prior written notice of the date when
the same shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).

         (j) Issue Taxes. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.

         (k) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Certificate of
Incorporation.

         (l) Fractional Shares. No fractional share shall be issued upon the
conversion of any share or shares of Senior Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Preferred Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to the fair



<PAGE>



market value of such fraction on the date of conversion (as determined in good
faith by the Board of Directors).

         (m) Notices. Any notice required by the provisions of this Section 4 to
be given to the holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, or if sent by facsimile or
delivered personally by hand or nationally recognized courier and addressed to
each holder of record at such holder's address or facsimile number appearing in
the records of the Corporation.

5. VOTING.

         (a) Except as otherwise provided herein or in any other agreement
between the Corporation and the holders of Senior Preferred, or as otherwise
required by law, each outstanding share of Senior Preferred shall not be
entitled to vote on any matter on which the stockholders of the Corporation
shall be entitled to vote, and shares of Senior Preferred shall not be included
in determining the number of shares voting or entitled to vote on any such
matters. Each outstanding share of Series C Preferred shall be entitled to vote
on any matter on which the holders of Common Stock of the Corporation shall be
entitled to vote, and shares of Series C Preferred shall be included in
determining the number of share voting or entitled to vote on any such matters.
Except as otherwise provided herein or as otherwise required by law, on any
matter on which the holders of shares of Common Stock and the holders of shares
of Preferred Stock are entitled to vote, the Common Stock and the Preferred
Stock shall vote together as a single class. Each holder of shares of Preferred
Stock entitled to vote may act by written consent in the same manner as the
holders of Common Stock, and shall be entitled to such number of votes as shall
be equal to the whole number of shares of Common Stock into which such holder's
aggregate number of shares of Preferred Stock are convertible (pursuant to
Section 4 hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.

         (b) Notwithstanding the foregoing subsection (a), the Corporation shall
not, without first obtaining the vote or written consent of the holders of 75%
of the outstanding shares of the Senior Preferred, voting together as a single
class:

                           (i) amend, repeal or modify any provision of the
                  Certificate of Incorporation in a manner that adversely
                  affects the powers, preferences or special rights that are
                  distinctive to the Senior Preferred;

                           (ii) amend, repeal or modify the Amended and Restated
                  Stockholders' Agreement between the Corporation and the
                  holders of the Preferred Stock;

                           (iii) amend, repeal or modify the Amended and
                  Restated Registration Rights Agreement between the Corporation
                  and the holders of the Preferred Stock;

                           (iv) amend, repeal or modify the existing agreements
                  between the Corporation and Maxine Clark; or



<PAGE>



                           (v) increase the number of members on the
                  Corporation's Board of Directors to more than seven (7).

         (c) Notwithstanding the foregoing subsection (a), the Corporation shall
not, without first obtaining the vote or written consent of the holders of 60%
of the outstanding shares of the Senior Preferred voting together as a single
class:

                           (i) sell, lease or otherwise dispose of all or
substantially all of the assets, property or business of the Corporation, or
merge or consolidate the Corporation with any person, or permit any other person
to merge into it, or undertake any other reorganization, other than mergers,
consolidations or reorganizations in which the Corporation is the surviving
corporation and, after giving effect to the merger, consolidation, or
reorganization, the holders of the Corporation's outstanding capital stock
immediately preceding such merger own more than fifty percent (50%) of the
outstanding capital stock of the surviving corporation;

                           (ii) create, incur, assume, guarantee, suffer to
exist or become or remain liable directly or indirectly, on account of any
indebtedness of borrowed money, except that the foregoing shall not apply to any
indebtedness existing as of the date hereof (including an increase of up to
$25,000,000 in total amount of the amounts that may be borrowed under the
Company's loan agreement with Firstar Bank, National Association, a national
banking association, or any other similar institution), or trade payables
incurred in the ordinary course of business for inventory or otherwise; or

                           (iii) authorize, create (by reclassification or
otherwise) or issue shares of any class or series of equity securities of the
Corporation.

         (d) Notwithstanding the foregoing subsection (a), the Corporation shall
not, without first obtaining the vote or written consent of the holders of a
majority of the outstanding shares of the Senior Preferred voting together as a
single class:

                           (i) repurchase or redeem any capital stock of the
Corporation (except for repurchases of Common Stock by the Corporation pursuant
to agreements which permit the Corporation to repurchase such shares upon
termination of employment or in exercise of the Corporation's right of first
refusal upon a proposed transfer);

                           (ii) enter into or amend any transaction between the
Corporation and an affiliate of the Corporation except in connection with
transactions made on an arms-length basis at the then-prevailing market rates;
or

                           (iii) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein.

6. REACQUIRED SHARES. Shares of the Preferred Stock which have been issued and
reacquired through purchase, conversion or otherwise shall, upon compliance with
the applicable



<PAGE>



provisions of the General Corporation Law, have the status of authorized and
unissued shares of Preferred Stock and may be reissued, but only as part of a
new series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>4
<FILENAME>c86750exv3w2.txt
<DESCRIPTION>BYLAWS OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                    EXHIBIT 3.2









                                     BY-LAWS


                                       OF


                           BUILD-A-BEAR WORKSHOP, INC.


                                  APRIL 3, 2000



<PAGE>




                                     BY-LAWS
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               Page
<S>                      <C>                                                                                   <C>
ARTICLE I    Stockholders                                                                                         1
         Section 1.1.    Annual Meetings..........................................................................1
         Section 1.2.    Special Meetings.........................................................................1
         Section 1.3.    Notice of Meetings.......................................................................1
         Section 1.4.    Adjournments.............................................................................1
         Section 1.5.    Quorum...................................................................................1
         Section 1.6.    Organization.............................................................................2
         Section 1.7.    Voting; Proxies..........................................................................2
         Section 1.8.    Fixing Date for Determination of Stockholders of Record..................................2
         Section 1.9.    List of Stockholders Entitled to Vote....................................................3
         Section 1.10.   Consent of Stockholders in Lieu of Meeting...............................................3


ARTICLE II    Board of Directors                                                                                  3
         Section 2.1.    Powers; Number; Qualifications...........................................................3
         Section 2.2.    Election; Term of Office; Resignation; Removal; Vacancies................................3
         Section 2.3.    Regular Meetings.........................................................................4
         Section 2.4.    Special Meetings.........................................................................4
         Section 2.5.    Telephonic Meetings Permitted............................................................4
         Section 2.6.    Quorum; Vote Required for Action.........................................................4
         Section 2.7.    Organization.............................................................................4
         Section 2.8.    Informal Action by Directors.............................................................4


ARTICLE III    Committees.........................................................................................5
         Section 3.1.    Committees...............................................................................5
         Section 3.2.    Committee Rules..........................................................................5


ARTICLE IV    Officers............................................................................................5
         Section 4.1.    Officers; Election; Qualification; Term of Office; Resignation;
                                Removal; Vacancies................................................................5
         Section 4.2.    Powers and Duties of Executive Officers..................................................6


ARTICLE V    Stock................................................................................................6
         Section 5.1.    Certificates.............................................................................6
         Section 5.2.    Lost, Stolen or Destroyed Stock Certificates; Issuance of New
                         Certificates.............................................................................6
</TABLE>

                                       i
<PAGE>


<TABLE>
<S>                      <C>                                                                                      <C>
ARTICLE VI    Miscellaneous.......................................................................................6
         Section 6.1.    Fiscal Year..............................................................................6
         Section 6.2.    Seal.....................................................................................7
         Section 6.3.    Waiver of Notice of Meetings of Stockholders, Directors and
                         Committees...............................................................................7
         Section 6.4.    Interested Directors; Quorum.............................................................7
         Section 6.5.    Form of Records..........................................................................7
         Section 6.6.    Amendment of By-Laws.....................................................................7


ARTICLE VII    Indemnification....................................................................................8
         Section 7.1.    Indemnity................................................................................8
         Section 7.2.    Voluntary Intervention...................................................................8
         Section 7.3.    Insurance................................................................................8
         Section 7.4.    By-laws..................................................................................9
</TABLE>



                                       ii


<PAGE>




                                    ARTICLE I

                                  STOCKHOLDERS

                  Section 1.1. Annual Meetings. An annual meeting of
stockholders shall be held for the election of directors at such date, time and
place either within or without the State of Delaware as may be designated by the
Board of Directors from time to time. Stockholders may act by written consent to
elect directors; provided, however, that, if such consent is less than
unanimous, such action by written consent may be in lieu of holding an annual
meeting only if all of the directorships to which directors could be elected at
an annual meeting held at the effective time of such action are vacant and are
filled by such action. Any other proper business may be transacted at the annual
meeting.

                  Section 1.2. Special Meetings. Special meetings of
stockholders may be called at any time by the Chairman of the Board, if any, the
Vice Chairman of the Board, if any, the President or the Board of Directors, to
be held at such date, time and place either within or without the State of
Delaware as may be stated in the notice of the meeting.

                  Section 1.3. Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, the written
notice of any meeting shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.

                  Section 1.4. Adjournments. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.

                  Section 1.5. Quorum. At each meeting of stockholders, except
where otherwise provided by law or the certificate of incorporation or these
by-laws, the holders of a majority of the outstanding shares of each of (i) the
common stock and (ii) all series and classes preferred stock entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum. For purposes of the foregoing, two or more classes or series of stock
shall be considered a single class if the holders thereof are entitled to vote
together as a single class at the meeting. In the absence of a quorum, the
stockholders so present may, by majority vote, adjourn the meeting from time to
time in the manner provided by Section 1.4 of these by-laws until a quorum shall
attend. Shares of its own capital stock belonging on the record date for the
meeting

<PAGE>



to the Corporation or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Corporation, shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the foregoing shall
not limit the right of the Corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.

                  Section 1.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in her or his absence by
the Vice Chairman of the Board, if any, or in her or his absence by the
President, or in her absence by a Vice President, or in the absence of the
foregoing persons by a chairman designated by the Board of Directors, or in the
absence of such designation by a chairman chosen at the meeting. The Secretary
shall act as secretary of the meeting, but in her or his absence the chairman of
the meeting may appoint any person to act as secretary of the meeting.

                  Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation or the Stockholders' Agreement, each stockholder
entitled to vote at any meeting of stockholders shall be entitled to one vote
for each share of stock held by him which has voting power upon the matter in
question. Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary of the Corporation.
Voting at meetings of stockholders need not be by written ballot and need not be
conducted by inspectors unless the holders of a majority of the outstanding
shares of all classes of stock entitled to vote thereon present in person or by
proxy at such meeting shall so determine. At all meetings of stockholders for
the election of directors, a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise provided by law
or by the certificate of incorporation or these by-laws, be decided by the vote
of the holders of a majority of the outstanding shares of all classes of stock
entitled to vote thereon present in person or by proxy at the meeting, provided
that (except as otherwise required by law or by the certificate of
incorporation) the Board of Directors may require a larger vote upon any
election or question.

                  Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on

                                       2
<PAGE>



which notice is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held; (2) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is necessary, shall
be the day on which the first written consent is expressed; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.

                  Section 1.9. List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.

                  Section 1.10. Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided in the certificate of incorporation, any action
required by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.


                                   ARTICLE II

                               BOARD OF DIRECTORS

                  Section 2.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by the Board of Directors, except as
may be otherwise provided by law or in the certificate of incorporation. The
Board shall consist of one or more members, the number thereof to be determined
from time to time by the Board. Directors need not be stockholders.

                  Section 2.2. Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until the annual meeting of
stockholders next succeeding his election and until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the Board of Directors or to the President

                                       3
<PAGE>


or the Secretary of the Corporation. Such resignation shall take effect at the
time specified therein, and unless otherwise specified therein no acceptance of
such resignation shall be necessary to make it effective. Unless otherwise
provided in the certificate of incorporation or these by-laws, vacancies and
newly created directorships resulting from any increase in the authorized number
of directors or from any other cause may be filled by a majority of the
directors then in office, although less than a quorum, or by the sole remaining
director.

                  Section 2.3. Regular Meetings. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware
and at such times as the Board may from time to time determine, and if so
determined and forty-eight hours (48) notice thereof shall be given.

                  Section 2.4. Special Meetings. Special meetings of the Board
of Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the President
or by any two directors. Reasonable notice thereof shall be given by the person
or persons calling the meeting, but in no event shall such notice be less than 5
days.

                  Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by the certificate of incorporation or these by-laws, members of the
Board of Directors, or any committee designated by the Board, may participate in
a meeting of the Board or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this by-law shall constitute presence in person at such
meeting.

                  Section 2.6. Quorum; Vote Required for Action. At all meetings
of the Board of Directors a majority of the entire Board shall constitute a
quorum for the transaction of business. The vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
unless the certificate of incorporation, these by-laws or the Stockholders'
Agreement by and among the Company and certain stockholders of the Corporation
party thereto, dated April 3, 2000, shall require a vote of a greater number. In
case at any meeting of the Board a quorum shall not be present, the members of
the Board present may adjourn the meeting from time to time until a quorum shall
attend.

                  Section 2.7. Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in his absence
by the Vice Chairman of the Board, if any, or in his absence by the President,
or in their absence by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.

                  Section 2.8. Informal Action by Directors. Unless otherwise
restricted by the certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.

                                       4
<PAGE>


                                   ARTICLE III

                                   COMMITTEES

                  Section 3.1. Committees. The Board of Directors may designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. The by-laws may provide that in the
absence or disqualification of a member of a committee, the member or members
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to the
following matter: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by these by-laws to be
submitted to stockholders for approval or (ii) adopting, amending or repealing
any by-law of the Corporation.

                  Section 3.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these by-laws.


                                   ARTICLE IV

                                    OFFICERS

                  Section 4.1. Officers; Election; Term of Office; Resignation.
The Board of Directors shall elect a Chief Executive Officer, President and a
Secretary, and it may, if it so determines, elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The chief executive
officer shall have general and active management of the affairs of the
Corporation. In the absence of the chairman of the board and any vice chairmen,
the Chief Executive Officer shall preside at all meetings of the shareholders
and directors at which he/she is present. If no officer has been expressly
designated as Chief Executive Officer by the Board, the President shall be Chief
Executive Officer of the Corporation. The Board may also elect a Chief Financial
Officer and/or Chief Operating Officer, one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and
one or more Assistant Treasurers and may give any of them such further
designations or alternate titles as it considers desirable. Such described
officers may also have such titles as "Chief Executive Bear" "Chief Financial
Bear" or similar titles in keeping with the culture of the Company. Each such
officer shall hold office until his successor is elected and qualified or until
his earlier resignation or removal. Any officer may resign at any time upon
written notice to the Board or to the Chief Executive Officer. Such resignation
shall take effect at the time specified therein, and unless otherwise specified
therein no acceptance of

                                       5
<PAGE>
such resignation shall be necessary to make it effective. The Board may remove
any officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation, but the election or appointment of an officer shall not of itself
create contractual rights. Any number of offices may be held by the same person.
Any vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise may be filled for the unexpired portion of the term by the
Board at any regular or special meeting.

                  Section 4.2. Powers and Duties of Executive Officers. The
officers of the Corporation shall have such powers and duties in the management
of the Corporation as may be prescribed by the Board of Directors and, to the
extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board. The Board may require any officer, agent or
employee to give security for the faithful performance of his duties.

                                    ARTICLE V

                                      STOCK

                  Section 5.1. Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman or Vice Chairman of the Board of Directors, if
any or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
certifying the number of shares owned by him in the Corporation. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.

                  Section 5.2. Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.


                                   ARTICLE VI

                                  MISCELLANEOUS

                  Section 6.1. Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.

                                       6
<PAGE>

                  Section 6.2. Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.

                  Section 6.3. Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law or
under any provision of the certificate of incorporation or these by-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these by-laws.

                  Section 6.4. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (1) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.

                  Section 6.5. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.

                  Section 6.6. Amendment of By-Laws. These by-laws may be
altered or repealed, and new by-laws made, by the Board of Directors, but the
stockholders may make additional by-laws and may alter or repeal any by-law
whether or not adopted by them.

                                       7
<PAGE>


                                   ARTICLE VII

                                 INDEMNIFICATION

                  Section 7.1. Indemnity. Every person who was or is a party or
is threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or a person of whom such
person is a legal representative is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation or for its
benefit as a director, officer, employee or agent of any other corporation, or
as the representative of the Corporation in a partnership, joint venture, trust
or other entity, shall be indemnified and held harmless by the Corporation to
the fullest extent legally permissible under the General Corporation Law, as
amended from time to time, against all expenses, liabilities and losses
(including attorneys' fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably paid or incurred by such person in connection therewith.
Such right of indemnification shall be a contract right that may be enforced in
any manner desired by such person. Such right of indemnification shall include
the right to be paid by the Corporation the expenses incurred in defending any
such action, suit or proceeding in advance of its final disposition upon receipt
of an undertaking by or on behalf of such person to repay such amount if
ultimately it should be determined that such person is not entitled to be
indemnified by the Corporation under the General Corporation Law of the State of
Delaware. Such right of indemnification shall not be exclusive of any other
right which such directors, officers or representatives may have or hereafter
acquire and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under the Certificate of
Incorporation of the Corporation or any agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under this Article VII.
Any person or persons who, pursuant to any provisions of the Certificate of
Incorporation of the Corporation, exercises or performs any of the powers or
duties conferred or imposed upon a director of the Corporation, shall be
entitled to the indemnification rights set forth in this Article VII.

                  Section 7.2. Voluntary Intervention. Notwithstanding anything
in this Article VII to the contrary, no person shall be indemnified in respect
of any claim, action, suit or proceeding initiated by any such person or in
which any such person has voluntarily intervened, other than an action initiated
by such person to enforce indemnification rights hereunder or an action
initiated with the approval of a majority of the Board of Directors.

                  Section 7.3. Insurance. The Board of Directors may cause the
Corporation to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation or for its benefit as a director,
officer, employee or agent of any other corporation, or as the representative of
the Corporation in a partnership, joint venture, trust or other entity, against
any expense, liability or loss asserted against or incurred by any such person
in any such capacity or arising out of such status, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss.

                                       8
<PAGE>


                  Section 7.4. By-laws. The Board of Directors may adopt further
By-laws from time to time with respect to indemnification and may amend these
and such further By-laws to provide at all times the fullest indemnification
permitted by the General Corporation Law of the State of Delaware, as amended
from time to time.


                                       9



<PAGE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.3
<SEQUENCE>5
<FILENAME>c86750exv3w3.txt
<DESCRIPTION>FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>
                                                                     EXHIBIT 3.3


                           SECOND AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.


                  It is hereby certified that:

         1. The present name of the corporation (herein called the
"Corporation") is BUILD-A-BEAR WORKSHOP, INC., which is the name under which the
Corporation was originally incorporated; and the date of filing the original
Certificate of Incorporation of the Corporation with the Secretary of State of
Delaware is March 31, 2000. The Corporation filed an Amended and Restated
Certificate of Incorporation with the Secretary of State of Delaware on
September 21, 2001.

         2. The Restated Certificate of Incorporation of the Corporation, as
heretofore amended and/or supplemented, is hereby amended in its entirety as set
forth in the Second Amended and Restated Certificate of Incorporation of
Build-A-Bear Workshop, Inc., as provided for herein.

         3. The Second Amended and Restated Certificate of Incorporation has
been duly adopted by the stockholders in accordance with the provisions of
Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware.

         4. The Certificate of Incorporation of the Corporation shall at the
effective time of this Second Amended and Restated Certificate of Incorporation,
read as set forth on EXHIBIT A hereto.

                  IN WITNESS WHEREOF, said Build-A-Bear Workshop, Inc., has
caused this certificate to be signed by Maxine Clark, its Chief Executive
Officer, this ____ day of _____________, 2004.


                                              BUILD-A-BEAR WORKSHOP, INC.

                                              By:
                                                  ------------------------------
                                              Name:  Maxine Clark
                                              Title: Chief Executive Officer



<PAGE>



                                                                       EXHIBIT A

                           SECOND AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                           BUILD-A-BEAR WORKSHOP, INC.


                                  ARTICLE FIRST

         The name of the Corporation is Build-A-Bear Workshop, Inc.

                                 ARTICLE SECOND

         The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange St., Wilmington, Delaware 19801. The name and address of
its registered agent is The Corporation Trust Company, 1209 Orange St.,
Wilmington, Delaware 19801.

                                  ARTICLE THIRD

         The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

                                 ARTICLE FOURTH

         1. AUTHORIZED STOCK. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 65,000,000 shares,
consisting of (i) 50,000,000 shares of Common Stock, par value $.001 per share
(the "Common Stock") and (ii) 15,000,000 shares of Preferred Stock, par value
$.001 per share (the "Preferred Stock").

         2. COMMON STOCK. The powers, preferences and rights, and the
qualifications, limitations and restrictions, of the Common Stock are as
follows:

                  (a) NO CUMULATIVE VOTING. The holders of shares of Common
Stock shall not have cumulative voting rights.

                  (b) DIVIDENDS; STOCK SPLITS. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of this Second
Amended and Restated Certificate of Incorporation, as it may be amended from
time to time, the holders of Common Stock shall be entitled to receive such
dividends and other distributions in cash, stock or property of the Corporation
when, as and if declared thereon by the Board of Directors from time to time out
of assets or funds of the Corporation legally available therefor.

                  (c) LIQUIDATION, DISSOLUTION, ETC. In the event of any
liquidation, dissolution or winding up (either voluntary or involuntary) of the
Corporation, the holders of shares of Common Stock shall be entitled to receive
the assets and funds of the Corporation available for distribution after
payments to creditors and to the holders of any Preferred Stock of the
Corporation that may at the time be outstanding, in proportion to the number of
shares held by



                                       2
<PAGE>



them, respectively. For purposes of this paragraph 2(c), the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities,
or other consideration) of all or substantially all of the assets of the
Corporation or a consolidation or merger of the Corporation with one or more
other corporations or other persons (whether or not the Corporation is the
corporation surviving such consolidation or merger) shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary.

                  (d) MERGER, ETC. In the event of a merger or consolidation of
the Corporation with or into another entity (whether or not the Corporation is
the surviving entity), the holders of each share of Common Stock shall be
entitled to receive the same per share consideration on a per share basis.

                  (e) VOTING. At every meeting of the stockholders of the
Corporation in connection with the election of directors and all other matters
submitted to a vote of stockholders, every holder of Common Stock is entitled to
one vote in person or by proxy for each share of Common Stock registered in the
name of the holder on the transfer books of the Corporation. Except as otherwise
required by law, the holders of Common Stock shall vote together as a single
class, subject to any right that may be conferred upon holders of Preferred
Stock to vote together with holders of Common Stock on all matters submitted to
a vote of stockholders of the Corporation.

                  (f) NO PREEMPTIVE OR SUBSCRIPTION RIGHTS. No holder of shares
of Common Stock shall be entitled to preemptive or subscription rights.

         3. PREFERRED STOCK.

                  (a) The Preferred Stock may be issued from time to time in one
or more classes or series. The Board of Directors is hereby authorized to
provide for the issuance of shares of Preferred Stock in a class or series and,
by filing a certificate pursuant to the applicable law of the State of Delaware
(a "Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such class or series, and to fix the designation,
powers, preferences and rights of the shares of each such class or series and
the qualifications, limitations and restrictions thereof. The authority of the
Board of Directors with respect to each class or series shall include, but not
be limited to, determination of the following:

                           (i) The designation of the class or series, which may
be by distinguishing number, letter or title;

                           (ii) The number of shares of the series, which number
the Board of Directors may thereafter (except where otherwise provided in the
Preferred Stock Designation) increase or decrease (but not below the number of
shares thereof then outstanding);

                           (iii) Whether dividends, if any, shall be cumulative
or noncumulative and the dividend rate of the class or series;

                           (iv) The dates on which dividends, if any, shall be
payable;




                                       3
<PAGE>

                           (v) The redemption rights and price or prices, if
any, for shares of the class or series;

                           (vi) The terms and amount of any sinking fund
provided for the purchase or redemption of shares of the class or series;

                           (vii) The amounts payable on, and the preferences, if
any, of, shares of the class or series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation;

                           (viii) Whether the shares of the class or series
shall be convertible into shares of any other class or series, or any other
security, of the Corporation or any other corporation, and, if so, the
specification of such other class or series of such other security, the
conversion price or prices or rate or rates, any adjustments thereof, the date
or dates at which such shares shall be convertible and all other terms and
conditions upon which such conversion may be made;

                           (ix) Restrictions on the issuance of shares of the
same class or series or of any other class or series; and

                           (x) The voting rights, if any, of the holders of
shares of the class or series.

                  (b) The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the voting power of Common
Stock, without a vote of the holders of the Preferred Stock, or of any series
thereof, unless a vote of any such holders is required pursuant to the terms of
the applicable Preferred Stock Designation.

                  (c) The Corporation shall be entitled to treat the person in
whose name any share of its stock is registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other claim to, or
interest in, such share on the part of any other person, whether or not the
Corporation shall have notice thereof, except as expressly provided in this
Second Amended and Restated Certificate of Incorporation or by applicable law.

         4. POWER TO SELL AND PURCHASE SHARES. Subject to the requirements of
applicable law, the Corporation shall have the power to issue and sell all or
any part of any shares of any class of stock hereon or hereafter authorized to
such persons, and for such consideration, as the Board of Directors shall from
time to time, in its discretion, determine, whether or not greater consideration
could be received upon the issue or sale of the same number of shares of another
class, and as otherwise permitted by law. Subject to the requirements of
applicable law, the Corporation shall have the power to purchase any shares of
any class of stock herein or hereafter authorized from such persons, and for
such consideration, as the Board of Directors shall from time to time, in its
discretion, determine, whether or not less consideration could be paid upon the
purchase of the same number of shares of another class, and as otherwise
permitted by law.




                                       4
<PAGE>




                                  ARTICLE FIFTH

         For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

         1. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of directors which
shall constitute the whole Board of Directors shall be fixed by the Board of
Directors in the manner provided in the Bylaws.

         2. The directors, other than those who may be elected by the holders of
any class or series of Preferred Stock issued by the Corporation, shall be
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The initial
division of the Board of Directors into classes shall be made by the decision of
the Board of Directors. The term of the initial Class I directors shall
terminate on the date of the annual meeting next following December 31, 2004;
the term of the initial Class II directors shall terminate on the date of the
annual meeting next following December 31, 2005; and the term of the initial
Class III directors shall terminate on the date of the annual meeting next
following December 31, 2006. At each succeeding annual meeting of stockholders
beginning in 2005, successors to the class of directors whose term expires at
that annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director.

         3. A director shall hold office until the annual meeting for the year
in which his or her term expires or until his or her successor shall be elected
and shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.

         4. Subject to applicable law and the terms of any one or more classes
or series of Preferred Stock, any vacancy on the Board of Directors that results
from an increase in the number of directors or resulting from the death,
resignation, removal from office or any other cause may be filled by a majority
of the Board of Directors then in office, although less than a quorum, or by a
sole remaining director, and not by the stockholders. Any director of any class
elected to fill a vacancy resulting from an increase in the number of directors
of such class shall hold office for a term that shall coincide with the
remaining term of that class. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of his predecessor. Subject to applicable law and the
rights, if any, of the holders of shares of Preferred Stock then outstanding,
any or all of the directors of the Corporation may be removed from office at any
time by the stockholders only for cause and only by the affirmative vote of a
majority of the voting power of all of the then outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors. A director




                                       5
<PAGE>



may not be removed by the stockholders at a meeting unless the notice of the
meeting states that the purpose, or one of the purposes, of the meeting is the
removal of the director. Notwithstanding the foregoing, whenever the holders of
any one or more classes or series of Preferred Stock issued by the Corporation
shall have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of this Second Amended and Restated Certificate of Incorporation
applicable thereto, and such directors so elected shall not be divided into
classes pursuant to this Article Fifth unless expressly provided otherwise by
such terms.

         5. The Board of Directors may from time to time adopt, amend or repeal
Bylaws; provided, however, that the stockholders may amend or repeal any Bylaw
or Bylaws adopted by the Board of Directors, or adopt a new Bylaw or Bylaws, in
either case by the affirmative vote of the holders of at least eighty percent
(80%) of the voting power of all of the then outstanding shares of the capital
stock of the Corporation, voting together as a single class; and, provided,
further, however, that in the case of any such stockholder action at a special
meeting of stockholders, notice of the proposed adoption, amendment or repeal of
the new Bylaw or Bylaws must be contained in the notice of such special meeting.

         6. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.

         7. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.

         8. In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the Delaware
General Corporation Law, this Second Amended and Restated Certificate of
Incorporation, and any Bylaws adopted by the stockholders; provided, however,
that no Bylaws hereafter adopted by the stockholders shall invalidate any prior
act of the directors which would have been valid if such Bylaws had not been
adopted.

                                  ARTICLE SIXTH

         1. LIMITATION OF LIABILITY. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.

         2. INDEMNIFICATION. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action,
suit or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer, employee or agent of the Corporation, or any
predecessor of the Corporation, or serves or served at any other enterprise as a
director,



                                       6
<PAGE>



officer, employee or agent at the request of the Corporation or any predecessor
to the Corporation.

         3. AMENDMENTS. Neither any amendment nor repeal of this Article Sixth,
nor the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article Sixth, shall eliminate or reduce
the effect of this Article Sixth, in respect of any matter occurring, or any
action or proceeding accruing or arising or that, but for this Article Sixth,
would accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.

                                 ARTICLE SEVENTH

         Unless otherwise required by law, special meetings of stockholders, for
any purpose or purposes may be called by (i) the chairperson of the Board of
Directors, if there be one, (ii) the chief executive officer, (iii) the
president, or (iv) the Board of Directors. The ability of the stockholders to
call a special meeting is hereby specifically denied.

                                 ARTICLE EIGHTH

         Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation, and the ability of the stockholders to consent
in writing to the taking of any action is hereby specifically denied, provided,
however, that the holders of Preferred Stock may act by written consent to the
extent expressly provided in the applicable Preferred Stock Designation
authorizing the issuance of particular series of Preferred Stock pursuant to
Article Fourth of this Second Amended and Restated Certificate of Incorporation.

                                  ARTICLE NINTH

         Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.

                                  ARTICLE TENTH

         The Corporation is to have perpetual existence.

                                ARTICLE ELEVENTH

         The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Second Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by this Second Amended
and Restated Certificate of Incorporation, the Corporation's Bylaws or by
statute, and all rights conferred upon the stockholders herein are granted
subject to this right; provided, however, that notwithstanding any other
provision of this Second Amended and Restated Certificate of Incorporation (and
in addition to any other vote that may be required by law), the affirmative vote
of the holders of at least eighty percent (80%) of the voting power of all of
the then outstanding shares of the capital stock of the Corporation, voting
together as a single class, shall be required to amend, alter, change or repeal,
or to adopt any provisions as part of this Second Amended and Restated
Certificate of Incorporation inconsistent with the purposes and intent of
Article Fifth, Article Sixth, Article Seventh, Article Eighth and this Article
Eleventh.




                                       7

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.4
<SEQUENCE>6
<FILENAME>c86750exv3w4.txt
<DESCRIPTION>FORM OF AMENDED AND RESTATED BYLAWS OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                     EXHIBIT 3.4


                              AMENDED AND RESTATED

                                     BYLAWS

                                       of

                           BUILD-A-BEAR WORKSHOP, INC.

                           Effective ___________, 2004


1. MEETINGS OF STOCKHOLDERS.


         1.1 Annual Meeting. The annual meeting of stockholders of Build-A-Bear
Workshop, Inc. (the "corporation") shall be held on such date and at such time
fixed from time to time by the board of directors of the corporation (the
"Board"), provided that each successive annual meeting shall be held on the
Thursday of the second week of May of each year if not a legal holiday, and if a
legal holiday then on the next succeeding day not a legal holiday, or such other
date of time and at such place as may be determined from time to time by the
Board. The business to be transacted at the meeting shall be the election of
directors and any other proper business as may be brought before the meeting.
Any previously scheduled annual meeting of the stockholders may be postponed by
resolution of the Board upon public notice given on or prior to the date
previously scheduled for such annual meeting of stockholders.

         1.2 Special Meetings. Subject to the rights of the holders of any
series of preferred stock under the Certificate of Incorporation, as amended or
restated, of the corporation (the "Certificate of Incorporation"), special
meetings of the stockholders may be called by (i) the chairperson of the Board,
if there be one, (ii) the chief executive officer/chief executive bear, (iii)
the President or (iii) the Board. Only business related to the purposes set
forth in the notice of the meeting may be transacted at a special meeting. The
ability of stockholders to call a special meeting is hereby specifically denied.

         1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board;
provided that the Board may, in its sole discretion, determine that the meeting
shall not be held at any place, but may instead be held solely by means of
remote communication as authorized by Section 211(a)(2) of the General
Corporation Law of the State of Delaware (or any successor thereto) (the
"General Corporation Law of Delaware").

         1.4 Notice of Meeting; Waiver of Notice. (a) Written or printed notice
of each meeting of stockholders shall be given by or at the direction of the
secretary or the chief executive officer/chief executive bear of the corporation
to each stockholder entitled to vote at the meeting, except that (a) it shall
not be necessary to give notice to any stockholder who




<PAGE>



properly waives notice before or after the meeting, whether in writing or by
electronic transmission or otherwise, and (b) no notice of an adjourned meeting
need be given except when required under Section 1.6 of these Bylaws or by law.
Each notice of a meeting shall be given, personally or by mail or, as provided
below, by means of electronic transmission, not less than ten (10) nor more than
sixty (60) days before the meeting and shall state the time and place of the
meeting, or if held by remote communications, the means of remote communication
by which stockholders and proxy holders may be deemed to be present in person
and vote at such meeting, and unless it is the annual meeting, shall state at
whose direction or request the meeting is called and the purposes for which it
is called. The attendance of any stockholder at a meeting, without protesting at
the beginning of the meeting that the meeting is not lawfully called or
convened, shall constitute a waiver of notice by him or her. Any previously
scheduled meeting of stockholders may be postponed, and (unless the Certificate
of Incorporation otherwise provides) any special meeting of stockholders may be
canceled, by resolution of the Board upon public disclosure (as defined in
Section 1.13(a)) given on or prior to the date previously scheduled for such
meeting of stockholders.

         (b) Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to a stockholder may be given by a form
of electronic transmission consented to by the stockholder to whom the notice is
given. Any such consent shall be revocable by the stockholder by written notice
to the corporation. Any such consent shall be deemed revoked (1) if the
corporation is unable to deliver by electronic transmission two consecutive
notices given by the corporation in accordance with such consent and (2) such
inability becomes known to the secretary or an assistant secretary of the
corporation or to the transfer agent, or other person responsible for the giving
of notice; provided, however, the inadvertent failure to treat such inability as
a revocation shall not invalidate any meeting or other action. For purposes of
these Bylaws, "electronic transmission" means any form of communication, not
directly involving the physical transmission of paper, that creates a record
that may be retained, retrieved and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an
automated process.

         (c) Notice shall be deemed given, if mailed, when deposited in the
United States mail with postage prepaid, if addressed to a stockholder at his or
her address on the corporation's records. Notice given by electronic
transmission shall be deemed given: (1) if by facsimile, when directed to a
number at which the stockholder has consented to receive notice; (2) if by
electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice; (3) if by posting on an electronic
network together with separate notice to the stockholder of such specific
posting, upon the later of (A) such posting and (B) the giving of such separate
notice; and (4) by any other form of electronic transmission, when directed to
the stockholder.

         (d) An affidavit of the secretary or an assistant secretary or of the
transfer agent or other agent of the corporation that the notice has been given,
whether by a form of electronic transmission or otherwise, shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.



                                       2
<PAGE>



         1.5 Quorum; Voting; Validation of Meeting. (a) The holders of a
majority in voting power of the stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the Certificate of Incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then either (i) the person presiding over the meeting or (ii) the
stockholders by the vote of the holders of a majority of the stock, present in
person or represented by proxy shall have power to adjourn the meeting in
accordance with Section 1.6 of these Bylaws.

                  (b) When a quorum is present at any meeting, a plurality of
the votes present in person or represented by proxy and entitled to vote on the
election of a director shall be sufficient to elect directors, subject to the
rights of the holders of preferred stock to elect directors under specified
circumstances pursuant to the Certificate of Incorporation. On all other
matters, the vote of the holders of a majority of the stock having voting power
on such matter present in person or represented by proxy shall decide any
question brought before such meetings, unless the question is one upon which, by
express provision of the laws of the State of Delaware or of the Certificate of
Incorporation or these Bylaws, a vote of a greater number or voting by classes
is required, in which case such express provision shall govern and control the
decision of the question.

                  (c) If a quorum is initially present, the stockholders may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum, if any action taken is
approved by a majority of the stockholders initially constituting the quorum.

                  (d) The transactions of any meeting of stockholders, either
annual or special, however called and noticed, and wherever held, shall be as
valid as though they had been taken at a meeting duly held after regular call
and notice, if a quorum is present either in person or by proxy.

         1.6 Adjourned Meeting; Notice. (a) Any stockholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the voting power of the shares represented at
that meeting, either in person or by proxy. In the absence of a quorum, no other
business may be transacted at that meeting except as provided in Section 1.5 of
these Bylaws.

                  (b) When any meeting of stockholders, either annual or
special, is adjourned to another time or place or means of remote communication,
notice need not be given of the adjourned meeting if the time and place, if any,
thereof, and the means of remote communication, if any, by which stockholders
and proxyholders may be deemed to be present in person and vote at such
adjourned meeting, are announced at the meeting at which the adjournment is
taken.



                                       3
<PAGE>



However, if a new record date for the adjourned meeting is fixed or if the
adjournment is for more than thirty (30) days from the date set for the original
meeting, then notice of the adjourned meeting shall be given. Notice of any such
adjourned meeting shall be given to each stockholder of record entitled to vote
at the adjourned meeting in accordance with the provisions of Section 1.4 of
these Bylaws. At any adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting.

         1.7 Voting. (a) The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
1.8 of these Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgors and joint owners, and to voting trusts and other voting agreements).

                  (b) Except as may be otherwise provided in the Certificate of
Incorporation, by these Bylaws or as required by law, each stockholder shall be
entitled to one vote for each share of capital stock held by such stockholder
which has voting power upon the matter in question.

                  (c) Any stockholder entitled to vote on any matter may vote
part of the shares in favor of the proposal and refrain from voting the
remaining shares or, except when the matter is the election of directors, may
vote the remaining shares against the proposal; but if the stockholder fails to
specify the number of shares which the stockholder is voting affirmatively or
otherwise indicates how the number of shares to be voted affirmatively is to be
determined, it will be conclusively presumed that the stockholder's approving
vote is with respect to all shares which the stockholder is entitled to vote.

                  (d) Voting need not be by ballot unless requested by a
stockholder at the meeting or ordered by the chairperson of the meeting;
however, all elections of directors shall be by written ballot, unless otherwise
provided in the Certificate of Incorporation; provided, that if authorized by
the Board, a written ballot may be submitted by electronic transmission,
provided that any such electronic transmission must either set forth or be
submitted with information from which it can be determined that the electronic
transmission was authorized by the stockholder or proxyholder.

         1.8 Record Date for Stockholder Notice. (a) For purposes of determining
the stockholders entitled to notice of any meeting or to vote thereat, the Board
may fix, in advance, a record date, which shall not precede the date upon which
the resolution fixing the record date is adopted by the Board, and which record
date shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting, and in such event only stockholders of record on
the date so fixed are entitled to notice and to vote, notwithstanding any
transfer of any shares on the books of the corporation after the record date,
except as otherwise provided in the Certificate of Incorporation, by these
Bylaws, by agreement or by applicable law.



                                       4
<PAGE>



         (b) If the Board does not so fix a record date, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.

         (c) A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting unless the Board fixes a new record date for the adjourned meeting, but
the Board shall fix a new record date if the meeting is adjourned for more than
thirty (30) days from the date set for the original meeting.

         (d) The record date for any other lawful purpose shall be as provided
in Section 5.8 of these Bylaws.

         1.9 Proxies. Every person entitled to vote for directors, or on any
other matter, shall have the right to do so either in person or by one or more
agents authorized by a written proxy filed with the secretary of the
corporation. A written proxy may be in the form of a telegram, cablegram, or
other means of electronic transmission which sets forth or is submitted with
information from which it can be determined that the telegram, cablegram, or
other means of electronic transmission was authorized by the person. No such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of Section 212(e) of the General Corporation Law
of Delaware. A stockholder may revoke any proxy which is not irrevocable by
attending the meeting and voting in person or by filing an instrument in writing
revoking the proxy or by filing another duly executed proxy bearing a later date
with the secretary of the corporation.

                  A proxy is not revoked by the death or incapacity of the maker
unless, before the vote is counted, written notice of such death or incapacity
is received by the secretary of the corporation.

         1.10 List of Stockholders. Not less than 10 days prior to the date of
any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of such stockholder; provided, that the
corporation shall not be required to include electronic mail addresses or other
electronic contact information on such list. For a period of not less than 10
days prior to the meeting, the list shall be available during ordinary business
hours for inspection by any stockholder for any purpose germane to the meeting.
During this period, the list shall be kept either (1) on a reasonably accessible
electronic network, provided that the information required to gain access to
such list is provided with the notice of the meeting or (2) during ordinary
business hours, at the principal place of business of the corporation. If the
corporation determines to make the list


                                       5
<PAGE>



available on an electronic network, the corporation may take reasonable steps to
ensure that such information is available only to stockholders of the
corporation. If the meeting is to be held at a place, then the list shall be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. If the meeting
is to be held solely by means of remote communication, then the list shall also
be open to the examination of any stockholder during the whole time of the
meeting on a reasonably accessible electronic network, and the information
required to access such list shall be provided with the notice of the meeting.

         1.11 Notice of Stockholder Nominee. Only persons who are nominated in
accordance with the procedures set forth in this paragraph shall be eligible for
election by the stockholders as directors of the corporation. Nominations of
persons for election to the Board may be made at a meeting of stockholders (a)
by or at the direction of the Board, or (b) provided that the Board has
determined that directors shall be elected at such meeting, by any stockholder
of the corporation entitled to vote for the election of directors at such
meeting who complies with the procedures set forth in this paragraph. Such
nominations by any stockholder shall be made pursuant to timely notice in proper
written form to the secretary of the corporation in accordance with this
paragraph. To be timely, a stockholder's notice must be delivered to or mailed
to and received by the secretary at the principal executive offices of the
corporation not less than 90 days nor more than 120 days in advance of the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that (i) no annual meeting was held in the previous year or (ii) the
date of the annual meeting has been changed by more than 30 days from the date
of the previous year's meeting, or in the event of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the day on which notice of the date
of the meeting was mailed or public disclosure of the date of the meeting was
made, whichever occurs first. In no event shall the public disclosure of an
adjournment or postponement of a stockholders meeting commence a new time period
for the giving of a stockholders notice as described above. To be in proper
written form, such stockholders' notice to the secretary shall set forth in
writing (a) as to each person whom such stockholder proposes to nominate for
election or re-election as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (or any successor thereto)
(the "Exchange Act"), including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as
director if elected as well as (i) such person's name, age, business address and
residence address, (ii) his or her principal occupation or employment, (iii) the
class and number of shares of the corporation that are beneficially owned by
such person, and (iv) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nominations are to be made by the
stockholder; and (b) as to such stockholder (i) the name and address, as they
appear on the corporation's books, of such stockholder and the beneficial owner,
if any, on whose behalf the nomination is made, and (ii) the class and number of
shares of the corporation which are beneficially owned by such stockholder and
the beneficial owner, if any, on whose behalf the



                                       6
<PAGE>



nomination is made, and any material interest of such stockholder and owner. At
the request of the Board, any person nominated by the Board for election as a
director shall furnish to the secretary of the corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election by the stockholders as
a director unless nominated in accordance with the procedures set forth in the
Bylaws of the corporation. The chairperson of the meeting shall, if the facts
warrant, determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by the Bylaws of the corporation, and
if he or she shall so determine, he or she shall so declare at the meeting that
the defective nomination shall be disregarded.

         1.12 Stockholder Proposals. At any special meeting of the stockholders,
only such business shall be conducted as shall have been brought before the
meeting by or at the direction of the Board. At any annual meeting of the
stockholders, only such business shall be conducted as shall have been brought
before the meeting (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board, (b) otherwise properly
brought before the meeting by or at the direction of the Board, or (c) by any
stockholder who complies with the procedures set forth in this paragraph. For
business properly to be brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in proper written form to the
secretary of the corporation and such other business must otherwise be a proper
matter for stockholder action. To be timely, a stockholder's notice must be
delivered to or mailed to and received by the secretary at the principal
executive offices of the corporation not less than 90 days nor more than 120
days in advance of the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that (1) no annual meeting was held in the
previous year or (2) the date of the annual meeting has been changed by more
than 30 days before or after the date of the previous year's meeting, not later
than the close of business on the tenth day following the day on which notice of
the date of the meeting was mailed or public disclosure of the date of the
meeting was made, whichever occurs first. In no event shall the public
disclosure of an adjournment or postponement of a stockholders meeting commence
a new time period for the giving of a stockholders notice as described above. To
be in proper written form, such stockholder's notice to the secretary shall set
forth in writing as to each matter such stockholder proposed to bring before the
annual meeting (a) a brief description of the business desired to be brought
before the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, and the
beneficial owner, if any, on whose behalf the nomination or proposal is made,
(c) the text of the proposal or business (including the text of any resolutions
proposed for consideration and in the event that such business includes a
proposal to amend the Bylaws of the corporation, the language of the proposed
amendment) and the reasons for conducting such business at the meeting, (d) the
class and number of shares of the corporation which are owned beneficially by
such stockholder and the beneficial owner, if any, on whose behalf the proposal
is made, (e) any material interest in such business of the stockholder or the
beneficial owner, if any, on whose behalf the proposal is made, (f) any other
information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Exchange Act in such stockholder's capacity as a
proponent of a stockholder proposal, (g) a representation that the stockholder
is a holder of record of stock of the



                                       7
<PAGE>



corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to propose such business, and (h) a representation
whether the stockholder or the beneficial owner, if any, intends or is part of a
group which intends (1) to deliver a proxy statement and/or form of proxy to
holders of at least the percentage of the corporation's outstanding capital
stock required to approve or adopt the proposal or (2) otherwise to solicit
proxies from stockholders in support of such proposal. The foregoing notice
requirements shall be deemed satisfied by a stockholder if the stockholder has
notified the corporation of his or her intention to present a proposal at an
annual meeting in compliance with Rule 14a-8 (or any successor thereof)
promulgated under the Exchange Act and such stockholder's proposal has been
included in a proxy statement that has been prepared by the corporation to
solicit proxies for such annual meeting. Notwithstanding anything in the Bylaws
to the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this paragraph. The chairperson of
an annual meeting shall, if the facts warrant, determine and declare at the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this paragraph, and, if he or she should so determine, he
or she shall so declare at the meeting that any such business not properly
brought before the meeting shall not be transacted.

         1.13 Public Disclosure; Conduct of Nominations and Proposals by
Stockholders. (a) For purposes of Sections 1.4(a), 1.11 and 1.12 hereof, "public
disclosure" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press, Reuters or comparable national news service or
in a document publicly filed or furnished by the corporation with the Securities
and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

                  (b) Notwithstanding the foregoing provisions of these Sections
1.11 and 1.12, if the stockholder (or a qualified representative of the
stockholder) does not appear at the annual meeting of stockholders of the
corporation to present a nomination or business, such nomination shall be
disregarded and such proposed business shall not be transacted, notwithstanding
that proxies in respect of such vote may have been received by the corporation.

                  (c) Notwithstanding the foregoing provisions of Sections 1.11
and 1.12, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in Sections 1.11 and 1.12. Nothing in Sections 1.11 and 1.12
shall be deemed to affect any rights (i) of stockholders to request inclusion of
proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (ii) of the holders of any series of preferred stock to elect
directors under specified circumstances pursuant to the Certificate of
Incorporation.

         1.14 Meeting Required. Whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken for or in connection with any
corporate action, such vote may only be taken at an annual or special meeting
with prior notice, except as provided in the Certificate of Incorporation.



                                       8
<PAGE>



         1.15 Organization. (a) Meetings of stockholders shall be presided over
by the chairperson of the Board, if any, or in his or her absence by the vice
chairperson of the Board, if any, or in his or her absence, by the chief
executive officer/chief executive bear, if any, or in his or her absence by a
chairperson of the meeting, which chairperson must be an officer or director of
the corporation and must be designated as chairperson of the meeting by the
Board. The secretary, or in his or her absence an assistant secretary, or in his
or her absence a person whom the person presiding over the meeting shall
appoint, shall act as secretary of the meeting and keep a record of the
proceedings thereof.

                  (b) The Board shall be entitled to make such rules or
regulations for the conduct of meetings of stockholders as it shall deem
appropriate. Subject to such rules and regulations of the Board, if any, the
person presiding over the meeting shall have the right and authority to convene
and adjourn the meeting, to prescribe such rules, regulations and procedures and
to do all such acts as, in the judgment of the person presiding over the
meeting, are necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order of
business for the meeting, rules and procedures for maintaining order at the
meeting and the safety of those present, limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies and such other persons as the person presiding over the
meeting shall permit, restrictions on entry to the meeting after the time fixed
for the commencement thereof, limitations on the time allotted to questions or
comments by participants and regulation of the opening and closing of the polls
for balloting and matters which are to be voted on by ballot. The person
presiding over the meeting, in addition to making any other determinations that
may be appropriate to the conduct of the meeting, shall, if the facts warrant,
determine and declare to the meeting that a matter or business was not properly
brought before the meeting and if the person presiding over the meeting should
so determine and declare, any such matter or business shall not be transacted or
considered. Unless and to the extent determined by the Board or the person
presiding over the meeting, meetings of stockholders shall not be required to be
held in accordance with rules of parliamentary procedure.

         1.16 Inspectors of Election. Before any meeting of stockholders, the
Board may, and shall if required by law, appoint one or more inspectors of
election, who may be employees of the corporation, to act at the meeting or its
adjournment and to make a written report thereof. If any person appointed as
inspector fails to appear or fails or refuses to act, then the person presiding
over the meeting may, and upon the request of any stockholder or a stockholder's
proxy, shall appoint a person to fill that vacancy.

                  Such inspectors shall:

                  (a)      determine the number of shares outstanding and the
                           voting power of each, the number of shares
                           represented at the meeting, the existence of a
                           quorum, and the authenticity, validity and effect of
                           proxies and ballots;



                                       9
<PAGE>



                  (b)      receive votes and ballots, including, if applicable,
                           votes and ballots submitted by means of electronic
                           transmission;

                  (c)      hear and determine all challenges and questions in
                           any way arising in connection with the right to vote;

                  (d)      determine when the polls shall close;

                  (e)      determine and retain for a reasonable period a record
                           of the disposition of any challenges made to any
                           determination by the inspector or inspectors;

                  (f)      certify their determination of the number of shares
                           of the corporation represented at the meeting and
                           such inspectors' count of all votes and ballots,
                           which certification and report shall specify such
                           other information as may be required by law; and

                  (g)      do any other acts that may be proper to conduct the
                           election or vote with fairness to all stockholders.

                  Each inspector of election shall perform his or her duties
impartially, in good faith, to the best of his or her ability and as
expeditiously as is practical, and before entering upon the discharge of his or
her duties, shall take and sign an oath to execute faithfully the duties of
inspector of election with strict impartiality and according to the best of his
or her ability. In determining the validity and counting of proxies and ballots
cast at any meeting of stockholders of the corporation, the inspectors may
consider such information as is permitted by applicable law. If there are three
(3) or more inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.

2. BOARD OF DIRECTORS.

         2.1 Number, Qualification, Election and Term of Directors. The business
and affairs of the corporation shall be managed by or under the direction of the
Board, which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute, the Certificate of Incorporation
or these Bylaws directed or required to be exercised or done exclusively by the
stockholders. Subject to the rights of the holders of any series of preferred
stock, the number of directors may be fixed or changed from time to time by
resolution of a majority of the entire Board; provided that the number shall be
no less than three (3) and no more than eleven (11), and the initial number of
directors upon effectiveness of these Amended and Restated Bylaws shall be eight
(8). No reduction in the number of directors shall have the effect of shortening
the term of any incumbent director, and when so fixed, such number shall
continue to be the authorized number of directors until changed by the Board by
vote as aforesaid. The



                                       10
<PAGE>



directors shall be divided into three (3) classes, Class I, Class II and Class
III, each class to be as nearly equal in number as possible. The term of office
of each director shall be until the third annual meeting following his or her
election and until the election and qualification of his or her successor;
provided, however, the directors first serving as Class I directors shall serve
for a term expiring at the annual meeting next following December 31, 2002, the
directors first serving as Class II directors shall serve for a term expiring at
the second annual meeting next following December 31, 2003, and the directors
first serving as Class III directors shall serve for a term expiring at the
third annual meeting next following December 31, 2004. As used in these Bylaws,
the term "entire Board" means the total number of directors which the
corporation would have if there were no vacancies on the Board.

         2.2 Quorum and Manner of Acting. (a) A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in Section 2.10 of these Bylaws. In the absence of a quorum a
majority of the directors present may adjourn any meeting from time to time
until a quorum is present. Every act or decision done or made by a majority of
the directors present at a duly held meeting at which a quorum is present shall
be regarded as the act of the Board, subject to the provisions of the
Certificate of Incorporation and applicable law.

                  (b) A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
that meeting.

         2.3 Place of Meetings. Meetings of the Board may be held in or outside
Delaware.

         2.4 Annual and Regular Meetings. Annual meetings of the Board for the
election of officers and consideration of other matters shall be held either (a)
without notice immediately after the annual meeting of stockholders and at the
same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in Section 2.6 of these Bylaws. Regular
meetings of the Board may be held without notice and, unless otherwise specified
by the Board, shall be held in accordance with a schedule and at such locations
as determined from time to time by the Board, provided no less than four (4)
such meetings shall be held each year. If the day fixed for a regular meeting is
a legal holiday, the meeting shall be held on the next business day.

         2.5 Special Meetings. Special meetings of the Board may be called by
the chairperson of the board, the chief executive officer/chief executive bear,
the president or by a majority of the directors in office.

         2.6 Notice of Meetings; Waiver of Notice. Notice of the time and place
of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director in advance of the time set for such meeting as
provided herein; provided, that if the meeting is to be held at the



                                       11
<PAGE>



principal executive offices of the corporation, the notice need not specify the
place of the meeting. Except for amendments to the Bylaws, as provided under
Section 6.9, notice of a special meeting need not state the purpose or purposes
for which the meeting is called and, unless indicated in the notice thereof, any
and all business may be transacted at a special meeting. Notice need not be
given to any director who submits a signed waiver of notice before or after the
meeting or who attends the meeting without protesting at the beginning of the
meeting the transaction of any business because the meeting was not lawfully
called or convened. Notice of any adjourned meeting need not be given, other
than by announcement at the meeting at which the adjournment is taken unless the
meeting is adjourned for more than twenty-four (24) hours. If the meeting is
adjourned for more than twenty-four (24) hours, then notice of the time and
place of the adjourned meeting shall be given before the adjourned meeting takes
place, in the manner specified herein to the directors who were not present at
the time of adjournment. Notice of a special meeting may be given by any one or
more of the following methods and the method used need not be the same for each
director being notified:

         (a)      written notice sent by mail at least three (3) days prior to
                  the meeting;

         (b)      personal service at least twenty-four (24) hours prior to the
                  time of the meeting;

         (c)      telegraphic notice at least twenty-four (24) hours prior to
                  the time of the meeting, said notice to be sent as a straight
                  full-rate telegram;

         (d)      telephonic notice at least twenty-four (24) hours prior to the
                  time of the meeting; or

         (e)      facsimile or other means of electronic transmission at least
                  twenty-four (24) hours prior to the time of the meeting.

                  Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director.

         2.7 Board or Committee Action Without a Meeting. Any action required or
permitted to be taken by the Board or by any committee of the Board may be taken
without a meeting if all of the members of the Board or of the committee
individually or collectively consent in writing or by electronic transmission to
the adoption of a resolution authorizing the action. Such action by written
consent shall have the same force and effect as a unanimous vote of the Board.
The resolution and the written consents or electronic transmission or
transmissions by the members of the Board or the committee shall be filed with
the minutes of the proceeding of the Board or of the committee. Such filing
shall be in paper form if the minutes are maintained in paper form and shall be
in electronic form if the minutes are maintained in electronic form.



                                       12
<PAGE>



         2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or of any committee of the Board may
participate in a meeting of the Board or of the committee by means of a
conference telephone or other communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at the meeting.

         2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his or her resignation in writing, including by means of
electronic transmission, to the president or secretary of the corporation, to
take effect at the time specified in the resignation; the acceptance of a
resignation, unless required by its terms, shall not be necessary to make it
effective. Subject to the Certificate of Incorporation, applicable law and the
rights, if any, of the holders of shares of preferred stock then outstanding,
any or all of the directors of the corporation may be removed from office at any
time by the stockholders only for cause and only by the affirmative vote of a
majority of the voting power of all of the then outstanding shares of capital
stock of the corporation entitled to vote generally in the election of
directors. A director may not be removed by the stockholders at a meeting unless
the notice of the meeting states that the purpose, or one of the purposes, of
the meeting is the removal of the director. Notwithstanding the foregoing,
whenever the holders of any one or more classes or series of preferred stock
issued by the corporation shall have the right, voting separately by class or
series, to elect directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of the Certificate of Incorporation
applicable thereto, and such directors so elected shall not be divided into
classes pursuant thereto unless expressly provided otherwise by such terms.

         2.10 Vacancies. Subject to applicable law and the terms of any one or
more classes or series of preferred stock, any vacancy on the Board that results
from an increase in the number of directors or resulting from the death,
resignation, removal from office or any other cause may be filled by a majority
of the Board then in office, although less than a quorum, or by a sole remaining
director and not by the stockholders. Any director of any class elected to fill
a vacancy resulting from an increase in the number of directors of such class
shall hold office for a term that shall coincide with the remaining term of that
class. Any director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of his
predecessor.

         2.11 Compensation. The Board is authorized to fix such compensation for
directors as it may determine, including a fee and reimbursement of expenses for
attendance at any meeting of the directors or committees. A director may also be
paid for serving the corporation, its affiliates or its subsidiaries in other
capacities.

         2.12 Notice to Members of the Board. Each member of the Board shall
file with the secretary of the corporation an address to which mail or
telegraphic notices shall be sent, a telephone number to which a telephonic or
facsimile notice may be transmitted and, at the sole discretion of a director,
such electronic address to which other electronic transmissions may be




                                       13
<PAGE>



sent. A notice mailed, telegraphed, telephoned or transmitted by facsimile or
other means of electronic transmission in accordance with the instructions
provided by the director shall be deemed sufficient notice. Such address or
telephone number may be changed at any time and from time to time by a director
by giving written notice of such change to the secretary. Failure on the part of
any director to keep an address and telephone number on file with the secretary
(but not including an address for other electronic transmissions) shall
automatically constitute a waiver of notice of any regular or special meeting of
the Board which might be held during the period of time that such address and
telephone number are not on file with the secretary. A notice shall be deemed to
be mailed when deposited in the United States mail, postage prepaid. A notice
shall be deemed to be telegraphed when the notice is delivered to the
transmitter of the telegram and either payment or provision for payment is made
by the corporation. Notice shall be deemed to be given by telephone if the
notice is transmitted over the telephone to some person (whether or not such
person is the director) or message recording device answering the telephone at
the number which the director has placed on file with the secretary. Notice
shall be deemed to be given by facsimile or other means of electronic
transmission when sent to the telephone number or other address which the
director has placed on file with the secretary.

         2.13 Organization. Meetings of the Board shall be presided over by the
chairperson of the Board, if any, or in his or her absence by the vice
chairperson of the Board, if any, or in his or her absence by the chief
executive officer/chief executive bear, if any, or in his or her absence by the
president, if any. In the absence of all such directors, a president pro tem
chosen by a majority of the directors present shall preside at the meeting. The
secretary shall act as secretary of the meeting, but in his or her absence the
chairperson of the meeting may appoint any person to act as secretary of the
meeting.

3. COMMITTEES.

         3.1 Audit Committee. The Board by resolution shall designate an Audit
Committee consisting of three directors or such other number as may be specified
by the Board, which shall review the internal financial controls of the
corporation, and the integrity of its financial reporting, and have such other
powers and duties as the Board determines. The Board shall adopt a charter,
which may be amended from time to time, setting for the powers and duties of the
Audit Committee. The members of the Audit Committee shall serve at the pleasure
of the Board. All action of the Audit Committee shall be reported to the Board
at its next meeting.

         3.2 Compensation Committee. The Board by resolution shall designate a
Compensation Committee consisting of three directors or such other number as may
be specified by the Board, which shall administer the corporation's compensation
plans and have such other powers and duties as the Board determines. The members
of the Compensation Committee shall serve at the pleasure of the Board. All
action of the Compensation Committee shall be reported to the Board at its next
meeting. The Board shall adopt a charter, which may be amended from time to
time, setting forth the powers and duties of the Compensation Committee.



                                       14
<PAGE>



         3.3 Nominating and Corporate Governance Committee. The Board by
resolution shall designate a Nominating and Corporate Governance Committee
consisting of three directors or such other number as may be specified by the
Board, which shall nominate candidates for election to the Board, formulate
corporate governance principles, and have such other powers and duties as the
Board determines. The members of the Nominating and Corporate Governance
Committee shall serve at the pleasure of the Board. All action of the Nominating
and Corporate Governance Committee shall be reported to the Board at its next
meeting. The Board shall adopt a charter, which may be amended from time to
time, setting forth the powers and duties of the Nominating and Corporate
Governance Committee.

         3.4 Other Committees. The Board, by resolution adopted by a majority of
the entire Board, may designate other committees of directors of one or more
directors, which shall serve at the Board's pleasure and have such powers and
duties as the Board determines.

         3.5 Meetings and Action of Committees. (a) The Board may designate one
or more directors as alternate members of any committee (other than the Audit
Committee), who may replace any absent or disqualified member at any meeting of
the committee. Each committee shall keep regular minutes of its meetings and
report the same to the Board at its next meeting. Each committee may adopt rules
of procedure and shall meet as provided by those rules or by resolutions of the
Board.

                  (b) Meetings and actions of committees shall be governed by,
and held and taken in accordance with, the provisions of Article 2 of these
Bylaws, including Section 2.2 (quorum and manner of acting), Section 2.3 (place
of meetings), Section 2.4 (annual and regular meetings), Section 2.5 (special
meetings), 2.6 (notice of meetings and waiver of notice), Section 2.7 (board or
committee action without a meeting), Section 2.8 (participation in Board or
committee meetings by conference telephone), Section 2.12 (notice to members of
the Board), and Section 2.13 (organization), with such changes in the context of
those Bylaws as are necessary to substitute the committee and its members for
the Board and its members; provided, however, (i) that the time of regular
meetings of committees may be determined either by resolution of the Board or by
resolution of the committee, (ii) that special meetings of committees may also
be called by resolution of the Board, (iii) that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee; (iv) that a majority of the
members of a committee shall constitute a quorum for the transaction of business
at any meeting; and (v) that the affirmative vote of a majority of the members
of a committee shall be required to take action in respect of any matter
presented to or requiring the approval of the committee.

         3.6 Election Pursuant to Section 141(c)(2). By resolution of the Board,
the corporation has elected pursuant to Section 141(c) of the General
Corporation Law of Delaware to be governed by paragraph (2) of Section 141(c) in
respect of committees of the Board.



                                       15
<PAGE>



4. OFFICERS.

         4.1 Number; Security. The officers of the corporation shall consist of
a chief executive officer (or, interchangeably, a chief executive bear), a
president, one or more vice presidents (including executive vice president(s)
and senior vice president(s) if the Board so determines), a secretary and a
treasurer and a chief financial officer (or, interchangeably, a chief financial
bear) who shall be chosen by the Board and such other officers, including but
not limited to a chairperson of the Board, a vice chairperson of the Board, as
the Board shall deem expedient, who shall be chosen in such manner and hold
their offices for such terms as the Board may prescribe. Any two or more offices
may be held by the same person. The Board may from time to time designate the
president or any executive vice president as the chief operating officer (or,
interchangeably, the chief operating bear) of the corporation. Any vice
president, treasurer or assistant treasurer, or assistant secretary,
respectively, may exercise any of the powers of the president, the chief
financial officer/chief financial bear, or the secretary, respectively, as
directed by the Board and shall perform such other duties as are imposed upon
such officer by the Bylaws or the Board. The Board may require any officer,
agent or employee to give security for the faithful performance of his duties.
The Board may designate that the word "bear" may be used in any officer's title,
and such term may be used in substitution for or interchangeably with the word
"officer" in such person's title; in such case, each of such designations shall,
together or separately, be considered an official title for such person.

         4.2 Election; Term of Office; Salaries. The term of office and salary
of each of the officers of the corporation and the manner and time of the
payment of such salaries shall be fixed and determined by the Board and may be
altered by said Board from time to time at its pleasure, subject to the rights,
if any, of said officers under any contract of employment; provided, that the
Board may designate such responsibilities to the Compensation Committee and may
also authorize the chief executive officer/chief executive bear or the president
to establish the salaries of officers appointed pursuant to Section 4.3.

         4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any officer or to any
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.

         4.4 Resignation and Removal of Officers. Any officer may resign at any
time by delivering his resignation in writing to the chief executive
officer/chief executive bear, president or secretary of the corporation, to take
effect at the time specified in the resignation; the acceptance of a
resignation, unless required by its terms, shall not be necessary to make it
effective. Any officer elected or appointed by the Board or appointed by an
officer or by a committee may be removed by the Board either with or without
cause, and in the case of an officer appointed by an officer or by a committee,
by the officer or committee who appointed him or her or by the president.



                                       16
<PAGE>



         4.5 Vacancies. A vacancy in any office may be filled for the unexpired
term in the manner prescribed in Sections 4.2 and 4.3 of these Bylaws for
election or appointment to the office.

         4.6 Chairperson of the Board. The chairperson of the Board, if such an
officer shall be chosen, shall have general supervision, direction and control
of the corporation's business and its officers, and, if present, preside at
meetings of the stockholders and the Board and exercise and perform such other
powers and duties as may from time to time be assigned to him by the Board or as
may be prescribed by these Bylaws. The chairperson of the Board shall report to
the Board.

         4.7 Vice Chairperson of the Board. The vice chairperson of the Board,
if there shall be one, shall, in the case of the absence, disability or death of
the chairperson of the Board, exercise all the powers and perform all the duties
of the chairperson of the Board. The vice chairperson shall have such other
powers and perform such other duties as may be granted or prescribed by the
Board.

         4.8 Chief Executive Officer/Chief Executive Bear. Subject to the
control of the Board, the chief executive officer/chief executive bear of the
corporation shall have general supervision over the business of the corporation;
the powers and duties of the chief executive officer/chief executive bear shall
be:

                  (a) To affix the signature of the corporation to such deeds,
conveyances, mortgages, leases, obligations, bonds, certificates and other
papers and instruments in writing which have been authorized by the Board or
which, in the judgment of the chief executive officer/chief executive bear,
should be executed on behalf of the corporation, and to sign certificates for
shares of capital stock of the corporation.

                  (b) To have such other powers and be subject to such other
duties as the Board may from time to time prescribe.

         4.9 President. The powers and duties of the president are:

                  (a) To affix the signature of the corporation to such deeds,
conveyances, mortgages, leases, obligations, bonds, certificates and other
papers and instruments in writing which have been authorized by the Board or
which, in the judgment of the president, should be executed on behalf of the
corporation, and to sign certificates for shares of capital stock of the
corporation.

                  (b) To have such other powers and be subject to such other
duties as the Board may from time to time prescribe.



                                       17
<PAGE>



         4.10 Vice President. In case of the absence, disability or death of the
president, the elected vice president, or one of the elected vice presidents,
shall exercise all the powers and perform all the duties of the president. If
there is more than one elected vice president, the order in which the elected
vice presidents shall succeed to the powers and duties of the president shall be
as fixed by the Board. The elected vice president or elected vice presidents
shall have such other powers and perform such other duties as may be granted or
prescribed by the Board.

                  Vice presidents appointed pursuant to Section 4.3 shall have
such powers and duties as may be fixed by the chairperson of the Board or
president. Each vice president shall have such powers and duties as the Board or
the president assigns to him or her.

         4.11 Secretary. The powers and duties of the secretary are:

                  (a) To keep a book of minutes at the principal office of the
corporation, or such other place as the Board may order, of all meetings of its
directors and stockholders with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof given, the names
of those present at directors' meetings, the number of shares present or
represented at stockholders' meetings and the proceedings thereof.

                  (b) To keep the seal of the corporation, if any, and affix the
same, if any, to all instruments which may require it.

                  (c) To keep or cause to be kept at the principal office of the
corporation, or at the office of the transfer agent or agents, a share register,
or duplicate share registers, showing the names of the stockholders and their
addresses, the number of and classes of shares, and the number and date of
cancellation of every certificate surrendered for cancellation.

                  (d) To keep a supply of certificates for shares of the
corporation, to fill in all certificates issued, and to make a proper record of
each such issuance; provided, that so long as the corporation shall have one or
more duly appointed and acting transfer agents of the shares, or any class or
series of shares, of the corporation, such duties with respect to such shares
shall be performed by such transfer agent or transfer agents.

                  (e) To transfer upon the share books of the corporation any
and all shares of the corporation; provided, that so long as the corporation
shall have one or more duly appointed and acting transfer agents of the shares,
or any class or series of shares, of the corporation, such duties with respect
to such shares shall be performed by such transfer agent or transfer agents, and
the method of transfer of each certificate shall be subject to the reasonable
regulations of the transfer agent to which the certificate is presented for
transfer, and also, if the corporation then has one or more duly appointed and
acting registrars, to the reasonable regulations of the registrar to which the
new certificate is presented for registration; and provided, further that no
certificate for shares of stock shall be issued or delivered or, if issued or
delivered, shall have any validity whatsoever until and unless it has been
signed or authenticated in the manner provided in Section 5.1 hereof.



                                       18
<PAGE>



                  (f) To make service and publication of all notices that may be
necessary or proper, and without command or direction from anyone. In case of
the absence, disability, refusal, or neglect of the secretary to make service or
publication of any notices, then such notices may be served and/or published by
the president or a vice president, or by any person thereunto authorized by
either of them or by the Board or by the holders of a majority of the
outstanding shares of the corporation.

                  (g) To sign certificates for shares of capital stock of the
corporation.

                  (h) Generally to do and perform all such duties as pertain to
the office of secretary and as may be required by the Board.

         4.12 Treasurer. The treasurer shall be or shall be under the direction
of the chief financial officer/chief financial bear of the corporation, and
shall be in charge of the corporation's books and accounts. Subject to the
control of the Board, he or she shall have such other powers and duties as the
Board or the president assigns to him or her.

         4.13 Chief Financial Officer/Chief Financial Bear. The powers and
duties of the chief financial officer/chief financial bear are:

                  (a) To supervise the corporate-wide treasury functions and
financial reporting to external bodies.

                  (b) To have the custody of all funds, securities, evidence of
indebtedness and other valuable documents of the corporation and, at the chief
financial officer's/chief financial bear's discretion, to cause any or all
thereof to be deposited for account of the corporation at such depositary as may
be designated from time to time by the Board.

                  (c) To receive or cause to be received, and to give or cause
to be given, receipts and acquittances for monies paid in for the account of the
corporation.

                  (d) To disburse, or cause to be disbursed, all funds of the
corporation as may be directed by the Board, taking proper vouchers for such
disbursements.

                  (e) To render to the chairperson of the board, chief executive
officer/chief executive bear and president, and to the Board, whenever they may
require, accounts of all transactions and of the financial condition of the
corporation.

                  (f) Generally to do and perform all such duties as pertain to
the office of chief financial officer/chief financial bear and as may be
required by the Board.



                                       19
<PAGE>


5. SHARES.

         5.1 Shares of the Corporation. The shares of the corporation shall be
represented by certificates, provided that the Board may provide by resolution
or resolutions that some or all of any or all classes or series of its stock
shall be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the Board,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the corporation by the chairperson or vice chairperson of the
Board or by the president or a vice-president, and by the secretary or an
assistant secretary, or the treasurer or an assistant treasurer, representing
the number of shares registered in certificate form. The signatures of any such
officers thereon may be facsimiles. The seal of the corporation shall be
impressed, by original or by facsimile, printed or engraved, on all such
certificates. The certificate shall also be signed by the transfer agent and a
registrar and the signature of either the transfer agent or the registrar may
also be facsimile, engraved or printed. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon any
such certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, such certificate may nevertheless
be issued by the corporation with the same effect as if such officer, transfer
agent, or registrar had not ceased to be such officer, transfer agent, or
registrar at the date of its issue.

         5.2 Special Designation on Certificates. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences, and the relative,
participating, optional or other special rights or each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.

         5.3 Lost, Stolen, Destroyed and Mutilated Certificates. The owner of
any stock of the corporation shall immediately notify the corporation of any
loss, theft, destruction or mutilation of any certificate therefor, and the
corporation may issue uncertificated shares or a new certificate for stock in
the place of any certificate theretofore issued by it and alleged to have been
lost, stolen or destroyed, and the Board may, in its discretion, require the
owner of the lost, stolen or destroyed certificate or his or her legal
representatives to give the corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board shall
in its uncontrolled discretion determine, to indemnify the corporation against
any claim that may be



                                       20
<PAGE>



made against it on account of the alleged loss, theft or destruction of any such
certificate, or the issuance of any such new certificate or uncertificated
shares. The Board may, however, in its discretion refuse to issue any such new
certificate or uncertificated shares except pursuant to legal proceedings under
the laws of the State of Delaware in such case made and provided.

         5.4 Stock Records. The corporation or a transfer agent shall keep stock
books in which shall be recorded the number of shares issued, the names of the
owners of the shares, the number owned by them respectively, whether such shares
are represented by certificates or are uncertificated, and the transfer of such
shares with the date of transfer.

         5.5 Transfers. Transfers of stock shall be made only on the stock
transfer record of the corporation upon surrender of the certificate or
certificates being transferred which certificate shall be properly endorsed for
transfer or accompanied by a duly executed stock power, except in the case of
uncertificated shares, for which the transfer shall be made only upon receipt of
transfer documentation reasonably acceptable to the corporation. Whenever a
certificate is endorsed by or accompanied by a stock power executed by someone
other than the person or persons named in the certificate, or the transfer
documentation for the uncertificated shares is executed by someone other than
the holder of record thereof, evidence of authority to transfer same shall also
be submitted with the certificate or transfer documentation. All certificates
surrendered to the corporation for transfer shall be canceled.

         5.6 Regulations Governing Issuance and Transfers of Shares. The Board
shall have the power and authority to make all such rules and regulations as it
shall deem expedient concerning the issue, transfer and registration of shares
of stock of the corporation.

         5.7 Transfer Agents and Registrars. The Board may appoint, or authorize
one or more officers to appoint, one or more transfer agents and one or more
registrars.

         5.8 Record Date for Purposes Other than Notice and Voting. For purposes
of determining the stockholders entitled to receive payment of any dividend or
other distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any other lawful action, the Board may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted and which shall not be more than
sixty (60) days before any such action. In that case, only stockholders of
record at the close of business on the date so fixed are entitled to receive the
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date so fixed, except as otherwise provided in the
Certificate of Incorporation, by these Bylaws, by agreement or by law. If the
Board does not so fix a record date, then the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board adopts the applicable resolution.



                                       21
<PAGE>



6. MISCELLANEOUS.

         6.1 Seal. The Board shall adopt a corporate seal, which shall be in the
form of a circle and shall bear the corporation's name and the year and state in
which is was incorporated.

         6.2 Fiscal Year. The Board may determine the corporation's fiscal year.
Until changed by the Board, the corporation's fiscal year shall consists of the
52 or 53 week period that ends on the Saturday nearest December 31 in each year.

         6.3 Voting of Shares in Other Corporations. Shares in other
corporations which are held by the corporation may be represented and voted by
the president or a vice president of this corporation or by proxy or proxies
appointed by one of them. The Board may, however, appoint some other person to
vote the shares.

         6.4 Checks; Drafts; Evidences of Indebtedness. From time to time, the
Board shall determine by resolution which person or persons may sign or endorse
all checks, drafts, other orders for payment of money, notes or other evidences
of indebtedness that are issued in the name of or payable to the corporation,
and only the persons so authorized shall sign or endorse those instruments.

         6.5 Corporate Contracts and Instruments; How Executed. The Board,
except as otherwise provided in these Bylaws, may authorize any officer or
officers, or agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation; such authority may
be general or confined to specific instances.

         6.6 Construction; Definitions. Unless the context requires otherwise,
the general provisions, rules of construction, and definitions in the General
Corporation Law of Delaware shall govern the construction of these Bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular, the term "person" includes
both a corporation and a natural person, and the masculine gender includes the
feminine gender and vice versa.

         6.7 Provisions Additional to Provisions of Law. All restrictions,
limitations, requirements and other provisions of these Bylaws shall be
construed, insofar as possible, as supplemental and additional to all provisions
of law applicable to the subject matter thereof and shall be fully complied with
in addition to the said provisions of law unless such compliance shall be
illegal.

         6.8 Provisions Contrary to Provisions of Law. Any article, section,
subsection, subdivision, sentence, clause or phrase of these Bylaws which upon
being construed in the manner provided in Section 6.7 hereof, shall be contrary
to or inconsistent with any applicable provisions of law, shall not apply so
long as said provisions of law shall remain in effect, but such result shall not
affect the validity or applicability of any other portions of these Bylaws, it
being hereby declared that these Bylaws would have been adopted and each
article, section,



                                       22
<PAGE>



subsection, subdivision, sentence, clause or phrase thereof, irrespective of the
fact that any one or more articles, sections, subsections, subdivisions,
sentences, clauses or phrases is or are illegal.

         6.9 Amendments. The Board may from time to time adopt, amend or repeal
the Bylaws; provided, however, that the stockholders may amend or repeal any
Bylaw or Bylaws adopted by the Board, or adopt a new Bylaw or Bylaws, in either
case by the affirmative vote of the holders of at least eighty percent (80%) of
the voting power of all of the then outstanding shares of the capital stock of
the corporation, voting together as a single class; and, provided, further,
however, that in the case of any such stockholder action at a special meeting of
stockholders, notice of the proposed adoption, amendment or repeal of the new
Bylaw or Bylaws must be contained in the notice of such special meeting.

                  Whenever an amendment or new bylaw is adopted, it shall be
copied in the book of bylaws with the original bylaws, in the appropriate place.
If any bylaw is repealed, the fact of repeal with the date of the meeting at
which the repeal was enacted or the filing of the operative written consent(s)
shall be stated in said book.

Section 6.10 Indemnification and Insurance.

         (a) Generally.

                  (1) The corporation shall indemnify any person who was or is a
         party or is threatened to be made a party to any threatened, pending or
         completed action, suit or proceeding, whether civil, criminal,
         administrative or investigative, by reason of the fact that he or she
         is or was or has agreed to serve at the request of the corporation as a
         director or officer of the corporation or any subsidiary of the
         corporation, or is or was serving or has agreed to serve at the request
         of the corporation as a director or officer (which, for purposes
         hereof, shall include a trustee or similar capacity) of another
         corporation, partnership, joint venture, trust, employee benefit plan
         or other enterprise, or by reason of any action alleged to have been
         taken or omitted in such capacity.

                  (2) The corporation may indemnify any person who was or is a
         party or is threatened to be made a party to any threatened, pending or
         completed action, suit or proceeding, whether civil, criminal,
         administrative or investigative, by reason of the fact that he or she
         is or was or has agreed to serve at the request of the corporation as
         an employee or agent of the corporation or any subsidiary of the
         corporation, or is or was serving or has agreed to serve at the request
         of the corporation as an employee or agent of another corporation,
         partnership, joint venture, trust, employee benefit plan or other
         enterprise, or by reason of any action alleged to have been taken or
         omitted in such capacity.

                  (3) The indemnification provided by this subsection (a) shall
         be from and against expenses (including attorneys' fees), judgments,
         fines and amounts paid in



                                       23
<PAGE>



         settlement actually and reasonably incurred by the indemnitee or on his
         or her behalf in connection with such action, suit or proceeding and
         any appeal therefrom, but shall only be provided if the indemnitee
         acted in good faith and in a manner he or she reasonably believed to be
         in or not opposed to the best interests of the corporation and, with
         respect to any criminal action, suit or proceeding, had no reasonable
         cause to believe his or her conduct was unlawful.

                  (4) Notwithstanding the foregoing provisions of this
         subsection (a), in the case of an action or suit by or in the right of
         the corporation to procure a judgment in its favor (i) the
         indemnification provided by this subsection (a) shall be limited to
         expenses (including attorneys' fees) actually and reasonably incurred
         by such person in the defense or settlement of such action or suit, and
         (ii) no indemnification shall be made in respect of any claim, issue or
         matter as to which such person shall have been adjudged to be liable to
         the corporation unless, and only to the extent that, the Delaware Court
         of Chancery or the court in which such action or suit was brought shall
         determine upon application that, despite the adjudication of liability
         but in view of all the circumstances of the case, such person is fairly
         and reasonably entitled to indemnity for such expenses which the
         Delaware Court of Chancery or such other court shall deem proper.

                  (5) The termination of any action, suit or proceeding by
         judgment, order, settlement, conviction, or upon a plea of nolo
         contendere or its equivalent, shall not, of itself, create a
         presumption that the person did not act in good faith and in a manner
         which he or she reasonably believed to be in or not opposed to the best
         interests of the corporation, and, with respect to any criminal action
         or proceeding, had reasonable cause to believe that his or her conduct
         was unlawful.

                  (b) Good Faith.

                  (1) For purposes of any determination under this Bylaw, a
         director or officer or, if applicable, employee or agent shall be
         deemed to have acted in good faith and in a manner he or she reasonably
         believed to be in or not opposed to the best interests of the
         corporation, and, with respect to any criminal action or proceeding, to
         have had no reasonable cause to believe that his or her conduct was
         unlawful, if his or her action is based on information, opinions,
         reports and statements, including financial statements and other
         financial data, in each case prepared or presented by:

                           (i) one or more officers or employees of the
                  corporation whom the director, officer, employee or agent
                  reasonably believed to be reliable and competent in the
                  matters presented;

                           (ii) counsel, independent accountants or other
                  persons as to matters which the director, officer, employee or
                  agent reasonably believed to be within such person's
                  professional or expert competence; and



                                       24
<PAGE>



                           (iii) with respect to a director, a committee of the
                  Board upon which such director does not serve, as to matters
                  within such committee's designated authority, which committee
                  the director reasonably believes to merit confidence;

         so long as, in each case, the director acts without knowledge that
         would cause such reliance to be unwarranted.

                  (2) The termination of any proceeding by judgment, order,
         settlement, conviction or upon a plea of nolo contendere or its
         equivalent shall not, of itself, create a presumption that the person
         did not act in good faith and in a manner which he or she reasonably
         believed to be in or not opposed to the best interests of the
         corporation, and, with respect to any criminal proceeding, that he or
         she had reasonable cause to believe that his or her conduct was
         unlawful.

                  (3) The provisions of this paragraph (b) shall not be deemed
         to be exclusive or to limit in any way the circumstances in which a
         person may be deemed to have met the applicable standard of conduct set
         forth by the Delaware General Corporation Law.

                  (c) Advancement of Expenses. The corporation shall advance,
prior to the final disposition of any proceeding, promptly following request
therefor, all expenses actually and reasonably incurred by any director or
officer in connection with such proceeding upon receipt of an undertaking by or
on behalf of such person to repay said amounts if it should be ultimately
determined that such person is not entitled to be indemnified under this Bylaw
or otherwise. Such expenses (including attorneys' fees) actually and reasonably
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate.

         Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (d) of this Bylaw, no advance shall be made by the corporation if a
determination is made (1) by the Board by a majority vote of a quorum consisting
of directors who were not parties to the proceeding, or (2) if such quorum is
not obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) or by a panel
of arbitrators, one of whom is selected by the corporation, another of whom is
selected by an indemnitee and the last of whom is selected by the first two
arbitrators so selected, that the facts known to the decision making party at
the time such determination is made demonstrate that such person acted in bad
faith or in a manner that such person did not believe to be in or not opposed to
the best interests of the corporation.

                  (d) Enforcement. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between the
corporation and the director or officer. Any right to indemnification or
advances granted by this Bylaw to a director or officer shall be enforceable by
or on behalf of the person



                                       25
<PAGE>



holding such right in any court of competent jurisdiction in Delaware or
Missouri if (i) the claim for indemnification or advances is denied, in whole or
in part, or (ii) no disposition of such claim is made within ninety (90) days of
request therefor. The claimant in such enforcement action, if successful in
whole or in part, shall be entitled to be paid also the expense of prosecuting
his or her claim. The corporation shall be entitled to raise as a defense to any
such action that the claimant has not met the applicable standards of conduct
that make it permissible for the corporation to indemnify the claimant for the
amount claimed. Neither the failure of the corporation (including its Board,
independent legal counsel or panel of arbitrators) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board, independent legal counsel
or panel of arbitrators) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that
claimant has or has not met the applicable standard of conduct.

                  (e) Exceptions. Any other provision herein to the contrary
notwithstanding, the corporation shall not be obligated pursuant to the terms of
this Bylaw:

                  (i) to indemnify or advance expenses to any person with
         respect to proceedings or claims initiated or brought voluntarily by
         such person and not by way of defense, except with respect to
         proceedings brought to establish or enforce a right to indemnification
         under this Bylaw or any other statute or law or otherwise as required
         under Section 145, but such indemnification or advancement of expenses
         may be provided by the corporation in specific cases if the Board finds
         it to be appropriate; or

                  (ii) to indemnify an indemnitee for any expenses incurred by
         any person with respect to any proceeding instituted by such person to
         enforce or interpret this Bylaw if the material assertions made by such
         person in such proceeding were not made in good faith or were
         frivolous; or

                  (iii) to indemnify any person under this Bylaw for any amounts
         paid in settlement of a proceeding effected without the corporation's
         written consent; or

                  (iv) to indemnify any person in connection with proceedings or
         claims involving the enforcement of non-compete and/or non-disclosure
         agreements or the non-compete and/or non-disclosure provisions of
         employment, consulting or similar agreements the person may be a party
         to with the corporation, any subsidiary of the corporation or any other
         applicable foreign or domestic corporation, partnership, limited
         liability company, joint venture, trust or other enterprise, if any; or

                  (v) to indemnify any person on account of any proceeding with
         respect to (A) remuneration paid to such person if it is determined by
         final judgment or other final adjudication that such remuneration was
         in violation of law, (B) which final judgment is



                                       26
<PAGE>



         rendered against such person for an accounting of profits made by the
         purchase or sale by such person of securities of the corporation
         pursuant to the provisions of Section 16(b) of the Securities Exchange
         Act of 1934, as amended, or similar provisions of any federal, state or
         local statute, (C) which it is determined by final judgment or other
         final adjudication that such person's conduct was knowingly fraudulent
         or intentionally dishonest, or (D) which it is determined by final
         judgment or other final adjudication by a court having jurisdiction in
         the matter that such indemnification is not lawful; or

                  (vi) to indemnify any person under this Bylaw for any amounts
         indemnified by the corporation other than pursuant to this Bylaw or
         amounts paid to or for the benefit of such person by available
         insurance.

                  (f) Non-Exclusivity of Rights. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law.

                  (g) Survival of Rights. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

                  (h) Insurance. The corporation may, but shall not be obligated
to, maintain insurance, at its expense, to protect itself and any director,
officer, employee or agent of the corporation or another corporation,
partnership, joint venture, trust or other enterprise against any loss
indemnified pursuant to this Bylaw, regardless whether the corporation would
have the power to indemnify such person against such loss indemnified pursuant
to this Bylaw under the General Corporation Law of Delaware.

                  (i) Amendments. Any repeal or modification of this Bylaw shall
not reduce, terminate or otherwise adversely affect the right of any director or
officer to obtain the indemnification or the advance of expenses with respect to
any proceeding that arises out of any action or omission that occurred after
this Bylaw was in effect.

                  (j) Saving Clause. If this Bylaw or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer to the full
extent not prohibited by any applicable portion of this Bylaw that shall not
have been invalidated, or by any other applicable law.

                  (k) Certain Definitions. For the purposes of this Bylaw, the
following definitions shall apply:



                                       27
<PAGE>



                  (1) The term "proceeding" shall be broadly construed and shall
         include, without limitation, the investigation, preparation,
         prosecution, defense, settlement, arbitration and appeal of, and the
         giving of testimony in, any threatened, pending or completed action,
         suit or proceeding, whether civil, criminal, administrative or
         investigative.

                  (2) The term "expenses" shall be broadly construed and shall
         include, without limitation, all direct and indirect costs of any type
         or nature whatsoever (including, without limitation, actual and
         reasonable attorneys' fees and related disbursements, other
         out-of-pocket costs and reasonable compensation for time spent by the
         indemnified party for which he or she is not otherwise compensated by
         the corporation or any third party, provided that the rate of
         compensation and estimated time involved is approved by the Board,
         which approval shall not be unreasonably withheld), actually and
         reasonably incurred by the indemnified party in connection with either
         the investigation, defense or appeal of a proceeding or establishing or
         enforcing a right to indemnification under this Bylaw, Section 145 or
         otherwise.

                  (3) The term the "corporation" shall include, in addition to
         the resulting corporation, any constituent corporation (including any
         constituent of a constituent) absorbed in a consolidation or merger
         which, if its separate existence had continued, would have had power
         and authority to indemnify its directors, officers, and employees or
         agents, so that any person who is or was a director, officer, employee
         or agent of such constituent corporation, or is or was serving at the
         request of such constituent corporation as a director, officer,
         employee or agent of another corporation, partnership, joint venture,
         trust or other enterprise, shall stand in the same position under the
         provisions of this Bylaw with respect to the resulting or surviving
         corporation as he or she would have with respect to such constituent
         corporation if its separate existence had continued.

                  (4) References to "other enterprises" shall include employee
         benefit plans; references to "fines" shall include any excise taxes
         assessed on a person with respect to an employee benefit plan; and
         references to "serving at the request of the corporation" shall include
         any service as a director, officer, employee or agent of the
         corporation which imposes duties on, or involves services by, such
         director, officer, employee, or agent with respect to an employee
         benefit plan, its participants, or beneficiaries; and a person who
         acted in good faith and in a manner he or she reasonably believed to be
         in the interest of the participants and beneficiaries of an employee
         benefit plan shall be deemed to have acted in a manner "not opposed to
         the best interests of the corporation" as referred to in this Bylaw.





                                       28

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>7
<FILENAME>c86750exv4w2.txt
<DESCRIPTION>STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>



                                                                     EXHIBIT 4.2
================================================================================

================================================================================







                            STOCK PURCHASE AGREEMENT

                                       by

                                       and

                                      among


                           BUILD-A-BEAR WORKSHOP, INC.


                           CATTERTON PARTNERS IV, L.P.


                      CATTERTON PARTNERS IV OFFSHORE, L.P.


                                       and

                   CATTERTON PARTNERS IV SPECIAL PURPOSE, L.P.

                                  and the other

                                   PURCHASERS

                                  named herein
                               ------------------


                            Dated as of April 3, 2000

                               -------------------







================================================================================



<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                                                       <C>

ARTICLE 1.  DEFINITIONS...................................................................................................1


       1.1. Definitions...................................................................................................1

       1.2. Accounting Terms; Financial Statements........................................................................7

       1.3. Knowledge Standard............................................................................................7

       1.4. Other Defined Terms...........................................................................................7


ARTICLE 2.  AUTHORIZATION OF PREFERRED STOCK; PURCHASE AND SALE OF PREFERRED STOCK........................................8


       2.1. Series A-5 Convertible Preferred Stock and Series B-4 Convertible Preferred Stock.............................8

       2.2. Purchase and Sale of Preferred Shares.........................................................................8

       2.3. Closing.......................................................................................................8


ARTICLE 3.  CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO PURCHASE THE SECURITIES.....................................9


       3.1. Representations and Warranties................................................................................9

       3.2. Compliance with Terms and Conditions of this Agreement........................................................9

       3.3. Delivery of Certificates Evidencing the Preferred Shares......................................................9

       3.4. Closing Certificates..........................................................................................9

       3.5. Secretary's Certificates......................................................................................9

       3.6. Documents.....................................................................................................9

       3.7. Purchase Permitted by Applicable Laws........................................................................10

       3.8. Opinion of Counsel...........................................................................................10

       3.9. Consents and Approvals.......................................................................................10

       3.10. Certain Waivers.............................................................................................10

       3.11. No Material Adverse Effect..................................................................................10

       3.12. No Material Judgment or Order...............................................................................10

       3.13. Financial Statements........................................................................................11

       3.14. Registration Rights Agreement...............................................................................11

       3.15. Stockholders' Agreement.....................................................................................11

       3.16. Certificate of Designation..................................................................................11

       3.17. Employment Agreements.......................................................................................11

       3.18. Board of Directors..........................................................................................11

       3.19. Stock Plan..................................................................................................12

       3.20. Insurance...................................................................................................12

       3.21. Amendment to Bank Loan......................................................................................12


ARTICLE 4.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO CLOSE........................................................12


       4.1. Representations and Warranties...............................................................................12

       4.2. Compliance with Terms and Conditions of this Agreement.......................................................12

       4.3. Issuance Permitted by Applicable Laws........................................................................12

       4.4. Payment of Purchase Price....................................................................................13

       4.5. Consents and Approvals.......................................................................................13

       4.6. No Material Judgment or Order................................................................................13

       4.7. Registration Rights Agreement................................................................................13

       4.8. Stockholders' Agreement......................................................................................13


ARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................................13


       5.1. Corporate Existence and Authority............................................................................14

</TABLE>


<PAGE>

                           TABLE OF CONTENTS-(cont'd)

<Table>
<Caption>
                                                                                                                      Page
<S>                                                                                                                     <C>
       5.2. Corporate Authorization; No Contravention....................................................................14

       5.3. Governmental Authorization; Third Party Consents.............................................................14

       5.4. Binding Effect...............................................................................................14

       5.5. Other Agreements.............................................................................................14

       5.6. Capitalization...............................................................................................15

       5.7. Subsidiaries.................................................................................................16

       5.8. Private Offering.............................................................................................16

       5.9. Litigation...................................................................................................16

       5.10. Financial Statements........................................................................................16

       5.11. Title and Condition of Assets...............................................................................17

       5.12. Contractual Obligations.....................................................................................17

       5.13. Patents, Trademarks, Etc....................................................................................18

       5.14. Tax Matters.................................................................................................18

       5.15. Severance Arrangements......................................................................................19

       5.16. No Material Adverse Effect..................................................................................20

       5.17. Environmental Matters.......................................................................................20

       5.18. Investment Company/Government Regulations...................................................................21

       5.19. Broker's, Finder's or Similar Fees..........................................................................21

       5.20. Labor Relations and Employee Matters........................................................................21

       5.21. Employee Benefits Matters...................................................................................21

       5.22. Potential Conflicts of Interest.............................................................................22

       5.23. Business Relationships......................................................................................22

       5.24. Outstanding Borrowings......................................................................................22

       5.25. Insurance Schedule..........................................................................................22

       5.26. Undisclosed Liabilities.....................................................................................23

       5.27. Solvency....................................................................................................23

       5.28. Compliance with Law.........................................................................................23

       5.29. No Other Agreements to Sell the Assets or Capital Stock of the Company......................................23

       5.30. Inventory...................................................................................................23

       5.31. Suppliers...................................................................................................24

       5.32. Changes.....................................................................................................24

       5.33. Certain Payments............................................................................................25


ARTICLE 6.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.............................................................26


       6.1. Existence and Authority......................................................................................26

       6.2. Authorization; No Contravention..............................................................................26

       6.3. Binding Effect...............................................................................................26

       6.4. Purchase for Own Account.....................................................................................26

       6.5. Accredited Investor Status; Institutional Investor Status....................................................27

       Exculpation Among Purchasers......................................................................................27

       No Public Market..................................................................................................27

       6.9 Access to Data................................................................................................27


ARTICLE 7.  COVENANTS OF THE COMPANY WITH  RESPECT TO THE PERIOD FOLLOWING THE CLOSING...................................28


       7.1. Notices......................................................................................................28


</Table>

<PAGE>
                           TABLE OF CONTENTS-(cont'd)
<Table>
<Caption>
                                                                                                                        Page
       <S>                                                                                                               <C>
       7.2. Reservation of Shares........................................................................................28


ARTICLE 8.  INDEMNIFICATION..............................................................................................29


       8.1. Indemnification..............................................................................................29

       8.2. Notification.................................................................................................30

       8.3. Registration Rights Agreement................................................................................30


ARTICLE 9.  MISCELLANEOUS................................................................................................31


       9.1. Survival of Representations and Warranties...................................................................31

       9.2. Notices......................................................................................................31

       9.3. Successors and Assigns.......................................................................................31

       9.4. Amendment and Waiver.........................................................................................32

       9.5. Counterparts.................................................................................................32

       9.6. Headings.....................................................................................................32

       9.7. Governing Law................................................................................................32

       9.8. Jurisdiction.................................................................................................32

       9.9. Severability.................................................................................................33

       9.10. Rules of Construction.......................................................................................33

       9.11. Entire Agreement............................................................................................33

       9.12. Transaction Expenses........................................................................................33

       9.13. Publicity...................................................................................................33

       9.14. Further Assurances..........................................................................................33

       9.15. Rights of Purchasers Inter Se...............................................................................34

       9.16. Severability of the Representations, Warranties and Covenants...............................................34

       9.17. Arbitration.................................................................................................34



</Table>


<PAGE>



                            STOCK PURCHASE AGREEMENT


                  THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of the 3rd day of April, 2000 by and among Catterton Partners IV, L.P.,
a Delaware limited partnership, Catterton Partners IV Offshore, L.P. a Cayman
Island limited partnership and Catterton Partners IV Special Purpose, L.P. a
Cayman Island limited partnership (collectively, "Catterton") and those other
Persons named on Schedule 1 hereto (collectively with Catterton, the
"Purchasers") and Build-A-Bear Workshop, Inc., a Delaware corporation (the
"Company").

                                    RECITALS:


                  A.    WHEREAS, upon the terms and subject to the conditions
set forth in this Agreement, the Company proposes to issue and sell shares of
its Series A-5 Convertible Preferred Stock (as defined herein) and Series B-4
Convertible Preferred Stock (as defined herein) to the Purchasers.

                  B.    WHEREAS, upon the terms and subject to the conditions
set forth in this Agreement, the Purchasers desire to contribute capital to the
Company in exchange for the issuance to the Purchasers of shares of the Series
A-5 Convertible Preferred Stock and Series B-4 Convertible Preferred Stock as
set forth herein.

                  C.    WHEREAS, the Company and the Purchasers desire to set
forth the objectives and agreements, that will govern their relations and
responsibilities with respect to each other by entering into concurrently with
the sale and purchase of securities hereunder a Stockholders Agreement (as
defined herein).

                                    AGREEMENT

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereby agree as
follows:

                                   ARTICLE 1.

                                   DEFINITIONS

                  1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

                  "Affiliate" means, with respect to any specified Person, any
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, whether by contract, through one or
more intermediaries, or otherwise, provided however, that Smart Stuff, Inc., a
Missouri corporation, is not an Affiliate of the Company. Unless otherwise
qualified, all references to a "Affiliate" or to "Affiliates" in this Agreement
shall refer to a Affiliate or Affiliates of the Company.


                  "Balance Sheet Date" means January 1, 2000.

<PAGE>




                  "Benefit Arrangement"* means any employment, consulting,
severance or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including, without limitation, any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits) or for deferred compensation, profit-sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or an ERISA Affiliate or under which the Company or any ERISA
Affiliate may incur any liability, and (C) covers any employee or former
employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).


                  "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.

                  "Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.

                 "Common Stock" means the common stock, par value $0.01 per
share, of the Company, or any other capital stock of the Company into which such
stock is reclassified or reconstituted.

                  "Condition of the Company" means the assets, business,
properties, operations or financial condition of the Company and its
subsidiaries taken as a whole.

                  "Contractual Obligation" means as to any Person, any provision
of any security issued by such Person or any provision of any agreement, lease
of real or personal property, undertaking, contract, indenture, mortgage, deed
of trust or other instrument to which such Person is a party or by which it or
any of its property is bound.

                  "Employee Plans" means all Benefit Arrangements, Multiemployer
Plans, Pension Plans and Welfare Plans.

                  "Employment Agreements" means the Employment Agreements
entered into by the Company with Maxine Clark, Brian Vent and Tina Klocke.

                  "Environmental Expenses" means any liability, loss, cost or
expense arising from any pre-Closing violation by the Company of any
Environmental Law which proximately causes expenses, including, without
limitation, costs of investigation, cleanup, removal, remedial, corrective or
response action, the costs associated with posting financial assurances for the
completion of investigation, cleanup, removal, remedial, corrective or response
actions, the preparation of any closure or other necessary or required plans or
analyses, or other reports or analyses submitted to or prepared by regulating
agencies, including the cost of health assessments, epidemiological studies and
the like, retention of engineers and other expert consultants, legal counsel,
operation and maintenance testing and monitoring costs, and administrative costs
or damages.

                                       2
<PAGE>



                  "Environmental Laws" means any federal, state or local law,
common law doctrine, rule, order, decree, judgment, injunction, license, permit
or regulation relating to environmental matters, including those pertaining to
land use, air, soil, surface water, ground water (including the protection,
cleanup, removal, remediation or damage thereof), public or employee health or
safety or any other environmental matter, together with any other laws (federal,
state or local) relating to emissions, discharges, releases or threatened
releases of any pollutant or contaminant including, without limitation, medical,
chemical, biological, biohazardous or radioactive waste and materials, into
ambient air, land, surface water, groundwater, personal property or structures,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, discharge or handling of any
contaminant, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss. 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.),
as such laws have been, or are, amended, modified or supplemented heretofore or
from time to time hereafter and any analogous future federal, or present or
future state or local laws, statutes and regulations promulgated thereunder.

                  "Equipment" means all of the tangible personal property owned
or leased by the Company or any of its Affiliates and used in or held for use in
the operations of the business of the Company or any of its Affiliates.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "ERISA Affiliate" means any Person that is (or at any relevant
time was) a member of a "controlled group of corporations" with or under "common
control" with the Company as defined in Section 414(b),(c),(m) or (o) of the
Code.

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

                  "Facilities" means the buildings, plants, offices and all
other improvements on any real property (including fixtures affixed thereto)
which are owned or leased by the Company or any of its Affiliates and used or
held for use in the operation of the business of the Company or any of its
Affiliates.

                  "GAAP" means United States generally accepted accounting
principles, in effect from time to time, consistently applied.

                  "Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
exercising public functions owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

                                       3
<PAGE>


                  "Hazardous Materials" means those substances which are
regulated by or form the basis of liability under any Environmental Laws,
including, without limitation, petroleum products, radon and asbestos.

                  "Indebtedness" means, as to any Person: (a) all obligations,
whether or not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person representing the balance of
deferred purchase price of property or services, except trade accounts payable
and accrued commercial or trade liabilities arising in the ordinary course of
business, (d) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such Person, whether periodically or upon the happening of a contingency, (e)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases recorded as capital leases in
accordance with GAAP, , (g) all indebtedness secured by any Lien (other than
Liens in favor of lessors under leases other than leases included in clause (f))
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
non-recourse to the credit of that Person, and (h) all Indebtedness of any other
Person referred to in clauses (a) through (f) above, guaranteed, directly or
indirectly, by that Person.

                  "Initial Issue Date" shall mean the date that shares of
Preferred Stock are first issued by the Company to the Purchasers.

                  "Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or other
security interest of any kind or nature whatsoever (excluding preferred stock or
equity related preferences) including, without limitation, those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease obligation, or any
financing lease having substantially the same economic effect as any of the
foregoing.

                  "Material Adverse Effect" means any material adverse change in
Condition of the Company.

                  "Multiemployer Plan" means any "multiemployer plan," as
defined in Section 4001(a)(3) or Section 3(37) of ERISA, (A) which the Company
or any ERISA Affiliate maintains, administered, contributed to or is required to
contribute to, or, after September 25, 1980, maintained, administered,
contributed to or was required to contribute to, or under which the Company or
any ERISA Affiliate may incur any liability and (B) which covers any employee or
former employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).

                  "Outstanding Borrowings" means all Indebtedness of the Company
and/or its Affiliates for borrowed money (including without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured), excluding obligations
with respect to trade payables incurred in the ordinary course of business.

                                       4
<PAGE>


                  "Pension Plan" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which the
Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, within the five years prior to the Closing Date,
maintained, administered, contributed to or was required to contribute to, or
under which the Company or any ERISA Affiliate may incur any liability and (B)
which covers any employee or former employee of the Company or any ERISA
Affiliate (with respect to their relationship with such entities).

                  "Permitted Liens" means (i) Liens for taxes, governmental
charges or levies which (a) are not yet due and payable, or (b) are being
diligently contested in good faith by appropriate proceedings; provided, that
for any such taxes being diligently contested in good faith, the Company has set
aside adequate reserves, (ii) Liens imposed by law, such as mechanic's,
materialman's, landlord's, warehouseman's and carrier's liens, securing
obligations incurred in the ordinary course of business which are not yet
overdue or which are being diligently contested in good faith by appropriate
proceeding and, with respect to such obligations which are being contested, for
which the Company has set aside adequate reserves, (iii) Liens which (x) in each
case, secure obligations of less than $10,000, and (y) do not in the aggregate
interfere with the use and enjoyment of the property subject thereto and (iv)
Liens with respect to the Firstar Loan Agreement by and among the Company, the
Subsidiary and Firstar Bank, N.A. dated March 1, 2000 and the agreements
contemplated thereby, including, without limitation, the Security Agreement, for
up to an aggregate principal amount of $10,000,000.

                  "Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.

                  "Preferred Stock" means, collectively, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock.


                 "Qualified Initial Public Offering" shall mean a public
offering, underwritten on a firm commitment basis pursuant to an effective
registration statement under the Securities Act of shares of the Common Stock
the aggregate gross proceeds (prior to underwriting discounts and commissions
and other expenses of issuance) of which equal or exceed $15,000,000 and (i) at
any time prior to the third anniversary of the date hereof, the offering is
managed by a nationally recognized underwriter, (ii) between the third and
fourth anniversary hereof, the price per share is at least $15 (appropriately
adjusted for stock splits, recapitalizations and the like), and (iii) thereafter
the price per share is at least $20.

                  "Registration Rights Agreement" means the Registration Rights
Agreement substantially in the form attached hereto as Exhibit A.

                  "Requirements of Law" means, as to any Person, the provisions
of the Certificate of Incorporation and By-laws or other organizational or
governing documents of such Person, and any law, treaty, rule, regulation,
right, privilege, qualification, license or franchise, order, judgment, or
determination, in each case, of an arbitrator or a court or other Governmental
Authority, in each case, applicable to or binding upon such Person or any of its
property (or to which such Person or any of its property is subject) or
applicable to any or all of the transactions contemplated by or referred to in
the Transaction Agreements.

                                       5
<PAGE>

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.

                  "Stockholders' Agreement" means the Stockholders' Agreement
substantially in the form attached hereto as Exhibit B.

                  "Shares" means the Common Stock and the Preferred Stock.


                  "Series A Convertible Preferred Stock" means the Series A-1,
A-2, A-3, A-4 and A-5 Convertible Preferred Stock, par value $0.01 per share, of
the Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.

                 "Series A-5 Convertible Preferred Stock" means the Series A-5
Convertible Preferred Stock, par value $0.01 per share, of the Company, or any
other capital stock of the Company into which such stock is reclassified or
reconstituted.

                  "Series B Convertible Preferred Stock" means the Series B-1,
B-2, B-3, and B-4 Convertible Preferred Stock, par value $0.01 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.

                  "Series B-4 Convertible Preferred Stock" means the Series B-4
Convertible Preferred Stock, par value $0.01 per share, of the Company, or any
other capital stock of the Company into which such stock is reclassified or
reconstituted.

                  "Subsidiary" means Shirts Illustrated, L.L.C., a Missouri
limited liability company and wholly-owned subsidiary of the Company.

                  "Tax" or "Taxes" shall mean all federal, state, local foreign
and other taxes, assessments or other government charges, including, without
limitation, income, estimated income, business, occupation, franchise, property
sales, transfer, use, employment, commercial rent or withholding taxes,
including interest, penalties and additions in connection therewith for which
the Company may be liable.

                  "Transaction Agreements" means collectively, this Agreement,
the Registration Rights Agreement and the Stockholders' Agreement.

                  "Transaction Expenses" means up to $100,000 in legal fees and
reasonable out-of-pocket expenses incurred by the Purchasers in connection with
the negotiation and preparation of the Transaction Agreements, the consummation
of the transactions contemplated thereby and preparation for any of the
foregoing, including, without limitation, travel expenses, fees, charges and
disbursements of the Purchasers' legal counsel and any similar or related costs
and expenses.


                  "Welfare Plan" means any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, (A) which the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or under
which the Company or any ERISA Affiliate may incur any liability

                                       6
<PAGE>
and (B) which covers any employee or former employee of the Company or any ERISA
Affiliate (with respect to their relationship with such entities).

                  1.2. Accounting Terms; Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with GAAP.

                  1.3. Knowledge Standard. When used herein, the phrase "to the
knowledge of" any Person, "to the best knowledge of" any Person or any similar
phrase shall mean, (i) with respect to any individual, the actual knowledge of
such Person after reasonable inquiry, (ii) with respect to any corporation, the
actual knowledge of officers and directors, or Persons acting in similar
capacities, of such corporation after reasonable inquiry, (iii) with respect to
any limited liability company, the actual knowledge of the Manager or Persons
acting in similar capacities, of such entity after reasonable inquiry, and (iv)
with respect to a partnership, the actual knowledge of the officers and
directors of the general partner of such partnership after reasonable inquiry.
Notwithstanding the foregoing, "to the best knowledge of" or "to the knowledge
of" either BABW or the Company shall mean the actual knowledge of Maxine Clark,
Tina Klocke and Brian Vent, after due inquiry. When used herein, the phrase "to
the knowledge of the Company," "to the best knowledge of the Company" or any
similar phrase shall mean "to the best knowledge of the Company and each
Affiliate" using the standards set forth in the previous sentence.


                  1.4. Other Defined Terms. The following terms shall have the
meanings specified in the Sections set forth below:

<TABLE>
<CAPTION>


Term                                               Section
----                                               -------
<S>                                                <C>

Actions                                             5.9
Certificate                                         2.1
Closing                                             2.3
Closing Date                                        2.3
Indemnified Party                                   9.1
Indemnifying Party                                  9.1
Intellectual Property                              5.13
Liability (and Liabilities)                         9.1
Preferred Shares                                    2.2
Purchase Price                                      2.2
Taxpayers                                          5.14
Audited Financial Statements                       5.10

</TABLE>

                                   ARTICLE 2.

                        AUTHORIZATION OF PREFERRED STOCK;
                      PURCHASE AND SALE OF PREFERRED STOCK


                  2.1. Series A-5 Convertible Preferred Stock and Series B-4
Convertible Preferred Stock. The Company has authorized (a) the issuance and
sale to the Purchasers of an aggregate of 1,061,988 shares of Series A-5
Convertible Preferred Stock and an aggregate of 1,604,678 shares of Series B-4
Convertible Preferred Stock and (b) has filed the Certificate (as hereinafter
defined)

                                       7
<PAGE>

establishing the rights, preferences, privileges and restrictions of
the Series A Convertible Preferred Stock and Series B Convertible Preferred
Stock. The Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock will have the respective rights, preferences and privileges set
forth in the Company's Certificate of Designation substantially in the form
attached hereto as Exhibit C (the "Certificate").

                  2.2. Purchase and Sale of Preferred Shares. Upon the terms and
subject to the conditions herein contained, at the Closing (as defined herein)
on the Closing Date (as defined herein), the Company agrees that it will issue
and sell to each of the Purchasers, and each Purchaser agrees that it will
acquire and purchase from the Company, the number of shares of Series A-5
Convertible Preferred Stock and Series B-4 Convertible Preferred Stock listed
next to such Purchaser's name on Schedule 1 hereto (collectively, the "Preferred
Shares"). The purchase price of the Series A-5 Convertible Preferred Stock shall
be $5.649780 per share and the Series B-4 Convertible Preferred Stock shall be
$3.739067 per share.

                  2.3. Closing. The closing of the sale to and purchase by the
Purchasers of the Preferred Shares referred to in Section 2.2 hereof (the
"Closing") shall occur at the offices of Bryan Cave, LLP 1 Metropolitan Square,
Suite 3600, St. Louis, MO 63102 at 10:00 a.m. Central Standard Time on April 3,
2000, or at such other date, place or time of day as the Purchasers and the
Company shall agree to in writing (the "Closing Date"). At the Closing, (i) the
Company shall deliver to each Purchaser certificates evidencing the Preferred
Shares being purchased by such Purchaser, free and clear of any Liens of any
nature whatsoever, other than those created by the Certificate, registered in
such Purchaser's name, and (ii) each Purchaser shall deliver to the Company the
portion of the Purchase Price listed next to such Purchaser's name on Schedule 1
hereto, by cashier's check, wire transfer of immediately available funds, or in
the case of Clark/Fox, L.L.C., by a note in the form as attached hereto as
Exhibit D.

                                   ARTICLE 3.

                       CONDITIONS TO THE OBLIGATION OF THE
                      PURCHASERS TO PURCHASE THE SECURITIES


                  The obligation of each Purchaser to purchase the Preferred
Shares, to pay the purchase prices therefor and to perform any obligations
hereunder on the Closing Date (unless otherwise specified) shall be subject to
the satisfaction as determined by, or waiver by, such Purchaser of the following
conditions on or before the Closing Date:

                  3.1. Representations and Warranties. The representations and
warranties of the Company contained in Article 5 hereof shall be true and
correct at and as of the Closing Date (both before and after giving effect to
the transactions contemplated under this Agreement) as if made at and as of such
date.

                  3.2. Compliance with Terms and Conditions of this Agreement.
The Company shall have duly and properly performed and complied with all of the
agreements, covenants, obligations and conditions set forth herein that are
required to be performed or complied with by the Company on or before the
Closing Date.

                                       8
<PAGE>



                  3.3. Delivery of Certificates Evidencing the Preferred Shares.
The Company shall have delivered to each Purchaser the certificates evidencing
the Preferred Shares as set forth in Section 2.3.

                  3.4. Closing Certificates. The Company shall have delivered to
each Purchaser a certificate executed by an authorized officer of the Company
certifying to such matters as the Purchasers may reasonably request, including
that the representations and warranties of the Company contained in the
Agreement are true and correct on and as of the Closing Date, and that the
conditions set forth in this Section 3 to be satisfied by the Company have been
satisfied on and as of the Closing Date.

                  3.5. Secretary's Certificates. Each Purchaser shall have
received a certificate from the Company, dated as of the Closing Date and signed
by the Secretary or an Assistant Secretary of the Company, certifying that the
attached copies of the Certificate of Incorporation, the Certificate, By-laws of
the Company, and resolutions of the Board of Directors of the Company approving
the Transaction Agreements and the transactions contemplated thereby, are all
true, complete and correct and remain unamended and in full force and effect.

                  3.6. Documents. Each Purchaser or one Purchaser on behalf of
all Purchasers shall have received true, complete and correct copies of such
documents and such other information as it may have reasonably requested in
connection with or relating to the sale of the Preferred Shares and the
transactions contemplated by the Transaction Agreements, all in form and
substance reasonably satisfactory to the Purchasers prior to the Closing.

                  3.7. Purchase Permitted by Applicable Laws. The acquisition of
and payment for the Preferred Shares to be acquired by the Purchasers hereunder
and the consummation of the transactions contemplated by the Transaction
Agreements shall not (a) violate any Requirements of Law, (b) result in a breach
or default (i) under any of the Contractual Obligations of the Company or (ii)
under any order, writ, judgment, injunction, decree, determination or award of
any court, arbitrator, or commission, board, bureau, agency or other
governmental instrumentality, (c) result in, or require, the creation or
imposition of any Lien, or the obligation to make any payment with respect to
any Lien, upon or with respect to any of the property of the Company or (d)
require any consents, approvals, exemptions, authorizations, registrations,
declarations or filings by the Company.

                  3.8. Opinion of Counsel. Each Purchaser shall have received an
opinion of counsel to the Company, dated as of the Closing Date substantially in
the form of Exhibit E hereto.

                  3.9. Consents and Approvals. All agreements, approvals,
consents, exemptions, authorizations, or other actions by, or notices to, or
filings with, Governmental Authorities and other Persons in respect of all
Requirements of Law and with respect to those material Contractual Obligations
of the Company, necessary or required in connection with the execution, delivery
or performance of the Transaction Agreements (including, without limitation, the
issuance of the Preferred Shares, and issuance of the Common Stock upon
conversion of the Preferred Shares) by the Company, shall have been obtained and
be in full force and effect, and the Purchasers shall have been furnished with
appropriate evidence thereof, and all waiting periods shall have lapsed without
extension or the imposition of any conditions or restrictions.

                  3.10. Certain Waivers. Each holder of the shares of the
capital stock of the Company (or any other party who may possess such rights)
shall have waived any and all preemptive rights, rights

                                       9
<PAGE>
of first refusal, "tag along" rights, rights of co-sale and any similar rights
with respect to the issuance of the Preferred Shares contemplated hereby.

                  3.11. No Material Adverse Effect. Since the Balance Sheet
Date, there shall have been no Material Adverse Effect.

                  3.12. No Material Judgment or Order. There shall not be on the
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority or any condition imposed under any
Requirement of Law which, in the reasonable judgment of the Purchasers, would
(i) prohibit the purchase of the Preferred Shares or the consummation of the
other transactions contemplated hereunder, (ii) subject the Purchasers to any
penalty if the Preferred Shares were to be purchased hereunder, (iii) question
the validity or legality of the transactions contemplated hereby, or (iv) be
reasonably expected to adversely affect the value of the capital stock of the
Company, the Preferred Shares or the Condition of the Company.

                  3.13. Financial Statements. The Company shall have delivered
to the Purchasers a copy of the audited balance sheet of the Company (or its
predecessor, Build-A-Bear Workshop, L.L.C. ("BABW"), as applicable) as of
January 1, 2000 and the related consolidated statements of operations and cash
flows for the fiscal year then ended, accompanied by the report of an
independent auditor, together with a copy of the unaudited balance sheet of the
Company (or BABW, as applicable) as of January 29, 2000 and February 26, 2000
and the related consolidated statements of operations and cash flows for the
periods then ended. Such financial statements fairly present the financial
condition and results of operations in accordance with GAAP as of the dates and
for the periods set forth in the balance sheet included therein and the results
of operations of the Company for the period covered.


                  3.14. Registration Rights Agreement. The Company shall have
duly executed and delivered to the Purchasers the Registration Rights Agreement.

                  3.15. Stockholders' Agreement. The Company and the
shareholders of the Company shall have duly executed and delivered to the
Purchasers the Stockholders' Agreement.

                  3.16. Certificate of Designation. The Company shall have duly
executed and filed the Secretary of State of the State of Delaware the
Certificate substantially in the form attached hereto as Exhibit C.

                  3.17. Employment Agreements. The Company shall have entered
into the Employment Agreements reasonably satisfactory to Catterton.

                  3.18. Board of Directors. As of the Closing, the Company's
Board of Directors shall consist of the persons set forth in the Shareholders
Agreement.

                  3.19. Stock Plan. The Company shall have adopted and the
Shareholders shall have approved the Stock Plan in the form attached hereto as
Exhibit F , and the Common Stock reserved under the Stock Plan shall be no
greater than 1,374,074 shares of common stock.

                  3.20.   Insurance.

                          BABW shall have transferred to the Company its
comprehensive general liability insurance policies.


                                       10

<PAGE>

                  3.21. Amendment to Bank Loan.

                  The Company shall have amended its Loan Agreement with Firstar
Bank, N.A. dated March 1, 2000, in a manner reasonably satisfactory to
Catterton.

                                   ARTICLE 4.

                                CONDITIONS TO THE
                       OBLIGATIONS OF THE COMPANY TO CLOSE


                  The obligation of the Company to issue and sell the Preferred
Shares and the other obligations of the Company hereunder, shall be subject to
the satisfaction as determined by, or waiver by, the Company of the following
conditions on or before the Closing Date, provided however, that the
non-fulfillment of a condition by a Purchaser will not relieve the Company of
its obligation to each other fulfilling Purchaser:


                  4.1. Representations and Warranties. The representations and
warranties of the Purchasers contained in Section 6 hereof shall be true and
correct at and as of the Closing Date (both before and after giving effect to
the transactions contemplated under this Agreement) as if made at and as of such
date.


                  4.2. Compliance with Terms and Conditions of this Agreement.
The Purchasers shall have performed and complied with all of the obligations and
conditions set forth herein that are required to be performed or complied with
by the Purchasers on or before the Closing Date.


                  4.3. Issuance Permitted by Applicable Laws. The issuance of
the Preferred Shares by the Company hereunder and the consummation of the
transactions contemplated by the Transaction Agreements shall not (a) violate
any Requirements of Law, or (b) result in a breach or default (i) under any of
the Contractual Obligations of the Purchasers, or (ii) under any order, writ,
judgment, injunction, decree, determination or award of any court, arbitrator,
or commission, board, bureau, agency or other governmental instrumentality, or
(c) require any consents, approvals, exemptions, authorizations, registrations,
declarations or filings by the Purchasers.


                  4.4. Payment of Purchase Price. The Purchasers shall tender to
the Company the Purchase Price set forth in Section 2.2 in the respective
amounts specified on Schedule 1 hereto.


                  4.5. Consents and Approvals. All agreements, approvals
consents, exemptions, authorizations, or other actions by, or notices to, or
filings with, Governmental Authorities and other Persons in respect of all
Requirements of Law and with respect to those material Contractual Obligations
of the Purchasers; necessary or required in connection with the execution,
delivery or performance of the Transaction Agreements by each Purchaser, shall
have been obtained and be in full force and effect, and the Company shall have
been furnished with appropriate evidence thereof as requested by the Company and
all waiting periods shall have lapsed without extension or imposition of any
conditions or restrictions.


                  4.6. No Material Judgment or Order. There shall not be on the
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any Governmental Authority or any condition imposed under any
Requirements of Law which, in the reasonable judgment of the Company would (i)
prohibit the sale of the Preferred Shares or the consummation of the other

                                       11
<PAGE>


transactions contemplated hereunder, (ii) subject the Company to any penalty if
the Preferred Shares were to be sold hereunder, or (iii) question the validity
or legality of the transactions contemplated hereby.


                  4.7. Registration Rights Agreement. The Purchasers shall have
duly executed and delivered to the Company the Registration Rights Agreement.


                  4.8. Stockholders' Agreement. The Purchasers shall have duly
executed and delivered to the Company the Stockholders' Agreement.

                                   ARTICLE 5.

                               REPRESENTATIONS AND
                            WARRANTIES OF THE COMPANY


                  The Company hereby represents and warrants to the Purchasers
as of the date hereof as follows:


                  5.1. Corporate Existence and Authority. The Company (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) has all requisite corporate power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be
engaged, (c) is duly qualified as a foreign corporation, licensed and in good
standing in each jurisdiction in which such qualification is necessary under
applicable law as a result of the conduct of its business or the ownership of
its properties except where the failure to qualify would not have a Material
Adverse Effect, and (d) has the corporate power and authority to execute,
deliver and perform its obligations under each Transaction Agreement to which it
is or will be a party.

                  5.2. Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of each of the Transaction Agreements
and the consummation of the transactions contemplated thereby, including without
limitation, the issuance of the Preferred Shares (a) has been duly authorized by
all necessary corporate action, including, if required, stockholder action, (b)
does not and will not conflict with or contravene the terms of the Certificate
of Incorporation or the By-Laws of the Company, or any amendment thereof; and
(c) does not and will not violate, conflict with or result in any material
breach or contravention of (i) any Contractual Obligation of the Company or the
Subsidiary, or (ii) any Requirements of Law applicable to the Company or the
Subsidiary.

                  5.3. Governmental Authorization; Third Party Consents. No
approval, consent, compliance, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any applicable Requirements of Law, and no lapse of a waiting period
under any applicable Requirements of Law, is necessary or required in connection
with the execution, delivery or performance (including, without limitation, the
issuance of the Preferred Shares, the issuance of the Common Stock upon the
conversion or exercise of the Preferred Shares) by the Company or the
enforcement against the Company of the Transaction Agreements, or the
transactions contemplated thereby.

                                       12
<PAGE>


                  5.4. Binding Effect. The Transaction Agreements have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability.

                  5.5. Other Agreements. None of the Company, BABW or the
Subsidiary has previously entered into any agreement which is currently in
effect or to which the Company or the Subsidiary is currently bound, granting
any registration or other material rights to any Person, the provision or
performance of which would render the provision or performance (including,
without limitation, the issuance of the Preferred Shares and the issuance of the
Common Stock upon the conversion of the Preferred Shares) of the material rights
to be granted to the Purchasers by the Company in the Transaction Agreements
impracticable.

                       5.6.   Capitalization.

                  (a) As of the date hereof, the capital stock of the Company
consists solely of (i) 15,000,000 authorized shares of Common Stock (of which
492,335 are issued and outstanding, 3,506,954 are reserved for issuance upon the
exercise of outstanding shares of Series A Convertible Preferred Stock,
3,644,104 are reserved for issuance upon the exercise of outstanding shares of
Series B Convertible Preferred Stock, 4,998,088 are reserved for issuance upon
the exercise of the outstanding shares of Series C Convertible Preferred Stock
and 574,815 are reserved for issuance upon the exercise of outstanding options);
(ii) 3,506,954 authorized shares of Series A Convertible Preferred Stock (of
which 2,444,966 are issued and outstanding); (iii) 3,644,104 authorized shares
of Series B Convertible Preferred Stock (of which 2,039,426 are issued and
outstanding); and (iv) 4,998,088 authorized shares of Series C Convertible
Preferred (of which 4,998,088 are issued and outstanding). Immediately following
the Closing, the capital stock of the Company will consist solely of (i)
15,000,000 authorized shares of Common Stock (of which 492,335 will be issued
and outstanding, 3,506,954 will be reserved for issuance upon the exercise of
outstanding shares of Series A Convertible Preferred Stock, 4,998,088 will be
reserved for issuance upon the exercise of outstanding shares of Series B
Convertible Preferred Stock, and 581,481 will be reserved for issuance upon the
exercise of outstanding options); (ii) 3,506,954 authorized shares of Series A
Convertible Preferred Stock (of which 3,506,954 will be issued and outstanding);
(iii) 3,644,104 authorized shares of Series B Convertible Preferred Stock (of
which 3,644,104 will be issued and outstanding) and (iv) 4,998,088 authorized
shares of Series C Convertible Preferred (of which 4,998,088 are issued and
outstanding). A total of 13,216,296 fully diluted shares of Common Stock will be
outstanding immediately following the Closing, assuming the conversion of all
outstanding shares of Preferred Stock and the exercise of all outstanding
options. All outstanding shares of capital stock of the Company are, and the
Preferred Shares (when issued, sold and delivered against payment therefor) will
be, duly authorized and validly issued, fully paid, nonassessable and free and
clear of any Liens, preferential rights, priorities, claims, options, charges or
other encumbrances or restrictions, other than those created by the Certificate
and the Stockholders' Agreement.

                  (b) Schedule 5.6 sets forth the name of each holder of the
issued and outstanding capital stock of the Company, the number of shares of
such capital stock held of record by each such holder, the name of each Person
holding any options, warrants or other rights to purchase any capital stock of
the Company, the number, class and series of shares of capital stock subject to
each such option, warrant or right and the exercise price of each such option,
warrant or right. Except as set forth on Schedule 5.6, and except for the stock
options and rights referred to in Section 5.6(a) and the Preferred Stock, there
are no outstanding securities convertible into or exchangeable for capital stock
of the

                                       13
<PAGE>


Company or options, warrants or other rights to purchase or subscribe to capital
stock of the Company or contracts, commitments, agreements, understandings or
arrangements of any kind to which the Company or any such holder of capital
stock is a party relating to the issuance of any capital stock of the Company,
any such convertible or exchangeable securities or any such options, warrants or
rights.

                  (c) Except as set forth on Schedule 5.6 or as contained in any
of the Transaction Documents, no Person has any preemptive rights, rights of
first refusal, "tag along" rights, rights of co-sale or any similar rights with
respect to the issuance of the Preferred Shares contemplated hereby. Schedule
5.6 identifies all Persons holding any such rights and describes the material
terms of all such rights and as of the Closing Date, except for such rights
contained in the Transaction Documents.


                  5.7. Subsidiaries. The Subsidiary is the only subsidiary of
the Company. The Subsidiary is a limited liability company is duly organized,
validly existing and in good standing under the laws of the State of Missouri,
with the requisite power and authority to own its properties and conduct its
business. The Subsidiary is qualified and licensed to transact business in each
jurisdiction where such qualification is necessary under applicable law as a
result of the conduct of its business and ownership of its properties except
where failure to qualify would not have a Material Adverse Effect. All of the
outstanding ownership interests of the Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable. All of the outstanding
ownership interests in the Subsidiary are owned by the Company free and clear of
any Liens, claims, options, charges or other encumbrances other than Permitted
Liens. The Subsidiary has no outstanding options, warrants, subscriptions,
calls, rights, convertible securities or other agreements or commitments
obligating the Subsidiary to issue, transfer or sell any securities of the
Subsidiary.

                  5.8. Private Offering. No form of general solicitation or
general advertising was used by the Company or its representatives in connection
with the offer or sale of the Preferred Shares. No registration of the Preferred
Shares pursuant to the provisions of the Securities Act will be required by the
offer, sale or issuance of the Preferred Shares pursuant to this Agreement. The
Company agrees that neither it, nor anyone acting on its behalf, will offer or
sell the Preferred Shares or any other security so as to require the issuance
and sale of the Preferred Shares pursuant to the provisions of the Securities
Act or any state securities or "blue sky" laws, unless such shares are so
registered.

                  5.9. Litigation. Except as set forth in Schedule 5.9 hereto,
there is no complaint, action, order, writ, injunction, judgment or decree
outstanding, or claim, suit, litigation, proceeding, labor dispute, arbitral
action or investigation (collectively, "Actions") pending or, to the knowledge
of the Company, threatened against or relating to (i) the assets of the Company
or the Subsidiary which would have a Material Adverse Effect, or (ii) the
transactions required to be performed under this Agreement or by the Transaction
Agreements. Neither the Company, BABW nor the Subsidiary are in default with
respect to any judgment, order, writ, injunction or decree of any court or
governmental agency, and there are no unsatisfied judgments against the Company,
BABW or the Subsidiary.

                  5.10. Financial Statements. The Company has furnished the
Purchasers with the audited balance sheet of the Company (or BABW, as
applicable) as of January 1, 2000 and the related statements of operations and
cash flows for the fiscal year then ended, accompanied by the report of an
independent auditor (collectively, the "Audited Financial Statements"), together
with a copy of the unaudited balance sheet of the Company (or BABW, as
applicable) as of January 29, 2000 and February 26, 2000 and the related
consolidated statements of operations and cash flows for the periods then ended
(collectively, together with the Audited Financial Statements, the "Financial
Statements"). The Financial Statements fairly present the financial condition
and results of operations in accordance with GAAP as of

                                       14
<PAGE>

the dates and for the periods set forth in the balance sheet included therein
and the results of operations of the Company (or BABW, as applicable) for the
periods covered.


                  Attached hereto as Schedule 5.10 is the Company's pro forma
balance sheet at February 26, 2000 showing (i) the balance sheet information pro
forma for the reorganization of BABW into the Company, (ii) the pro forma
adjustments and (iii) the pro forma balance sheet information adjusted for the
transaction contemplated by this Agreement. The balance sheet attached hereto as
Schedule 5.10 has been prepared in a manner consistent with the Financial
Statements.

                       5.11.   Title and Condition of Assets.



                  (a) The Company has good, and with respect to real property,
marketable, title to all of the real and personal property reflected on the
balance sheets included in the Financial Statements or acquired by the Company
and the Subsidiary since the Balance Sheet Date, free and clear of any Liens or
defects of title, other than Permitted Liens. All real property which is leased
by the Company is listed on Schedule 5.11(a) hereto. Except as set forth on
Schedule 5.11(a), the Company has a valid and enforceable leasehold interest in
all real property leased by it pursuant to the terms of the respective lease
agreements. With respect to the leases listed on Schedule 5.11(a) hereto, the
Company is in compliance with the leases except to the extent, either
individually or in the aggregate, such non-compliance would not have a Material
Adverse Effect, and such leases are sufficient for the conduct of the Company's
business as now being conducted.

                  (b) The Facilities and Equipment are in good operating
condition and repair (except for ordinary wear and tear and any defect the cost
of repairing which would not be material), are sufficient for the operation of
the Company's business and are in conformity in all material respects with
applicable laws, ordinances, orders, regulations and other requirements
(including applicable zoning, environmental, motor vehicle safety standards,
occupational safety and health laws and regulations) relating thereto, except
where such failure to conform would not have a Material Adverse Effect. The
Company enjoys peaceful and undisturbed possession of all Facilities owned or
leased by the Company, and, to the knowledge of the Company, such Facilities are
not subject to any encroachments, building or use restrictions, exceptions,
reservations or limitations which in any material respect interfere with or
impair the present and continued use thereof in the usual and normal conduct of
the business of the Company. There are no pending or, to the knowledge of the
Company, threatened, condemnation proceedings relating to any of the Facilities.
The Facilities and the Equipment are insured.

                  (c) Assets are valued on the books of the Company at or below
actual cost less adequate and proper depreciation charges. The Company has not
depreciated any of its assets for tax purposes on an accelerated basis or in any
other manner inconsistent with the Code or the rules, regulations, or guidelines
of the Internal Revenue Service.

                           5.12.   Contractual Obligations.

                  (a) Except as set forth on Schedule 5.12, the Company is not
in default or breach under or with respect to any Contractual Obligation to
which it is a party (and to the best knowledge of the Company, no other party to
any such Contractual Obligation is in default or breach thereunder), except any
such default which, individually or together with all such defaults, would not
have a Material Adverse Effect or which would not materially affect the ability
of the Company to perform its obligations

                                       15
<PAGE>


under the Transaction Agreements. Neither the Company nor the Subsidiary has
received notice that any party to any such Contractual Obligation intends to
cancel, amend or terminate any such agreement.

                  (b) Schedule 5.12 lists all of the contracts, leases,
agreements, indentures, letters of intent or offers with respect to real estate
leasing activities, letters of credit, foreign bills of lading and undertakings
governing or relating to the Contractual Obligations of the Company other than
(i) the Transaction Agreements, (ii) domestic purchase orders entered into in
the ordinary course of business, and (iii) any such contracts, leases,
agreements, indentures or undertaking that (x) do not involve the receipt or
payment of more than $50,000 each, (y) do not involve employment or labor
matters and (z) do not contain covenants restricting the Company from engaging
in any line of business. The Company has provided the Purchaser with true,
correct and complete copies of all contracts, leases, agreements, indentures and
undertakings listed on Schedule 5.12. Every contract listed on Schedule 5.12 is
legal, valid, binding and enforceable in accordance with its terms with respect
to the Company and, to the knowledge of the Company, with respect to any other
parties bound thereby.

                  5.13. Patents, Trademarks, Etc. As of the Closing, the Company
owns or has applied for or is licensed or otherwise have the right to use all
patents, trademarks, service marks, trade names, copyrights, licenses,
franchises and other intellectual property rights that are material to the
operation of the businesses of the Company (the "Intellectual Property").
Schedule 5.13 hereto contains a list of all pending applications related to such
Intellectual Property, registered rights in such Intellectual Property and
executed agreements related to such Intellectual Property. All domestic
registered patents, copyrights, trademarks and service marks listed on Schedule
5.13 are in full force and effect and are not subject to any taxes or other fees
except for annual filing and maintenance fees. To the best of the Company's
knowledge, no product, process, method, substance or other material presently
sold by or employed by the Company, or which the Company contemplates selling or
employing, infringes upon the patents, trademarks, service marks, trade names,
copyrights, licenses or other intellectual property rights that are owned by
others. Except as set forth on Schedule 5.13 hereto, no litigation is pending
and no claim has been made against the Company or any Affiliate or, to the best
knowledge of the Company, is threatened, contesting the right of the Company to
sell or use any product, process, method, substance or other material presently
sold by or employed by the Company.

                        5.14.   Tax Matters.

                  (a) Filing of Tax Returns. Except as set forth on Schedule
5.14, the Company and BABW (each such entity hereinafter a "Taxpayer" or
collectively the "Taxpayers") have timely filed with the appropriate taxing
authorities all returns (including without limitation information returns and
other material information) in respect of Taxes required to be filed through the
date hereof and will timely file any such returns required to be filed on or
prior to the Closing Date. The returns and other information filed (or to be
filed) are complete and accurate in all material respects. No Taxpayer has
requested any extension of time within which to file returns (including without
limitation information returns) in respect of any Taxes that have not been
filed.

                  (b) Payment of Taxes. Except as set forth on Schedule 5.14,
all Taxes due and payable of each of the Taxpayers in respect of periods
beginning before the Closing Date have been timely paid, or will be timely paid
prior to the Closing Date, and no Taxpayer has any material liability for Taxes
in excess of the amounts so paid. All Taxes that each Taxpayer has been required
to collect or withhold have been duly collected or withheld and, to the extent
required when due, have been or will be (prior to the Closing Date) paid if due
and payable to the proper taxing authority.

                                       16
<PAGE>


                  (c) Audits, Investigations or Claims. The federal income tax
returns of each of the Taxpayers have not been examined by the Internal Revenue
Service, and no material deficiencies for Taxes of any of the Taxpayers have
been claimed, proposed or assessed by any taxing or other governmental authority
against any of the Taxpayers. There are no pending or, to the best knowledge of
the Taxpayers, threatened audits, investigations or claims for or relating to
any material additional liability to any of them in respect of Taxes, and there
are no matters under discussion with any governmental authorities with respect
to Taxes that in the reasonable judgment of any of the Taxpayers, or its or
their counsel, is likely to result in a material additional liability to any of
them for Taxes. No audits of any of the Taxpayers' federal, state, and local
returns for Taxes by the relevant taxing authorities have occurred. None of the
Taxpayers have been notified that any taxing authority intends to audit a return
for any period. No extension of a statute of limitations relating to Taxes is in
effect with respect to any of the Taxpayers.

                  (d) Lien. There are no liens for Taxes on any assets of any
Taxpayer other than Permitted Liens.

                  (e) Tax Elections; Tax Sharing Arrangements.

                      (i) None of the Taxpayers have made an election, and none
of them are required, to treat any asset as owned by another person or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of section 168 of the Code or under any comparable state or local income tax or
other tax provision.

                      (ii) None of the Taxpayers are a party to or bound by any
binding tax sharing, tax indemnity or tax allocation agreement or other similar
arrangement with any other party.

                      (iii) None of the Taxpayers have filed a consent pursuant
to the collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state or local law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision of state or local law)
apply to any disposition of any asset owned by it.

                  (f) Affiliated Group. None of the Taxpayers have ever been a
member of an affiliated group of corporations, within the meaning of Section
1504 of the Code.

                  (g) Section 481(a). None of the Taxpayers have agreed to make,
or are required to make, any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.

                  (h) Excess Parachute Payments. Except as set forth on Schedule
5.14, none of the Taxpayers are a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.


                  5.15. Severance Arrangements. Except as set forth on Schedule
5.15, neither the Company nor the Subsidiary has entered into any severance or
similar arrangement in respect of any present or former employee of the Company
that will result in any obligation (absolute or contingent) of the Purchasers or
the Company to make any payment to any present or former employee following
termination of employment.

                                       17
<PAGE>

                  5.16. No Material Adverse Effect. Since the Balance Sheet
Date, there has not been any Material Adverse Effect.

                         5.17.   Environmental Matters.


                  (a) Except as set forth on Schedule 5.17, to the best
knowledge of the Company, the property, assets and operations of the Company,
BABW and the Subsidiary are and have been in compliance in all material respects
with all applicable Environmental Laws; to the best knowledge of the Company
there are and have been no Hazardous Materials stored, handled or otherwise
located in, on or under any of the property or assets of the Company and the
Subsidiary, including the groundwater other than in compliance with any
Environmental Law; and, to the best knowledge of the Company, there have been no
reportable releases of Hazardous Materials in, on or under any property
adjoining any of the property or assets of the Company and the Subsidiary.
Neither the Company, BABW nor the Subsidiary has stored or caused to be stored
any Hazardous Materials on or under any of the property or assets of the
Company, including the groundwater, other than in compliance with Environmental
Laws; and the neither the Company nor BABW has generated, released or discharged
any Hazardous Materials other than in compliance with Environmental Laws.

                  (b) To the best knowledge of the Company, none of the
property, assets or operations of the Company, BABW or the Subsidiary is or has
been the subject of any federal, state or local investigation evaluating whether
(i) any remedial action is needed to respond to a release or threatened release
of any Hazardous Materials into the environment or (ii) any release or
threatened release of any Hazardous Materials into the environment is in
contravention of any Environmental Law.

                  (c) There are no pending, or, to the best knowledge of the
Company, threatened lawsuits or proceedings against the Company, BABW or the
Subsidiary, with respect to violations of an Environmental Law or in connection
with the presence of or exposure to any Hazardous Materials in the environment
or any release or threatened release of any Hazardous Materials into the
environment, and neither the Company nor the Subsidiary is or was the owner or
operator of any property which (i) pursuant to any Environmental Law has been
placed on any list of Hazardous Materials disposal sites, including without
limitation, the "National Priorities List" or "CERCLIS List," (ii) has or, to
the best knowledge of the Company, had any subsurface storage tanks located
thereon; or (iii) to the knowledge of the Company, has ever been used as or for
a waste disposal facility, a mine, a gasoline service station or a petroleum
products storage facility.

                  (d) To the best knowledge of the Company, neither the Company,
BABW nor the Subsidiary has any present or contingent liability in connection
which the presence either on or off the property or assets of the Company or any
Affiliate of any Hazardous Materials in the environment or any release or
threatened release of any Hazardous Materials into the environment, except for
any such liability that would not have a Material Adverse Effect on the
Condition of the Company.


                  5.18. Investment Company/Government Regulations. Immediately
following the Closing, after giving effect to the transactions contemplated by
the Transaction Agreements, neither the Company nor any Person controlling,
controlled by or under common control with the Company will be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.


                  5.19. Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated

                                       18
<PAGE>

hereby based on any agreement, arrangement or understanding with the Company or
any officer, director, shareholder, or Affiliate of the Company, or any action
taken by any such person.


                 5.20.   Labor Relations and Employee Matters.

                  (a) The Company is not engaged in any unfair labor practice.
There is (i) no unfair labor practice complaint pending or, to the best
knowledge of the Company, threatened against the Company or BABW before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is so pending or, to
the best knowledge of the Company, threatened against the Company, (ii) no
strike, labor dispute, slowdown or stoppage pending or, to the best knowledge of
the Company, threatened against the Company, and (iii) no union representation
question existing with respect to the employees of the Company and, to the
knowledge of the Company, no union organizing activities are taking place.

                  (b) Except as set forth on Schedule 5.12, the Company is not a
party to any employment agreement (other than "at will" employment
relationships), collective bargaining agreement or covenant not to compete.

                           5.21.   Employee Benefits Matters.


                  (a) Except as set forth on Schedule 5.21, neither the Company
nor the Subsidiary maintains or contributes to any Employee Plans which cover or
have covered employees of the Company or a Affiliate (with respect to their
relationship with such entities).

                  (b) Except as set forth in Schedule 5.21, the Company
represents as follows:

                      (1) Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company or the Subsidiary (with respect to their relationship with such
entities) that, individually or collectively, provides for the payment by the
Company of any amount (i) that is not deductible under Section 162(a)(1) or 404
of the Code or (ii) that is an "excess parachute payment" pursuant to Section
280G of the Code.

                      (2) No Amendments. Neither the Company nor the Subsidiary
has any announced plan or legally binding commitment to create any additional
Employee Plans which are intended to cover employees or former employees of the
Company or the Subsidiary(with respect to their relationship with such entities)
or to amend or modify any existing Employee Plan which covers or has covered
employees or former employees of the Company or the Subsidiary(with respect to
their relationship with such entities).

                      (3) No Other Material Liability. No event has occurred in
connection with which the Company or any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any material liability (i) under any
statute, regulation or governmental order relating to any Employee Plans or (ii)
pursuant to any obligation of the Company or the Subsidiary to indemnify any
person against liability incurred under, any such statute, regulation or order
as they relate to the Employee Plans.


                  5.22. Potential Conflicts of Interest. Except as set forth on
Schedule 5.22, no officer, director, or stockholder of five percent (5%) or more
of the aggregate number of shares of Common Stock then outstanding on a fully
diluted basis of the Company or the Subsidiary, no spouse of any such

                                       19

<PAGE>

officer, director or stockholder: (a) owns, directly or indirectly, any interest
in, or is an officer, director, employee or consultant of, any Person which is,
or is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, sales agent or customer of, or lender to or borrower from, the
Company; (b) owns, directly or indirectly, in whole or in part, any tangible or
intangible property that the Company uses in the conduct of business; or (c) has
any cause of action or other claim whatsoever against, or owes any amount to,
the Company, except for claims in the ordinary course of business such as for
accrued vacation pay, accrued benefits under employee benefit plans, and similar
matters and agreements existing on the date hereof and described in Schedule
5.22.

                  5.23. Business Relationships. There exists no actual or, to
the best of the Company's knowledge, threatened, termination, cancellation or
limitation of, or any adverse modification or change in, the business
relationship of the Company with any customer, supplier or any group of
customers or suppliers whose purchases or sales, as the case may be, are
individually or in the aggregate are material to the Condition of the Company,
and there exists no present condition or state of facts or circumstances that
would have a Materially Adverse Effect or prevent the Company from conducting
its business after the consummation of this Agreement, in substantially the same
manner in which it has been heretofore conducted by BABW and the Company.

                  5.24. Outstanding Borrowings. Schedule 5.24 lists the amount
of all Outstanding Borrowings as of the date hereof and the name of each lender
thereof.

                  5.25. Insurance Schedule. Schedule 5.25 accurately summarizes
all of the insurance policies or programs of the Company in effect as of the
date hereof, including key-person insurance, (true and correct copies of which
have been provided to the Purchasers), and indicates the insurer's name, policy
number, expiration date, amount of coverage, type of coverage, annual premiums
and deductibles, and also indicates any self-insurance program that is in
effect. The insurance policies summarized on Schedule 5.25 are in full force and
effect and are adequate to protect the Company's assets, and businesses and to
cover property damage by fire, business interruption or other casualty,
sufficient in amount to allow it to replace any of its properties damaged or
destroyed and are adequate to protect against all liabilities, claims, and risks
against which it is customary to insure.

                  5.26. Undisclosed Liabilities. The Company has no liabilities
or obligations (absolute, accrued, contingent or otherwise) except (i)
liabilities that are reflected and reserved against on the balance sheets
included in the Financial Statements (including the notes thereto), (ii)
liabilities incurred in the ordinary course of business since the Balance Sheet
Date, and which are reflected and reserved for in the balance sheets included in
the Financial Statements, and (iii) liabilities arising under Contractual
Obligations described on Schedule 5.12.

                  5.27. Solvency. Neither the Company nor any Affiliate has (i)
made a general assignment for the benefit of its creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition in bankruptcy by its creditors, (iii) suffered the appointment of a
receiver to take possession of all or substantially all of its assets or
properties, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets or (v) admitted in writing its inability to pay
its debts as they come due.

                  5.28. Compliance with Law. The Company and the conduct of its
business is in compliance with all applicable laws, statutes, ordinances and
regulations, whether federal, state or local, except where the failure to comply
would not have a Material Adverse Effect. Neither the Company nor the Subsidiary
has received any written notice to the effect that it is not in compliance with
any of such

                                       20
<PAGE>
statutes, regulations, orders, ordinances or other laws where the failure to
comply would have a Material Adverse Effect.


                  5.29. No Other Agreements to Sell the Assets or Capital Stock
of the Company.

                  Except as set forth on Schedule 5.29, neither the Company nor
any Affiliate has any legal obligation, absolute or contingent, other than the
obligations under the Transaction Agreements, to any person or firm to (i) sell
the assets other than in the ordinary course of business consistent with past
practices, (ii) sell any capital stock of the Company (other than as set forth
in Section 5.6) or effect any merger, consolidation or other reorganization of
the Company or (iii) enter into any agreement with respect any of the foregoing,
other than agreements related to the merger of BABW with and into the Company
and the Transaction Documents.

                  5.30. Inventory. The inventory of the Company is reflected in
the Financial Statements in a manner consistent with GAAP, except for obsolete
items and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Financial Statements or on the
accounting records of the Company, as of the Closing Date, as the case may be.
All inventories not written off have been priced at the lower of cost or net
realizable value on a average cost basis. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the Company.

                  5.31. Suppliers. Except as disclosed in Schedule 5.31, the
Company has not received any actual notice that any current supplier that sold
goods or merchandise to the Company or BABW in an aggregate amount in excess of
$50,000 during the preceding twelve months will not sell raw materials,
supplies, merchandise and other goods to the Company at any time after the
Closing Date on terms and conditions substantially similar to those currently in
effect, subject only to general and customary price increases.

                  5.32. Changes.

                  Since the Balance Sheet Date, except for the merger of BABW
with and into the Company and as set forth on Schedule 5.32, there has not been
(for purposes of this Section 5.32, all references to the "Company" include
BABW):

                  (a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not been
materially adverse;

                  (b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted);

                  (c) any waiver by the Company of a valuable right or of a
material debt owed to it;

                  (d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);

                                      21
<PAGE>

                  (e) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;

                  (f) any material change in any compensation arrangement or
agreement with any employee;

                  (g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;

                  (h) any resignation or termination of employment of any key
officer of the Company; and to the knowledge of the Company, there is no
impending resignation or termination of employment of any such officer;

                  (i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;

                  (j) receipt of notice that any material supplier or
third-party outsourcing provider will no longer supply products or services to
the Company;

                  (k) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company, with respect to any of its material properties
or assets, except liens for taxes not yet due or payable;

                  (l) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;

                  (m) any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company;

                  (n) to the Company's knowledge, any other event or condition
of any character that would reasonably be expected to materially and adversely
affect the assets, properties, financial condition, operating results or
business of the Company (as such business is presently conducted); or

                  (o) any agreement or commitment by the Company to do any of
the things described in this Section 5.31.

                  5.33. Certain Payments. Neither the Company nor any director,
officer, agent, or employee of the Company, or any other Person associated with
or acting for or on behalf of the Company has directly or indirectly (a) made
any contribution, gift, bribe, payoff, influence payment, kickback, or other
payment to any person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in

                                       22

<PAGE>

respect of the Company, or (iv) in violation of any law, (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.

                                   ARTICLE 6.

                               REPRESENTATIONS AND
                          WARRANTIES OF THE PURCHASERS


                  Catterton and each other Purchaser, severally but not jointly,
hereby represents and warrants to the Company as of the date hereof as follows:

                  6.1. Existence and Authority. Such Purchaser who is not a
natural person: (a) is a corporation, limited liability company, or limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, (b) has all requisite partnership or
corporate power and authority to own its assets and operate its business, and
(c) has all requisite corporate or partnership power and authority to execute,
deliver and perform its obligations under each of the Transaction Agreements to
which it is or will be a party.

                  6.2. Authorization; No Contravention. The execution, delivery
and performance by such Purchaser of the Transaction Agreements to which it is a
party and the consummation of the transactions contemplated thereby, including,
without limitation, the acquisition of the Preferred Shares: (a) is within such
Purchaser's partnership or corporate power and authority and has been duly
authorized by all necessary partnership or corporate action on the part of such
Purchaser; (b) does not conflict with or contravene the terms of such
Purchaser's partnership agreement or certificate of limited partnership or
certificate of incorporation or bylaws or any amendment thereof; and (c) will
not violate, conflict with or result in any material breach or contravention of
(i) any Contractual Obligation of such Purchaser, or (ii) the Requirements of
Law or any order or decree applicable to such Purchaser.

                  6.3. Binding Effect. This Agreement has been duly executed and
delivered by such Purchaser, and this Agreement constitutes the legal, valid and
binding obligation of such Purchaser, enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.

                  6.4. Purchase for Own Account. The Preferred Shares and the
Common Stock to be issued upon conversion of the Preferred Shares, are being or
will be acquired by such Purchaser for its own account and with no intention of
distributing or reselling such securities or any part thereof in any transaction
that would be in violation of the securities laws of the United States of
America, or any state. Such Purchaser agrees to the imprinting, so long as
required by law, of legends on certificates representing all of the Preferred
Shares or the shares of Common Stock to be issued upon conversion of the
Preferred Shares to the following effect:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH

                                       23
<PAGE>


 ACT OR SUCH LAWS."

                  "THE SALE, TRANSFER OR ENCUMBRANCE OF THIS CERTIFICATE IS
SUBJECT TO A STOCKHOLDERS' AGREEMENT DATE AS OF APRIL 3, 2000 BETWEEN THE
CORPORATION AND CERTAIN HOLDERS OF SHARES OF THE CAPITAL STOCK OF THE
CORPORATION. A COPY OF THIS AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY
OF THE CORPORATION AND MAY BE OBTAINED FROM THE COMPANY UPON REQUEST. THE
AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR CERTAIN OBLIGATIONS TO SELL AND TO
PURCHASE THE SHARES EVIDENCED BY THIS CERTIFICATE, FOR A DESIGNATED PURCHASE
PRICE. BY ACCEPTING THE SHARES EVIDENCED BY THIS CERTIFICATE THE HOLDER AGREES
TO BE BOUND BY SAID AGREEMENT."


                  6.5. Accredited Investor Status; Institutional Investor
Status. Such Purchaser is an "accredited investor" as such term is defined in
Rule 501(a) of Regulation D, promulgated under the Securities Act.

                       Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable by
the Company in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchasers.

                       Exculpation Among Purchasers.

                  Each Purchaser acknowledges that in making its decision to
invest in the Company, it is not relying on any other Purchaser or upon any
person, firm or company, other than the Company and its officers, employees
and/or directors. Each Purchaser agrees that no other Purchaser, nor the
partners, employees, officers or controlling persons of any other Purchaser
shall be liable for any actions taken by such Purchaser, or omitted to be taken
by such Purchaser, in connection with such investment.


                  No Public Market. Each Purchaser acknowledges and understands
that no public market now exists for any securities of the Company and that the
Company has made no assurances that a public market will ever exist for any
securities of the Company.


                  6.9 Access to Data. Each Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with the
Company's officers and management.

                  6.10 Tax-Free Contribution. Each Purchaser hereby represents
and warrants that such the Purchaser, individually or with any other Purchaser
or group of Purchasers, does not have a plan, intention or agreement to dispose
of any or all of their shares of stock of the Company and hereby covenants not
to take any action which would cause the transactions contemplated by the
Transaction Documents and the merger of BABW into the Company not to be treated
as a tax-free transfer to a controlled corporation within the meaning of Section
351 of the Code.

                                       24
<PAGE>


                                   ARTICLE 7.

                          COVENANTS OF THE COMPANY WITH
                   RESPECT TO THE PERIOD FOLLOWING THE CLOSING


                  Until (i) all shares of Series A Convertible Preferred Stock,
Series B Convertible Preferred Stock and Common Stock are no longer outstanding
due to conversion, redemption or otherwise, and (ii) the Company has paid to the
Purchasers all other amounts due to them under the Transaction Agreements or the
Certificate, the Company hereby covenants and agrees with the Purchasers as
follows, except with respect to the obligations of the Company set forth in
paragraph 8.1 which shall terminate upon the earlier of either (a) a Qualified
Initial Public Offering or (b) the date on which the Purchasers or their
Affiliates hold less than 15% of the Preferred Shares (or Common Stock issued
upon conversion of such Preferred Shares) issued hereunder:

                  7.1. Notices. Within 5 business days of obtaining knowledge of
any of the events described below, the Company shall give written notice to the
Purchasers:

                  (a) any of the following: (i) default or event of default
under any material Contractual Obligation of the Company or any Affiliate, (ii)
initiation or resolution of any material dispute, litigation, investigation, or
proceeding which may exist at any time between the Company or any Affiliate and
any private third party or Governmental Authority, and (iii) any default or
breach of the terms of any of the Transaction Agreements by the Company; and

                  (b) any other matter that has resulted in a Material Adverse
Effect in the Condition of the Company.


                  Each notice pursuant to this Section 7.1 shall be accompanied
by a statement on behalf of the Company by the Chief Executive Officer,
President or Chief Financial Officer of the Company setting forth details of the
occurrence referred to therein, stating what action the Company proposes to take
with respect thereto, the Company officer responsible for such action and the
timetable with respect to such action.


                  7.2. Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue or delivery upon conversion of the Preferred Shares as provided
in the Certificate, the maximum number of shares of Common Stock that may be
issuable or deliverable upon such conversion, as well as the number of shares of
Common Stock that may be issuable or deliverable upon conversion of the
Preferred Shares issued to the Purchasers as dividends. Such shares of Common
Stock shall, when issued or delivered in accordance with the provisions of the
Certificate, be duly authorized, validly issued and fully paid and
non-assessable. The Company shall issue such Common Stock in accordance with the
provisions of the Certificate and shall otherwise comply with the terms thereof.


                  7.3 Directors and Officers Insurance. The Company will use its
reasonable best efforts to have in full force and effect no later than 60 days
from the date of the Closing a directors and officers insurance policy in a
commercially reasonable amount.


                                       25
<PAGE>

                  7.4 Use of Proceeds. The Company shall not use the proceeds of
the sale of the Preferred Shares hereunder for the redemption of any of its
capital stock, the payment of dividends on shares of its capital stock or any
purpose other than working capital in the ordinary course of business.

                                   ARTICLE 8.

                                 INDEMNIFICATION

                  8.1. Indemnification. The Company with respect to the
Purchasers or the Purchasers, severally and not jointly, with respect to the
Company (the "Indemnifying Party") agrees to indemnify and hold harmless each
Purchaser or the Company, as the case may be, and its Affiliates and its
respective officers, directors, agents, employees, Affiliates, partners,
shareholders and assigns (each, an "Indemnified Party") to the fullest extent
permitted by law from and against any and all (i) Environmental Expenses that
are the proximate cause of the Company's violation of any Environmental Law and
(ii) tax liabilities, losses, costs, claims, damages, expenses (including
reasonable fees, disbursements and other charges of counsel) (collectively,
"Liabilities") based upon, relating to or arising out of any breach of any
representation or warranty, covenant or agreement of such Indemnifying Party in
this Agreement or any legal, administrative or other actions (including actions
brought by any of the Purchasers or any Indemnifying Party or any equity holders
of the Company or derivative actions brought by any Person claiming through or
in the Company's name), proceedings or investigations (whether formal or
informal), based upon, relating to or arising out of (A) the status of the
Purchasers as shareholders of the Company and the existence or exercise of the
rights and powers of the Purchasers relating (including without limitation, any
claim against any Indemnified Party relating to Environmental Matters), (B)
violations of applicable securities laws by the Company in connection with the
offering of the Shares, or (C) third party claims that the Preferred Shares
hereunder violate preexisting understandings or arrangements with the Company
upon the settlement or final judicial determination of (A) through (C) above;
provided, however, that no Indemnifying Party shall be liable under this Section
8.1 to an Indemnified Party: (a) for any amount paid in settlement of claims
without such Indemnifying Party's consent (which consent shall not be
unreasonably withheld), (b) to the extent that it is finally judicially
determined that such Liabilities resulted solely from the willful misconduct or
gross negligence of such Indemnified Party, or (c) to the extent that it is
finally judicially determined that such Liabilities resulted solely from the
breach by such Indemnified Party of any representation, warranty, covenant or
other agreement of such Indemnified Party contained in this Agreement; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Indemnifying Party shall make the maximum contribution to
the payment and satisfaction of such indemnified liability which shall be
permissible under applicable laws. In connection with the obligation of the
Indemnifying Party to indemnify for expenses as set forth above, the
Indemnifying Party further agrees to reimburse each Indemnified Party for all
such expenses (including reasonable fees, disbursements and other charges of
counsel) as they are incurred by such Indemnified Party.


                  8.2. Notification. Each Indemnified Party under this Article 8
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from any Indemnifying Party under this
Article 9, notify the Indemnifying Party in writing of the commencement thereof.
The omission of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not relieve the Indemnifying Party from any liability which it
may have to such Indemnified Party under this Article 8 except to the extent
that such failure to notify results in a loss of a material defense of such
Indemnified Party. In case any such action, claim or other proceeding shall be
brought against any Indemnified Party and such Indemnified Party shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to assume the defense thereof at its own expense, with counsel


                                    26
<PAGE>

satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense. Notwithstanding the foregoing, in any
action, claim or proceeding in which both the Indemnifying Party, on the one
hand, and an Indemnified Party, on the other hand, is, or is reasonably likely
to become, a party, such Indemnified Party shall have the right to employ
separate counsel at the Indemnifying Party's expense and to control its own
defense of such action, claim or proceeding if, in the reasonable opinion of
counsel to such Indemnified Party, a conflict or potential conflict exists
between the Indemnifying Party, on the one hand, and such Indemnified Party, on
the other hand, that would make such separate representation advisable. The
Indemnifying Party agrees that it will not, without the prior written consent of
the Purchasers (such consent not to be unreasonably withheld), settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Purchasers (and each other Indemnified Party) from
all liability arising or that may arise out of such claim, action or proceeding.
The rights accorded to Indemnified Parties hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise.

                  8.3. Registration Rights Agreement. Notwithstanding anything
to the contrary in this Article 8, the indemnification and contribution
provisions of the Registration Rights Agreement shall govern any claim made with
respect to registration statements filed pursuant thereto or sales made
thereunder.

                                   ARTICLE 9.

                                  MISCELLANEOUS

                  9.1. Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the Closing Date of
this Agreement for a period of two (2) years from the date hereof except the
representations and warranties in (i) Section 5.17 shall survive until the
statute of limitations period has expired for such representations and
warranties and (ii) Section 5.14 and Section 6.10 shall survive until thirty
days after the expiration of the statute of limitations period has expired for
such representations and warranties.

                  9.2. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, courier
service or personal delivery:

                  (a)   if to the Company:

                        Build-A-Bear Workshop, Inc.
                        1964 Innerbelt Business Center Drive
                        St. Louis, Missouri 63114-5760
                        Attention:  Maxine Clark
                        Facsimile (not to be deemed notice): 314-423-8188

                        with a copy to:

                                       27
<PAGE>


                        Bryan Cave LLP
                        211 N. Broadway, Suite 3600
                        St. Louis, Missouri  63102
                        Attention: James H. Erlinger III
                        Facsimile (not to be deemed notice): 314-259-2020


                  (b)   if to a Purchaser, to the last recorded address on the
                        books and records of the Company with a copy to the last
                        known counsel of such Purchaser.

                  All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; when mailed,
five business days after being deposited in the mail, postage prepaid.

                  9.3. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Neither the Company nor any of the Purchasers may assign any of
its rights under this Agreement without the written consent of each of the other
Parties hereto provided however that any Purchaser may assign its rights and
obligations to one or more Affiliates or wholly-owned corporations, which shall
agree to be bound by the terms hereof. Except as provided in Article 9, no
Person other than the parties hereto and their successors and permitted assigns
is intended to be a beneficiary of any of the Transaction Agreements.

                       9.4.   Amendment and Waiver.

                  (a) No failure or delay on the part of the Company, or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.

                  (b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by the Company and Catterton or by the party or parties to be bound
hereby, and (ii) only in the specific instance and for the specific purpose for
which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on any party in any case shall entitle any
party hereto to any other or further notice or demand in similar or other
circumstances.

                  9.5. Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

                  9.6. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  9.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law of such state.

                                       28
<PAGE>


                  9.8. Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
shall be brought in the courts of the United States of America for the Eastern
District of Missouri and hereby expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 10.3, such service to become effective 10 days after such
mailing.

                  9.9. Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provision or provisions held invalid, illegal or unenforceable shall
substantially impair the remaining provisions hereof.

                  9.10. Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections refer
to sections or subsections of this Agreement.

                  9.11. Entire Agreement. This Agreement, together with the
exhibits and schedules hereto and the other Transaction Agreements is intended
by the parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth herein or therein. This Agreement, together with the exhibits
and schedules hereto, the other Transaction Agreements, supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                  9.12. Transaction Expenses. The Company will pay all
Transaction Expenses of the Purchasers with payments to each Purchaser being
made pro rata in proportion to the number of shares of Preferred Stock purchased
by such Purchaser hereunder.

                  9.13. Publicity. Except as may be required by applicable law,
none of the parties hereto shall issue a publicity release or announcement or
otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto. If any announcement is required by law to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties an
opportunity to comment thereon.

                  9.14. Further Assurances. Upon the terms and subject to the
conditions contained herein, each of the parties hereto agrees, both before and
after the Closing, (i) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from other parties that
may be required; (B) to obtain all necessary permits as are required to be
obtained under any federal, state, local or foreign law or regulations, and (C)
to fulfill all conditions to this Agreement.

                                       29
<PAGE>


                  9.15. Rights of Purchasers Inter Se. Each Purchaser shall have
the absolute right to exercise or refrain from exercising any right or rights
which such Purchaser may have by reason of this Agreement or any security,
including, without limitation, the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter into an agreement
with the Company for the purpose of modifying this Agreement or any agreement
effecting any such modification, and such Purchasers shall not incur any
liability to any other or with respect to exercising or remaining from
exercising any such right or rights.

                  9.16. Severability of the Representations, Warranties and
Covenants.

                 No Purchaser shall be liable to the Company for the breach or
violation, if any, of any representation, warranty or covenant made or to be
complied with by any of the other Purchasers, but each such Purchaser shall be
liable to the Company solely for its own breaches or violations, if any, of any
representation, warranty or covenant made or to be complied with by such
Purchasers. For purposes of this Section 9.16, Catterton shall be deemed to be
one Purchaser.

                  9.17. Arbitration. If any controversy or dispute shall arise
between the parties hereto in connection with, arising from or in respect to
this Agreement, any provision hereof, or any provision of any instrument,
document, agreement, certification or other writing delivered pursuant hereto,
or with respect to the validity of this Agreement or any such document,
agreement, certification or other writing, and if such controversy or dispute
shall not be resolved within thirty (30) days after the same shall arise, then
such dispute or controversy shall be submitted for arbitration to the St. Louis,
Missouri office of the American Arbitration Association in accordance with its
commercial arbitration rules then in effect. Such proceeding shall be conducted
in St. Louis, Missouri. Any such dispute or controversy shall be determined by
one (1) arbitrator. Such arbitrator may award any relief which he shall deem
proper in the circumstances, without regard to the relief which would otherwise
be available to either party hereto in a court of law or equity, including
without limitation an award of money damages (including interest on unpaid
amounts, calculated from the due date of any such amount, at a rate per annum
determined by said arbitrator), specific performance and injunctive relief. The
award and findings of such arbitrator shall be conclusive and binding upon the
parties thereto, and judgment upon such award may be entered in any court of
competent jurisdiction. Any party against whom an arbitrator's award shall be
issued shall not, in any manner, oppose or defend against any suit to confirm
such award, or any enforcement proceedings brought against such party, whether
within or outside of the United States of America, with respect to any judgment
entered upon the award, or any enforcement proceedings brought against such
party, whether within or outside of the United States of America, with respect
to any judgment entered upon the award, and such party hereby consents to the
entry of a judgment against it, in the full amount thereof, or other relief
granted therein, in any jurisdiction in which such enforcement is sought. The
party against whom the arbitrator award is issued shall pay the fees of the
arbitrator.


          THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
                        MAY BE ENFORCED BY THE PARTIES.


                  IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.

                           BUILD-A-BEAR WORKSHOP, INC.

                                       30
<PAGE>



                     By: /s/ Maxene Clark
                        -----------------------
                     Name:
                     Title:


                     CATTERTON PARTNERS IV, L.P.

                        By:  CATTERTON MANAGING PARTNER IV,
                        L.L.C., its General Partner

                        By:  CP4 PRINCIPALS, L.L.C., its Managing Member

                        By:   /s/ Frank Vest
                          --------------------------------
                        Name:
                        Title: Authorized Person

                     CATTERTON PARTNERS IV OFFSHORE, L.P.

                        By:  CATTERTON MANAGING PARTNER IV,
                        L.L.C., its Managing General Partner

                        By:  CP4 PRINCIPALS, L.L.C., its Managing Member

                        By:   /s/ Frank Vest
                          --------------------------------
                        Name:
                        Title: Authorized Person


                     CATTERTON PARTNERS IV SPECIAL PURPOSE, L.P.

                        By:  CATTERTON MANAGING PARTNER IV,
                             L.L.C., its Managing General Partner

                        By:  CP4 PRINCIPALS, L.L.C., its Managing Member

                        By:  /s/ Frank Vest
                           --------------------------------
                           Name:
                           Title: Authorized Person


                           CLARK/FOX, L.L.C.


                                       31
<PAGE>

                        a Missouri limited liability company


                        /s/ Maxine Clark
                        ----------------------------
                        By:  Maxine Clark, its Manager



                        /s/ Barney A. Ebsworth
                        ----------------------------
                        BARNEY A. EBSWORTH


                        /s/ Wayne L. Smith, II
                        ----------------------------
                            Wayne L. Smith, II


                        /s/ Brian Vent
                        ----------------------------
                        Brian Vent


                        HYCEL PARTNERS V, L.L.C.,
                        a Missouri limited liability company

                        /s/ Mark H. Zorensky
                        --------------------------
                        By:    Mark H. Zorensky, Manager

                        KCEP VENTURES II, L.P.,
                        a Missouri limited partnership

                        KCEP Ventures II, L.C., its General Partner

                        By:   /s/ William Reisler, Managing Director
                        ----------------------------------------

                         /s/ Adrienne Weiss
                        ------------------------------------------
                        Adrienne Weiss


                                       32








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>8
<FILENAME>c86750exv4w3.txt
<DESCRIPTION>STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                     EXHIBIT 4.3







                            STOCK PURCHASE AGREEMENT

                                       BY

                                       AND

                                      AMONG


                           BUILD-A-BEAR WORKSHOP, INC.



                                     AND THE



                                   PURCHASERS

                                  NAMED HEREIN

                               -------------------


                         Dated as of September 21, 2001

                               -------------------








================================================================================



<PAGE>





<TABLE>
<S>                                                                                                                     <C>
ARTICLE 1.  DEFINITIONS...................................................................................................1

       1.1. Definitions...................................................................................................1
       1.2. Accounting Terms; Financial Statements........................................................................7
       1.3. Knowledge Standard............................................................................................7
       1.4. Other Defined Terms...........................................................................................8

ARTICLE 2.  AUTHORIZATION OF PREFERRED STOCK; PURCHASE AND SALE OF PREFERRED STOCK........................................8

       2.1. Series D Preferred Stock......................................................................................8
       2.2. Purchase and Sale of Preferred Shares.........................................................................9
       2.3. Closing......................................................................................................10

ARTICLE 3.  CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO PURCHASE THE SECURITIES....................................10

       3.1. Representations and Warranties...............................................................................11
       3.2. Compliance with Terms and Conditions of this Agreement.......................................................11
       3.3. Delivery of Certificates Evidencing the Series D Preferred Stock.............................................11
       3.4. Closing Certificates.........................................................................................11
       3.5. Secretary's Certificates.....................................................................................11
       3.6. Documents....................................................................................................11
       3.7. Purchase Permitted by Applicable Laws........................................................................11
       3.8. Opinion of Counsel...........................................................................................12
       3.9. Consents and Approvals.......................................................................................12
       3.10. Certain Waivers.............................................................................................12
       3.11. No Material Adverse Effect..................................................................................12
       3.12. No Material Judgment or Order...............................................................................12
       3.13. Financial Statements........................................................................................12
       3.14. Registration Rights Agreement...............................................................................13
       3.15. Stockholders' Agreement.....................................................................................13
       3.16. Stock Options...............................................................................................13
       3.17. Investment Banker...........................................................................................13
       3.18. Amendment to Certificate....................................................................................13
       3.19 SBIC Certificate.............................................................................................13

ARTICLE 4.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO CLOSE........................................................13

       4.1. Representations and Warranties...............................................................................14
       4.2. Compliance with Terms and Conditions of this Agreement.......................................................14
       4.3. Issuance Permitted by Applicable Laws........................................................................14
       4.4. Payment of Purchase Price....................................................................................14
       4.5. Consents and Approvals.......................................................................................14
       4.6. No Material Judgment or Order................................................................................14
       4.7. Registration Rights Agreement................................................................................14
       4.8. Stockholders' Agreement......................................................................................15

ARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................................15

       5.1. Corporate Existence and Authority............................................................................15
       5.2. Corporate Authorization; No Contravention....................................................................15
       5.3. Governmental Authorization; Third Party Consents.............................................................15
</TABLE>




<PAGE>


                          TABLE OF CONTENTS- (CONT'D)

<TABLE>
<S>                                                                                                                    <C>
       5.4. Binding Effect...............................................................................................15
       5.5. Other Agreements.............................................................................................16
       5.6. Capitalization...............................................................................................16
       5.7. Subsidiaries.................................................................................................17
       5.8. Private Offering.............................................................................................17
       5.9. Litigation...................................................................................................18
       5.10. Financial Statements........................................................................................18
       5.11. Title and Condition of Assets...............................................................................18
       5.12. Contractual Obligations.....................................................................................19
       5.13. Patents, Trademarks, Etc....................................................................................19
       5.14. Tax Matters.................................................................................................20
       5.15. Severance Arrangements......................................................................................
       5.16 No Material Adverse Effect...................................................................................21
       5.17 Environmental Matters........................................................................................21
       5.18 Investment Company/Government Regulations....................................................................22
       5.19 Broker's, Finder's or Similar Fees...........................................................................22
       5.20 Labor Relations and Employee Matters.........................................................................22
       5.21 Employee Benefits Matters....................................................................................23
       5.22 Potential Conflicts of Interest..............................................................................23
       5.23 Business Relationships.......................................................................................24
       5.24 Outstanding Borrowings.......................................................................................24
       5.25 Insurance....................................................................................................24
       5.26 Undisclosed Liabilities......................................................................................24
       5.27 Solvency.....................................................................................................24
       5.28 Compliance with Law..........................................................................................25
       5.29 No Other Agreements to Sell the Assets or Capital Stock of the Company.......................................25
       5.30 Inventory....................................................................................................25
       5.31 Suppliers....................................................................................................25
       5.32 Changes......................................................................................................25
       5.33 Certain Payments.............................................................................................27

ARTICLE 6.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.............................................................27

       6.1. Existence and Authority......................................................................................27
       6.2. Authorization; No Contravention..............................................................................27
       6.3. Binding Effect...............................................................................................28
       6.4. Purchase for Own Account.....................................................................................28
       6.5. Accredited Investor Status; Institutional Investor Status....................................................28
       6.6  Broker's, Finder's or Similar Fees...........................................................................28
       6.7 Exculpation Among Purchasers..................................................................................28
       6.8 No Public Market..............................................................................................29
       6.9 Access to Data................................................................................................29
       6.10 Potential Conflicts of Interest..............................................................................29

ARTICLE 7.  COVENANTS OF THE COMPANY WITH  RESPECT TO THE PERIOD FOLLOWING THE CLOSING...................................29

       7.1. Notices......................................................................................................30
       7.2. Reservation of Shares........................................................................................30
       7.3 Series E Closing..............................................................................................30
</TABLE>



<PAGE>



                          TABLE OF CONTENTS- (CONT'D)

<TABLE>
<S>                                                                                                                    <C>
       7.4 Use of Proceeds...............................................................................................31
       7.5 Line of Credit................................................................................................31
       7.6 Board of Directors............................................................................................31
       7.7 Insurance.....................................................................................................31

ARTICLE 8.  INDEMNIFICATION..............................................................................................31

       8.1. Indemnification..............................................................................................31
       8.2. Notification.................................................................................................32
       8.3. Amended and Restated Registration Rights Agreement...........................................................33

ARTICLE 9.  MISCELLANEOUS................................................................................................33

       9.1. Survival of Representations and Warranties...................................................................33
       9.2. Notices......................................................................................................33
       9.3. Successors and Assigns.......................................................................................34
       9.4. Amendment and Waiver.........................................................................................34
       9.5. Counterparts.................................................................................................34
       9.6. Headings.....................................................................................................34
       9.7. Governing Law................................................................................................35
       9.8. Jurisdiction.................................................................................................35
       9.9. Severability.................................................................................................35
       9.10. Rules of Construction.......................................................................................35
       9.11. Entire Agreement............................................................................................35
       9.12. Transaction Expenses........................................................................................35
       9.13. Publicity...................................................................................................35
       9.14. Further Assurances..........................................................................................35
       9.15. Rights of Purchasers Inter Se...............................................................................36
       9.16. Severability of the Representations, Warranties and Covenants...............................................36
       9.17. Arbitration.................................................................................................36
</TABLE>




<PAGE>



                        SERIES D STOCK PURCHASE AGREEMENT

                  THIS SERIES D STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of the 21st day of September, 2001 by and among those Persons
named on Schedule 1 hereto (the "Purchasers") and Build-A-Bear Workshop, Inc., a
Delaware corporation (the "Company").

                                    RECITALS:


                  A. WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the Company proposes to issue and sell shares of its
Series D Preferred Stock (defined herein) to the Purchasers.

                  B. WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the Purchasers desire to contribute capital to the
Company in exchange for the issuance to the Purchasers of shares of the Series D
Preferred Stock as set forth herein.

                  C. WHEREAS, the Company and the Purchasers desire to set forth
the objectives and agreements, that will govern their relations and
responsibilities with respect to each other by entering into concurrently with
the sale and purchase of securities hereunder an Amended and Restated
Stockholders' Agreement and an Amended and Restated Registration Rights
Agreement (each as defined herein).

                                    AGREEMENT


                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereby agree as
follows:

                                   ARTICLE 1.

                                   DEFINITIONS


                  1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

                  "Affiliate" means, with respect to any specified Person, any
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, whether by contract, through one or
more intermediaries, or otherwise, provided however, that Smart Stuff, Inc., a
Missouri corporation, is not an Affiliate of the Company. Unless otherwise
qualified, all references to a "Affiliate" or to "Affiliates" in this Agreement
shall refer to a Affiliate or Affiliates of the Company.




<PAGE>






                  "Amended and Restated Registration Rights Agreement" means the
Amended and Restated Registration Rights Agreement substantially in the form
attached hereto as Exhibit A.

                  "Amended and Restated Stockholders' Agreement" means the
Amended and Restated Stockholders' Agreement substantially in the form attached
hereto as Exhibit B.

                  "BABW" means the predecessor to the Company, Build-A-Bear
Workshop, L.L.C., a Missouri limited liability company.

                  "Benefit Arrangement" means any employment, consulting,
severance or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including, without limitation, any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits) or for deferred compensation, profit-sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or an ERISA Affiliate or under which the Company or any ERISA
Affiliate may incur any liability, and (C) covers any employee or former
employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).

                  "Catterton" means Catterton Partners IV, L.P., Catterton
Partners IV-A, L.P., and Catterton Partners IV-B, L.P., each a Delaware limited
partnership, Catterton Partners IV Offshore, L.P. a Cayman Island limited
partnership and Catterton Partners IV Special Purpose, L.P. a Cayman Island
limited partnership.

                  "Clark" means Maxine Clark and her Affiliates, including Smart
Stuff, Inc., Clark/Fox LLC and Clark/Fox II LLC.

                  "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.

                  "Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.

                  "Common Stock" means the common stock, par value $0.01 per
share, of the Company, or any other capital stock of the Company into which such
stock is reclassified or reconstituted.


                                       2
<PAGE>
                  "Condition of the Company" means the assets, business,
properties, operations or financial condition of the Company and its
Subsidiaries taken as a whole.

                  "Contractual Obligation" means as to any Person, any provision
of any security issued by such Person or any provision of any agreement, lease
of real or personal property, undertaking, contract, indenture, mortgage, deed
of trust or other instrument to which such Person is a party or by which it or
any of its property is bound.

                  "Employee Plans" means all Benefit Arrangements, Multiemployer
Plans, Pension Plans and Welfare Plans.

                  "Environmental Expenses" means any liability, loss, cost or
expense arising from any pre-Closing violation by the Company of any
Environmental Law which proximately causes expenses, including, without
limitation, costs of investigation, cleanup, removal, remedial, corrective or
response action, the costs associated with posting financial assurances for the
completion of investigation, cleanup, removal, remedial, corrective or response
actions, the preparation of any closure or other necessary or required plans or
analyses, or other reports or analyses submitted to or prepared by regulating
agencies, including the cost of health assessments, epidemiological studies and
the like, retention of engineers and other expert consultants, legal counsel,
operation and maintenance testing and monitoring costs, and administrative costs
or damages.

                  "Environmental Laws" means any federal, state or local law,
common law doctrine, rule, order, decree, judgment, injunction, license, permit
or regulation relating to environmental matters, including those pertaining to
land use, air, soil, surface water, ground water (including the protection,
cleanup, removal, remediation or damage thereof), public or employee health or
safety or any other environmental matter, together with any other laws (federal,
state or local) relating to emissions, discharges, releases or threatened
releases of any pollutant or contaminant including, without limitation, medical,
chemical, biological, biohazardous or radioactive waste and materials, into
ambient air, land, surface water, groundwater, personal property or structures,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, discharge or handling of any
contaminant, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section  9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section  1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section  6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section  1251 et seq.), the Clean
Air Act (42 U.S.C. Section  1251 et seq.), the Toxic Substances Control Act (15
U.S.C. Section  2601 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Section  651 et seq.), as such laws have been, or are, amended, modified
or supplemented heretofore or from time to time hereafter and any analogous
future federal, or present or future state or local laws, statutes and
regulations promulgated thereunder.



                                       3
<PAGE>

                  "Equipment" means all of the tangible personal property owned
or leased by the Company or any of its Affiliates and used in or held for use in
the operations of the business of the Company or any of its Affiliates.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "ERISA Affiliate" means any Person that is (or at any relevant
time was) a member of a "controlled group of corporations" with or under "common
control" with the Company as defined in Section 414(b), (c), (m) or (o) of the
Code.

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

                  "Facilities" means the buildings, plants, offices and all
other improvements on any real property (including fixtures affixed thereto)
which are owned or leased by the Company or any of its Affiliates and used or
held for use in the operation of the business of the Company or any of its
Affiliates.

                  "GAAP" means United States generally accepted accounting
principles, in effect from time to time, consistently applied.

                  "Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
exercising public functions owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

                  "Hazardous Materials" means those substances which are
regulated by or form the basis of liability under any Environmental Laws,
including, without limitation, petroleum products, radon and asbestos.

                  "Indebtedness" means, as to any Person: (a) all obligations,
whether or not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person representing the balance of
deferred purchase price of property or services, except trade accounts payable
and accrued commercial or trade liabilities arising in the ordinary course of
business, (d) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such Person, whether periodically or upon the happening of a contingency, (e)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or


                                       4
<PAGE>


lender under such agreement in the event of default are limited to repossession
or sale of such property), (f) all obligations of such Person under leases
recorded as capital leases in accordance with GAAP, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) all
Indebtedness of any other Person referred to in clauses (a) through (g) above,
guaranteed, directly or indirectly, by that Person.

                  "Initial Issue Date" shall mean the date that shares of Series
D Preferred Stock are first issued by the Company to the Purchasers.

                  "Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or other
security interest of any kind or nature whatsoever (excluding preferred stock or
equity related preferences) including, without limitation, those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease obligation, or any
financing lease having substantially the same economic effect as any of the
foregoing.

                  "Material Adverse Effect" means any material adverse change in
Condition of the Company.

                  "Multiemployer Plan" means any "multiemployer plan," as
defined in Section 4001(a)(3) or Section 3(37) of ERISA, (A) which the Company
or any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, after September 25, 1980, maintained, administered,
contributed to or was required to contribute to, or under which the Company or
any ERISA Affiliate may incur any liability and (B) which covers any employee or
former employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).

                  "Outstanding Borrowings" means all Indebtedness of the Company
and/or its Affiliates for borrowed money (including without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured), excluding obligations
with respect to trade payables incurred in the ordinary course of business.

                  "Pension Plan" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which the
Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, within the five years prior to the Initial
Closing Date, maintained, administered, contributed to or was required to
contribute to, or under which the Company or any ERISA Affiliate may incur any
liability and (B) which covers any employee or former employee of the Company or
any ERISA Affiliate (with respect to their relationship with such entities).




                                       5
<PAGE>

                  "Permitted Liens" means (i) Liens for taxes, governmental
charges or levies which (a) are not yet due and payable, or (b) are being
diligently contested in good faith by appropriate proceedings; provided, that
for any such taxes being diligently contested in good faith, the Company has set
aside adequate reserves, (ii) Liens imposed by law, such as mechanic's,
materialman's, landlord's, warehouseman's and carrier's liens, securing
obligations incurred in the ordinary course of business which are not yet
overdue or which are being diligently contested in good faith by appropriate
proceeding and, with respect to such obligations which are being contested, for
which the Company has set aside adequate reserves, (iii) Liens which (x) in each
case, secure obligations of less than $10,000, and (y) do not in the aggregate
interfere with the use and enjoyment of the property subject thereto and (iv)
Liens with respect to the Amended and Restated Credit Facility dated as of June
1, 2001 by and among Firstar Bank, National Association, the Company and Shirts
Illustrated, LLC, and the agreements contemplated thereby, including, without
limitation, the Security Agreement, for up to an aggregate principal amount of
$13,000,000.

                  "Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.

                  "Qualified Initial Public Offering" shall mean a public
offering, underwritten on a firm commitment basis pursuant to an effective
registration statement under the Securities Act of shares of the Common Stock
the aggregate gross proceeds (prior to underwriting discounts and commissions
and other expenses of issuance) of which equal or exceed $25,000,000 and (i) at
any time prior to the third anniversary of the date hereof, the offering is
managed by a nationally recognized underwriter, (ii) between the third and
fourth anniversary hereof, the price per share is at least $15 (appropriately
adjusted for stock splits, recapitalizations and the like), or (iii) thereafter
the price per share is at least $20 (appropriately adjusted for stock splits,
recapitalizations and the like).

                  "Requirements of Law" means, as to any Person, the provisions
of the Certificate of Incorporation and By-laws or other organizational or
governing documents of such Person, and any law, treaty, rule, regulation,
right, privilege, qualification, license or franchise, order, judgment, or
determination, in each case, of an arbitrator or a court or other Governmental
Authority, in each case, applicable to or binding upon such Person or any of its
property (or to which such Person or any of its property is subject) or
applicable to any or all of the transactions contemplated by or referred to in
the Transaction Agreements.

                  "SBIC Certificate" shall mean the certificate attached as
Exhibit D hereto.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.




                                       6
<PAGE>

                  "Series D Preferred Stock" means the Series D Convertible
Preferred Stock, par value $0.01 per share, of the Company, or any other capital
stock of the Company into which such stock is reclassified or reconstituted.

                  "Series E Preferred Stock" means the capital stock of the
Company to be designated the Series E Convertible Preferred Stock, par value
$0.01 per share, of the Company, or any other capital stock of the Company into
which such stock is reclassified or reconstituted.

                  "Subsidiaries" means Shirts Illustrated, L.L.C., a Missouri
limited liability company, and Build-A-Bear Entertainment, LLC, each
Subsidiaries of the Company.

                  "Tax" or "Taxes" shall mean all federal, state, local foreign
and other taxes, assessments or other government charges, including, without
limitation, income, estimated income, business, occupation, franchise, property
sales, transfer, use, employment, commercial rent or withholding taxes,
including interest, penalties and additions in connection therewith for which
the Company may be liable.

                  "Transaction Agreements" means collectively, this Agreement,
the Amended and Restated Registration Rights Agreement and the Amended and
Restated Stockholders' Agreement.

                  "Transaction Expenses" means up to $35,000 in fees and
reasonable out-of-pocket expenses incurred by Catterton in connection with the
negotiation and preparation of the Transaction Agreements, the consummation of
the transactions contemplated thereby and preparation for any of the foregoing,
including, without limitation, fees and expenses for one legal counsel engaged
by Catterton.

                  "Welfare Plan" means any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, (A) which the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or under
which the Company or any ERISA Affiliate may incur any liability and (B) which
covers any employee or former employee of the Company or any ERISA Affiliate
(with respect to their relationship with such entities).

                  1.2. Accounting Terms; Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with GAAP.

                  1.3. Knowledge Standard. When used herein, the phrase "to the
knowledge of" any Person, "to the best knowledge of" any Person or any similar
phrase shall mean, (i) with respect to any individual, the actual knowledge of
such Person after reasonable inquiry, (ii) with respect to any corporation, the
actual knowledge of officers and directors, or Persons acting in similar
capacities, of such corporation after reasonable inquiry, (iii) with respect to
any limited liability company, the actual knowledge





                                       7
<PAGE>

of the Manager or Persons acting in similar capacities, of such entity after
reasonable inquiry, and (iv) with respect to a partnership, the actual knowledge
of the officers and directors of the general partner of such partnership after
reasonable inquiry. Notwithstanding the foregoing, "to the best knowledge of" or
"to the knowledge of" either BABW or the Company shall mean the actual knowledge
of Maxine Clark, Tina Klocke, Brian Vent and Jack Burtelow after due inquiry.
When used herein, the phrase "to the knowledge of the Company," "to the best
knowledge of the Company" or any similar phrase shall mean "to the best
knowledge of the Company and each Affiliate" using the standards set forth in
the previous sentence.


                  1.4. Other Defined Terms. The following terms shall have the
meanings specified in the Sections set forth below:

<TABLE>
<CAPTION>
Term                                               Section
----                                               -------
<S>                                                <C>
Audited Financial Statements                       5.10
Actions                                            5.9
Additional Closing                                 2.2
Certificate                                        2.1
Clark Shares                                       2.2
Greenshoe Closing                                  2.2
Greenshoe Period                                   2.2
Initial Closing                                    2.3
Initial Closing Date                               2.3
Indemnified Party                                  8.1
Indemnifying Party                                 8.1
Intellectual Property                              5.13
Investment Banker                                  3.17
KCEP                                               Schedule 1
Liability (and Liabilities)                        8.1
Options                                            3.16
Purchase Price                                     2.2
Secondary Closing                                  2.2
Series E Closing                                   7.3
Subscription Period Closing                        2.2
Walnut                                             Schedule 1
</TABLE>

                                   ARTICLE 2.

                        AUTHORIZATION OF PREFERRED STOCK;
                      PURCHASE AND SALE OF PREFERRED STOCK


                  2.1. Series D Preferred Stock. The Company has authorized (a)
the issuance and sale to the Purchasers of not less than 3,301,350 nor more than
3,629,219 shares of Series D Preferred Stock and (b) has filed (or will have
filed as of the Initial Closing) the Certificate (as hereinafter defined)
establishing the rights, preferences, privileges and restrictions of the Series
D


                                       8
<PAGE>

Preferred Stock. The Series D Preferred Stock will have the respective rights,
preferences and privileges set forth in the Company's Amended and Restated
Certificate of Incorporation substantially in the form attached hereto as
Exhibit C (the "Certificate").

                  2.2. Purchase and Sale of Preferred Shares. (a) Upon the terms
and subject to the conditions herein contained, at the Initial Closing and/or
the Secondary Closing (each as defined herein) on the Initial Closing Date or
the appropriate Additional Closing Date (each as defined herein), the Company
agrees that it will issue and sell to each of the Purchasers, and (except as
provided in Section 2.2(b)) each Purchaser agrees severally, and not jointly and
severally, that it will acquire and purchase from the Company, the number of
shares of Series D Preferred Stock listed next to such Purchaser's name on
Schedule 1 hereto. The purchase price of the Series D Preferred Stock shall be
$6.10 per share ("Purchase Price"). Notwithstanding the foregoing, the parties
agree that KCEP shall be entitled to defer payment for up to 98,361 shares to be
purchased by KCEP under this Agreement until a second closing to occur on or
before October 5, 2001 (the "Secondary Closing"). The parties agree that the
obligation of KCEP to purchase such shares is unconditional and irrevocable and
that the Company shall be entitled to specific performance of its rights to
require such Purchaser to purchase such shares. The parties agree that if KCEP
fails to make payment in full for the shares on or before October 5, 2001, the
Company may, at any time prior to accepting payment in full from KCEP for the
shares to be purchased by KCEP hereunder, elect to terminate this Agreement as
it relates to KCEP, in which case the Company shall so notify KCEP and the other
parties hereto.

                  (b) Clark may purchase less than the number of shares
allocated to Clark pursuant to Schedule 1 (the "Clark Shares"), provided that
Clark shall purchase no less than 213,115 shares at the Initial Closing. If
Clark does not purchase all of such Clark Shares at the Initial Closing (defined
below), then at any one time during the period ending on the earlier of (1) 60
days following the Initial Closing (2) the Greenshoe Closing (defined herein),
or (3) the Series E Closing (defined herein) (the "Greenshoe Period"), Clark
shall have the right to purchase all or part of the remaining number of Clark
Shares on the same terms and conditions as set forth in this Agreement, provided
that such additional Clark Shares may be allocated to Clark and Clark's
Affiliates in such manner as Clark may determine. Should Clark elect to purchase
additional Clark Shares during such time, the closing of such purchase shall
take place no later than five (5) business days following the expiration of such
Greenshoe Period, and in the manner described in Section 2.3 (the "Greenshoe
Closing"). Should Clark purchase less than all of the Clark Shares, then the
other Purchasers of the Series D Preferred Stock shall purchase any remaining
portion of the Clark Shares not purchased by Clark, in the same relative
proportions that the subscribing Purchasers of the Series D Preferred Stock hold
among themselves. The closing of such purchases shall take place no later than
30 days after the Greenshoe Period (the "Subscription Period Closing").

                  (c) In addition, in the event that Clark purchases all of the
Clark Shares, Clark shall also have an option to purchase in whole or in part,
an additional 131,148 shares of Series D Preferred (the "Optional Increase")
under the same terms and conditions outlined herein (increasing the aggregate
amount of the Clark Shares to 836,066 shares). Clark shall exercise such option
by providing notice of intent to exercise such option to the Company with copies
to



                                       9
<PAGE>

Catterton, Walnut and KCEP prior to the expiration of the Greenshoe Period. If
Clark does not notify the Company of its intent to exercise the Optional
Increase prior to the expiration of the Greenshoe Period, then the Option
Increase right shall expire at the end of the Greenshoe Period. If Clark does
provide notice of intent to exercise any portion of the Optional Increase during
the Greenshoe Period, then Clark will purchase such additional shares at the
Optional Increase Closing (defined below) and during the 30 days after the end
of the Greenshoe Period, Catterton, Walnut and KCEP shall each have an option to
purchase additional Series D Preferred Stock in an amount equal 50% of the
amount of shares purchased by Clark pursuant to the Optional Increase (i.e., for
greater clarity, if Clark purchases 131,148 shares of additional Series D
Preferred Stock pursuant to the Optional Increase, then each of Catterton,
Walnut and KCEP shall have an option to purchase 65,574 shares of additional
Series D Preferred Stock). The closing of the transactions described in this
Section 2.2(c) shall be referred to as the "Optional Increase Closing," and such
purchases shall take place no later than thirty (30) days following the
expiration of the Greenshoe Period.


                  (d) Each of the Secondary Closing, Greenshoe Closing, the
Subscription Period Closing and the Optional Increase Closing shall be
collectively referred to herein as the "Additional Closings." The Company will
reaffirm the original representations and warranties given as of the Initial
Closing Date at each of the Additional Closings.

                  2.3. Closing. The closing of the sale to and purchase by the
Purchasers of the Series D Preferred Stock referred to in Section 2.2(a) hereof
(the "Initial Closing") shall occur on September 21, 2001 (the "Initial Closing
Date"). The Additional Closings shall take place on such date as set forth in
Section 2.2.(b) or Section 2.2(c) (each an "Additional Closing Date"). Each of
the Initial Closing and the Additional Closings shall occur at the offices of
Bryan Cave LLP, One Metropolitan Square, Suite 3600, St. Louis, MO 63102 at
10:00 a.m. Central Standard Time. At the Initial Closing and the Additional
Closings, (i) the Company shall deliver to each Purchaser certificates
evidencing the Series D Preferred Stock being purchased by such Purchaser, free
and clear of any Liens of any nature whatsoever, other than those created by the
Certificate, registered in such Purchaser's name, and shall have delivered the
SBIC Certificate to Walnut and KCEP, and (ii) each Purchaser shall deliver to
the Company an amount equal to the Purchase Price multiplied by the number of
shares purchased by such Purchaser, by cashier's check, wire transfer of
immediately available funds.

                                   ARTICLE 3.

                       CONDITIONS TO THE OBLIGATION OF THE
                      PURCHASERS TO PURCHASE THE SECURITIES


                  The obligation of each Purchaser to purchase the Series D
Preferred Stock, to pay the purchase prices therefor and to perform any
obligations hereunder on the Initial Closing Date or Additional Closing Date, as
the case may be (unless otherwise specified) shall be subject to the
satisfaction as determined by, or waiver by, such Purchaser of the following
conditions on or before the Initial Closing Date or Additional Closing Date, as
the case may be:




                                       10
<PAGE>

                  3.1. Representations and Warranties. The representations and
warranties of the Company contained in Article 5 hereof shall be true and
correct at and as of the Initial Closing Date or Additional Closing Date, as the
case may be (both before and after giving effect to the transactions
contemplated under this Agreement), as if made at and as of such date.

                  3.2. Compliance with Terms and Conditions of this Agreement.
The Company shall have duly and properly performed and complied with all of the
agreements, covenants, obligations and conditions set forth herein that are
required to be performed or complied with by the Company on or before the
Initial Closing Date or Additional Closing Date, as the case may be.

                  3.3. Delivery of Certificates Evidencing the Series D
Preferred Stock. The Company shall have delivered to each Purchaser the
certificates evidencing the Series D Preferred Stock as set forth in Section
2.3.

                  3.4. Closing Certificates. The Company shall have delivered to
each Purchaser a certificate executed by an authorized officer of the Company
certifying to such matters as the Purchasers may reasonably request, including
that the representations and warranties of the Company contained in the
Agreement are true and correct on and as of the Initial Closing Date or
Additional Closing Date, as the case may be, and that the conditions set forth
in this Article 3 to be satisfied by the Company have been satisfied on and as
of the Initial Closing Date or Additional Closing Date, as the case may be.

                  3.5. Secretary's Certificates. Each Purchaser shall have
received a certificate from the Company, dated as of the Initial Closing Date or
Additional Closing Date, as the case may be and signed by the Secretary or an
Assistant Secretary of the Company, certifying that the attached copies of the
Certificate, By-laws of the Company, and resolutions of the Board of Directors
of the Company approving the Transaction Agreements and the transactions
contemplated thereby, are all true, complete and correct and remain unamended
and in full force and effect.

                  3.6. Documents. Each Purchaser or one Purchaser on behalf of
all Purchasers shall have received true, complete and correct copies of such
documents and such other information as it may have reasonably requested in
connection with or relating to the sale of the Series D Preferred Stock and the
transactions contemplated by the Transaction Agreements, all in form and
substance reasonably satisfactory to the Purchasers prior to the Initial
Closing.

                  3.7. Purchase Permitted by Applicable Laws. The acquisition of
and payment for the Series D Preferred Stock to be acquired by the Purchasers
hereunder and the consummation of the transactions contemplated by the
Transaction Agreements shall not (a) violate any Requirements of Law, (b) result
in a breach or default (i) under any of the Contractual Obligations of the
Company or (ii) under any order, writ, judgment, injunction, decree,
determination or award of any court, arbitrator, or commission, board, bureau,
agency or other governmental instrumentality, (c) result in, or require, the
creation or imposition of any Lien, or the obligation to make any payment with
respect to any Lien, upon or with respect to any of the




                                       11
<PAGE>

property of the Company or (d) require any consents, approvals, exemptions,
authorizations, registrations, declarations or filings by the Company.

                  3.8. Opinion of Counsel. Each Purchaser shall have received an
opinion of counsel to the Company, dated as of the Initial Closing Date or
Additional Closing Date, as the case may be substantially in the form of Exhibit
E hereto.

                  3.9. Consents and Approvals. All agreements, approvals,
consents, exemptions, authorizations, or other actions by, or notices to, or
filings with, Governmental Authorities and other Persons in respect of all
Requirements of Law and with respect to those material Contractual Obligations
of the Company, necessary or required in connection with the execution, delivery
or performance of the Transaction Agreements (including, without limitation, the
issuance of the Series D Preferred Stock, and issuance of the Common Stock upon
conversion of the Series D Preferred Stock) by the Company, shall have been
obtained and be in full force and effect, and the Purchasers shall have been
furnished with appropriate evidence thereof, and all waiting periods shall have
lapsed without extension or the imposition of any conditions or restrictions.

                  3.10. Certain Waivers. Each holder of the shares of the
capital stock of the Company (or any other party who may possess such rights)
shall have waived any and all preemptive rights, rights of first refusal, "tag
along" rights, rights of co-sale and any similar rights with respect to the
issuance of the Series D Preferred Stock contemplated hereby.

                  3.11. No Material Adverse Effect. Since July 28, 2001, there
shall have been no Material Adverse Effect.

                  3.12. No Material Judgment or Order. There shall not be on the
Initial Closing Date or Additional Closing Date, as the case may be, any
judgment or order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which, in the reasonable judgment of the Purchasers, would (i) prohibit the
purchase of the Series D Preferred Stock or the consummation of the other
transactions contemplated hereunder, (ii) subject the Purchasers to any penalty
if the Series D Preferred Stock were to be purchased hereunder, (iii) question
the validity or legality of the transactions contemplated hereby, or (iv) be
reasonably expected to adversely affect the value of the capital stock of the
Company, the Series D Preferred Stock or the Condition of the Company.

                  3.13. Financial Statements. The Company shall have delivered
to the Purchasers a copy of the audited balance sheet of the Company as of
December 31, 2000 and the related consolidated statements of operations and cash
flows for the fiscal year then ended, accompanied by the report of an
independent auditor, together with a copy of the unaudited balance sheet of the
Company as of July 28, 2001 and the related consolidated statements of
operations and cash flows for the period then ended. Such financial statements
fairly present the financial condition and results of operations in accordance
with GAAP as of the dates and for the periods set forth in the balance sheet
included therein and the results of operations of the Company for the period
covered.




                                       12
<PAGE>

                  3.14. Registration Rights Agreement. The Company shall have
duly executed and delivered to the Purchasers the Amended and Restated
Registration Rights Agreement.

                  3.15. Stockholders' Agreement. The Company and the
shareholders of the Company shall have duly executed and delivered to the
Purchasers the Amended and Restated Stockholders' Agreement.

                  3.16. Stock Options. The Company shall have agreed to take and
the shareholders of the Company shall have approved the following actions with
respect to stock options for the Company's common stock (each an "Option"): (a)
the Company shall increase the Option pool for existing management and new
management team members from 1,374,074 to 2,200,000 (an increase of 825,926
shares); and (b) the Company shall grant a special Option to Maxine Clark to
purchase 75,000 shares of Common Stock at $6.10 per share.

                  3.17. Investment Banker.

                  The Company shall have engaged an investment banker (the
"Investment Banker") to represent the Company in connection with the sale of the
Series E Preferred Stock and the Company's other financial and capital formation
strategies.

                  3.18. Amendment to Certificate.

                  The Company shall have filed with the Delaware Secretary of
State an amendment to its Certificate increasing the authorized capital stock of
the Company from 30,000,000 to 50,000,000 shares and establishing the rights,
preferences and privileges of the Series D Preferred Stock.

                  3.19 SBIC Certificate.

                  The following shall only be a condition to Walnut Investment
Partners, L.P.'s and KCEP's obligation to close the transactions contemplated
hereby: The Company shall have delivered the SBIC Certificate to Walnut
Investment Partners, L.P. and KCEP.

                                   ARTICLE 4.

                                CONDITIONS TO THE
                       OBLIGATIONS OF THE COMPANY TO CLOSE

                  The obligation of the Company to issue and sell the Series D
Preferred Stock and the other obligations of the Company hereunder, shall be
subject to the satisfaction as determined by, or waiver by, the Company of the
following conditions on or before the Initial Closing Date or Additional Closing
Date, as the case may be, provided however, that the non-fulfillment of a
condition by a Purchaser will not relieve the Company of its obligation to each
other fulfilling Purchaser:




                                       13
<PAGE>

                  4.1. Representations and Warranties. The representations and
warranties of the Purchasers contained in Section 6 hereof shall be true and
correct at and as of the Initial Closing Date or Additional Closing Date, as the
case may be (both before and after giving effect to the transactions
contemplated under this Agreement) as if made at and as of such date.

                  4.2. Compliance with Terms and Conditions of this Agreement.
The Purchasers shall have performed and complied with all of the obligations and
conditions set forth herein that are required to be performed or complied with
by the Purchasers on or before the Initial Closing Date or Additional Closing
Date, as the case may be.

                  4.3. Issuance Permitted by Applicable Laws. The issuance of
the Series D Preferred Stock by the Company hereunder and the consummation of
the transactions contemplated by the Transaction Agreements shall not (a)
violate any Requirements of Law, or (b) result in a breach or default (i) under
any of the Contractual Obligations of the Purchasers, or (ii) under any order,
writ, judgment, injunction, decree, determination or award of any court,
arbitrator, or commission, board, bureau, agency or other governmental
instrumentality, or (c) require any consents, approvals, exemptions,
authorizations, registrations, declarations or filings by the Purchasers.

                  4.4. Payment of Purchase Price. The Purchasers shall tender to
the Company the Purchase Price set forth in Section 2.2 in the respective
amounts specified on Schedule 1 hereto, subject to Section 2.2(b) hereof.

                  4.5. Consents and Approvals. All agreements, approvals
consents, exemptions, authorizations, or other actions by, or notices to, or
filings with, Governmental Authorities and other Persons in respect of all
Requirements of Law and with respect to those material Contractual Obligations
of the Purchasers; necessary or required in connection with the execution,
delivery or performance of the Transaction Agreements by each Purchaser, shall
have been obtained and be in full force and effect, and the Company shall have
been furnished with appropriate evidence thereof as requested by the Company and
all waiting periods shall have lapsed without extension or imposition of any
conditions or restrictions.

                  4.6. No Material Judgment or Order. There shall not be on the
Initial Closing Date or Additional Closing Date, as the case may be any judgment
or order of a court of competent jurisdiction or any ruling of any Governmental
Authority or any condition imposed under any Requirements of Law which, in the
reasonable judgment of the Company would (i) prohibit the sale of the Series D
Preferred Stock or the consummation of the other transactions contemplated
hereunder, (ii) subject the Company to any penalty if the Series D Preferred
Stock were to be sold hereunder, or (iii) question the validity or legality of
the transactions contemplated hereby.

                  4.7. Registration Rights Agreement. The Purchasers shall have
duly executed and delivered to the Company the Amended and Restated Registration
Rights Agreement.



                                       14
<PAGE>
                  4.8. Stockholders' Agreement. The Purchasers shall have duly
executed and delivered to the Company the Amended and Restated Stockholders'
Agreement.

                                   ARTICLE 5.

                               REPRESENTATIONS AND
                            WARRANTIES OF THE COMPANY


                  The Company hereby represents and warrants to each of the
Purchasers as of the date hereof as follows:


                  5.1. Corporate Existence and Authority. The Company (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) has all requisite corporate power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be
engaged, (c) is duly qualified as a foreign corporation, licensed and in good
standing in each jurisdiction in which such qualification is necessary under
applicable law as a result of the conduct of its business or the ownership of
its properties except where the failure to qualify would not have a Material
Adverse Effect, and (d) has the corporate power and authority to execute,
deliver and perform its obligations under each Transaction Agreement to which it
is or will be a party.


                  5.2. Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of each of the Transaction Agreements
and the consummation of the transactions contemplated thereby, including without
limitation, the issuance of the Series D Preferred Stock (a) has been duly
authorized by all necessary corporate action, including, if required,
stockholder action, (b) does not and will not conflict with or contravene the
terms of the Certificate or the By-Laws of the Company, or any amendment
thereof; and (c) does not and will not violate, conflict with or result in any
material breach or contravention of (i) any Contractual Obligation of the
Company or the Subsidiaries, or (ii) any Requirements of Law applicable to the
Company or the Subsidiaries.

                  5.3. Governmental Authorization; Third Party Consents. No
approval, consent, compliance, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any applicable Requirements of Law, and no lapse of a waiting period
under any applicable Requirements of Law, is necessary or required in connection
with the execution, delivery or performance (including, without limitation, the
issuance of the Series D Preferred Stock, the issuance of the Common Stock upon
the conversion or exercise of the Series D Preferred Stock) by the Company or
the enforcement against the Company of the Transaction Agreements or the
transactions contemplated thereby.

                  5.4. Binding Effect. The Transaction Agreements have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability.




                                       15
<PAGE>

                  5.5. Other Agreements. None of the Company, BABW or the
Subsidiaries have previously entered into any agreement which is currently in
effect or to which the Company or the Subsidiaries are currently bound, granting
any registration or other material rights to any Person, the provision or
performance of which would render the provision or performance (including,
without limitation, the issuance of the Series D Preferred Stock and the
issuance of the Common Stock upon the conversion of the Series D Preferred
Stock) of the material rights to be granted to the Purchasers by the Company in
the Transaction Agreements impracticable.

                  5.6. Capitalization.

                  (a) As of the date hereof and prior to the consummation of the
transactions contemplated hereby, the capital stock of the Company consists
solely of (i) 15,000,000 authorized shares of Common Stock (of which 533,316 are
issued and outstanding, 3,506,952 are reserved for issuance upon the exercise of
outstanding shares of Series A Convertible Preferred Stock, 3,644,107 are
reserved for issuance upon the exercise of outstanding shares of Series B
Convertible Preferred Stock, and 4,998,089 are reserved for issuance upon
exercise of Series C Convertible Preferred Stock and 804,815 are reserved for
issuance upon the exercise of outstanding options); and (ii) 15,000,000 shares
of Preferred Stock, consisting of (A) 3,506,952 authorized shares of Series A
Convertible Preferred Stock (of which 3,506,952 are issued and outstanding); (B)
3,644,107 authorized shares of Series B Convertible Preferred Stock (of which
3,644,107 are issued and outstanding), (C) 4,998,089 authorized shares of Series
C Convertible Preferred Stock(of which 4,998,089 are issued and outstanding),
(D) 3,629,219 shares of Series D Preferred Stock reserved for the issuance of
the Series D Preferred Stock hereunder, (of which none are be outstanding), and
(E) the remainder of which are undesignated and not outstanding. Immediately
following the Initial Closing, the capital stock of the Company will consist
solely of (i) 25,000,000 authorized shares of Common Stock (of which 533,316
will be issued and outstanding, 3,506,952 will be reserved for issuance upon the
exercise of outstanding shares of Series A Convertible Preferred Stock,
3,644,107 will be reserved for issuance upon the exercise of outstanding shares
of Series B Convertible Preferred Stock, and 4,998,089 are reserved for issuance
upon exercise of Series C Convertible Preferred Stock and 804,815 will be
reserved for issuance upon the exercise of outstanding options); and (ii)
25,000,000 million shares of Preferred Stock, consisting of (A) 3,506,952
authorized shares of Series A Convertible Preferred Stock (of which 3,506,952
will be issued and outstanding); (B) 3,644,107 authorized shares of Series B
Convertible Preferred Stock (of which 3,644,107 will be issued and outstanding),
(C) 4,998,089 authorized shares of Series C Convertible Preferred (of which
4,998,089 are issued and outstanding), (D) 3,629,219 authorized shares of Series
D Preferred Stock (of which 2,809,547 will be outstanding), and (E) the
remainder of which are undesignated and not outstanding. A total of 16,654,828
fully diluted shares of Common Stock will be outstanding immediately following
the consummation of the Initial Closing, assuming the conversion of all
outstanding shares of Preferred Stock and the exercise of all outstanding
options. All outstanding shares of capital stock of the Company are, and the
Series D Preferred Stock (when issued, sold and delivered against payment
therefor) will be, duly authorized and validly issued, fully paid, nonassessable
and free and clear of any Liens, preferential rights, priorities, claims,
options, charges or other encumbrances or restrictions, other than those created
by the Certificate and the Stockholders' Agreement.



                                       16
<PAGE>

                  (b) Schedule 5.6 sets forth the name of each holder of the
issued and outstanding capital stock of the Company, the number of shares of
such capital stock held of record by each such holder, the name of each Person
holding any options, warrants or other rights to purchase any capital stock of
the Company, the number, class and series of shares of capital stock subject to
each such option, warrant or right and the exercise price of each such option,
warrant or right. Except as set forth on Schedule 5.6, and except for the stock
options and rights referred to in Section 5.6(a) and the Series D Preferred
Stock, there are no outstanding securities convertible into or exchangeable for
capital stock of the Company or options, warrants or other rights to purchase or
subscribe to capital stock of the Company or contracts, commitments, agreements,
understandings or arrangements of any kind to which the Company or any such
holder of capital stock is a party relating to the issuance of any capital stock
of the Company, any such convertible or exchangeable securities or any such
options, warrants or rights. Schedule 5.6 sets forth the dividends that have
accrued to date on the Series A Convertible Preferred Stock. No dividends have
been declared or paid on the Series A Convertible Preferred Stock.

                  (c) Except as set forth on Schedule 5.6 or as contained in any
of the Transaction Documents, no Person has any preemptive rights, rights of
first refusal, "tag along" rights, rights of co-sale or any similar rights with
respect to the issuance of the Series D Preferred Stock contemplated hereby.
Schedule 5.6 identifies all Persons holding any such rights and describes the
material terms of all such rights and as of the Initial Closing Date, except for
such rights contained in the Transaction Documents.


                  5.7. Subsidiaries. The Subsidiaries are the only subsidiaries
of the Company. The Subsidiaries are limited liability companies duly organized,
validly existing and in good standing under the laws of the State of Missouri,
with the requisite power and authority to own its properties and conduct its
business. The Subsidiaries are qualified and licensed to transact business in
each jurisdiction where such qualification is necessary under applicable law as
a result of the conduct of its business and ownership of its properties except
where failure to qualify would not have a Material Adverse Effect. All of the
outstanding ownership interests of the Subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable. All of the outstanding
ownership interests in the Subsidiaries are owned by the Company free and clear
of any Liens, claims, options, charges or other encumbrances other than
Permitted Liens. The Subsidiaries have no outstanding options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating the Subsidiaries to issue, transfer or sell any
securities of the Subsidiaries or any phantom equity or similar plans.

                  5.8. Private Offering. No form of general solicitation or
general advertising was used by the Company or its representatives in connection
with the offer or sale of the Series D Preferred Stock. No registration of the
Series D Preferred Stock pursuant to the provisions of the Securities Act will
be required by the offer, sale or issuance of the Series D Preferred Stock
pursuant to this Agreement. The Company agrees that neither it, nor anyone
acting on its behalf, will offer or sell the Series D Preferred Stock or any
other security so as to require the issuance and sale of the Series D Preferred
Stock pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws, unless such shares are so registered.



                                       17
<PAGE>

                  5.9. Litigation. Except as set forth on Schedule 5.9 or as
disclosed in the Financial Statements, there is no complaint, action, order,
writ, injunction, judgment or decree outstanding, or claim, suit, litigation,
proceeding, labor dispute, arbitral action or investigation (collectively,
"Actions") pending or, to the knowledge of the Company, threatened against or
relating to (i) the assets of the Company or the Subsidiaries which would have a
Material Adverse Effect, or (ii) the transactions required to be performed under
this Agreement or by the Transaction Agreements. Neither the Company nor the
Subsidiaries are in default with respect to any judgment, order, writ,
injunction or decree of any court or governmental agency, and there are no
unsatisfied judgments against the Company or the Subsidiaries.


                  5.10. Financial Statements. The Company has furnished the
Purchasers with the audited balance sheet of the Company as of December 31, 2000
and the related statements of income and cash flows for the fiscal year then
ended, accompanied by the report of an independent auditor (collectively, the
"Audited Financial Statements"), together with a copy of the unaudited balance
sheet of the Company as of July 28, 2001 and the related consolidated statements
of operations and cash flows for the period then ended (collectively, together
with the Audited Financial Statements, the "Financial Statements"). The
Financial Statements fairly present the financial condition and results of
operations in accordance with GAAP as of the dates set forth in the balance
sheet included therein and the results of operations and cash flows of the
Company for the periods covered.

                  5.11. Title and Condition of Assets.

                  (a) The Company has good, and with respect to real property,
marketable, title to all of the real and personal property reflected on the
balance sheets included in the Financial Statements or acquired by the Company
and the Subsidiaries since July 28, 2001, free and clear of any Liens or defects
of title, other than Permitted Liens. Except as set forth on Schedule 5.11, the
Company has a valid and enforceable leasehold interest in all real property
leased by it pursuant to the terms of the respective lease agreements. The
Company is in compliance with all of its real estate leases except to the
extent, either individually or in the aggregate, such non-compliance would not
have a Material Adverse Effect, and such leases are sufficient for the conduct
of the Company's business as now being conducted (without regard to the
Company's expansion plans).


                  (b) The Facilities and Equipment are in good operating
condition and repair (except for ordinary wear and tear and any defect the cost
of repairing which would not be material), are sufficient for the operation of
the Company's business (without regard to the Company's expansion plans) and are
in conformity in all material respects with applicable laws, ordinances, orders,
regulations and other requirements (including applicable zoning, environmental,
motor vehicle safety standards, occupational safety and health laws and
regulations) relating thereto, except where such failure to conform would not
have a Material Adverse Effect. The Company enjoys peaceful and undisturbed
possession of all Facilities owned or leased by the Company, and, to the
knowledge of the Company, such Facilities are not subject to any encroachments,
building or use restrictions, exceptions, reservations or limitations which in
any material respect interfere with or impair the present and continued use
thereof in the




                                       18
<PAGE>

usual and normal conduct of the business of the Company. There are no pending
or, to the knowledge of the Company, threatened, condemnation proceedings
relating to any of the Facilities. The Facilities and the Equipment are insured.

                  (c) Assets are valued on the books of the Company at or below
actual cost less adequate and proper depreciation charges. The Company has not
depreciated any of its assets for tax purposes in any manner inconsistent with
the Code or the rules, regulations, or guidelines of the Internal Revenue
Service.

                  5.12. Contractual Obligations.

                  Except as set forth on Schedule 5.12, the Company is not in
default or breach under or with respect to any Contractual Obligation to which
it is a party (and to the best knowledge of the Company, no other party to any
such Contractual Obligation is in default or breach thereunder), except any such
default which, individually or together with all such defaults, would not have a
Material Adverse Effect or which would not materially affect the ability of the
Company to perform its obligations under the Transaction Agreements. Neither the
Company nor the Subsidiaries have received notice that any party to any such
Contractual Obligation intends to cancel, amend or terminate any such agreement.
All leases and agreements whereby the Company's commitments or receipts are
reasonably expected to exceed $250,000 are valid and binding obligations of the
Company and, to the Company's knowledge, the other parties thereto, enforceable
by the Company and, to the Company's knowledge, the other parties thereto, in
accordance with the terms thereof. All leases and all agreements whereby the
Company's commitments or receipts are reasonably expected to exceed $250,000 are
set forth on Schedule 5.12.

                  5.13. Patents, Trademarks, Etc. As of the Initial Closing, the
Company owns or has applied for or is licensed or otherwise have the right to
use all patents, trademarks, service marks, trade names, copyrights, licenses,
franchises and other intellectual property rights that are material to the
operation of the businesses of the Company (the "Intellectual Property"). All
domestic registered patents, copyrights, trademarks and service marks are in
full force and effect and are not subject to any taxes or other fees except for
annual filing and maintenance fees. To the best of the Company's knowledge, no
product, process, method, substance or other material presently sold by or
employed by the Company, or which the Company contemplates selling or employing,
infringes upon the patents, trademarks, service marks, trade names, copyrights,
licenses or other intellectual property rights that are owned by others. Except
as set forth on Schedule 5.13, no litigation is pending and no claim has been
made against the Company or any Affiliate or, to the best knowledge of the
Company, is threatened, contesting the right of the Company to sell or use any
product, process, method, substance or other material presently sold by or
employed by the Company.



                                       19
<PAGE>

                  5.14. Tax Matters.

                  (a) Filing of Tax Returns. The Company and BABW (each such
entity hereinafter a "Taxpayer" or collectively the "Taxpayers") have timely
filed with the appropriate taxing authorities all returns (including without
limitation information returns and other material information) in respect of
Taxes required to be filed through the date hereof and will timely file any such
returns required to be filed on or prior to the Closing Date. The returns and
other information filed (or to be filed) are complete and accurate in all
material respects.

                  (b) Payment of Taxes. Except as set forth on Schedule 5.14,
all Taxes due and payable of each of the Taxpayers in respect of periods
beginning before the Closing Date have been timely paid, or will be timely paid
prior to the Closing Date, and no Taxpayer has any material liability for Taxes
in excess of the amounts so paid. All Taxes that each Taxpayer has been required
to collect or withhold have been duly collected or withheld and, to the extent
required when due, have been or will be (prior to the Closing Date) paid if due
and payable to the proper taxing authority.

                  (c) Audits, Investigations or Claims. The federal income tax
returns of each of the Taxpayers have not been examined by the Internal Revenue
Service, and no material deficiencies for Taxes of any of the Taxpayers have
been claimed, proposed or assessed by any taxing or other governmental authority
against any of the Taxpayers. There are no pending or, to the best knowledge of
the Taxpayers, threatened audits, investigations or claims for or relating to
any material additional liability to any of them in respect of Taxes, and there
are no matters under discussion with any governmental authorities with respect
to Taxes that in the reasonable judgment of any of the Taxpayers, or its or
their counsel, is likely to result in a material additional liability to any of
them for Taxes. No audits of any of the Taxpayers' federal, state, and local
returns for Taxes by the relevant taxing authorities are currently in process
or, to the Company's knowledge, threatened. None of the Taxpayers have been
notified that any taxing authority intends to audit a return for any period. No
extension of a statute of limitations relating to Taxes is in effect with
respect to any of the Taxpayers.

                  (d) Lien. There are no liens for Taxes on any assets of any
Taxpayer other than Permitted Liens.

                  (e) Tax Elections; Tax Sharing Arrangements.

                           (i) None of the Taxpayers have made an election, and
none of them are required, to treat any asset as owned by another person or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of section 168 of the Code or under any comparable state or local income tax or
other tax provision.



                                       20
<PAGE>

                           (ii) None of the Taxpayers are a party to or bound by
any binding tax sharing, tax indemnity or tax allocation agreement or other
similar arrangement with any other party.

                           (iii) None of the Taxpayers have filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of the Code
(or any corresponding provision of state or local law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision of state or local law)
apply to any disposition of any asset owned by it.

                  (f) Affiliated Group. None of the Taxpayers have ever been a
member of an affiliated group of corporations, within the meaning of Section
1504 of the Code.

                  (g) Section 481(a). None of the Taxpayers have agreed to make,
or are required to make, any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.

                  (h) Excess Parachute Payments. Except as set forth on Schedule
5.14, none of the Taxpayers are a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.

                  5.15 Severance Arrangements. Except as set forth on Schedule
5.15, neither the Company nor the Subsidiaries have entered into any severance
or similar arrangement in respect of any present or former employee of the
Company that will result in any obligation (absolute or contingent) of the
Purchasers or the Company to make any payment to any present or former employee
following termination of employment.

                  5.16 No Material Adverse Effect. Since July 28, 2001, there
has not been any Material Adverse Effect.

                  5.17 Environmental Matters.

                  (a) Except as set forth on Schedule 5.17, to the best
knowledge of the Company, the property, assets and operations of the Company,
BABW and the Subsidiaries are and have been in compliance in all material
respects with all applicable Environmental Laws; to the best knowledge of the
Company there are and have been no Hazardous Materials stored, handled or
otherwise located in, on or under any of the property or assets of the Company
and the Subsidiaries, including the groundwater other than in compliance with
any Environmental Law; and, to the best knowledge of the Company, there have
been no reportable releases of Hazardous Materials in, on or under any property
adjoining any of the property or assets of the Company and the Subsidiaries.
Neither the Company, BABW nor the Subsidiaries have stored or caused to be
stored any Hazardous Materials on or under any of the property or assets of the
Company, including the groundwater, other than in compliance with Environmental
Laws; and the neither the Company, BABW nor the Subsidiaries have generated,
released or discharged any Hazardous Materials other than in compliance with
Environmental Laws.




                                       21
<PAGE>

                  (b) To the best knowledge of the Company, none of the
property, assets or operations of the Company, BABW or the Subsidiaries are or
has been the subject of any federal, state or local investigation evaluating
whether (i) any remedial action is needed to respond to a release or threatened
release of any Hazardous Materials into the environment or (ii) any release or
threatened release of any Hazardous Materials into the environment is in
contravention of any Environmental Law.

                  (c) There are no pending, or, to the best knowledge of the
Company, threatened lawsuits or proceedings against the Company, BABW or the
Subsidiaries, with respect to violations of an Environmental Law or in
connection with the presence of or exposure to any Hazardous Materials in the
environment or any release or threatened release of any Hazardous Materials into
the environment, and neither the Company nor the Subsidiaries are or was the
owner or operator of any property which (i) pursuant to any Environmental Law
has been placed on any list of Hazardous Materials disposal sites, including
without limitation, the "National Priorities List" or "CERCLIS List," (ii) has
or, to the best knowledge of the Company, had any subsurface storage tanks
located thereon; or (iii) to the knowledge of the Company, has ever been used as
or for a waste disposal facility, a mine, a gasoline service station or a
petroleum products storage facility.

                  (d) To the best knowledge of the Company, neither the Company,
BABW nor the Subsidiaries have any present or contingent liability in connection
which the presence either on or off the property or assets of the Company or any
Affiliate of any Hazardous Materials in the environment or any release or
threatened release of any Hazardous Materials into the environment, except for
any such liability that would not have a Material Adverse Effect on the
Condition of the Company.

                  5.18 Investment Company/Government Regulations. Immediately
following the all of the closings hereunder, after giving effect to the
transactions contemplated hereby, neither the Company nor any Person
controlling, controlled by or under common control with the Company will be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

                  5.19 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any officer, director,
shareholder, or Affiliate of the Company, or any action taken by any such
person.

                  5.20 Labor Relations and Employee Matters.

                  (a) The Company is not engaged in any unfair labor practice.
There is (i) no unfair labor practice complaint pending or, to the best
knowledge of the Company, threatened against the Company or BABW before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is so pending or, to
the best knowledge of the Company, threatened against the Company, (ii) no
strike, labor




                                       22
<PAGE>

dispute, slowdown or stoppage pending or, to the best knowledge of the Company,
threatened against the Company, and (iii) no union representation question
existing with respect to the employees of the Company and, to the knowledge of
the Company, no union organizing activities are taking place.

                  (b) Except as set forth on Schedule 5.20, the Company is not a
party to any employment agreement (other than "at will" employment
relationships), collective bargaining agreement or covenant not to compete.

                  5.21 Employee Benefits Matters.

                  (a) Except as set forth on Schedule 5.21, neither the Company
nor the Subsidiaries maintains or contributes to any Employee Plans which cover
or have covered employees of the Company or a Affiliate (with respect to their
relationship with such entities).

                  (b) Except as set forth on Schedule 5.21, the Company
represents as follows:

                  (1) Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company or the Subsidiaries (with respect to their relationship with such
entities) that, individually or collectively, provides for the payment by the
Company of any amount (i) that is not deductible under Section 162(a)(1) or 404
of the Code or (ii) that is an "excess parachute payment" pursuant to Section
280G of the Code.

                  (2) No Amendments. Neither the Company nor the Subsidiaries
have any announced plan or legally binding commitment to create any additional
Employee Plans which are intended to cover employees or former employees of the
Company or the Subsidiaries(with respect to their relationship with such
entities) or to amend or modify any existing Employee Plan which covers or has
covered employees or former employees of the Company or the Subsidiaries(with
respect to their relationship with such entities).

                  (3) No Other Material Liability. No event has occurred in
connection with which the Company or any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any material liability (i) under any
statute, regulation or governmental order relating to any Employee Plans or (ii)
pursuant to any obligation of the Company or the Subsidiaries to indemnify any
person against liability incurred under, any such statute, regulation or order
as they relate to the Employee Plans.

                  5.22 Potential Conflicts of Interest. Except as set forth on
Schedule 5.22, no officer, director or stockholder of five percent (5%) or more
of the aggregate number of shares of Common Stock then outstanding on a fully
diluted basis of the Company or the Subsidiaries, no spouse of any such officer,
director or stockholder: (a) owns, directly or indirectly, any interest in, or
is an officer, director, employee or consultant of, any Person which is, or is
engaged in business as, a competitor, lessor, lessee, supplier, distributor,
sales agent or customer of, or




                                       23
<PAGE>

lender to or borrower from, the Company; (b) owns, directly or indirectly, in
whole or in part, any tangible or intangible property that the Company uses in
the conduct of business; or (c) has any cause of action or other claim
whatsoever against, or owes any amount to, the Company, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements existing on the
date hereof and described on Schedule 5.22.

                  5.23 Business Relationships. There exists no actual or, to the
best of the Company's knowledge, threatened, termination, cancellation or
limitation of, or any adverse modification or change in, the business
relationship of the Company with any customer, supplier or any group of
customers or suppliers whose purchases or sales, as the case may be, are
individually or in the aggregate are material to the Condition of the Company,
and there exists no present condition or state of facts or circumstances that
would have a Materially Adverse Effect or prevent the Company from conducting
its business after the consummation of this Agreement, in substantially the same
manner in which it has been heretofore conducted by BABW and the Company.

                  5.24 Outstanding Borrowings. Schedule 5.24 lists the amount of
all Outstanding Borrowings as of the date hereof and the name of each lender
thereof. Except as set forth in Schedule 5.24, the Company is not in default
under any Outstanding Borrowings.

                  5.25 Insurance. Schedule 5.25 accurately summarizes all of the
insurance policies or programs of the Company in effect as of the date hereof,
including key person insurance, directors and officers liability insurance, and
indicates the insurer's name, policy number, expiration date, amount of
coverage, type of coverage, annual premiums and deductibles, and also indicates
any self-insurance program that is in effect. The Company's insurance policies
or programs are in full force and effect and are adequate to protect the
Company's assets, and businesses and to cover property damage by fire, business
interruption or other casualty, sufficient in amount to allow it to replace any
of its properties damaged or destroyed and are adequate to protect against all
liabilities, claims, and risks against which it is customary to insure.

                  5.26 Undisclosed Liabilities. The Company has no liabilities
or obligations (absolute, accrued, contingent or otherwise) except (i)
liabilities that are reflected and reserved against on the balance sheets
included in the Financial Statements (including the notes thereto), (ii)
liabilities incurred in the ordinary course of business since July 28, 2001, and
(iii) liabilities arising under the Company's Contractual Obligations.

                  5.27 Solvency. Neither the Company nor any Affiliate has (i)
made a general assignment for the benefit of its creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition in bankruptcy by its creditors, (iii) suffered the appointment of a
receiver to take possession of all or substantially all of its assets or
properties, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets or (v) admitted in writing its inability to pay
its debts as they come due.




                                       24
<PAGE>

                  5.28 Compliance with Law. The Company and the conduct of its
business is in compliance with all applicable laws, statutes, ordinances and
regulations, whether federal, state or local, except where the failure to comply
would not have a Material Adverse Effect. Neither the Company nor the
Subsidiaries have received any written notice to the effect that it is not in
compliance with any of such statutes, regulations, orders, ordinances or other
laws where the failure to comply would have a Material Adverse Effect.

                  5.29 No Other Agreements to Sell the Assets or Capital Stock
of the Company. Except as set forth on Schedule 5.29, neither the Company nor
any Affiliate has any legal obligation, absolute or contingent, other than the
obligations under the Transaction Agreements, to any person or firm to (i) sell
the assets other than in the ordinary course of business consistent with past
practices, (ii) sell any capital stock of the Company (other than as set forth
in Section 5.6) or effect any merger, consolidation or other reorganization of
the Company or (iii) enter into any agreement with respect any of the foregoing,
other than agreements related to the merger of BABW with and into the Company
and the Transaction Documents.

                  5.30 Inventory. The value at which the inventory of the
Company is carried on the Financial Statements reflects the customary inventory
valuation policy of the Company and is in accordance with GAAP consistently
applied. The current inventory of the Company and its Subsidiaries consists of
items of a quantity and quality which are usable and saleable in the ordinary
course of business except to the extent deviations in such quality or quantity
could not have, individually or in the aggregate, a Material Adverse Effect.

                  5.31 Suppliers. Except as disclosed on Schedule 5.31, the
Company has not received any actual notice that any current supplier that sold
goods or merchandise to the Company in an aggregate amount in excess of $250,000
during the preceding twelve months will not sell raw materials, supplies,
merchandise and other goods to the Company at any time after the Initial Closing
Date on terms and conditions substantially similar to those currently in effect,
subject only to general and customary price increases.

                  5.32 Changes.

                  Except as set forth on Schedule 5.32, since July 28, 2001,
there has not been:

                  (a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not been
materially adverse;

                                       25
<PAGE>




                  (b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted);

                  (c) any waiver by the Company of a material right or of a
material debt owed to it;

                  (d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);

                  (e) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;

                  (f) any material change in any compensation arrangement or
agreement with any employee;

                  (g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;

                  (h) any resignation or termination of employment of any key
officer of the Company; and to the knowledge of the Company, there is no
impending resignation or termination of employment of any such officer;

                  (i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;

                  (j) receipt of notice that any material supplier or
third-party outsourcing provider will no longer supply products or services to
the Company;

                  (k) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company, with respect to any of its material properties
or assets, except liens for taxes not yet due or payable;

                  (l) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;

                  (m) any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company;

                                       26
<PAGE>


                  (n) to the Company's knowledge, any other event or condition
of any character that would reasonably be expected to materially and adversely
affect the assets, properties, financial condition, operating results or
business of the Company (as such business is presently conducted); or

                  (o) any agreement or commitment by the Company to do any of
the things described in this Section 5.32.

                  5.33 Certain Payments. Neither the Company nor any director,
officer, agent, or employee of the Company, or any other Person associated with
or acting for or on behalf of the Company has directly or indirectly (a) made
any contribution, gift, bribe, payoff, influence payment, kickback, or other
payment to any person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, or (iv) in violation of any law, (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.

                                   ARTICLE 6.

                               REPRESENTATIONS AND
                          WARRANTIES OF THE PURCHASERS


                  Each Purchaser, severally but not jointly, hereby represents
and warrants to the Company as of the date hereof as follows:

                  6.1. Existence and Authority. Such Purchaser who is not a
natural person: (a) is a corporation, limited liability company, or limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, (b) has all requisite partnership or
corporate power and authority to own its assets and operate its business, and
(c) has all requisite corporate or partnership power and authority to execute,
deliver and perform its obligations under each of the Transaction Agreements to
which it is or will be a party.

                  6.2. Authorization; No Contravention. The execution, delivery
and performance by such Purchaser of the Transaction Agreements to which it is a
party and the consummation of the transactions contemplated thereby, including,
without limitation, the acquisition of the Series D Preferred Stock: (a) is
within such Purchaser's partnership or corporate power and authority and has
been duly authorized by all necessary partnership or corporate action on the
part of such Purchaser; (b) does not conflict with or contravene the terms of
such Purchaser's partnership agreement or certificate of limited partnership or
certificate of incorporation or bylaws or any amendment thereof; and (c) will
not violate, conflict with or result in any material breach or contravention of
(i) any Contractual Obligation of such Purchaser, or (ii) the Requirements of
Law or any order or decree applicable to such Purchaser.



                                       27
<PAGE>

                  6.3. Binding Effect. This Agreement has been duly executed and
delivered by such Purchaser, and this Agreement constitutes the legal, valid and
binding obligation of such Purchaser, enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.

                  6.4. Purchase for Own Account. The Series D Preferred Stock
and the Common Stock to be issued upon conversion of the Series D Preferred
Stock, are being or will be acquired by such Purchaser for its own account and
with no intention of distributing or reselling such securities or any part
thereof in any transaction that would be in violation of the securities laws of
the United States of America, or any state. Such Purchaser agrees to the
imprinting, so long as required by law, of legends on certificates representing
all of the Series D Preferred Stock or the shares of Common Stock to be issued
upon conversion of the Series D Preferred Stock to the following effect:

      "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS."

                  "THE SALE, TRANSFER OR ENCUMBRANCE OF THIS CERTIFICATE IS
SUBJECT TO AN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF SEPTEMBER
__, 2001 BETWEEN THE CORPORATION AND CERTAIN HOLDERS OF SHARES OF THE CAPITAL
STOCK OF THE CORPORATION. A COPY OF THIS AGREEMENT IS ON FILE IN THE OFFICE OF
THE SECRETARY OF THE CORPORATION AND MAY BE OBTAINED FROM THE COMPANY UPON
REQUEST. THE AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR CERTAIN OBLIGATIONS TO
SELL AND TO PURCHASE THE SHARES EVIDENCED BY THIS CERTIFICATE, FOR A DESIGNATED
PURCHASE PRICE. BY ACCEPTING THE SHARES EVIDENCED BY THIS CERTIFICATE THE HOLDER
AGREES TO BE BOUND BY SAID AGREEMENT."

                  6.5. Accredited Investor Status; Institutional Investor
Status. Such Purchaser is an "accredited investor" as such term is defined in
Rule 501(a) of Regulation D, promulgated under the Securities Act.

                  6.6 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Purchasers.

                  6.7 Exculpation Among Purchasers.




                                       28
<PAGE>

                  Each Purchaser acknowledges that in making its decision to
invest in the Company, it is not relying on any other Purchaser or upon any
person, firm or company, other than the Company and its officers, employees
and/or directors. Each Purchaser agrees that no other Purchaser, nor the
partners, employees, officers or controlling persons of any other Purchaser
shall be liable for any actions taken by such Purchaser, or omitted to be taken
by such Purchaser, in connection with such investment.

                  6.8 No Public Market. Each Purchaser acknowledges and
understands that no public market now exists for any securities of the Company
and that the Company has made no assurances that a public market will ever exist
for any securities of the Company.

                  6.9 Access to Data. Each Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with the
Company's officers and management.

                  6.10 Potential Conflicts of Interest.

                  Except as set forth on Schedule 5.22, no Purchaser who is an
officer, director or stockholder of five percent (5%) or more of the aggregate
number of shares of Common Stock then outstanding on a fully diluted basis of
the Company or the Subsidiaries, or spouse of any such officer, director or
stockholder: (a) owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of, any Person which is, or is engaged
in business as, a competitor, lessor, lessee, supplier, distributor, sales agent
or customer of, or lender to or borrower from, the Company; (b) owns, directly
or indirectly, in whole or in part, any tangible or intangible property that the
Company uses in the conduct of business; or (c) has any cause of action or other
claim whatsoever against, or owes any amount to, the Company, except for claims
in the ordinary course of business such as for accrued vacation pay, accrued
benefits under employee benefit plans, and similar matters and agreements
existing on the date hereof and described on Schedule 5.22.

                                   ARTICLE 7.

                          COVENANTS OF THE COMPANY WITH
                   RESPECT TO THE PERIOD FOLLOWING THE CLOSING


                  Until (i) all shares of Series D Preferred Stock and Common
Stock are no longer outstanding due to conversion, redemption or otherwise, and
(ii) the Company has paid to the Purchasers all other amounts due to them under
the Transaction Agreements or the Certificate, the Company hereby covenants and
agrees with the Purchasers as follows, except with respect to the obligations of
the Company set forth in paragraph 8.1 which shall terminate upon the earlier of
either (a) a Qualified Initial Public Offering or (b) the date on which the
Purchasers or their Affiliates hold less than 15% of the Series D Preferred
Stock (or Common Stock issued upon conversion of such Series D Preferred Stock)
issued hereunder:



                                       29
<PAGE>

                  7.1. Notices. Within 5 business days of obtaining knowledge of
any of the events described below, the Company shall give notice to the
Purchasers:

                  (a) any of the following: (i) default or event of default
under any material Contractual Obligation of the Company or any Affiliate, (ii)
initiation or resolution of any material dispute, litigation, investigation, or
proceeding which may exist at any time between the Company or any Affiliate and
any private third party or Governmental Authority, and (iii) any default or
breach of the terms of any of the Transaction Agreements by the Company; and

                  (b) any other matter that has resulted in a Material Adverse
Effect in the Condition of the Company.

                  Each notice pursuant to this Section 7.1 shall be accompanied
by a statement on behalf of the Company by the Chief Executive Officer,
President or Chief Financial Officer of the Company setting forth details of the
occurrence referred to therein, stating what action the Company proposes to take
with respect thereto, the Company officer responsible for such action and the
timetable with respect to such action.

                  7.2. Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue or delivery upon conversion of the Series D Preferred Stock as
provided in the Certificate, the maximum number of shares of Common Stock that
may be issuable or deliverable upon such conversion, the maximum number of
shares of Series E Preferred Stock issuable at the time of the Series E Closing,
as well as the number of shares of Common Stock that may be issuable or
deliverable upon conversion of the Series D Preferred Stock issued to the
Purchasers as dividends. Such shares of Common Stock shall, when issued or
delivered in accordance with the provisions of the Certificate, be duly
authorized, validly issued and fully paid and non-assessable. The Company shall
issue such Common Stock in accordance with the provisions of the Certificate and
shall otherwise comply with the terms thereof.

                  7.3 Series E Closing. The Company will use reasonable business
efforts, subject to the discretion of the Board of Directors of the Company, to
issue and receive proceeds of Ten Million Dollars ($10,000,000) for Series E
Preferred Stock sold on or before June 30, 2002. The closing of such transaction
is sometimes referred to herein as the "Series E Closing." The Series E
Preferred Stock shall have such rights as designated in the Certificate of
Designation for the Series E Preferred Stock filed at the time of the Series E
Closing, provided that in no event shall the Series E Preferred Stock have
dividend rights, preemptive rights, liquidation rights and participation rights
which are more favorable than the rights granted to the Series D Preferred
Stock. In the event any such rights are granted to the Series E Preferred Stock
which are more favorable than those granted to the Series D Preferred Stock,
then the Company shall amend the Certificate as it relates to the Series D
Preferred Stock such that the rights granted therein are similar to those
granted to the Series E Preferred Stock, unless such more favorable rights are
approved by the holders of at least 75% of the holders of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series
D Preferred Stock.



                                       30
<PAGE>

                  7.4 Use of Proceeds.

                  The Company shall not use the proceeds of the sale of the
Series D Preferred Stock hereunder for the redemption of any of its capital
stock or the payment of dividends on shares of its capital stock or any purpose
other than working capital in the ordinary course of business.

                  7.5 Line of Credit.

                  The Company shall use reasonable business efforts to increase
the aggregate funds available under its line(s) of credit to Twenty-Five Million
Dollars ($25,000,000) on or before December 31, 2001.

                  7.6 Board of Directors.

                  Within 60 days of the date of the Initial Closing of the
Series D Preferred Stock, the currently authorized second Board of Directors
seat that is to be designated by SSI (as defined in the Amended and Restated
Stockholders' Agreement) shall be filled.

                  7.7 Insurance.

                  The Company shall maintain in force its directors and officers
liability insurance as currently in effect.

                                   ARTICLE 8.

                                 INDEMNIFICATION


                  8.1. Indemnification. The Company with respect to the
Purchasers or the Purchasers, severally and not jointly, with respect to the
Company (the "Indemnifying Party") agrees to indemnify and hold harmless each
Purchaser or the Company, as the case may be, and its Affiliates and its
respective officers, directors, agents, employees, Affiliates, partners,
shareholders and assigns (each, an "Indemnified Party") to the fullest extent
permitted by law from and against any and all (i) Environmental Expenses that
are the proximate cause of the Company's violation of any Environmental Law and
(ii) tax liabilities, losses, costs, claims, damages, expenses (including
reasonable fees, disbursements and other charges of counsel) (collectively,
"Liabilities") based upon, relating to or arising out of any breach of any
representation or warranty, covenant or agreement of such Indemnifying Party in
this Agreement or any legal, administrative or other actions (including actions
brought by any of the Purchasers or any Indemnifying Party or any equity holders
of the Company or derivative actions brought by any Person claiming through or
in the Company's name), proceedings or investigations (whether formal or
informal), based upon, relating to or arising out of (A) the status of the
Purchasers as shareholders of the Company and the existence or exercise of the
rights and powers of the Purchasers relating (including without limitation, any
claim against any Indemnified Party relating to Environmental Matters), (B)
violations of applicable securities laws by the Company




                                       31
<PAGE>

in connection with the offering of the Shares, or (C) third party claims that
the Series D Preferred Stock hereunder violate preexisting understandings or
arrangements with the Company upon the settlement or final judicial
determination of (A) through (C) above; provided, however, that no Indemnifying
Party shall be liable under this Section 8.1 to an Indemnified Party: (a) for
any amount paid in settlement of claims without such Indemnifying Party's
consent (which consent shall not be unreasonably withheld), (b) to the extent
that it is finally judicially determined that such Liabilities resulted solely
from the willful misconduct or gross negligence of such Indemnified Party, or
(c) to the extent that it is finally judicially determined that such Liabilities
resulted solely from the breach by such Indemnified Party of any representation,
warranty, covenant or other agreement of such Indemnified Party contained in
this Agreement; provided, further, that if and to the extent that such
indemnification is unenforceable for any reason, the Indemnifying Party shall
make the maximum contribution to the payment and satisfaction of such
indemnified liability which shall be permissible under applicable laws. In
connection with the obligation of the Indemnifying Party to indemnify for
expenses as set forth above, the Indemnifying Party further agrees to reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party.

                  8.2. Notification. Each Indemnified Party under this Article 8
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from any Indemnifying Party under this
Article 9, notify the Indemnifying Party in writing of the commencement thereof.
The omission of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not relieve the Indemnifying Party from any liability which it
may have to such Indemnified Party under this Article 8 except to the extent
that such failure to notify results in a loss of a material defense of such
Indemnified Party. In case any such action, claim or other proceeding shall be
brought against any Indemnified Party and such Indemnified Party shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense. Notwithstanding the foregoing, in any
action, claim or proceeding in which both the Indemnifying Party, on the one
hand, and an Indemnified Party, on the other hand, is, or is reasonably likely
to become, a party, such Indemnified Party shall have the right to employ
separate counsel at the Indemnifying Party's expense and to control its own
defense of such action, claim or proceeding if, in the reasonable opinion of
counsel to such Indemnified Party, a conflict or potential conflict exists
between the Indemnifying Party, on the one hand, and such Indemnified Party, on
the other hand, that would make such separate representation advisable. The
Indemnifying Party agrees that it will not, without the prior written consent of
the Purchasers (such consent not to be unreasonably withheld), settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Purchasers (and each other Indemnified Party) from
all liability arising or that may arise out of such claim, action or proceeding.
The rights accorded to Indemnified Parties hereunder shall be


                                       32
<PAGE>

in addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise.


                  8.3. Amended and Restated Registration Rights Agreement.
Notwithstanding anything to the contrary in this Article 8, the indemnification
and contribution provisions of the Amended and Restated Registration Rights
Agreement shall govern any claim made with respect to registration statements
filed pursuant thereto or sales made thereunder.

                                   ARTICLE 9.

                                  MISCELLANEOUS

                  9.1. Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the Initial Closing
Date or Additional Closing Date, as the case may be of this Agreement for a
period of two (2) years from the date hereof except the representations and
warranties in (i) Section 5.17 shall survive until the statute of limitations
period has expired for such representations and warranties and (ii) Section 5.14
and Section 6.10 shall survive until thirty days after the expiration of the
statute of limitations period has expired for such representations and
warranties.

                  9.2. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, courier
service or personal delivery:


                  (a)      if to the Company:

                           Build-A-Bear Workshop, Inc.
                           1964 Innerbelt Business Center Drive
                           St. Louis, Missouri 63114-5760
                           Attention:  Maxine Clark
                           Facsimile (not to be deemed notice):  314-423-8188

                           with a copy to:

                           Bryan Cave LLP
                           211 N. Broadway, Suite 3600
                           St. Louis, Missouri  63102
                           Attention:  James H. Erlinger III
                           Facsimile (not to be deemed notice): 314-259-2020

                  (b)      if to a Purchaser, to the last recorded address on
                           the books and records of the Company with a copy to
                           the last known counsel of such Purchaser.

                           With a copy to:


                                       33
<PAGE>

                           Latham & Watkins
                           555 Eleventh Street N.W., Suite 1000
                           Washington, D.C.  20004-1304
                           Attention:  David McPherson
                           Facsimile (not to be deemed notice):  202-637-2201

                  All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; when mailed,
five business days after being deposited in the mail, postage prepaid.

                  9.3. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Neither the Company nor any of the Purchasers may assign any of
its rights under this Agreement without the written consent of each of the other
Parties hereto provided however that any Purchaser may assign its rights and
obligations to one or more Affiliates or wholly-owned corporations, which shall
agree to be bound by the terms hereof. Except as provided in Article 9, no
Person other than the parties hereto and their successors and permitted assigns
is intended to be a beneficiary of any of the Transaction Agreements.

                  9.4. Amendment and Waiver.

                  (a) No failure or delay on the part of the Company, or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.

                  (b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by the Company and all of the Purchasers, and (ii) only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on any party in any case shall entitle any party hereto to any other or further
notice or demand in similar or other circumstances.

                  9.5. Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

                  9.6. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.



                                       34
<PAGE>

                  9.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law of such state.

                  9.8. Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
shall be brought in the courts of the United States of America for the Eastern
District of Missouri and hereby expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 10.3, such service to become effective 10 days after such
mailing.

                  9.9. Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provision or provisions held invalid, illegal or unenforceable shall
substantially impair the remaining provisions hereof.

                  9.10. Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections refer
to sections or subsections of this Agreement.

                  9.11. Entire Agreement. This Agreement, together with the
exhibits and schedules hereto and the other Transaction Agreements is intended
by the parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth herein or therein. This Agreement, together with the exhibits
and schedules hereto, the other Transaction Agreements, supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                  9.12. Transaction Expenses. The Company will pay the
Transaction Expenses.

                  9.13. Publicity. Except as may be required by applicable law,
none of the parties hereto shall issue a publicity release or announcement or
otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto. If any announcement is required by law to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties an
opportunity to comment thereon.

                  9.14. Further Assurances. Upon the terms and subject to the
conditions contained herein, each of the parties hereto agrees, both before and
after the Closing, (i) to use all



                                       35
<PAGE>

reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, (ii) to execute
any documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the transactions contemplated
hereunder, and (iii) to cooperate with each other in connection with the
foregoing, including using their respective best efforts (A) to obtain all
necessary waivers, consents and approvals from other parties that may be
required; (B) to obtain all necessary permits as are required to be obtained
under any federal, state, local or foreign law or regulations, and (C) to
fulfill all conditions to this Agreement.

                  9.15. Rights of Purchasers Inter Se. Each Purchaser shall have
the absolute right to exercise or refrain from exercising any right or rights
which such Purchaser may have by reason of this Agreement or any security,
including, without limitation, the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter into an agreement
with the Company for the purpose of modifying this Agreement or any agreement
effecting any such modification, and such Purchasers shall not incur any
liability to any other or with respect to exercising or remaining from
exercising any such right or rights.

                  9.16. Severability of the Representations, Warranties and
Covenants.

                  No Purchaser shall be liable to the Company for the breach or
violation, if any, of any representation, warranty or covenant made or to be
complied with by any of the other Purchasers, but each such Purchaser shall be
liable to the Company solely for its own breaches or violations, if any, of any
representation, warranty or covenant made or to be complied with by such
Purchasers. For purposes of this Section 9.16, Catterton shall be deemed to be
one Purchaser.

                  9.17. Arbitration. If any controversy or dispute shall arise
between the parties hereto in connection with, arising from or in respect to
this Agreement, any provision hereof, or any provision of any instrument,
document, agreement, certification or other writing delivered pursuant hereto,
or with respect to the validity of this Agreement or any such document,
agreement, certification or other writing, and if such controversy or dispute
shall not be resolved within thirty (30) days after the same shall arise, then
such dispute or controversy shall be submitted for arbitration to the St. Louis,
Missouri office of the American Arbitration Association in accordance with its
commercial arbitration rules then in effect. Such proceeding shall be conducted
in St. Louis, Missouri. Any such dispute or controversy shall be determined by
one (1) arbitrator. Such arbitrator may award any relief which he shall deem
proper in the circumstances, without regard to the relief which would otherwise
be available to either party hereto in a court of law or equity, including
without limitation an award of money damages (including interest on unpaid
amounts, calculated from the due date of any such amount, at a rate per annum
determined by said arbitrator), specific performance and injunctive relief. The
award and findings of such arbitrator shall be conclusive and binding upon the
parties thereto, and judgment upon such award may be entered in any court of
competent jurisdiction. Any party against whom an arbitrator's award shall be
issued shall not, in any manner, oppose or defend against any suit to confirm
such award, or any enforcement proceedings brought against such party, whether
within or outside of the United States of America, with respect to any judgment
entered upon the award, or any enforcement proceedings brought against such



                                       36
<PAGE>

party, whether within or outside of the United States of America, with respect
to any judgment entered upon the award, and such party hereby consents to the
entry of a judgment against it, in the full amount thereof, or other relief
granted therein, in any jurisdiction in which such enforcement is sought. The
party against whom the arbitrator award is issued shall pay the fees of the
arbitrator.

             THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
                      WHICH MAY BE ENFORCED BY THE PARTIES.





                                       37
<PAGE>

                  SIGNATURE PAGES FOR SERIES D STOCK PURCHASE AGREEMENT


                  IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.

                                       BUILD-A-BEAR WORKSHOP, INC.


                                       By: /s/ Maxine Clark
                                          ---------------------------------
                                       Name:   Maxine Clark
                                       Title:  President

                                       CATTERTON PARTNERS IV, L.P.,
                                       a Delaware limited partnership

                                       By:  Catterton Managing
                                          ---------------------------------
                                       Partner IV, L.L.C.
                                       Its: General Partner

                                       By:  CP4 Principals, L.L.C.
                                       Its: Managing Member

                                       By:     /s/ Frank M. Vest, Jr.
                                          ---------------------------------
                                       Name:  Frank M. Vest, Jr.
                                       Title: Authorized Person

                                       CATTERTON PARTNERS IV-A, L.P.,
                                       a Delaware limited partnership

                                       By:  Catterton Managing
                                          ---------------------------------
                                       Partner IV, L.L.C.
                                       Its:  General Partner

                                       By:  CP4 Principals, L.L.C.
                                       Its: Managing Member

                                       By:     /s/ Frank M. Vest, Jr.
                                          ---------------------------------
                                       Name:  Frank M. Vest, Jr.
                                       Title: Authorized Person


<PAGE>




                                     CATTERTON PARTNERS IV-B, L.P.,
                                     a Delaware limited partnership

                                     By:  Catterton Managing
                                     Partner IV, L.L.C.
                                     Its: General Partner

                                     By:  CP4 Principals, L.L.C.
                                     Its: Managing Member

                                     By:     /s/ Frank M. Vest, Jr.
                                          -------------------------------------
                                     Name:  Frank M. Vest, Jr.
                                     Title: Authorized Person

                                     CATTERTON PARTNERS IV OFFSHORE, LP.
                                     a Cayman limited partnership

                                     By:  Catterton Managing
                                     Partner IV, L.L.C.
                                     Its: Managing General Partner

                                     By:  CP4 Principals, L.L.C.
                                     Its:  Managing Member

                                     By:     /s/ Frank M. Vest, Jr.
                                        ---------------------------------------
                                     Name:  Frank M. Vest, Jr.
                                     Title: Authorized Person

                                     CATTERTON PARTNERS IV SPECIAL PURPOSE, L.P.
                                     a Cayman limited partnership

                                     By:  Catterton Managing
                                     Partner IV, L.L.C.
                                     Its:  Managing General Partner

                                     By:  CP4 Principals, L.L.C.
                                     Its: Managing Member

                                     By:     /s/ Frank M. Vest, Jr.
                                        ---------------------------------------
                                     Name:  Frank M. Vest, Jr.
                                     Title: Authorized Person




<PAGE>



                                     CLARK/FOX, L.L.C.
                                     a Missouri limited liability company


                                          /s/ Maxine Clark
                                     ----------------------------------
                                     By:  Maxine Clark, its Manager


                                     CLARK/FOX II, L.L.C.
                                     a Missouri limited liability company


                                          /s/ Maxine Clark
                                     ----------------------------------
                                     By:  Maxine Clark, its Manager


                                     HYCEL PARTNERS V, L.L.C.,
                                     a Missouri limited liability company


                                         /s/ Mark H. Zorensky
                                     ----------------------------------
                                     By:
                                        -------------------------------
                                     Name:    Mark H. Zorensky
                                           ----------------------------
                                     Title:      Manager
                                           ----------------------------


                                     KCEP VENTURES II, L.P.,
                                     a Missouri limited partnership

                                     By: KCEP II, L.C., its general partner

                                     By:      /s/ William Reisler
                                         ------------------------------
                                         William Reisler, its Managing Director

                                     WALNUT INVESTMENT PARTNERS, L.P.,
                                     a Delaware limited partnership

                                     By: Walnut Investments Holding Company,
                                     LLC, its general partner


                                     By:      /s/ James M. Gould
                                         ------------------------------
                                     Name:     James M. Gould
                                         ------------------------------
                                     Title: Manager



<PAGE>




                                     /s/ Wayne L. Smith, II
                                     --------------------------------------
                                     Wayne L. Smith, II


                                     /s/ Brian Vent
                                     --------------------------------------
                                     Brian Vent


                                     /s/ Adrienne Weiss
                                     --------------------------------------
                                     Adrienne Weiss


                                     --------------------------------------
                                     Thomas Holley



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>9
<FILENAME>c86750exv4w4.txt
<DESCRIPTION>AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<TEXT>
<PAGE>
                                                                     EXHIBIT 4.4

                              AMENDED AND RESTATED

                           BUILD-A-BEAR WORKSHOP, INC.

                             STOCKHOLDERS' AGREEMENT


      THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("Agreement"), made as
of the 21st day of September, 2001, by and among Build-A-Bear Workshop, Inc., a
Delaware corporation, hereinafter referred to as the "Corporation", and the
individuals, hereinafter sometimes referred to collectively as "Stockholders" or
individually as "Stockholder," set forth on Schedule 1 hereto:


      WITNESSETH:

      WHEREAS, the Stockholders own the shares of capital stock of the
Corporation as indicated on EXHIBIT A attached to this Agreement and
incorporated herein by reference, which shares constitute all of the outstanding
capital stock of the Corporation as of the date hereof (hereinafter referred to
as "Shares"); and

      WHEREAS, the Stockholders previously entered into a Stockholders'
Agreement dated April 3, 2000, as amended on April 10, 2001 (the "Original
Agreement"); and

      WHEREAS, Barney A. Ebsworth and Windsor Capital, Inc., a Missouri
corporation ("Windsor") conveyed all of their respective Shares (the
"Transferred Shares") to the Barney A. Ebsworth Revocable Trust dated July 23,
1986 (the "Trust"); and

      WHEREAS, the Corporation's business is such that it is in its best
interests that its Shares be closely-held by persons knowledgeable about the
Corporation's business, and the Corporation and Stockholders desire to provide
for continuity and harmony in the management of the Corporation; and

      WHEREAS, it is in the best interests of the Stockholders and the
Corporation that management of the Corporation be conducted in an orderly manner
with the consensus of the Stockholders as hereinafter provided.

      NOW, THEREFORE, the Stockholders and the Corporation agree as follows:

      1.   Scope of Agreement; Restrictions on Transfer; Effectiveness.

      1.1 Scope; Restrictions on Transfer. From and after the date hereof, none
of the Stockholders will sell, assign, pledge, or otherwise transfer, any
interest in any Shares except pursuant to the provisions of this Agreement. This
Agreement shall apply to all transfers of Shares (now owned or hereafter
acquired) by the Stockholders, whether voluntary, involuntary or by operation of
law, resulting from death or otherwise and all exchanges or conversions of
Shares



<PAGE>
in a merger, consolidation or mandatory share exchange. Clark/Fox and SSI shall
cause all of their respective members or shareholders, as the case may be (the
"Indirect Stockholders"), to be bound by the terms and conditions of Sections 1
through 8, 10, 12 and 15 of this Agreement with respect to transfers of their
membership interests in Clark/Fox and/or shares in SSI, as the case may be (such
membership interests or SSI shares to be Shares for purposes of the transfer
restrictions herein), provided that such transfer restrictions in Sections 1
through 8 shall not apply to transfers to other Indirect Stockholders.

      1.2 Supersedes. Upon the execution of this Agreement by holders of not
less than 90% of the Shares of the Corporation, this Agreement shall supersede
the Original Agreement.

      2.  Option Upon Voluntary Transfer.

      2.1 Notice of Intention to Transfer. If a Stockholder intends to transfer
Shares of which he, she or it is owner to any person other than to the
Corporation or as a permitted transfer as provided in SECTION 2.4 hereof, such
Stockholder shall give written notice to the Corporation and the other
Stockholders of the proposed terms (including sales price), conditions and
manner of disposition, the number of Shares to be disposed of and the person(s),
firm(s) or corporation(s) to whom the selling Stockholder proposes to transfer
such Shares. The notice, in addition to stating the fact of the intention to
transfer Shares, shall state: (i) the number of Shares to be transferred; (ii)
the name, business and residence address of the proposed transferee; and (iii)
whether or not the transfer is for valuable consideration, and, if so, the
amount of the consideration and the other terms of sale.

      2.2 Corporation Option to Purchase. Within thirty (30) days of the
Corporation's receipt of the notice of the proposed transfer, the Corporation
may exercise an option (hereby granted by each Stockholder) to purchase all or
any of the Shares proposed to be transferred for the sales price and terms
thereof as set forth in the notice, and upon the other terms provided
hereinafter.

      2.3 Stockholders' Option to Purchase. If the Corporation does not exercise
its option to purchase all or any portion of such Shares, the remaining
Stockholders within sixty (60) days of the Corporation's receipt of the notice
of the proposed transfer, shall have an option (hereby granted by each
Stockholder) to purchase all unpurchased Shares, pro rata according to their
respective percentages of Common Stock, par value $.01 per share (the "Common
Stock") (without regard to the selling Stockholder's Shares and assuming all of
the Shares which are convertible into Common Stock had been so converted as of
the date of such determination), provided however, that if any such Stockholder
elects to exercise her or his option to purchase pursuant to this Section 2.3,
such Stockholder shall exercise it with respect to all but not less than all of
her or his respective pro rata portion. If the remaining Stockholders do not
exercise their respective options to purchase all of such Shares, then any
Stockholder who has exercised his or her option to purchase his or her pro rata
share of the remaining Shares may exercise an option to purchase all of its pro
rata portion of such unpurchased Shares, subject to SECTION 4.2 hereof. The
process in the immediately preceding sentence shall continue until all of the
unpurchased


                                       2
<PAGE>

Shares have been purchased or until no Stockholder desires to purchase any
remaining unpurchased Shares.

      2.4 Transfer to Revocable Trust; Permitted Transfers. Notwithstanding any
other provision of this Agreement, a Stockholder may transfer Shares to an
Affiliate (as hereinafter defined), or to a revocable trust established for his
or her benefit, of which he or she is the sole trustee at the time of the
transfer; provided, however, that any such Shares so transferred shall remain
subject to this Agreement, and the Stockholder shall remain obligated under this
Agreement. In the event Shares are transferred by a Stockholder to his or her
revocable trust, such Stockholder and his or her revocable trust shall be
treated as a single Stockholder for purposes of this Agreement.

      3.   Option Upon Involuntary Transfer.

      If other than by reason of a Stockholder's death, disability or
dissolution of marriage, Shares are transferred by operation of law to any
person other than to the Corporation (such as, but not limited to, a
Stockholder's trustee in bankruptcy or a purchaser at any creditor's or court
sale), the Corporation or the remaining Stockholders, within seventy (70) days
of the Corporation's receipt of actual notice of the transfer may exercise an
option (hereby granted by each Stockholder) to purchase all but not less than
all of the Shares so transferred in the same manner and upon the same terms as
provided in SECTION 2, with respect to Shares proposed to be transferred.

      4.   Exercise of Options and Effect of Non-Exercise of Options.

      4.1 Notice. The Corporation and the Stockholders who exercise options
granted in SECTIONS 2 OR 3 shall do so by delivering written notice of their
exercise of the options within the time provided in said Sections to the
proposed transferor or to the transferee in the case of SECTION 3.

      4.2 Non-Exercise. If the purchase options are forfeited or not exercised
in the aggregate for all the Shares proposed to be transferred in compliance
with SECTIONS 2 or SECTION 3, then, in the case of a proposed transfer under
SECTION 2, the Shares may be transferred, within ten (10) days after the
expiration of the option period granted to the other Stockholders, to the
transferee named in the notice required by SECTION 2, and upon the terms therein
stated, which Shares when so transferred shall be subject to the terms of this
Agreement. In the case of a transfer of Shares under SECTION 2 or SECTION 3, the
Shares shall, in the hands of the transferee, be subject to the terms of this
Agreement.

      4.3 Requirements. No transfer pursuant to SECTION 2 shall be valid if the
transfer is not within the aforesaid ten (10) day period, or is not for the
consideration or upon the terms or to the transferee stated in the notice
required of the transferring Stockholder by SECTION 2. In such a case the Shares
shall remain subject to this Agreement.



                                       3
<PAGE>
      4.4 Shares Reacquired. In the event a transferor in a SECTION 2 transfer
reacquires all or any portion of the transferred Shares, the Shares shall be
subject to this Agreement as if no transfer had been made.

      4.5 Vote. A proposed transferor of Shares under SECTION 2, as a
Stockholder or a director, or both, of the Corporation, shall vote in favor of
the Corporation's exercise of the purchase options granted to it by this
Agreement at any meeting of Stockholders or directors called for such purpose.

      5.  Purchase Price.

      5.1 Voluntary Transfer. For purposes of any purchase of all of a
Stockholder's Shares pursuant to SECTION 2 the purchase price shall be as set
forth in the notice given as provided in SECTION 2.

      5.2 Involuntary Transfer. For purposes of any purchase of all of a
Stockholder's Shares pursuant to SECTION 3, the purchase price of Shares shall
be lesser of (i) the price determined by all the Stockholders of the Corporation
pursuant to EXHIBIT B of this Agreement or (ii) the price per share at which
Shares were transferred pursuant to the most recent transaction giving rise to
an option granted in SECTION 3 of this Agreement.

      6.  Payment of the Purchase Price and Other Payments.

      6.1 Cash Payment. The purchase price for Shares purchased pursuant to
SECTION 2 and shall be paid in cash at the closing, except that at the option of
Clark, Klocke, Vent and Smith, if such persons are the purchasing party or
parties, fifty percent (50%) of the purchase price may be deferred and at least
fifty percent (50%) shall be paid at closing. The aggregate amount deferred by
Clark, Klocke, Vent and Smith shall not exceed $500,000 in the aggregate. The
purchase price for Shares purchased pursuant to SECTION 2 shall be paid on such
terms as set forth in the notice provided therein.

      6.2 Promissory Note. The deferred portion of the price, if any, shall be
evidenced by the promissory note of the purchasing party, shall be in
substantially the form set forth in EXHIBIT C to this Agreement, shall bear
interest at the semi-annual applicable federal rate (as determined pursuant to
regulations promulgated under the Internal Revenue Code of 1986, as amended in
effect on the date of closing) plus two percent (2%) and shall be payable in
equal monthly installments for a period not to exceed five (5) years.
Notwithstanding the foregoing, in no event shall the cumulative deferred portion
of the purchase price owed collectively by Clark, Klocke, Vent and Smith
outstanding at any time and pursuant any purchase under SECTION 2 exceed
$500,000.

      6.3 Pledge Agreement. All Shares purchased pursuant to this Agreement and
financed by a note shall be pledged to the selling Stockholder as security for
the payment of the note by a Collateral Pledge Agreement, in the form attached
hereto as EXHIBIT D.



                                       4
<PAGE>
      7.  The Closing.

      7.1 Time of Closing. In the case of a purchase of Shares under SECTIONS 2
OR 3, the closing of the sale and purchase shall take place twenty (20) days
after the delivery to the selling Stockholders of written notice by the last of
the purchasing party or parties to deliver such notice of its, his or their
exercise of the option or options to purchase said Stockholder's Shares.

      7.2 Absence of Liens. All Shares shall be delivered to the Corporation or
purchasing Stockholder free and clear of all liens, claims and encumbrances
excepting only those for which provision is expressly made in this Agreement.

      7.3 Sequence of Closings. The sale and purchase of Shares which the
remaining Stockholders have elected to purchase pursuant to SECTION 2 or SECTION
3 hereof shall take place immediately prior to the sale and purchase of Shares,
if any, which the Corporation has elected to purchase.

      8.  Compliance with Agreement.

      8.1 Legend on Certificates. All Shares now or hereafter owned by the
Stockholders of the Corporation shall be subject to the provisions of this
Agreement and the certificates representing Shares, including Shares in the
hands of permitted transferees, shall bear the following legend:

      "THE SALE, TRANSFER OR ENCUMBRANCE OF THIS CERTIFICATE IS
      SUBJECT TO AN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
      DATED AS OF SEPTEMBER 21, 2001 BETWEEN THE CORPORATION AND
      CERTAIN HOLDERS OF SHARES OF THE CAPITAL STOCK OF THE
      CORPORATION. A COPY OF THIS AGREEMENT IS ON FILE IN THE OFFICE
      OF THE SECRETARY OF THE CORPORATION AND MAY BE OBTAINED FROM
      THE COMPANY UPON REQUEST. THE AGREEMENT PROVIDES, AMONG OTHER
      THINGS, FOR CERTAIN OBLIGATIONS TO SELL AND TO PURCHASE THE
      SHARES EVIDENCED BY THIS CERTIFICATE, FOR A DESIGNATED
      PURCHASE PRICE. BY ACCEPTING THE SHARES EVIDENCED BY THIS
      CERTIFICATE THE HOLDER AGREES TO BE BOUND BY SAID AGREEMENT."

Omission of such legend shall not, however, vitiate the effect of this Agreement
in any respect as against any person with actual or constructive notice of the
existence of this Agreement.

      8.2 Additional Parties to Agreement. Before any Shares are issued or
transferred of record on the books of the Corporation in the future to any
person or entity whatsoever other than a signatory to this Agreement, such
person or entity shall be required to become a party to this Agreement.


                                       5
<PAGE>
      8.3 Pledge of Shares. No Stockholder may pledge his, her or its Shares
without the consent of the Board of Directors.

      9.   Drag-Along Rights; Pre-Emptive Rights.

      9.1 Drag-Along Rights. In the event that (i) (a) Maxine Clark ceases to be
President, Chairman or an employee of the Corporation, (b) Clark ceases to own
all of the capital stock of SSI, or (c) SSI ceases to own the Shares it
currently owns, and (ii) all of Walnut, Windsor and Catterton arrange for a bona
fide third-party to purchase or otherwise acquire all of the shares of the
Corporation, then Walnut, Windsor and Catterton shall give written notice to the
Stockholders of the terms of the offer and the Stockholders shall agree to
transfer and hereby agree to transfer all of the Shares in the Corporation
pursuant to the same terms as Walnut, Windsor and Catterton are bound.

      9.2 Pre-Emptive Rights. (a) The Corporation hereby grants to each
Stockholder the right to purchase his, her or its pro rata share of Additional
Shares (as defined below) that the Corporation may, from time to time, propose
to sell and issue. Each Stockholder's pro rata share, for purposes of this
preemptive right, is such Stockholder's pro rata share of Common Stock (which
number shall be determined as if all of the Shares which are convertible into
Common Stock had been so converted as of the date of such determination).

      (b) "Additional Shares" shall mean any shares or other securities of the
Corporation, whether now authorized or not, and rights, options or warrants to
purchase said shares or other securities of the Corporation, and securities of
any type whatsoever that are, or may become, convertible into or exchangeable
for said Shares (or other securities of the Corporation), provided that
"Additional Shares" shall not include (i) up to 2,200,000 shares of Common Stock
or other securities, or rights, options or warrants to purchase said shares of
Common Stock or other securities of the Corporation, securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
shares of Common Stock sold or granted to employees or advisors of the
Corporation pursuant to an Employee Stock Plan approved by the Board of
Directors of the Corporation, (ii) securities of the Corporation issued and sold
pursuant to a registration statement filed under the Securities Act of 1933, as
amended (the "Securities Act"), (iii) Shares or other securities of the
Corporation, options or warrants to purchase the Shares or other securities of
the Corporation and securities of any type whatsoever that are, or may become,
convertible or exchangeable for said Shares issued in connection with
acquisitions by the Corporation; (iv) the Clark Shares and the Optional Increase
(as defined in the Series D Stock Purchase Agreement between the Corporation and
the Purchasers named therein, dated September 21, 2001 (the "Stock Purchase
Agreement")) or (v) up to $10,000,000 of the Company's Series E Preferred Stock
(as defined in the Stock Purchase Agreement).

      (c) In the event that the Corporation proposes to undertake an issuance of
Additional Shares, the Corporation shall give each Stockholder written notice (a
"Sales Notice") of the Corporation's intention, describing the type of
Additional Shares, the price and the general terms upon which the Corporation
proposes to issue the same. Each Stockholder shall have twenty (20) business
days from the date of receipt of any such Sales Notice (unless a shorter period
is consented to by the President and greater than fifty percent (50%) of the
shares of



                                       6
<PAGE>


Common Stock (which number shall be determined as if all of the Shares which are
convertible into Common Stock had been so converted as of the date of such
determination)) to agree to purchase his, her or its pro rata share of such
Additional Shares for the price and upon the general terms specified in the
Sales Notice by giving written notice to the Corporation and stating therein the
quantity of Additional Shares to be purchased. In the event that a Stockholder
initially fails to exercise in full his, her or its preemptive rights within
said period, the Corporation shall promptly advise those Stockholders who have
exercised such right who may then purchase the Additional Shares as to which
Stockholders have not exercised such right, pro rata based upon their respective
percentage of the Common Stock of the Corporation as provided in paragraph (a)
of this SECTION 9.2 or as they otherwise may agree among themselves. The process
in the immediately preceding sentence shall continue until all of the Additional
Shares have been purchased or until no Stockholder desires to purchase any
remaining unpurchased Shares. This right of over-allotment must be exercised by
notice to the Corporation within five (5) business days after the Stockholder's
receipt of notice that all Stockholders have not exercised their preemptive
rights in full.

      (d) In the event that the Stockholders collectively fail to exercise in
full the preemptive right as aforesaid, the Corporation shall have 90 days
thereafter to sell (or enter into an agreement pursuant to which the sale of
Additional Shares covered thereby shall be closed, if at all, within thirty (30)
days from the date of said agreement) the Additional Shares respecting which the
Stockholders' rights were not exercised at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than specified
in the Corporation's Sales Notice. In the event the Corporation has not sold the
Additional Shares within said 90 day period (or sold and issued Additional
Shares in accordance with the foregoing within thirty (30) days from the date of
said agreement), the Corporation shall not thereafter issue or sell any
Additional Shares without first offering such Shares to the Stockholders in the
manner provided in this SECTION 9.2. The failure by any Stockholder to exercise
his, her or its preemptive rights with respect to any Additional Shares on any
occasion shall not affect its right to purchase Additional Shares hereunder on
any subsequent occasion.

      (e) If a Stockholder gives the Corporation notice, in accordance with the
foregoing provisions of this SECTION 9.2, that such Stockholder desires to
purchase any Additional Shares, payment therefor shall be made by check or wire
transfer within ten (10) business days after giving the Corporation such notice,
or at the option of the Corporation, upon the closing date for the sale of such
Additional Shares to other persons as contemplated by SECTION 9.2 above.

      10.  Termination.

      10.1 Events. This Agreement and all restrictions on transfer of Shares
created hereby shall terminate on the occurrence of any of the following events:

           (a) The bankruptcy or dissolution of the Corporation.



                                       7
<PAGE>



           (b) A single Stockholder becoming the owner of all of the Shares of
the Corporation, which are then subject to this Agreement.

           (c) The execution of a written instrument by the Corporation and the
Stockholders who are party to this Agreement and who collectively own not less
than ninety percent (90%) of the Corporation's Shares of Common Stock (which
number shall be determined as if all of the Shares which are convertible into
Common Stock had been so converted as of the date of such determination), which
terminates the same.

           (d) The closing of a sale of Shares of the Corporation's Common Stock
in a firm-commitment underwritten public offering registered under the
Securities Act in which gross proceeds to the Corporation (prior to
underwriter's discounts and commissions and other expenses) are at least
$25,000,000 and (i) at any time prior to the third anniversary of the date
hereof, the offering is managed by a nationally recognized underwriter, (ii)
between the third and fourth anniversary of the date hereof, the price per share
is at least $15 (appropriately adjusted for stock splits, recapitalizations and
the like) and (iii) thereafter the price per share is at least $20.

      10.2 Effect. The termination of this Agreement for any reason shall not
affect any right or remedy existing hereunder prior to the effective date of its
termination.

      11.   Management of the Corporation.

      11.1 Composition of the Board. The Corporation shall have a Board of
Directors comprised of seven (7) members. With respect to each of the Trust,
Walnut, KCEP and Catterton ("Senior Stockholders") for so long as each holds
fifty percent (50%) or more of such Senior Stockholder's originally acquired
preferred stock of the Corporation ("Senior Preferred Shares") then each such
Senior Stockholder shall designate one member of the Board of Directors;
provided, however, that in the case of the Trust, the Trust may only nominate
Barney A. Ebsworth, his wife or Christianne Ebsworth as such director. In the
event that one or more such Senior Stockholder's ceases to hold 50% of such
Senior Stockholder's Senior Preferred Shares then such Senior Stockholder shall
not designate a successor director at the expiration of such directors term and
such successor director shall be designated by a majority of the then-elected
board of directors. SSI shall designate two directors, one of whom shall be
Maxine Clark. One director's seat shall remain vacant until the date upon which
the Company issues the Series E Preferred Stock or the date upon which the Board
of Directors unanimously agrees to fill such seat, provided that the person
designated to fill such seat shall not be an Affiliate of any of the other
members.

      11.2 Agreement to Vote Shares. Each of the Stockholders shall at all times
exercise their respective voting power to support each of the other Stockholders
in appointing directors to the Board in accordance with this SECTION 11 and
shall cause each of his nominated directors to exercise their respective voting
power to elect the Maxine Clark as the Corporation's Chairman, President, and
Chief Executive Officer so long as Maxine Clark is in compliance with the terms
and conditions of the Employment Agreement with the Corporation. Each
Stockholder hereby agrees at all times during which this Agreement remains in
effect to vote any Pledged




                                       8
<PAGE>


Shares (as hereinafter defined) held by such Stockholder in the same manner as
the holders of greater than fifty percent (50%) of the Shares on all matters on
which such Stockholder is entitled to vote. For purposes of this Section 11.2
"Pledged Shares" shall mean all shares of Common Stock that are pledged to, or
used as collateral for or secure any loan or other obligation by a Stockholder
to the Corporation.

      11.3 Removal and Vacancy of Directors. In the event any Stockholder wishes
to remove a director who has been elected as such Stockholder's nominee, the
other Stockholders shall vote for such removal. In the event a vacancy in the
office of a director so elected is caused by death, disability, retirement or
removal of a director other than Maxine Clark, the vacancy shall be filled by
appointing or electing the nominee of the Stockholder whose previous nominee is
deceased, retired or removed. In the event of the death or disability of Maxine
Clark, such vacancy shall be filled by a vote of greater than fifty percent
(50%) of the Senior Preferred Shares. In the event any Stockholder wishes to
remove an officer who has been elected as his or her nominee, the other
Stockholders shall cause the directors they have nominated to vote for such
removal. In the event a vacancy in the office of an officer so elected is caused
by death, retirement or removal of such officer other than Maxine Clark, the
vacancy shall be filled by appointing or electing the nominee of the Stockholder
whose previous nominee is deceased, retired or removed.

      11.4 Required Votes. Except as provided in this Agreement or the Bylaws of
the Corporation, all actions by the Board shall be by (i) simple majority of the
Board members present either in person or by telephone at a duly called meeting
at which a quorum is present or (ii) by written unanimous consent.

      11.5 Interested Directors. Persons nominated for the position of director
shall not be deemed disqualified to serve by reason of their being officers,
directors or stockholders of any of the Stockholders or their Affiliates. Except
as otherwise provided herein, no director shall be deemed to have an interest in
a matter and thereby disqualified to vote or serve on the ground that such
director is a nominee of one of the Stockholders if the matter under
consideration involves commercial, financial or other relationships between the
Corporation and any of the Stockholders or their Affiliates.

      11.6 Committees. The Directors designated by Catterton, Walnut and Windsor
shall each have the option to be appointed to any committees of the Board of
Directors, whether now existing or hereinafter created (but consistent with the
fiduciary duties of the members of the Board of Directors). No executive or
other committee consisting of less than all of the members of the Board of
Directors shall be established with the maximum powers of the Board of Directors
permitted under Delaware law to be delegated to a Board committee.

      11.7 Observer Rights. Each Director shall be entitled to have one
representative attend in a nonvoting observer capacity at all meetings of the
Board of Directors; provided, however, that the Corporation shall not be
required to pay the expenses of any such observer incurred with respect to
attending any meeting of the Board of Directors and reserves the right to
exclude such representative from access to any meeting or portion thereof if the
Corporation


                                       9
<PAGE>
reasonably believes that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons.

      12.   Arbitration.

      Any dispute between the Stockholders as to the interpretation of this
Agreement shall be settled by arbitration in accordance with the following
procedures:

      12.1 The party desiring to arbitrate an issue (the "Commencing Party")
shall send a notice to the other Stockholders (the "Responding Parties")
specifying in reasonable detail the issue to be arbitrated. The parties shall
thereafter agree as to the arbitrator to be used to decide the issue, but if the
parties do not agree on one arbitrator within three weeks of the Commencing
Party's sending such notice, or if the arbitrator selected by the parties is
unable or unwilling to serve as an arbitrator for any reason, the head of the
American Arbitration Association in St. Louis, Missouri shall select a single
arbitrator.

      12.2 Within five business days after selection, the arbitrator shall set a
date for the arbitration proceedings which shall be not later than 30 days
thereafter. The arbitration shall be conducted at such location in the St. Louis
Metropolitan area as may be selected by the arbitrator.

      12.3 The decision entered by the arbitrator shall be final and binding on
all parties to arbitration.

      12.4 Each party shall bear its respective arbitration expenses. The
Commencing Party shall pay fifty percent (50%) of the arbitrator's charges and
expenses and the Responding Parties shall collectively pay fifty percent (50%)
of the arbitrator's charges and expenses, pro rata according to their respective
Share percentages.

      13. Financial Statements and Other Information. The Corporation shall
maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP (it being understood that monthly financial statements are
not required to have footnote disclosures). The Corporation shall deliver to the
Stockholders each of the financial statements and other reports described below:

      13.1 Monthly and Quarterly Financial Information. As soon as available and
in any event within forty-five (45) days after the end of each month, the
Corporation shall deliver (i) the balance sheet of the Corporation, as at the
end of such month and the related statements of income, stockholders' equity and
cash flow for such month and for the period from the beginning of the then
current fiscal year of the Corporation to the end of such month (and, with
respect to financial statements delivered for months that are also the last
month of any fiscal quarter, accompanied by the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for such
fiscal quarter) and (ii) a schedule of the material outstanding Indebtedness for
borrowed money of the Corporation describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid



                                       10
<PAGE>

interest with respect to each such debt issue or loan. Notwithstanding
the foregoing to the contrary, from and after January 1, 2002, the financial
information required to be delivered pursuant to this paragraph shall be
delivered as soon as available following the end of each fiscal month, but in no
event later than thirty (30) days after the end of such fiscal month.

      13.2 Year-End Financial Information. As soon as available and in any event
within one hundred twenty (120) days after the end of the fiscal year of the
Corporation, the Corporation shall deliver (i) the balance sheets of the
Corporation as at the end of such year and the related statements of income,
stockholders' equity and cash flow for such fiscal year, (ii) a schedule of the
material outstanding Indebtedness for borrowed money of the Corporation
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan, and (iii) a report with respect to the financial
statements from a "Big Five" firm of certified public accountants selected
by the Corporation, which report shall be issued pursuant to an audit conducted
by such firm of certified public accountants in conformity with generally
accepted accounting standards. The Corporation shall use commercially reasonable
efforts to ensure that such report shall contain an "Unqualified" opinion (as
such term is defined in AU Section 508.10 of the American Institute of Certified
Public Accountants Professional Standards).

      13.3 Accountants' Reports. Promptly upon receipt thereof, the Corporation
shall deliver copies of all significant reports submitted by the Corporation's
firm of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of the Corporation made by such accountants, including
any comment letter submitted by such accountants to management in connection
with their services.

      13.4 Management Reports. The Corporation will deliver within forty-five
(45) days after the end of each fiscal month a management report (i) describing
the operations and financial condition of the Corporation for the month then
ended and the portion of the current fiscal year then elapsed (or for the fiscal
year then ended in the case of year-end financials), (ii) setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the most recent
projections for the current fiscal year and (iii) discussing the reasons for any
significant variations. The information above shall be presented in reasonable
detail and shall be certified by the chief financial officer of the Corporation
to the effect that such information fairly presents the results of operations
and financial condition of the Corporation as at the dates and for the periods
indicated.

      13.5 Projections. No earlier than sixty (60) days prior nor later than
thirty (30) days after the end of each fiscal year beginning with the current
fiscal year, the Corporation shall prepare and deliver to Stockholders
projections of the Corporation for the next succeeding fiscal year, on a month
to month basis and for the following four (4) fiscal years on a quarter to
quarter basis, including a balance sheet as of the end of each relevant period
and income statements and statements of cash flows for each relevant period and
for the period commencing at the beginning of the fiscal year and ending on the
last day of such relevant period.



                                       11
<PAGE>


      13.6 Events of Default, Etc. Promptly upon the Corporation's obtaining
knowledge of any of the following events or conditions, the Corporation shall
deliver copies of all notices given or received by the Corporation with respect
to any such event or condition and a certificate of the Corporation's chief
executive officer specifying the nature and period of existence of such event or
condition and what action the Corporation has taken, is taking and proposes to
take with respect thereto: (i) any condition or event that constitutes a
material breach of any provision of this Agreement; (ii) any notice that any
Person has given to the Corporation, or any other action, taken with respect to
a claimed default in any agreement evidencing indebtedness or any other material
agreement to which the Corporation is a party; or (iii) any event or condition
that could reasonably be expected to result in any Material Adverse Effect on
the Condition of the Corporation.

      13.7 Litigation. Promptly upon the Corporation's obtaining knowledge of
(i) the institution of any action, suit, proceeding, governmental investigation
or arbitration against or affecting the Corporation or any property of the
Corporation not previously disclosed by the Corporation to the Stockholders or
(ii) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting the
Corporation or any property of the Corporation which, in each case, is
reasonably possible to have a Material Adverse Effect on the Condition of the
Corporation, the Corporation will promptly give notice thereof to the
Stockholders and provide such other information as may be reasonably available
to them to enable the Stockholders and their counsel to evaluate such matter.

      14. Representations and Warranties. Each Stockholder represents and
warrants to the Corporation and the other Stockholders as follows:

      14.1 The execution, delivery and performance of this Agreement by such
Stockholder will not violate any provision of law, any order of any court or
other agency of government, or any provision of any indenture, agreement or
other instrument to which such Stockholder or any of its or his properties or
assets is bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
such Stockholder.

      14.2 This Agreement has been duly executed and delivered by such
Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable in accordance with its terms.

      14.3 The Shares set forth in EXHIBIT A opposite the name of such
Stockholder constitute all the shares of the capital stock of the Corporation
owned by such Stockholder or that such Stockholder has acquired or may acquire
pursuant to any stock purchase or other subscription agreements.

      15.   General Provisions.

                                       12

<PAGE>


      15.1 Governing Law. This Agreement shall be construed pursuant to the laws
of the State of Delaware, without regard to principles of conflict of laws.

      15.2 Definitions. Unless the context otherwise requires, the words
"Stockholder" and "Stockholders" shall for all purposes of this Agreement mean
and include (i) all of the individual parties hereto and (ii) all persons to
whom any Shares may hereafter be transferred. "Affiliate" or "Affiliates" shall
mean with respect to any Stockholder, any individual, partnership, limited
partnership, limited liability company, corporation, trust, real estate
investment trust, estate, association and other business or not for profit
entity ("Person") (ii) (a) who directly or indirectly controls, is controlled
by, or is under common control with the Stockholder; (b) who owns or controls
fifty percent (50%) or more of the Stockholder's outstanding voting securities
or equity interests; (c) in whom such Stockholder owns or controls fifty percent
(50%) or more of the outstanding voting securities or equity interests; (d) who
is a director, partner, member, manager, executive officer or trustee of the
Stockholder; (e) in whom the Stockholder is a director, partner, member,
manager, executive officer or trustee; or (f) who has any relationship with the
Stockholder by blood, marriage or adoption, not more remote than first cousin.

      15.3 Remedies for Breach. The Shares are unique chattels and each party to
this Agreement shall have the remedies which are available to him or it for the
violation of any of the terms of this Agreement, including, but not limited to,
the equitable remedies for specific performance and injunctive relief.

      15.4 Notices. All notices provided for by this Agreement shall be made in
writing (i) either by actual delivery or (ii) by the mailing of the notice in
the United States mail to the last known address of the party entitled thereto,
registered or certified mail, return receipt requested, courier service or
personal delivery and shall be deemed to have been duly given or made and to
have become effective when delivered in hand to the party to which directed,
when delivered by courier if delivered by commercial overnight courier service,
or if sent by first-class registered mail, postage prepaid and properly
addressed, at the earlier of (a) the time when received by the addressee or (b)
the fifth business day following the dispatch thereof.

      15.5 Amendment. This Agreement may be amended or altered at any time if
the amendment or alteration is both ratified by the Board of Directors of the
Corporation and consented to in writing by Stockholders who are parties to this
Agreement and who collectively own not less than seventy-five percent (75%) of
the Corporation's Shares.

      15.6 Descriptive Headings. Titles to Sections are for information purposes
only.

      15.7 Binding Effect. This Agreement is binding upon and inures to the
benefit of the Corporation, its successors, assigns, and transferees, and to the
Stockholders and their respective heirs, personal representatives, successors
and permitted assigns and transferees including any successor entity by merger
or consolidation to the Corporation, unless



                                       13
<PAGE>


Stockholders who own not less than two-thirds of the Corporation's Senior
Preferred Shares (as defined in the Certificate of Incorporation) approve the
merger or consolidation.

      15.8 Conflict With Bylaws. If any terms or provisions in this Agreement
conflict with or are inconsistent with the terms of the Bylaws of the
Corporation, then the terms of this Agreement shall control.





                                       14
<PAGE>


                               SIGNATURE PAGES FOR
                   AMENDED AND RESTATED STOCKHOLDERS AGREEMENT


      IN WITNESS WHEREOF, the Corporation and the Stockholders have executed
this Agreement on the day and year above written.

      THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

                                  BUILD-A-BEAR WORKSHOP, INC.



                                  By  /s/ Maxine Clark
                                    -----------------------------
                                    Maxine Clark, President

                                  STOCKHOLDERS:

                                  SMART STUFF, INC.,
                                  a Missouri corporation


                                   /s/ Maxine Clark
                                  -------------------------------
                                  By:  Maxine Clark


                                  CLARK/FOX, L.L.C.
                                  a Missouri limited liability company


                                   /s/ Maxine Clark
                                  -------------------------------
                                  By:  Maxine Clark, its Manager


                                  CLARK/FOX II, L.L.C.
                                  a Missouri limited liability company


                                   /s/ Maxine Clark
                                  -------------------------------
                                  By:  Maxine Clark, its Manager


                                   /s/ Maxine Clark
                                  -------------------------------
                                  Maxine Clark



<PAGE>




                                  Barney A. Ebsworth Revocable Trust dated
                                  July 23, 1986


                                  Barney A. Ebsworth Rev. Tr.
                                  -----------------------------------
                                  By:  /s/ Barney A. Ebsworth
                                     --------------------------------


                                    /s/ Wayne L. Smith, II
                                  ---------------------------
                                  Wayne L. Smith, II


                                     /s/ Brian Vent
                                   Brian Vent


                                  HYCEL PARTNERS V, L.L.C.,
                                  a Missouri limited liability company

                                       /s/ Mark H. Zorensky
                                  -------------------------------
                                  By:  Mark H. Zorensky, Manager
                                       ----------------------------


                                  WALNUT CAPITAL PARTNERS, L.P.,
                                  a Delaware limited partnership

                                  By:  Walnut Capital Management Group, LLC,
                                       its general partner

                                  By:  /s/ James M. Gould
                                       -----------------------
                                       Manager


                                  WALNUT INVESTMENT PARTNERS, L.P.,
                                  a Delaware limited partnership

                                  By: Walnut Investments Holding Company, LLC,
                                      its general partner


                                  By:  /s/ James M. Gould
                                      ------------------------
                                       Manager




                                       2
<PAGE>



                                  KCEP VENTURES II, L.P.,
                                  a Missouri limited partnership

                                  By: KCEP II, L.C., its general partner

                                  By:    /s/ William Reisler
                                       ----------------------------------
                                       William Reisler, its Managing Director


                                  CATTERTON PARTNERS IV, L.P.,
                                  a Delaware limited partnership

                                  By:    Catterton Managing
                                  Partner IV, L.L.C.
                                  Its:   General Partner

                                  By:    CP4 Principals, L.L.C.
                                  Its:   Managing Member

                                  By:       /s/ Frank M. Vest, Jr.
                                         ----------------------------------
                                  Name:   Frank M. Vest, Jr.
                                  Title:  Authorized Person


                                  CATTERTON PARTNERS IV-A, L.P.,
                                  a Delaware limited partnership

                                  By:    Catterton Managing
                                  Partner IV, L.L.C.
                                  Its:    General Partner

                                  By:    CP4 Principals, L.L.C.
                                  Its:   Managing Member

                                  By:       /s/ Frank M. Vest, Jr.
                                         ----------------------------------
                                  Name:    Frank M. Vest, Jr.
                                  Title:   Authorized Person





                                       3
<PAGE>



                                  CATTERTON PARTNERS IV-B, L.P.,
                                  a Delaware limited partnership
                                  By:    Catterton Managing
                                  Partner IV, L.L.C.
                                  Its:    General Partner

                                  By:    CP4 Principals, L.L.C.
                                  Its:   Managing Member

                                  By:       /s/ Frank M. Vest, Jr.
                                         ----------------------------------
                                  Name:    Frank M. Vest, Jr.
                                  Title:   Authorized Person


                                  CATTERTON PARTNERS IV OFFSHORE, LP.
                                  a Cayman limited partnership

                                  By:    Catterton Managing
                                  Partner IV, L.L.C.
                                  Its:   Managing General Partner

                                  By:    CP4 Principals, L.L.C.
                                  Its:   Managing Member

                                  By:       /s/ Frank M. Vest, Jr.
                                         ----------------------------------
                                  Name:    Frank M. Vest, Jr.
                                  Title:   Authorized Person


                                  CATTERTON PARTNERS IV SPECIAL PURPOSE, L.P.
                                  a Cayman limited partnership

                                  By:    Catterton Managing Partner IV, L.L.C.
                                  Its:   Managing General Partner

                                  By:    CP4 Principals, L.L.C.
                                  Its:   Managing Member

                                  By:       /s/ Frank M. Vest, Jr.
                                         ----------------------------------
                                  Name:    Frank M. Vest, Jr.
                                  Title:   Authorized Person



                                       4
<PAGE>



                                  The following persons are executing this
                                  document solely with respect to the Sections 1
                                  through 12, 14 and 15 of this Agreement:



                                    /s/ Adrienne Weiss
                                  ------------------------------
                                  Adrienne Weiss


                                   /s/ Christianne Ebsworth
                                  ------------------------------
                                  Christianne Ebsworth


                                   /s/ Thomas Holley
                                  ------------------------------
                                  Thomas Holley







                                       5
<PAGE>



                                                                      SCHEDULE 1

                                  STOCKHOLDERS

       Smart Stuff, Inc., a Missouri corporation ("SSI");
       Barney A. Ebsworth Revocable Trust dated July 23, 1986 (the "Trust")
       Maxine Clark ("Clark");
       Wayne L. Smith, II ("Smith");
       Brian Vent ("Vent");
       Hycel Partners V, L.L.C., a Missouri limited liability company ("Hycel");
       Walnut Capital Partners, L.P., a Delaware limited partnership and Walnut
       Investment Partners, L.P., a Delaware limited partnership
       (collectively, "Walnut");
       KCEP Ventures II, L.P., a Missouri limited partnership ("KCEP");
       Adrienne Weiss ("Weiss");
       Christianne Ebsworth;
       Thomas Holley;
       Clark/Fox, L.L.C., and Clark/Fox II, L.L.C., each a Missouri limited
       liability company (collectively, "Clark/Fox"); and
       Catterton Partners IV, L.P., Catterton Partners IV-A, L.P., and Catterton
       Partners IV-B, L.P., each a Delaware limited partnership, Catterton
       Partners IV Offshore, L.P. a Cayman Island limited partnership and
       Catterton Partners IV Special Purpose, L.P. a Cayman Island limited
       partnership (collectively, "Catterton").


<PAGE>



                                                                       EXHIBIT A


                        SHARES OWNED BY THE STOCKHOLDERS
<TABLE>
<CAPTION>


                        STOCKHOLDER                CLASS             SHARES OWNED
----------------------------------------------- ------------- ---------------------------
<S>                                             <C>           <C>
SSI                                             C                              3,418,306

Trust                                           C                                911,383

                                                A                              1,264,278

                                                B                                190,963

                                                Common                            84,791

Clark                                           Common                           274,815

Smith                                           C                                 64,500

                                                A                                  3,230

                                                B                                  4,881

                                                D                                 18,409

Vent                                            C                                 64,500

                                                A                                  3,230

                                                B                                  4,881

                                                D                                 18,409

                                                Common                            20,491

Hycel                                           A                                160,782

                                                B                                306,783

                                                D                                131,148

                                                Common                            23,572

Walnut Capital Partners, L.P.                   A                             913,199.85

                                                B                            1,380,418.4

                                                Common                          93,863.8

Walnut Investment Partners, L.P.                D                                677,869

KCEP                                            A                                231,708

                                                B                                350,115

                                                D                                426,230

                                                Common                            10,352
</TABLE>
                                       2
<PAGE>
<TABLE>
<CAPTION>
<S>                                             <C>           <C>

                                                C                                 65,276

Weiss                                           A                                  3,269

                                                B                                  4,940

                                                D                                 18,631

Christianne Ebsworth                            C                                474,124

Thomas Holley                                   Common                           4,940.2

                                                A                              48,063.15

                                                B                               72,653.6

Clark/Fox, L.L.C.                               A                                171,200

                                                B                                258,686

                                                D                                 65,574

Clark/Fox II, L.L.C.                            D                                147,541

Catterton                                       A                                707,992

                                                B                              1,069,786

                                                D                              1,305,738



</TABLE>



                                        3
<PAGE>



                                                                       EXHIBIT B


                       DETERMINATION OF THE PURCHASE PRICE


      1. The price of Shares to be purchased under this Agreement shall be their
Fair Market Value as of the end of the Corporation's fiscal quarter immediately
preceding the event giving rise to the purchase and sale.

      2. The term "Fair Market Value" as used in paragraph 1 of this EXHIBIT B
shall be an amount which bears the same proportion to the amount of the Net
Worth of the Corporation as the number of Shares to be purchased bears to the
total number of the Corporation's Shares outstanding.

      3. The Net Worth of the Corporation shall be the price at which the
Corporation would be sold to a willing buyer by willing seller. The Net Worth of
the Corporation shall be determined by agreement of the Board of Directors of
the Corporation (with the transferring Stockholder not participating) and the
transferring Stockholder. If the Corporation and the transferring Stockholder
are unable to agree as to the Net Worth of the Corporation, then the Net Worth
of the Corporation shall be determined by one or more qualified business
appraisers selected in the following manner:

                   a.        The Corporation and the transferring
                   Stockholder shall attempt jointly to select an
                   appraiser within 30 days after the event giving rise
                   to the purchase and sale. If an appraiser is so
                   selected in a timely manner, the appraisal shall be
                   binding on all parties.

                   b.        If the Corporation and the transferring
                   Stockholder are unable jointly to select an appraiser
                   in a timely manner, the Corporation shall select an
                   appraiser within 40 days of the event giving rise to
                   the purchase and sale and shall notify the
                   transferring Stockholder of its selection within one
                   business day thereafter. The Corporation shall pay
                   the costs of such appraisal and shall provide the
                   transferring Stockholder with a copy of such
                   appraisal within one business day after receipt of
                   the appraisal by the Corporation. Unless the
                   transferring Stockholder submits to the Corporation
                   not later than 5 business days thereafter written
                   notice that the transferring Stockholder objects to
                   the appraisal, such appraisal shall be binding on all
                   the parties.

                   c.        If the transferring Stockholder delivers
                   to the Corporation timely written notice of objection
                   to the Corporation's appraisal as above provided, the
                   transferring Stockholder shall select an appraiser
                   within 5 business days after the date of the
                   Stockholder's written objection, and shall notify the
                   Corporation of such selection within one business day

<PAGE>



                   thereafter. The Transferring Stockholder shall pay
                   the costs of such appraisal obtained by the
                   transferring Stockholder. The transferring
                   Stockholder shall provide the Corporation with a copy
                   of such appraisal within one business day after
                   receipt of the appraisal by the transferring
                   Stockholder. If the transferring Stockholder declines
                   or fails to make a timely selection of an appraiser,
                   then the single appraisal obtained by the Corporation
                   as above provided shall be binding on all parties.

                   d.        If the two appraisals differ in value by
                   less than 15%, the average of the two appraisals
                   shall be binding on all parties.

                   e.        If the two appraisals differ in value by
                   more than 15%, the appraisers who made the two
                   appraisals shall select a third appraiser, and shall
                   notify the transferring Stockholder and the
                   Corporation of such selection within one business day
                   thereafter. The cost of the third appraisal shall be
                   split evenly between the Transferring Stockholder and
                   the Corporation. The third appraiser shall select one
                   of the two previously prepared appraisals, and such
                   selection shall be binding on all parties.


                                       2
<PAGE>
                                                                       EXHIBIT C


                                 PROMISSORY NOTE


$ ______________                                          ______________, ______


      For value received, the undersigned promises to pay to __________ or order
the sum of $____ at________, with interest at ________ percent (__%) per annum,
in installments payable as follows: Monthly payments in the sum of $_______,
the first payment to be made on the _____ day of ___________________, _____ and
a like amount on the ____ day of each succeeding month thereafter with the final
payment on the then outstanding principal balance to be made on the _____ day
___________________,____.

      This Note and all installments are to bear interest after maturity thereof
at the rate of ______ percent (__%) per annum. The interest on each installment,
and the interest on the unpaid balance of the principal sum are to be paid at
the maturity of each installment.

      If default is made in the payment of any installment whether interest or
principal, when due, then all the remaining installments shall, at the option of
the holder, become due and payable at once. In addition, in the event of a sale
of assets by the Maker, other than in the ordinary course of business, or as
trade-ins or other sale or exchange for the purpose of replacing any such
assets, or the sale of Shares by the current stockholders to a new stockholder,
or the issuance of new stock by the Maker to someone other than the current
stockholders, the Holder may, at the Holder's option, declare this Note
immediately due and payable to the extent of the proceeds received by the Maker
upon such sale.

      In case suit shall be brought on this Note, the Maker agrees to pay the
Holder's reasonable attorney's fees and Court costs. All signers, endorsers,
guarantors and parties to this instrument hereby waive demand, protest and
notice of nonpayment and agree to all extensions and partial payments before or
after maturity.



                  By:
                     --------------------------------
                                          , President
                       -------------------
ATTEST:


--------------------------------
                     , Secretary
---------------------


<PAGE>



                                                                       EXHIBIT D


                           COLLATERAL PLEDGE AGREEMENT


      In consideration of, and as collateral security for the payment of, the
liabilities of ___________________ (the "Pledgor"), to ___________________ (the
"Pledgee") evidenced by or arising in connection with (1) a certain
Stockholders' Agreement entered into between Pledgor and Pledgee on April 3,
2000, and (2) a certain Promissory Note of even date herewith executed by the
Pledgor and payable to Pledgee' and all renewals and extensions of such
liabilities (herein collectively called the "Liabilities"), Pledgor hereby
assigns, pledges and delivers to Pledgee ____________ shares of the
________________ stock of Build-A-Bear Workshop, Inc. and grants Pledgee a
continuing security interest in said shares, together with all proceeds thereof,
substitutions therefor and rights associated therewith (referred to collectively
herein as the "Collateral"), all of which the Pledgor owns free of liens or
claims of any kind and has the right to pledge to Pledgee.

      Pledgor hereby agrees that the Collateral shall constitute security for
any and all of the Liabilities. Pledgor authorizes Pledgee to cause any
Collateral to be transferred, in such manner and at such time(s) as Pledgee may
determine, into the names of Pledgee or Pledgee's nominees and this instrument
shall constitute Pledgee's authority to make such transfer(s).

      Pledgor agrees that:

      (1) Pledgor will execute, endorse and deliver all documents which Pledgee
may reasonably require to secure Pledgee's interests under this Collateral
Pledge Agreement.

      (2) Pledgor shall have no right to call, exchange, convert or otherwise
change or alter the form of the Collateral without the consent of Pledgee so
long as any portion of the Liabilities remain unpaid. Any dividend, increase or
distribution paid in cash out of the earnings of the issuer of any stock
constituting a part of the Collateral shall be released to Pledgor by Pledgee
unless such Collateral is transferred into the name of Pledgee or Pledgee's
nominee, and Pledgor shall retain all voting rights with respect to such
Collateral, except in the case of a default as defined herein. Any instruments,
securities, rights or the like which an owner of the Collateral has the right to
receive by way of stock split-up, stock dividend, warrants or other increase in
the Collateral (except dividends as set forth above) will be delivered to
Pledgee and Pledgee may, without notice or demand, take such action as is
necessary to assure Pledgor's direct receipt thereof.

      (3) The following events shall severally be considered events of default:
(a) material misrepresentation of any fact or warranty stated or made to Pledgee
by Pledgor, (b) failure by Pledgor to perform any term or provision of this or
any other agreement with Pledgee, (c) default in the payment of any sum due on
any of the Liabilities, (d) Pledgor's insolvency, adjudication of bankruptcy,
making an assignment for the benefit of creditors or


<PAGE>

suffering appointment of a receiver or seeking relief under any debtor's relief
law, (e) seizure of the Collateral by lawful execution or the sale or
encumbrance thereof (except as provided herein), failure to pay any tax thereon
when due (except any tax contested in good faith) or default on any debt or
security instrument constituting part of the Collateral , (f) material default
under the Stockholder's Agreement. Upon any such event of default all of the
Liabilities shall, at the option of Pledgee, become immediately due and payable
and Pledgee may without notice or demand (i) offset any obligations of Pledgee
to Pledgor against any of the Liabilities and (ii) forthwith realize upon the
Collateral or any part thereof and receive the proceeds therefrom, and may also,
without demand, advertisement or notice, sell at public or private sale, or at
any exchange or broker's board, at such prices and upon such terms and
conditions as Pledgee may deem best, either for cash or on credit, or for future
delivery, any part or all of such Collateral. Pledgee shall have the right at
any such sale, public or private, to purchase the whole or any part of such
Collateral so sold, provided that any excess of such Collateral or proceeds
thereof over the amount of the Liabilities shall be returned to the Pledgor.

      (4) In addition, Pledgee shall have all rights of a secured party under
the Missouri Uniform Commercial Code and shall first be entitled to apply the
proceeds of collection, disposition or other realization on the Collateral to
reasonable attorneys' fees and legal expenses incurred by Pledgee in the
collection of any Liabilities, and thereafter as required by law.

      (5) If notice of default or of intended disposition is required by law,
then such notice, if mailed, shall be deemed reasonably and properly given if
mailed by or on behalf of Pledgee to the principal business address of Pledgor
at least ten (10) days before the time of such disposition. If in the opinion of
Pledgee any Collateral cannot be disposed of in a commercially reasonable manner
without registration under applicable securities laws, Pledgor will take or
cause to be taken such action as is necessary to effect proper registration, and
if Pledgor shall refuse to take such action, Pledgee, at his or her sole
election, but without any obligation to do so, may take such action as he or she
deems warranted to effect or attempt to effect compliance with any applicable
law and any cost incurred by Pledgee in connection therewith or in enforcing
Pledgor's agreement will be considered a cost incurred in disposition of the
Collateral.

      (6) Pledgee's rights hereunder shall continue unimpaired notwithstanding
foreclosure or other disposition of any part of the Collateral, the availability
of additional Collateral, any release of or substitution for any of the
Collateral, any act or omission impairing Pledgee's lien on the Collateral or
the lien of any underlying security constituting part of the Collateral,
including failure to perfect the same, any extension (including extension of
time for payment), renewal, substitution, alteration, compromise, settlement,
surrender or other such agreement or action transferring, modifying or varying
the terms of or otherwise affecting any of the Liabilities or any part of the
Collateral, including any act or omission releasing any party primarily or
secondarily liable on the Collateral or on any of the Liabilities. No failure by
Pledgee to exercise or delay in exercising any of his or her rights hereunder
shall constitute a waiver thereof by Pledgee and no single or partial exercise
of any right shall preclude the further exercise thereof or the exercise of any
other right from time to time. All rights granted to Pledgee hereunder are
cumulative and not in substitution of any other rights at law or equity with



                                       2
<PAGE>


respect to the Collateral or the collection of the Liabilities. Pledgor hereby
waives notice of any and all actions, forbearance's and omissions of any rights
contemplated by this section and consents to be bound thereby as effectively as
if Pledgor had agreed thereto in advance.

      (7) Pledgee may assign or negotiate and deliver any of the Collateral to
any transferee of any of the Liabilities and Pledgee shall thereafter be
relieved of any responsibility for the Collateral so transferred and all rights
of Pledgee hereunder shall inure to his or her transferees.

      (8) This Agreement shall be governed by Missouri law and the rights and
obligations hereunder shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, assigns, legatees, transferees and
legal representatives.




                     ---------------------------------------------
                                        Pledgor








                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>10
<FILENAME>c86750exv4w5.txt
<DESCRIPTION>AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
<TEXT>
<PAGE>

                                                                     EXHIBIT 4.5

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT


         THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement"), dated as of 21st day of September, 2001, among BUILD-A-BEAR
WORKSHOP, INC., a Delaware corporation (the "Company"), SMART STUFF, INC., a
Missouri corporation ("SSI"), MAXINE CLARK ("Clark"), CHRISTIANE EBSWORTH,
BARNEY A. EBSWORTH REVOCABLE TRUST DATED JULY 23, 1986 ("Trust"), WAYNE L.
SMITH, II ("Smith"), BRIAN VENT ("Vent"), THOMAS HOLLEY ("Holley"), HYCEL
PARTNERS V, L.L.C., a Missouri limited liability company ("Hycel"), WALNUT
CAPITAL PARTNERS, L.P., a Delaware limited partnership ("WCP"), WALNUT
INVESTMENT PARTNERS, L.P., a Delaware limited partnership ("WIP"), KCEP VENTURES
II, L.P., a Missouri limited partnership ("KCEP"), ADRIENNE WEISS ("Weiss"),
CATTERTON PARTNERS IV, L.P., CATTERTON PARTNERS IV-A, L.P. and CATTERTON
PARTNERS IV-B, L.P., each a Delaware limited partnership, CATTERTON PARTNERS IV
OFFSHORE, L.P., a Cayman Island limited partnership and CATTERTON PARTNERS IV
SPECIAL PURPOSE, L.P., a Cayman Island limited partnership (collectively,
"Catterton"), CLARK/FOX, L.L.C., a Missouri limited liability company
("Clark/Fox"), and CLARK/FOX II, L.L.C., a Missouri limited liability company
("Clark/Fox II") (SSI, Clark, Christiane Ebsworth, Trust, Smith, Vent, Holley,
Hycel, WCP, WIP, KCEP, Weiss, Catterton, Clark/Fox and Clark/Fox II
collectively, "Holders").

         1. Background. Certain of the parties originally entered into that
certain Registration Rights Agreement dated April 3, 2000 (the "Original
Agreement"). Due to an additional issuance of preferred stock, the parties now
desire to amend and restate the Original Agreement and the Original Agreement
shall be deemed superseded in its entirety upon execution of this Agreement by
the requisite number of Holders required to amend the Original Agreement. It is
contemplated that the Company may effect an initial public offering of
securities (the "Initial Public Offering") and the parties to this Agreement
desire to define the respective rights and obligations of the Holders and the
Company with respect to the registration, upon and after the Initial Public
Offering, of Registrable Securities of the Company held by the Holders.

         2.   Registration under Securities Act, etc.

                  2.1   Registration of Registrable Securities on Demand.

                        (a) Priority Demand. At any time subsequent to the date
that is eighteen (18) months after the date of this Agreement, but subject to
Section 2.3, a Series D Holder or Series D Holders of at least a majority of the
originally issued Series D Registrable Securities in the Company shall have the
right to demand in writing that the Company use its reasonable best efforts to
effect an underwritten registration under the Securities Act of 1933, as amended
(the "Securities Act"), of at least two-thirds (2/3) of the shares of common
stock issuable upon conversion of Series D Registrable Securities originally
issued to such Series D Holders; provided, however, that the only securities
which the Company shall be required to register pursuant hereto shall be shares
of common stock of the Company; provided further, that

<PAGE>




if the requested registration is the Company's Initial Public Offering, the
reasonably anticipated aggregate price to the public would equal at least $25
million (otherwise, such aggregate price to the public shall be $2,000,000); and
provided, further, notwithstanding anything to the contrary contained herein,
that if, at any time after giving written notice of their intention to register
such securities and prior to filing the registration statement in connection
with such registration, the Company may elect to delay the filing of such
registration, in the reasonable judgment of the Board of Directors, for a period
of up to ninety (90) days upon giving written notice of such determination to
each Series D Holder. In no event shall the Company be obligated to effect more
than one (1) registration under this Section 2.1(a).

                        (b) Demand. At any time subsequent to the date that is
six (6) months after the date the Company's Initial Public Offering is
consummated, but subject to Section 2.3, a Holder or Holders that own
Registrable Securities equal to or greater than ten percent (10%) of the
outstanding Registrable Securities in the Company shall have the right to demand
in writing that the Company effect an underwritten registration under the
Securities Act, of all or part of such Holders' Registrable Securities;
provided, however, that the only securities which the Company shall be required
to register pursuant hereto shall be shares of common stock of the Company;
provided further, that the reasonably anticipated aggregate price to the public
would equal at least $2 million. In no event shall the Company be obligated to
effect more than two (2) registrations under this Section 2.1(b), other than
registrations on Form S-3 (as defined herein).

                        (c) Effecting the Registration. The Company will
promptly give written notice of any registration requested under Sections 2.1(a)
and 2.1(b) to all other Series D Holders in the case of registration requests
under Section 2.1(a) or all other Holders in all other cases, which Holders
shall be entitled to include, with respect to Section 2.1(a) their Series D
Registrable Securities and with respect to Section 2.1(b) their Registrable
Securities, in such registration subject to Sections 2.1(d) and 2.1(i).
Thereupon the Company will use its best efforts to effect the registration under
the Securities Act of:

                            (i) the Series D Registrable Securities or the
                   Registrable Securities which the Company has been so
                   requested to register by the Holders making the registration
                   demand under Sections 2.1(a) or 2.1(b), as applicable; and

                            (ii) subject to Sections 2.1(d) and 2.1(i), all
                   other Series D Registrable Securities or Registrable
                   Securities, as applicable, which the Company has been
                   requested to register by the Holders thereof by written
                   request given to the Company within twenty (20) days after
                   the giving of such written notice by the Company (which
                   request shall specify the intended method of disposition of
                   such Series D Registrable Securities or Registrable
                   Securities, as applicable) all to the extent requisite to
                   permit the disposition of the Series D Registrable Securities
                   or the Registrable Securities, as applicable, so to be
                   registered.

The Company shall be entitled to include in any registration statement referred
to in this Section 2.1, for sale in accordance with the method of disposition
specified by the requesting Holders, shares of common stock of the Company to be
sold by the Company for its own


                                       2
<PAGE>




account, except as and to the extent that, in the opinion of the managing
underwriter, such inclusion would adversely affect the marketing or pricing of
the Registrable Securities to be sold.

                        (d) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1, Series D
Registrable Securities held by Series D Holders other than the Holder or Holders
that make the registration demand under Section 2.1(a) and Registrable
Securities held by Holders other than the Holder or Holders that make the
registration demand under Section 2.1(b), shall, upon the request of such
Holders, be included in the registration unless the managing underwriter of such
offering shall have advised each Series D Holder of Series D Registrable
Securities and each Holder of Registrable Securities, as applicable, to be
covered by such registration in writing that the inclusion of such other Series
D Registrable Securities or Registrable Securities, as applicable, would, in the
opinion of the underwriter, materially adversely affect the marketing or the
selling price of the Series D Registrable Securities or Registrable Securities,
as applicable, to be covered by such registration. In such event, the Series D
Registrable Securities or Registrable Securities, as applicable, to be included
in the registration shall be allocated pro rata among the Holders demanding or
requesting registration, all as set forth in Section 2.1(i). The Company will
not grant to any person at any time on or after the date hereof the right to be
included among the securities registered pursuant to this Section 2.1 that is
inconsistent with the provisions of this Section 2.1(d).

                        (e) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form or prospectus of
the Commission (i) as shall be reasonably selected by the Company provided,
however, that the Company shall be entitled to use Form S-3 promulgated under
the Securities Act or any successor form thereto ("Form S-3") if eligible to do
so, and (ii) as shall permit the disposition of such Series D Registrable
Securities or Registrable Securities, as applicable, in accordance with the
intended method or methods of disposition specified in their demand for such
registration.

                        (f) Expenses. The Company will pay all Registration
Expenses for all Holders participating in a registration in connection with the
registration demands made pursuant to this Section 2.1 other than with respect
to registrations on Form S-3, in which case the Holders shall pay their own
expenses.

                        (g) Effective Registration Statement. A registration
demanded pursuant to this Section 2.1 shall not be deemed to have been effected
and shall not count as a demand registration pursuant to Section 2.1(a) or
Section 2.1(b), as applicable, hereof (i) unless a registration statement with
respect thereto has become effective, (ii) if a registration statement has been
filed with the Commission and prior to its becoming effective a majority of,
with respect to Section 2.1(a) the Series D Holders of the Series D Registrable
Securities or with respect to Section 2.1(b) the Holders of the Registrable
Securities, as applicable, that have demanded registration has decided to
terminate the registration process and has agreed in writing to reimburse the
Company for all reasonable Registration Expenses, (iii) if after it has become
effective, such registration is subject to any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court or
is withdrawn, suspended or


                                       3

<PAGE>




terminated by the Company, for any reason not the fault of a Holder of Series D
Registrable Securities or Registrable Securities, as applicable, and the Series
D Registrable Securities or Registrable Securities, as applicable, covered
thereby have not been sold, or (iv) if the conditions to closing specified in
the selling agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived by the parties thereto other than
a Holder of Series D Registrable Securities or Registrable Securities, as
applicable.

                        (h) Underwriters. Any registration effected pursuant to
Section 2.1(a) shall, at the election of the Company or the Holders requesting
such registration, be an underwritten public offering on a firm commitment basis
and, in such case, the Holders requesting such registration shall have the right
to select a nationally recognized managing underwriter or underwriters, subject
to the approval of the Company, which approval shall not be unreasonably
withheld. Any registration effected pursuant to Section 2.1(b) shall, at the
election of the Holders of at least fifty percent (50%) (by number of shares or
other equity interests) of the Registrable Securities held by the Holders making
the registration demand under Section 2.1(b), be an underwritten public offering
on a firm commitment basis or a best efforts basis. The managing underwriter or
underwriters thereof shall be selected by the Company and such managing
underwriting or underwriters, as well as the price, terms and provisions of the
offering, shall be subject to the approval of the Company and the Holders of
more than fifty percent (50%) (by number of shares) of the Registrable
Securities held by the Holders making the registration demand under Section
2.1(b).

                        (i) Apportionment in Registrations Requested. If, in
connection with a registration demanded pursuant to this Section 2.1, the
managing underwriter shall advise the Company in writing that, in its opinion,
the number of securities requested to be included in such registration would be
likely to have an adverse effect on marketing the offering, the Company will
include in such registration prior to including any other shares in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, Series D Registrable Securities or Registrable
Securities, as applicable, requested to be included in such registration pro
rata among the Holders thereof requesting such registration on the basis of the
percentage of the Series D Registrable Securities or Registrable Securities, as
applicable, sought to be registered held by such Holders of Series D Registrable
Securities or Registrable Securities, as applicable, which have requested that
such Series D Registrable Securities or Registrable Securities, as applicable,
be included.

                  2.2   "Piggyback" Registrations.

                        (a) Right to Include Registrable Securities. If the
Company at any time subsequent to its Initial Public Offering proposes to
register any of its common stock under the Securities Act (other than by a
registration on Form S-4 or Form S-8 or any other form not available for
registering restricted stock for sale to the public), whether or not for sale
for its own account, it will each such time give prompt written notice to all
Holders of Registrable Securities of its intention to do so and of such Holders'
rights under this Section 2.2. Upon the written request of any such Holder made
within ten (10) days after the date of any such notice given in accordance with
Section 7 hereof, the Company will use its best efforts to effect the
registration


                                       4
<PAGE>




under the Securities Act of all Registrable Securities which the Company has
been so requested to register by the Holders thereof, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered,
provided, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to effect or to delay such registration, the
Company may, at its election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration, without
prejudice, however to the rights of any Holder or Holders of Registrable
Securities entitled to do so to request that such registration be effected as a
demand registration under Section 2.1, and (ii) in the case of a determination
to delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. No registration effected under this Section 2.2 shall relieve the
Company of its obligation to effect any demand registration under Section 2.1.
Each participating Holder will pay all Registration Expenses allocable or
otherwise applicable to such Holder in connection with each registration of
Registrable Securities requested pursuant to this Section 2.2.

                        (b) Apportionment in "Piggyback" Registrations. If (i) a
registration to this 2.2 involves an underwritten offering of the securities
being registered, whether or not for sale for the account of the Company, to be
distributed (on a firm commitment basis) by or through one or more underwriters
of recognized national or regional standing under underwriting terms appropriate
for such a transaction, and (ii) the managing underwriters of such underwritten
offering shall inform the Company in writing that in its opinion, that the
number of securities requested to be included in such registration would be
likely to have an adverse effect on marketing the offering, then the Company may
include all securities proposed by the Company to be sold for its own account or
the maximum amount that the underwriters considers saleable and such limitation
on any remaining securities that may, in the opinion of the underwriter, be sold
will be imposed pro rata among Holders of Registrable Securities on the basis of
the percentage of the securities sought to be registered, provided, however,
that no holders of securities other than Holders of Registrable Securities shall
be entitled to include their securities in such registration if such limitation
is imposed on Holders of Registrable Securities.

                        (c) Notwithstanding anything to the contrary contained
in this Section 2.2, if, in the event of a firm commitment underwritten public
offering of the Company's common stock a Holder of Registrable Securities does
not elect, or is not allowed (at the discretion of the underwriters thereof), to
sell his Registrable Securities in connection with such offering, such Holder
shall refrain from selling such Registrable Securities during the period of
distribution of the common stock of the Company by such underwriters.


                                       5
<PAGE>




         2.3 Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
and under the Securities Act as provided in Sections 2.1 and 2.2, the Company
will as expeditiously as possible:

                    (i) prepare and (as soon thereafter as possible or in any
         event no later than forty-five (45) days after the end of the period
         within which requests for a registration may be given to the Company)
         file with the Commission a registration statement (which, in the case
         of an underwritten public offering, shall be on Form S-1, Form S-3 or
         other form of general applicability satisfactory to the managing
         underwriter) to effect such registration and thereafter use its best
         efforts to cause such registration statement to become effective,
         provided that the Company may discontinue and/or delay any registration
         of the securities which are not Registrable Securities (and, under the
         circumstances specified in Section 2.2(a), its securities which are
         Registrable Securities) at any time prior to the effective date of the
         registration statement relating thereto;

                    (ii) prepare and file with the Commission such amendments
         and supplements to such registration statement and the prospectus used
         in connection therewith as may be necessary to keep such registration
         statement effective and to comply with the provisions of the Securities
         Act with respect to the disposition of all securities covered by such
         registration statement until such time as all of such securities have
         been disposed of in accordance with the intended methods of disposition
         by the Holder or Holders thereof set forth in such registration
         statement or for one hundred eighty (180) days, whichever period is
         shorter;

                    (iii) furnish to each Holder of Registrable Securities
         covered by such registration statement such number of conformed copies
         of such registration statement and of each such amendment and
         supplement thereto, such number of copies of the prospectus contained
         in such registration statement (including each preliminary prospectus
         and any summary prospectus) and any other prospectus filed under Rule
         424 or Rule 430A under the Securities Act, in conformity with the
         requirements of the Securities Act, and such other documents, as such
         Holder may reasonably request;

                    (iv) use its best efforts to register or qualify all
         Registrable Securities and other securities covered by such
         registration statement under such other securities or blue sky laws of
         such jurisdictions as each Holder thereof shall reasonably request, to
         keep such registration or qualification in effect for so long as such
         registrations statement remains in effect, and take any other action
         which may be reasonably necessary to enable such Holder or Holders to
         consummate the disposition in such jurisdictions of the securities
         owned by such Holder or Holders, except that the Company shall not for
         any such purpose be required to qualify generally to do business as a
         foreign corporation in any jurisdiction wherein it would not but for
         the requirements of this subdivision (iv) be obligated to be qualified
         or to consent to general service of process in any such jurisdiction or
         subject itself to be required to pay any franchise or income taxes in
         any such jurisdiction;


                                       6
<PAGE>




                    (v) use its best efforts to cause all Registrable Securities
         covered by registration statement to be registered with or approved by
         such other governmental agencies or authorities as may be necessary to
         enable the Holder or Holders thereof to consummate the disposition of
         such Registrable Securities;

                    (vi) use its best efforts to cause to be furnished to each
         Holder of Registrable Securities as signed counterpart, addressed to
         such Holder (and the underwriters, if any), of

                            (x) an opinion of counsel for the Company, dated the
               effective date of such registration statement (and, if such
               registration includes an underwritten public offering, dated the
               date of the closing under the underwriting agreement), reasonably
               satisfactory in form and substance to counsel for all such
               Holders or, if such registration includes an underwritten public
               offering, to such underwriter, and

                            (y) a "comfort" letter, dated the effective date of
               such registration statement (and, if such registration includes
               an underwritten public offering, dated the date of the closing
               under the underwriting agreement), signed by the independent
               public accountants who have certified the Company's financial
               statements included in such registration statement, addressed to
               each Holder, to the extent the same can be reasonably obtained,
               and addressed to the underwriters, if any, covering substantially
               the same matters with respect to such registration statement (and
               the prospectus included therein) and, in the case of the
               accountants' letter, with respect to events subsequent to the
               date of such financial statements, as are customarily covered in
               accountants' letters delivered to the underwriters in
               underwritten public offerings of securities and such other
               financial matters as such Holder (or the underwriters, if any)
               may reasonably request;

                    (vii) notify each Holder of Registrable Securities covered
         by such registration statement, at any time when a prospectus relating
         thereto is required to be delivered under the Securities Act, upon
         discovery that, or upon the happening of any event as a result of
         which, the prospectus included in such registration statement, as then
         in effect, includes an untrue statement of a material fact or omits to
         state any material fact required to be stated therein or necessary to
         make the statements therein not misleading in the light of the
         circumstances under which they were made, and at the request of any
         such Holder promptly prepare to furnish to such Holder a reasonable
         number of copies of a supplement to or an amendment of such prospectus
         as may be necessary so that, as thereafter delivered to the purchasers
         of such securities, such prospectus shall not include an untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading in the light of the circumstances under which they were
         made;

                    (viii) otherwise use its best efforts to comply with all
         applicable rules and regulations of the Commission, and make available
         to its security holders, as soon as

                                       7
<PAGE>




         reasonably practicable, an earnings statement covering the period of at
         least twelve (12) months, but not more than eighteen (18) months,
         beginning with the first full calendar month after the effective date
         of such registration statement, which earnings statement shall satisfy
         the provisions of Section 11(a) of the Securities Act, and in the case
         of a registration requested pursuant to Section 2.1 hereof, will
         furnish to each such Holder at least two (2) business days prior to the
         filing thereof a copy of any amendment or supplement to such
         registration statement or prospectus and shall not file any thereof to
         which any such Holder shall have reasonably objected on the grounds
         that such amendment or supplement does not comply in all material
         respects with the requirements of the Securities Act or of the rules or
         regulations thereunder;

                    (ix) provide and caused to be maintained a transfer agent
         and registrar for all Registrable Securities covered by such
         registration statement from and after a date not later than the
         effective date of such registration statement; and

                    (x) use its best efforts to list all Registrable Securities
         covered by such registration statement on any securities exchange on
         which any of the Registrable Securities is then listed.

         Notwithstanding the foregoing, the Company may defer its obligations
under Section 2.1(b) to file a registration statement, but not its obligations
to initiate the process of preparing the applicable registration statement, for
a period of no more than (i) ninety (90) days in any three hundred sixty-five
(365) day period, if the Company's Board of Directors (or comparable governing
body) determines in good faith that filing such a registration statement would
be materially detrimental to the Company, provided, that once any such
detrimental information has been publicly disclosed or the condition which
caused such filing to be potentially materially detrimental to the Company no
longer exists, the Company shall promptly proceed to fulfill its obligations
under Section 2.1 and (ii) one hundred eighty (180) days from the most recent
effective date of any registration statement of the Company filed under the
Securities Act pursuant to Section 2.1 and occurring prior to the demand for
registration made pursuant to Section 2.1.

         The Company may require each proposed Holder of Registrable Securities
as to which any registration is being effected to promptly furnish the Company,
as a condition precedent to including such Holder's Registrable Securities in
any registration, such information regarding such Holder and the distribution of
such securities as the Company may from time to time reasonably request in
writing.

         Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such Holder will forthwith discontinue such Holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than


                                       8
<PAGE>




permanent file copies, then in such Holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.

                  2.4   Underwritten Offerings.

                        (a) Underwritten Demand Offerings. If requested by the
underwriters for any offering by Holders of Registrable Securities pursuant to a
registration demanded under Section 2.1, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to the Company, to Holders of more than
fifty percent (50%) (by number of shares or other equity interests) of the
Registrable Securities held by the Holders making the registration request under
Section 2.1(b) and the underwriters and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of this type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.6. The Holders of the Registrable
Securities will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable requests of
the Company regarding the form thereof, provided, that nothing herein contained
shall diminish the foregoing obligations of the Company. The Holders of
Registrable Securities to be distributed by such underwriters shall be parties
to such underwriting agreement.

                        (b) Incidental Underwritten Offerings. If the Company at
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any Holder
of Registrable Securities as provided in Section 2.2 and subject to the
provisions of Sections 2.2(a) and 2.2(b), arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such Holder
among the securities to be distributed by such underwriters. The Holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters.

                  2.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the Holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel (such Holders' counsel to be appointed by the
Holders of more than fifty percent (50%) (by number of shares or other equity
interests) of Registrable Securities held by the Holders making the registration
request under Section 2.1(b)), reasonable opportunity to review and comment on
such registration statement, each prospectus included there or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such Holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.


                                       9
<PAGE>




                  2.6   Indemnification.

                        (a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company agrees to indemnify and hold harmless the Holder of any Registrable
Securities covered by such registration statement, its directors and officers,
each other Person who participates as an underwriter in the offering or sale of
such securities and such other Person, if any, who controls such Holder or any
such underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such Holder or any
such director or officer or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such Holder and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
said preliminary or final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, specifically for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Holder or any such director, officer,
underwriter or controlling person and shall survive the transfer of such
securities by such Holder.

                        (b) Indemnification by the Holders of Securities. The
Holders of Registrable Securities agrees to severally and not jointly, indemnify
and hold harmless (in the same manner and to the same extent as set forth in
subdivision (a) of this Section 2.6) the Company, each director of the Company,
each officer of the Company and each other Person, if any, who controls the
Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which such indemnified Person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such Holder
or Holders of Registrable Securities for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any



                                       10
<PAGE>




such director, officer or controlling person and shall survive the transfer of
such securities by such Holder with respect to information furnished by such
Holder prior to such transfer. Provided however that in no event shall the
indemnification obligation of any Holder pursuant to this Section 2.6(b) exceed
the gross proceeds received by such Holder pursuant to the sale of the Holders
Registrable Securities.

                        (c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the assertion of a claim referred to in the
preceding subdivisions of this Section 2.6, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the assertion, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 2.6, except to the extent that the indemnifying party is prejudiced by
such failure to give notice. In case any such claim is made against an
indemnified party, unless in the written opinion of counsel a conflict of
interest between such indemnified party and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be entitled to participate
in and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.

                        (d) Other Indemnification. Indemnification similar to
that specified in the preceding subdivisions of this Section 2.6 (with
appropriate modifications) shall be given by the Company and each Holder of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of any
governmental authority other than the Securities Act.

                        (e) Indemnification Payments. The indemnification
required by this Section 2.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.

                  2.7 Adjustments Affecting Registrable Securities. The Company
will not effect or permit to occur any combination or subdivision of shares
which would adversely affect the ability of the Holders of Registrable
Securities to include such Registrable Securities in any registration of its
securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.

                  2.8 Exercise of Demand Rights. Notwithstanding anything to the
contrary contained herein, each Holder of Registrable Securities hereby agrees
not to exercise any demand


                                       11
<PAGE>




registration right pursuant to Section 2.1(a) or 2.1(b) hereof, (i) during the
seven (7) days prior to and during the ninety (90) days following the effective
date of any underwritten demand registration or any underwritten piggyback
registration pursuant to this Section 2 (other than the Initial Public Offering)
in which Registrable Securities are included, or (ii) during the seven (7) days
prior to and during the one hundred eighty (180) days following the effective
date of the registration statement relating to the Initial Public Offering.

         3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:

             Commission: The Securities and Exchange Commission or any other
             Federal agency at the time administering the Securities Act.

             Company Securities: All shares or other equity interests now or
             hereafter authorized by the Company and stock or other equity
             interests of any other class with which such shares or equity
             interests may hereafter have been exchanged or reclassified.

             Exchange Act: The Securities and Exchange Act of 1934, as amended.

             Person: A corporation, an association, a partnership, a limited
             liability company, a business, an individual, a governmental or
             political subdivision thereof or a governmental agency.

             Registrable Securities: Any Company Securities held by the Holders
             from time to time.

             As to any particular Registrable Securities, such securities shall
             cease to be Registrable Securities when (a) a registration
             statement with respect to the sale of such securities shall have
             become effective under the Securities Act and such securities shall
             have been disposed of in accordance with such registration
             statement, (b) they shall have been distributed to the public
             pursuant to Rule 144 (or any successor provision) under the
             Securities Act, or (c) they shall have ceased to be outstanding.

             Registration Expenses: All expenses incident to the Company's
             performance of or compliance with Section 2, including, without
             limitation, all registration, filing and National Association of
             Securities Dealers, Inc. fees, all fees and expenses of complying
             with securities or blue sky laws, all word processing, duplicating
             and printing expenses, messenger and delivery expenses, the
             reasonable fees and disbursements of counsel for the Company and
             the Company's independent public accountants, including the
             expenses of any special audits or "cold comfort" letters required
             by or incident to such performance and compliance, the reasonable
             fees and disbursements of a single counsel retained by the Holder
             or Holders of more than fifty percent (50%) (by number of shares or
             other equity interests) of the


                                       12
<PAGE>




             Registrable Securities being registered, premiums and other costs
             of policies of insurance obtained by the Company against
             liabilities arising out of the public offering of the Registrable
             Securities being registered and any fees and disbursements of
             underwriters customarily paid by issuers or seller of securities,
             including reasonable fees of underwriters counsel incurred in the
             qualification of the Securities under blue sky laws, but excluding
             all agency fees and commissions, underwriting discounts and
             commissions and transfer taxes, if any.

             Securities Act: As defined in Section 2.1(a).

             Series D Holder: Any Holder of Series D Registrable Securities.

             Series D Registrable Securities: Any Registrable Securities
             classified as Series D Preferred Stock, par value $.01 per share.

         4. Rule 144. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company will
file the reports required to be filed by it, and in the manner required to be
filed by it, under the Securities Act and the Exchange Act (or, if the Company
is not required to file such reports, will, upon the request of any Holder of
Registrable Securities, make publicly available other information) and will take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission ("Rule 144"). Upon the request of
any Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.

         5. Amendment and Waivers. This Agreement may be amended, and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holder or
Holders of seventy-five percent (75%) or more (by number of shares or other
equity interests) of Registrable Securities. Each Holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 5, whether or not such Registrable Securities shall
have been marked to indicate such consent.

         6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, upon the giving of written notice to the Company,
at its election, be treated as the holder of such Registrable Securities for
purposes of any demand, request or other action by any Holder or Holders of
Registrable Securities pursuant to this Agreement or any determination of any
number or percentage of shares of Registrable Securities held by any Holder or
Holders of Registrable

                                       13
<PAGE>




Securities contemplated by this Agreement. The Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.

         7. Notices. All notices provided for by this Agreement shall be made in
writing (i) either by actual delivery or (ii) by the mailing of the notice in
the United States mail to the last known address of the party entitled thereto,
registered or certified mail, return receipt requested, courier service or
personal delivery and shall be deemed to have been duly given or made and to
have become effective when delivered in hand to the party to which directed,
when delivered by courier if delivered by commercial overnight courier service,
or if sent by first-class registered mail, postage prepaid and properly
addressed, at the earlier of (a) the time when received by the addressee or (b)
the fifth business day following the dispatch thereof.

         8. Assignment. Subject to the restrictions on transfer of the
Registrable Securities imposed by the Company's Stockholders' Agreement or other
organizational documents, this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions respecting minimum numbers or percentages
of shares of Registrable Securities required in order to be entitled to certain
rights, or take certain actions, contained herein.

         9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.

         10. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
internal substantive laws of the State of Missouri.

         11. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

         12 Expiration. The registration rights granted pursuant to Sections 2.1
and 2.2 hereof shall expire on the earlier of (a) the date which is four (4)
years following an Initial Public Offering; or (b) as to each individual Holder,
at such time after the Company's Initial Public Offering as all Registrable
Securities held by and issuable to such Holder may be sold under Rule 144 of the
1933 Act without regard to volume and manner of sale limitations.

                          ----------------------------


                                       14
<PAGE>



                               SIGNATURE PAGES FOR
               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers or other authorized
representatives thereunto duly authorized as of the date first above written.

                                    COMPANY:

                                    BUILD-A-BEAR WORKSHOP, INC.,
                                    a Delaware corporation


                                    By:  /s/ Maxine Clark
                                        ----------------------------------------
                                    Name: Maxine Clark
                                    Title: President


                                    HOLDERS:

                                    SMART STUFF, INC.,
                                    a Missouri corporation

                                        /s/ Maxine Clark
                                    --------------------------------------------
                                    By: Maxine Clark


                                    CLARK/FOX, L.L.C.
                                    a Missouri limited liability company

                                        /s/ Maxine Clark
                                    --------------------------------------------
                                    By: Maxine Clark, its Manager


                                    CLARK/FOX II, L.L.C.
                                    a Missouri limited liability company


                                        /s/ Maxine Clark
                                    --------------------------------------------
                                    By: Maxine Clark, its Manager




                                       15
<PAGE>



                                        /s/ Maxine Clark
                                    --------------------------------------------
                                    Maxine Clark


                                    Barney A. Ebsworth Revocable Trust dated
                                    July 23, 1986


                                        /s/ Barney A. Ebsworth Rev. Tr.
                                    --------------------------------------------
                                    By: Barney A. Ebsworth
                                        ----------------------------------------


                                        /s/ Wayne L. Smith, II
                                        ----------------------------------------
                                    Wayne L. Smith, II


                                        /s/ Brian Vent
                                    --------------------------------------------
                                    Brian Vent


                                    HYCEL PARTNERS V, L.L.C.,
                                    a Missouri limited liability company

                                        /s/ Mark H. Zorensky
                                    --------------------------------------------
                                    By:    Mark H. Zorensky, Manager
                                           -------------------------------------


                                    WALNUT CAPITAL PARTNERS, L.P.,
                                    a Delaware limited partnership

                                    By: Walnut Capital Management Group, LLC,
                                    its general partner

                                     By:     /s/ James M. Gould
                                           -------------------------------------
                                           Manager

                                    WALNUT INVESTMENT PARTNERS, L.P.,
                                    a Delaware limited partnership

                                    By: Walnut Investments Holding Company, LLC,
                                    its general partner

                                    By:      /s/ James M. Gould
                                           -------------------------------------
                                           Manager


                                       16
<PAGE>




                                    KCEP VENTURES II, L.P.,
                                    a Missouri limited partnership

                                    By: KCEP II, L.C., its general partner

                                    By:      /s/ William Reisler
                                           -------------------------------------
                                          William Reisler, its Managing Director




                                    CATTERTON PARTNERS IV, L.P.,
                                    a Delaware limited partnership

                                    By:    Catterton Managing
                                    Partner IV, L.L.C.
                                    Its:    General Partner

                                    By:    CP4 Principals, L.L.C.
                                    Its:   Managing Member


                                    By:      /s/ Frank M. Vest, Jr.
                                           -------------------------------------
                                    Name:  Frank M. Vest, Jr.
                                    Title: Authorized Person



                                    CATTERTON PARTNERS IV-A, L.P.,
                                    a Delaware limited partnership

                                    By:    Catterton Managing
                                    Partner IV, L.L.C.
                                    Its:    General Partner

                                    By:    CP4 Principals, L.L.C.
                                    Its:   Managing Member

                                    By:      /s/ Frank M. Vest, Jr.
                                           -------------------------------------
                                    Name:  Frank M. Vest, Jr.
                                    Title: Authorized Person



                                       17

<PAGE>



                                    CATTERTON PARTNERS IV-B, L.P.,
                                    a Delaware limited partnership
                                    By:    Catterton Managing
                                    Partner IV, L.L.C.
                                    Its:   General Partner

                                    By:    CP4 Principals, L.L.C.
                                    Its:   Managing Member

                                    By:      /s/ Frank M. Vest, Jr.
                                           -------------------------------------
                                    Name:    Frank M. Vest, Jr.
                                    Title:   Authorized Person


                                    CATTERTON PARTNERS IV OFFSHORE, LP.
                                    a Cayman limited partnership

                                    By:    Catterton Managing
                                    Partner IV, L.L.C.
                                    Its:   Managing General Partner

                                    By:    CP4 Principals, L.L.C.
                                    Its:   Managing Member

                                    By:       /s/ Frank M. Vest, Jr.
                                           -------------------------------------
                                    Name:  Frank M. Vest, Jr.
                                    Title: Authorized Person


                                    CATTERTON PARTNERS IV SPECIAL
                                    PURPOSE, L.P.
                                    a Cayman limited partnership

                                    By:    Catterton Managing Partner IV, L.L.C.
                                    Its:   Managing General Partner

                                    By:    CP4 Principals, L.L.C.
                                    Its:   Managing Member

                                    By:      /s/ Frank M. Vest, Jr.
                                           -------------------------------------
                                    Name:  Frank M. Vest, Jr.
                                    Title: Authorized Person



                                       18
<PAGE>



                                                 /s/ Adrienne Weiss
                                                 -------------------------------
                                               Adrienne Weiss


                                                  /s/ Christiane Ebsworth
                                                 -------------------------------
                                               Christiane Ebsworth


                                                 /s/ Thomas Holley
                                                 -------------------------------
                                               Thomas Holley




                                       19

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>11
<FILENAME>c86750exv10w1.txt
<DESCRIPTION>2000 STOCK OPTION PLAN
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                           BUILD-A-BEAR WORKSHOP, INC.
                             2000 STOCK OPTION PLAN

1.    Purpose of the Plan.

      The Build-A-Bear Workshop, Inc. 2000 Stock Option Plan (the "Plan") is
intended as an incentive to, and to encourage ownership of the stock of
Build-A-Bear Workshop, Inc. ("Company") by, certain employees of the Company, a
parent or a subsidiary as well as certain other individuals. It is intended that
certain options granted hereunder will qualify as incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") (hereinafter referred to as an "Incentive Stock Option") and that other
options granted hereunder will not qualify as Incentive Stock Options.

2.    Stock Subject to the Plan.

      One million three hundred seventy-four thousand seventy-four ( 1,374,074)
shares of the authorized but unissued common stock, par value of $ 0.01 per
share, of the Company ("Common Stock") have been allocated to the Plan and will
be reserved for issue upon the exercise of options granted under the Plan. The
Company may, in its discretion, use shares held in the treasury in lieu of
authorized but unissued shares. If any such option shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares subject
thereto shall again be available for the purposes of the Plan. Any shares of
Common Stock which are used by an optionee as full or partial payment to the
Company of the purchase price of shares of Common Stock upon exercise of a stock
option shall again be available for the purposes of the Plan.

3.    Administration.

      The Plan shall be administered by the Committee referred to in Section 4
(the "Committee"). Subject to the express provisions of the Plan, the Committee
shall have plenary authority, in its discretion, to determine the individuals to
whom, and the time or times at which, options shall be granted and the number of
shares to be subject to each option. In making such determinations the Committee
may take into account the nature of the services rendered by the respective
individuals, their present and potential contributions to the Company's success
and such other factors as the Committee, in its discretion, shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall also have
plenary authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective stock option agreements (which need not be identical) and to make all
other determinations necessary or advisable for the administration of the Plan.
The Committee's determinations on the matters referred to in this Section 3
shall be conclusive.

<PAGE>

4.    The Committee.

      The Committee shall be comprised of directors on the compensation
committee of the Board of Directors of the Company ("Board of Directors") and
shall at all times be constituted to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, or any successor to such Rule. For calendar years
beginning after the "reliance period" defined in Treas. Reg. Section
1.162-27(f)(2) or any successor thereto with respect to the Company, such
Committee shall consist solely of two or more Outside Directors. For this
purpose, an Outside Director shall mean a director of the Company who:

      (1)   is not an employee of the Company, a parent or a subsidiary while he
            or she is a member of the Committee;

      (2)   is not a former employee of the Company, a parent or a subsidiary
            who receives compensation for prior services (other than benefits
            under a tax-qualified retirement plan) during the taxable year;

      (3)   has not been an Officer of the Company, a parent or a subsidiary;
            and

      (4)   shall not receive Remuneration from the Company, a parent or a
            subsidiary either directly or indirectly in any capacity other than
            as a director.

"Remuneration" and "Officer" as used herein shall be determined in accordance
with Treas. Reg. Section 1.162-27(e)(3) or any successor thereto.

      The Committee shall be appointed by the Board of Directors, which may from
time to time appoint members of the Committee in substitution for members
previously appointed and may fill vacancies, however caused, in the Committee.
The Board of Directors shall select one of the Committee members as its
Chairman, and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members
present at any meeting at which there is a quorum. Any decision or determination
reduced to writing and signed by all of the members shall be fully as effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary, shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall deem
advisable

5.    Eligibility.

      Incentive Stock Options may be granted to any individual classified by the
Committee as an employee of the Company, a parent or a subsidiary. The term
"parent" shall mean any corporation (other than Company) in an unbroken chain of
corporations ending with the Company if, at the time of the granting of the
option, each of the corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain, or such other meaning as may be

                                       2
<PAGE>

hereafter ascribed to it in Section 424 of the Code. The term "subsidiary" shall
mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the
option, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain, or such
other meaning as may be hereafter ascribed to it in Section 424 of the Code.
Options which are not Incentive Stock Options may be granted to any individual
selected by the Committee.

6.    Option Prices.

      (a)   Incentive Stock Options. The purchase price of the Common Stock
under each Incentive Stock Option shall not be less than 100% of the fair market
value of the stock at the time of the granting of the option; provided that, in
the case of an optionee who owns more than 10% of the total combined voting
power of all classes of stock of the Company, a parent or a subsidiary, the
purchase price of the Common Stock under each Incentive Stock Option shall not
be less than 110% of the fair market value of the stock on the date such option
is granted. If the Common Stock is publicly traded, such fair market value shall
generally be considered to be the mean between the high and low prices of the
Common Stock as traded on the applicable exchange on the day the option is
granted; provided, however, that the Committee may adopt any other criterion for
the determination of such fair market value as it may determine to be
appropriate.

      (b)   Options Other Than Incentive Stock Options. The purchase price of
the Common Stock under each option other than an Incentive Stock Option shall be
determined from time to time by the Committee, which need not be uniform for all
optionees.

      (c)   Exercise - Elections and Restrictions. The purchase price for an
option is to be paid in full upon the exercise of the option, either (i) in
cash, (ii) in the discretion of the Committee, by the tender to the Company
(either actual or by attestation) of shares of the Common Stock, already owned
by the optionee for a period of at least six months as of the date of tender and
registered in his or her name, having a fair market value equal to the cash
exercise price of the option being exercised, with the fair market value of such
stock to be determined in such appropriate manner as may be provided for by the
Committee or as may be required in order to comply with, or to conform to the
requirements of, any applicable laws or regulations, or (iii) in the discretion
of the Committee, by any combination of the payment methods specified in clauses
(i) and (ii) hereof; provided that, no shares of Common Stock may be tendered in
exercise of an Incentive Stock Option if such shares were acquired by the
optionee through the exercise of an Incentive Stock Option unless (a) such
shares have been held by the optionee for at least one year and (b) at least two
years have elapsed since such prior Incentive Stock Option was granted. The
Committee may, after consideration of any potential accounting consequences,
cause the Company to loan the option price to the optionee or to guaranty that
any shares to be issued will be delivered to a broker or lender in order to
allow the optionee to borrow the option price. The Committee may provide in an
option agreement that payment in full of the option

                                       3
<PAGE>

price need not accompany the written notice of exercise provided that the notice
of exercise directs that the certificate or certificates for the shares of
Common Stock for which the option is exercised be delivered to a licensed broker
acceptable to the Company as the agent for the individual exercising the option
and, at the time such certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the option price for the shares of Common Stock purchased pursuant to
the exercise of the option plus the amount (if any) of any withholding
obligations on the part of the Company. The proceeds of sale of stock subject to
option are to be added to the general funds of the Company or to the shares of
the Common Stock held in its Treasury, and used for its corporate purposes as
the Board of Directors shall determine.

7.    Incentive Stock Option Amounts Limit.

      The maximum aggregate fair market value (determined at the time an option
is granted in the same manner as provided for in Section 6 hereof) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any optionee during any calendar year (under all plans of the
Company, a parent and a subsidiary) shall not exceed $100,000.

8.    Exercise of Options.

      The term of each option shall be not more than ten (10) years from the
date of granting thereof or such shorter period as is prescribed in Section 9;
provided that, in the case of an option holder who owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
a parent or a subsidiary, the term of any Incentive Stock Option shall not be
more than five (5) years from the date of granting thereof or such shorter
period as prescribed in Section 9 below. Within such limit, options will be
exercisable at such time or times, and subject to such restrictions and
conditions, as the Committee shall, in each instance, approve, which need not be
uniform for all optionees; provided, however, that except as provided in
Sections 9 and 10, no Incentive Stock Option may be exercised at any time unless
the optionee is then an employee of the Company, a parent or a subsidiary and
has been so employed continuously since the granting of the option. The holder
of an option shall have none of the rights of a shareholder with respect to the
shares subject to option until such shares shall be issued to him or her upon
the exercise of his or her option. Upon the exercise of an option, the Committee
shall withhold a sufficient number of shares to satisfy the Company's minimum
required statutory withholding obligations for any taxes incurred as a result of
such exercise (based on the minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes); provided that, in lieu of all or
part of such withholding, the optionee may pay an equivalent amount of cash to
the Company.

9.    Termination of Employment.

      9.1   In General.

                                       4
<PAGE>

      The holder of any option issued hereunder must exercise the option prior
to his or her termination of employment, except that if the employment of an
optionee terminates with the consent and approval of his or her employer, the
Committee may, in its absolute discretion, permit the optionee to exercise his
or her option, to the extent that he or she was entitled to exercise it at the
date of such termination of employment, at any time within three (3) months or
such longer period as approved by the Committee after such termination, but not
after ten (10) years (or five (5) years, if applicable) from the date of the
granting thereof. Notwithstanding the preceding, the Committee may, in an
optionee's stock option agreement, afford an optionee who terminates employment
other than for cause, the right to exercise his or her option, to the extent
that he or she was entitled to exercise it at such date of termination of
employment, at any time within three (3) months or such longer period as
approved by the Committee after such termination, but not after ten (10) years
(or five (5) years, if applicable) from the date of granting thereof.

      9.2   Disability.

      If the optionee terminates employment on account of disability, his or her
option shall become fully vested (if not already fully vested) and the optionee
may exercise such option at any time within one year of the termination of his
or her employment but not after ten (10) years (or five (5) years, if
applicable) from the date of the granting thereof. For this purpose, a person
shall be deemed to be disabled if he or she is permanently and totally disabled
within the meaning of Section 422(c)(6) of the Code, which, as of the date
hereof, shall mean that he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months. A person shall be
considered disabled only if he or she furnishes such proof of disability as the
Committee may require.

      9.3   Transfers and Leaves of Absence.

      Options granted under the Plan shall not be affected by any change of
employment so long as the holder continues to be an employee of the Company, a
parent or a subsidiary thereof. The option agreements may contain such
provisions as the Committee shall approve with reference to the effect of
approved leaves of absence.

      9.4   No Right to Continued Employment.

      Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Company, a
parent or a subsidiary or interfere in any way with the right of the Company, a
parent or a subsidiary thereof to terminate his or her employment at any time.

                                       5
<PAGE>

10.   Death of Holder of Option.

      In the event of the death of an individual to whom an option has been
granted under the Plan, while he or she is employed by the Company, a parent or
a subsidiary or within three (3) months after the termination of his or her
employment (or one year in the case of the termination of employment of an
option holder who is disabled as provided above in Section 9), the option
theretofore granted to him or her shall become fully vested (if not already
fully vested) and may be exercised by a legatee or legatees of the option holder
under his or her last will, or by his or her personal representatives or
distributees, at any time within a period of one year after his or her death,
but not after ten (10) years (or five (5) years, if applicable) from the date of
granting thereof and only if and to the extent that he or she was entitled to
exercise the option at the date of his or her death.

11.   Transferability of Options.

      The Committee may provide in option agreements that options, other than
Incentive Stock Options, are transferable. Transferability may be subject to
such conditions and limitations as the Committee deems appropriate. Except to
the extent otherwise expressly set forth in the option agreement, each option
granted under the Plan shall, by its terms, be non-transferable otherwise than
by will or the laws of descent and distribution and an option may be exercised,
during the lifetime of the holder thereof, only by the optionee or his or her
guardian or legal representative.

12.   Successive Option Grants.

      Successive option grants may be made to any holder of options under the
Plan.

13.   Investment Purpose.

      Each option under the Plan shall be granted only on the condition that all
purchases of stock thereunder shall be for investment purposes, and not with a
view to resale or distribution, except that the Committee may make such
provision with respect to options granted under this Plan as it deems necessary
or advisable for the release of such condition upon the registration with the
Securities and Exchange Commission of stock subject to the option, or upon the
happening of any other contingency warranting the release of such condition.

 14.  Adjustments Upon Changes in Capitalization or Corporate Acquisitions.

      Notwithstanding any other provisions of the Plan, the option agreements
may contain such provisions as the Committee shall determine to be appropriate
for the adjustment of the number and class of shares subject to each outstanding
option and the option prices in the event of changes in the outstanding Common
Stock by reason of stock dividends, recapitalization, mergers, consolidations,
split-ups, combinations or exchanges of shares and the like, and, in the

                                       6
<PAGE>

event of any such change in the outstanding Common Stock, the aggregate number
and class of shares available under the Plan and the maximum number of shares as
to which options may be granted to any individual shall be appropriately
adjusted by the Committee, whose determination shall be conclusive. In the event
the Company, a parent or a subsidiary enters into a transaction described in
Section 424(a) of the Code with any other corporation, the Committee may grant
options to employees or former employees of such corporation in substitution of
options previously granted to them upon such terms and conditions as shall be
necessary to qualify such grant as a substitution described in Section 424(a) of
the Code.

15.   Amendment and Termination.

      The Board of Directors may at any time terminate the Plan, or make such
modifications to the Plan as it shall deem advisable; provided, however, that
the Board of Directors may not, without further approval by the holders of
Common Stock, increase the maximum numbers of shares as to which options may be
granted under the Plan (except under the anti-dilution provisions in Section
15), or change the class of employees to whom options may be granted, or
withdraw the authority to administer the Plan from a committee whose members
satisfy the requirements of Section 4. No termination or amendment of the Plan
may, without the consent of the optionee to whom any option shall theretofore
have been granted, adversely affect the rights of such optionee under such
option.

16.   Effectiveness of the Plan.

      The Plan shall become effective upon adoption by the Board of Directors
subject, however, to its further approval by the shareholders of the Company
given within twelve (12) months of the date the Plan is adopted by the Board of
Directors at a regular meeting of the shareholders or at a special meeting duly
called and held for such purpose. Grants of options may be made prior to such
shareholder approval but all option grants made prior to shareholder approval
shall be subject to the obtaining of such approval and if such approval is not
obtained, such options shall not be effective for any purpose.

17.   Time of Granting of Options.

      An option grant under the Plan shall be deemed to be made on the date on
which the Committee, by formal action of its members duly recorded in the
records thereof, makes an award of an option to an eligible employee of the
Company, a parent or a subsidiary (but in no event prior to the adoption of the
Plan by the Board of Directors); provided that, such option is evidenced by a
written option agreement duly executed on behalf of the Company and on behalf of
the optionee within a reasonable time after the date of the Committee action.

                                       7
<PAGE>

18.   Term of Plan.

      This Plan shall terminate ten (10) years after the date on which it is
approved and adopted by the Board of Directors and no option shall be granted
hereunder after the expiration of such ten-year period. Options outstanding at
the termination of the Plan shall continue in accordance with their terms and
shall not be affected by such termination.

                                      * * *

      The foregoing Plan was approved and adopted by the Board of Directors on
April 3, 2000.

                                       8
<PAGE>
                           BUILD-A-BEAR WORKSHOP, INC.
                             2000 STOCK OPTION PLAN

         WHEREAS, Build-A-Bear Workshop, Inc. ("Company") previously established
the Build-A-Bear Workshop, Inc. 2000 Stock Option Plan ("Plan"); and

         WHEREAS, the Company desires to amend Section 9 of the Plan concerning
the effect of a termination of employment on an optionee's ability to exercise
an option;

         NOW, THEREFORE, Section 9 of the Plan is amended by deleting Section
9.1 in its entirety and replacing it to read as follows:

     9.1 In General.

         The holder of any option issued hereunder must exercise the option
prior to his or her termination of employment, except that if the employment of
an optionee terminates with the consent and approval of his or her employer, the
Committee may, in its absolute discretion, permit the optionee to exercise his
or her option, to the extent that he or she was entitled to exercise it at the
date of such termination of employment, at any time within three (3) months or
such longer period as approved by the Committee after such termination, but not
after ten (10) years (or five (5) years, if applicable) from the date of the
granting thereof. Notwithstanding the preceding, the Committee may, in an
optionee's stock option agreement, afford an optionee who terminates employment
other than for cause, the right to exercise his or her option, to the extent
that he or she was entitled to exercise it at such date of termination of
employment, at any time within three (3) months or such longer period as
approved by the Committee after such termination, but not after ten (10) years
(or five (5) years, if applicable) from the date of granting thereof.

         IN WITNESS WHEREOF, the Company has caused this amendment to be
effective as of this 13th day of September 2001.


                                                BUILD-A-BEAR WORKSHOP, INC.

                                                By  /s/ MAXINE CLARK
                                                   ---------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>12
<FILENAME>c86750exv10w2.txt
<DESCRIPTION>2002 STOCK INCENTIVE PLAN
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.2

                           BUILD-A-BEAR WORKSHOP, INC.
                            2002 STOCK INCENTIVE PLAN
<PAGE>
                                                                               .
                                                                               .
                                                                               .

                           BUILD-A-BEAR WORKSHOP, INC.
                            2002 STOCK INCENTIVE PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     PAGE
                                                                                     ----
<S>                                                                                  <C>
1.  Purpose of the Plan..........................................................      1

2.  Definitions..................................................................      1
    A.      "Act"................................................................      1
    B.      "Award"..............................................................      1
    C.      "Award Agreement"....................................................      1
    D.      "Board"..............................................................      1
    E.      "Cash-Based Award"...................................................      1
    F.      "Change in Control"..................................................      1
    G.      "Code"...............................................................      2
    H.      "Committee"..........................................................      2
    I.      "Company"............................................................      2
    J.      "Employer"...........................................................      2
    K.      "Fair Market Value"..................................................      2
    L.      "Incentive Stock Option".............................................      2
    M.      "Non-qualified Stock Option".........................................      2
    N.      "Option".............................................................      3
    O.      "Other Stock-Based Award"............................................      3
    P.      "Parent".............................................................      3
    Q.      "Participant"........................................................      3
    R.      "Plan"...............................................................      3
    S.      "Stock"..............................................................      3
    T.      "Stock Appreciation Right"...........................................      3
    U.      "Subsidiary".........................................................      3

3.  Stock Subject to the Plan....................................................      3

4.  Administration...............................................................      3

5.  Committee....................................................................      4

6.  Options......................................................................      4
    A.      Type of Option.......................................................      4
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                                   <C>
    C.      Exercise - Elections and Restrictions................................      5
    D.      Option Terms.........................................................      5
    E.      Successive Option Grants.............................................      6
    F.      Additional Incentive Stock Option Requirements.......................      6
    G.      Deferral of Gain on a Non-qualified Stock Option.....................      6

7.  Stock Appreciation Rights....................................................      6

8.  Other Stock-Based Awards and Cash-Based Awards...............................      7

9.  Performance-Based Awards.....................................................      7

10. Nontransferability of Awards.................................................      8

11. Investment Purpose...........................................................      8

12. Adjustments Upon Changes in Capitalization or Corporation Acquisitions.......      8

13. Amendment and Termination....................................................      9

14. Effectiveness of the Plan....................................................      9

15. Time of Granting of an Award.................................................     10

16. Term of Plan.................................................................     10

17. No Right To Continued Employment.............................................     10

18. Choice of Law................................................................     11
</TABLE>

                                       ii
<PAGE>

                           BUILD-A-BEAR WORKSHOP, INC.
                            2002 STOCK INCENTIVE PLAN

1.    Purpose of the Plan.

      The purpose of the Plan is to provide the Company with a means to assist
in recruiting, retaining and rewarding certain employees, directors and
consultants and to motivate such individuals to exert their best efforts on
behalf of the Employer by providing incentives through the granting of Awards.
By granting Awards to such individuals, the Company expects that the interests
of the recipients will be better aligned with those of the Employer.

2.    Definitions.

      Unless the context clearly indicates otherwise, the following capitalized
terms shall have the meanings set forth below:

      A.    "Act" means the Securities Exchange Act of 1934, as amended, or any
            successor thereto.

      B.    "Award" means an a grant under the Plan of an Option, Stock
            Appreciation Right, Cash-Based Award or Other Stock-Based Award.

      C.    "Award Agreement" means an agreement entered into between the
            Employer and a Participant setting forth the terms and provisions
            applicable to Awards granted under the Plan.

      D.    "Board" means the Board of Directors of the Company.

      E.    "Cash-Based Award" means an Award described in Section 8 as a
            Cash-Based Award.

      F.    "Change in Control" means (i) the purchase or other acquisition
            (other than from the Company) by any person, entity or group of
            persons, within the meaning of Section 13(d) or 14(d) of the Act
            (excluding, for this purpose, the Company or its subsidiaries or any
            employee benefit plan of the Company or its subsidiaries), of
            beneficial ownership (within the meaning of Rule 13d-3 promulgated
            under the Act) of 20% or more of either the then-outstanding shares
            of common stock of the Company or the combined voting power of the
            Company's then-outstanding voting securities entitled to vote
            generally in the election of directors; or (ii) individuals who, as
            of the date hereof, constitute the Board (and, as of the date
            hereof, the "Incumbent Board") cease for any reason to constitute at
            least a majority of the Board, provided that any person who becomes
            a director subsequent to the date hereof whose election, or
            nomination for election by the Company's shareholders, was approved
            by a vote of at least a majority of the directors then comprising
            the Incumbent Board (other than an individual whose

                                       1
<PAGE>

            initial assumption of office is in connection with an actual or
            threatened election contest relating to the election of directors of
            the Company, as such terms are used in Rule 14a-11 of Regulation 14A
            promulgated under the Act) shall be, for purposes of this section,
            considered as though such person were a member of the Incumbent
            Board; or (iii) approval by the stockholders of the Company of a
            reorganization, merger or consolidation, in each case with respect
            to which persons who were the stockholders of the Company
            immediately prior to such reorganization, merger or consolidation do
            not, immediately thereafter, own more than 50% of, respectively, the
            common stock and the combined voting power entitled to vote
            generally in the election of directors of the reorganized, merged or
            consolidated corporation's then-outstanding voting securities, or of
            a liquidation or dissolution of the Company or of the sale of all or
            substantially all of the assets of the Company.

      G.    "Code" means the Internal Revenue Code of 1986, as amended, or any
            successor thereto.

      H.    "Committee" means the committee described in Section 5.

      I.    "Company" means Build-A-Bear Workshop, Inc., a Delaware corporation.

      J.    "Employer" means the Company and any other entity directly or
            indirectly controlling, controlled by, or under common control with,
            the Company or any other entity designated by the Board in which the
            Company has an interest.

      K.    "Fair Market Value" means (i) if there should be a public market for
            the relevant Stock on the determination date, the arithmetic mean
            between the high and low prices of such Stock as reported on such
            date on the Composite Tape of the principal national securities
            exchange on which such Stock is listed or admitted to trading, or,
            if such Stock is not listed or admitted on any national securities
            exchange, the arithmetic mean of the per share closing bid price and
            per share closing asked price on such date as quoted on the National
            Association of Securities Dealers Automated Quotation System (or
            such market in which such prices are regularly quoted) ("NASDAQ"),
            or if no sale of such shares shall have been reported on the
            Composite Tape of any national securities exchange or quoted on the
            NASDAQ on such date, then the immediately preceding date on which
            sales of such shares have been so reported or quoted shall be used,
            and (ii) if there should not be a public market for the Stock on
            such date, the Fair Market Value shall be the value established by
            the Committee in good faith.

      L.    "Incentive Stock Option" means a stock option which is an incentive
            stock option within the meaning of Code Section 422.

      M.    "Non-qualified Stock Option" means a stock option which is not an
            Incentive Stock Option.

                                       2
<PAGE>

      N.    "Option" means both an Incentive Stock Option and a Non-Qualified
            Stock Option.

      O.    "Other Stock-Based Award" means an Award granted pursuant to Section
            8 and described as an Other Stock-Based Award.

      P.    "Parent" means any corporation (other than the Company) in an
            unbroken chain of corporations ending with the Company if, at the
            time of the granting of the Option, each of the corporations other
            than the Company owns stock possessing 50% or more of the total
            combined voting power of all classes of stock in one of the other
            corporations in such chain, or such other meaning as may be
            hereafter described to it in Code Section 424.

      Q.    "Participant" means an employee, director or consultant of the
            Employer who is selected by the Committee to receive an Award.

      R.    "Plan" means the Build-A-Bear Workshop, Inc. 2002 Stock Incentive
            Plan.

      S.    "Stock" means the common stock, par value of $0.01 per share, of the
            Company.

      T.    "Stock Appreciation Right" means a stock appreciation right
            described in Section 7.

      U.    "Subsidiary" means any corporation (other than the Company) in an
            unbroken chain of corporations beginning with the Company if, at the
            time of granting an Award, each of the corporations other than the
            last corporation in the unbroken chain owns stock possessing 50% or
            more of the total combined voting power of all classes of stock in
            one of the other corporations in such chain, or such other meaning
            as may be hereafter ascribed to it in Code Section 424.

3.    Stock Subject to the Plan.

      ______________________________ ( ) shares of Stock have been allocated to
the Plan and will be reserved to satisfy Awards under the Plan. The maximum
number of shares of Stock subject to Awards which are Options and Stock
Appreciation Rights which may be granted during a calendar year to a Participant
shall be ________________ ( ). The Company may, in its discretion, use shares
held in the treasury in lieu of authorized but unissued shares. If any Award
shall expire or terminate for any reason, the shares subject to the Award shall
again be available for the purposes of the Plan. Any shares of Stock which are
used by a Participant as full or partial payment to the Company to satisfy a
purchase price related to an Award shall again be available for the purposes of
the Plan. To the extent any shares subject to an Award are not delivered to a
Participant because such shares are used to satisfy an applicable
tax-withholding obligation, such withheld shares shall again be available for
the purposes of the Plan.

4.    Administration.

                                        3
<PAGE>

      The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have plenary authority, in its
discretion, to determine the individuals to whom, and the time or times at
which, Awards shall be granted and the number of shares, if applicable, to be
subject to each Award. In making such determinations, the Committee may take
into account the nature of services rendered by the respective individuals,
their present and potential contributions to the Employer's success and such
other factors as the Committee, in its discretion, shall deem relevant. Subject
to the express provisions of the Plan, the Committee shall also have plenary
discretionary authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and provisions of
the respective Award Agreements (which need not be identical) and to make all
other determinations necessary or advisable for the administration of the Plan.
The Committee's determinations on the matters referred to in this Section 4
shall be conclusive.

5.    Committee.

      The Committee shall be comprised of directors on the compensation
committee of the Board of Directors of the Company ("Board of Directors") and,
after such time as the Company is subject to the Act, shall thereafter be
constituted to comply with Rule 16b-3 under the Act, or any successor to such
Rule.

      The Committee shall be appointed by the Board, which may from time to time
appoint members of the Committee in substitution for members previously
appointed and may fill vacancies, however caused, in the Committee. The Board
shall select one of the Committee members as its Chairman, and shall hold its
meetings at such times and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members present at any meeting at which there is a quorum. Any
decision or determination reduced to writing and signed by all of the members
shall be fully as effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary, shall keep
minutes of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.

6.    Options.

      The Committee, in its discretion, may grant Options which are Incentive
Stock Options or Non-qualified Stock Options, as evidenced by the Award
Agreement, and shall be subject to the foregoing and the following terms and
conditions and to such other terms and conditions, not inconsistent therewith,
as the Committee shall determine:

      A.    Type of Option. Incentive Stock Options may be granted to any
            individual classified by the Committee as an employee of the
            Company, a Parent or a Subsidiary. A Non-Qualified Stock Option may
            be granted to any individual selected by the Committee.

      B.    Option Prices. The purchase price of the Stock under each Incentive
            Stock Option shall not be less than 100% of the Fair Market Value of
            the Stock at the time of the granting of the Option; provided that,
            in the case of a Participant who owns more than 10% of the total
            combined voting power of all classes of stock of the

                                       4
<PAGE>

            Company, a Parent or a Subsidiary, the purchase price of the Stock
            under each Incentive Stock Option shall not be less than 110% of the
            Fair Market Value of the Stock on the date such Option is granted.
            The purchase price of the Stock under each Non-qualified Stock
            Option shall be determined from time to time by the Committee, which
            need not be uniform for all Participants.

      C.    Exercise - Elections and Restrictions. The purchase price for an
            Option is to be paid in full upon the exercise of the Option, either
            (i) in cash, (ii) in the discretion of the Committee, by the tender
            to the Company (either actual or by attestation) of shares of Stock
            already owned by the Participant for a period of at least six months
            as of the date of tender and registered in his or her name, having a
            Fair Market Value equal to the cash exercise price of the Option
            being exercised, or (iii) in the discretion of the Committee, by any
            combination of the payment methods specified in clauses (i) and (ii)
            hereof; provided that, no shares of Stock may be tendered in
            exercise of an Incentive Stock Option if such shares were acquired
            by the Participant through the exercise of an Incentive Stock Option
            unless (a) such shares have been held by the Participant for at
            least one year and (b) at least two years have elapsed since such
            prior Incentive Stock Option was granted. The Committee may, after
            consideration of any potential accounting consequences, cause the
            Company to loan the option price to the Participant or to guaranty
            that any shares to be issued will be delivered to a broker or lender
            in order to allow the Participant to borrow the option price. The
            Committee may provide in an Award Agreement that payment in full of
            the option price need not accompany the written notice of exercise
            provided that the notice of exercise directs that the certificate or
            certificates for the shares of Stock for which the Option is
            exercised be delivered to a licensed broker acceptable to the
            Company as the agent for the individual exercising the Option and,
            at the time such certificate or certificates are delivered, the
            broker tenders to the Company cash (or cash equivalents acceptable
            to the Company) equal to the option price for the shares of Stock
            purchased pursuant to the exercise of the Option plus the amount (if
            any) of any withholding obligations on the part of the Company. The
            proceeds of sale of Stock subject to the Option are to be added to
            the general funds of the Company or to the shares of the Stock held
            in its Treasury, and used for its corporate purposes as the Board
            shall determine.

      D.    Option Terms. The term of each Option shall not be more than ten
            (10) years from the date of granting thereof or such shorter period
            as is prescribed in the Award Agreement; provided that, in the case
            of a Participant who owns more than ten percent (10%) of the total
            combined voting power of all classes of stock of the Company, a
            Parent or a Subsidiary, the term of any Incentive Stock Option shall
            not be more than five (5) years from the date of granting thereof or
            such shorter period as prescribed in the Award Agreement. Within
            such limit, Options will be exercisable at such time or times, and
            subject to such restrictions and conditions, as the Committee shall,
            in each instance, approve, which need not be uniform for all
            Participants. The holder of an Option shall have none of the rights
            of a shareholder with respect to the shares subject to Option until
            such shares shall be

                                       5
<PAGE>

            issued to him or her upon the exercise of his or her Option. Upon
            exercise of an Option, the Committee shall withhold a sufficient
            number of shares to satisfy the Company's minimum required statutory
            withholding obligations for any taxes incurred as a result of such
            exercise (based on the minimum statutory withholding rates for
            federal and state tax purposes, including payroll taxes); provided
            that, in lieu of all or part of such withholding, the Participant
            may pay an equivalent amount of cash to the Company.

      E.    Successive Option Grants. As determined by the Committee, successive
            option grants may be made to any Participant under the Plan.

      F.    Additional Incentive Stock Option Requirements. The maximum
            aggregate Fair Market Value (determined at the time an Option is
            granted) of the Stock with respect to which Incentive Stock Options
            are exercisable for the first time by a Participant during any
            calendar year (under all plans of the Company, a Parent and a
            Subsidiary) shall not exceed $100,000. A Participant who disposes of
            Stock acquired upon the exercise of an Incentive Stock Option either
            (i) within two years after the date of grant of such Incentive Stock
            Option or (ii) within one year after the transfer of such shares to
            the Participant, shall notify the Company of such disposition and of
            the amount realized upon such disposition.

      G.    Deferral of Gain on a Non-qualified Stock Option. In accordance with
            the terms of the applicable non-qualified deferred compensation
            plan, if any, in which a Participant is eligible to participate, a
            Participant may elect to defer any gain realized upon the exercise
            of a Non-qualified Stock Option. The election to defer the gain must
            be made in accordance with the applicable non-qualified deferred
            compensation plan.

7.    Stock Appreciation Rights.

      A.    Grant Terms. The Committee may grant a Stock Appreciation Right
            independent of an Option or in connection with an Option or a
            portion thereof. A Stock Appreciation Right granted in connection
            with an Option or a portion thereof shall cover the same shares of
            Stock covered by the Option, or a lesser number as the Committee may
            determine. A Stock Appreciation Right shall be subject to the same
            terms and conditions as an Option, and any additional limitations
            set forth in this Section 7 or the Award Agreement.

      B.    Exercise Terms. The exercise price per share of Stock of a Stock
            Appreciation Right shall be an amount determined by the Committee. A
            Stock Appreciation Right granted independent of an Option shall
            entitle the Participant upon exercise to a payment from the Company
            in an amount equal to the excess of the Fair Market Value on the
            exercise date of a share of Stock over the exercise price per share,
            times the number of Stock Appreciation Rights exercised. A Stock
            Appreciation Right granted in connection with an Option shall
            entitle the Participant to surrender an unexercised Option (or
            portion thereof) and to receive in exchange an amount equal to the
            excess of the Fair Market Value on the

                                       6
<PAGE>

            exercise date of a share of Stock over the exercise price per share
            for the Option, times the number of shares covered by the Option (or
            portion thereof) which is surrendered. Payment may be made, in the
            discretion of the Committee, in (i) Stock, (ii) cash or (iii) any
            combination of Stock and cash. Cash shall be paid for fractional
            shares of Stock upon the exercise of a Stock Appreciation Right.

      C.    Limitations. The Committee may impose such conditions upon the
            exercisability or transferability of Stock Appreciation Rights as it
            determines in its sole discretion.

8.    Other Stock-Based Awards and Cash-Based Awards.

      The Committee may, in its sole discretion, grant Awards of Stock,
restricted Stock and other Awards that are valued in whole or in part by
reference to the Fair Market Value of Stock. These Awards shall collectively be
referred to herein as Other Stock-Based Awards. The Committee may also, in its
sole discretion, grant Cash-Based Awards, which shall have a value as may be
determined by the Committee. Other Stock-Based Awards shall be in such form, and
dependent on such conditions, as the Committee shall determine, including, but
not limited to, the right to receive one or more shares of Stock (or the
cash-equivalent thereof) upon the completion of a specified period of service,
the occurrence of an event or the attainment of performance objectives. Other
Stock-Based Awards and Cash-Based Awards may be granted with or in addition to
other Awards. Subject to the other terms of the Plan, Other Stock-Based Awards
and Cash-Based Awards may be granted to such Participants in such amounts and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee and set forth in an Award Agreement.

9.    Performance-Based Awards.

      To the extent applicable, the Committee may, in its sole and absolute
discretion, determine that certain Other Stock-Based Awards and/or Cash-Based
Awards should be subject to such requirements so that they are deductible by the
Employer under Code Section 162(m). If the Committee so determines, such Awards
shall be considered Performance-Based Awards subject to the terms of this
Section 9, as provided in the Award Agreement. A Performance-Based Award shall
be granted by the Committee in a manner to satisfy the requirements of Code
Section 162(m) and the regulations thereunder. The performance measures to be
used for purposes of a Performance-Based Award shall be chosen by the Committee,
in its sole and absolute discretion, from among the following: earnings per
share of Stock; book value per share of Stock; net income (before or after
taxes); operating income; return on invested capital, assets or equity; cash
flow return on investments which equals net cash flows divided by owners'
equity; earnings before interest or taxes; gross revenues or revenue growth;
market share; expense management; improvements in capital structure; profit
margins; Stock price; total shareholder return; free cash flow; or working
capital. The performance measures may relate to the Company, a Parent, a
Subsidiary, an Employer or one or more units of such an entity.

      The Committee shall determine whether, with respect to a performance
period, the applicable performance goals have been met with respect to an Award
and, if they have, to so certify and ascertain the amount of the applicable
Performance-Based Award. The Committee shall have the discretion to adjust
Performance-Based Awards downward.

                                       7
<PAGE>

      For calendar years beginning after the "reliance period" defined in Treas.
Reg. Section 1.162-27(f)(2) or any successor thereto with respect to the
Company, an Award shall be a Performance-Based Award only if the Committee
described in Section 5 consists solely of two or more Outside Directors. For
this purpose an Outside Director shall mean a director of the Company who:

      (1)   is not an employee of the Company, a parent or a subsidiary while he
            or she is a member of the Committee;

      (2)   is not a former employee of the Company, a parent or a subsidiary
            who receives compensation for prior services (other than benefits
            under a tax-qualified retirement plan) during the taxable year;

      (3)   has not been an Officer of the Company, a parent or a subsidiary;
            and

      (4)   shall not receive Remuneration from the Company, a parent or a
            subsidiary either directly or indirectly in any capacity other than
            as a director, or

such other definition as provided from time to time under Treas. Reg. Section
1.162-27(e)(3) or any successor thereto.

"Remuneration" and "Officer" as used herein shall be determined in accordance
with Treas. Reg. Section 1.162-27(e)(3) or any successor thereto.

10.   Nontransferability of Awards.

      Unless otherwise determined by the Committee and expressly set forth in an
Award Agreement, an Award granted under the Plan shall, by its terms, be
non-transferable otherwise than by will or the laws or descent and distribution
and an Award may be exercised, if applicable, during the lifetime of the
Participant thereof, only by the Participant or his or her guardian or legal
representative. Notwithstanding the above, the Committee may not provide in an
Award Agreement that an Incentive Stock Option is transferable.

11.   Investment Purpose.

      Each Award under the Plan shall be awarded only on the condition that all
purchases of Stock thereunder shall be for investment purposes, and not with a
view to resale or distribution, except that the Committee may make such
provision with respect to Awards granted under this Plan as it deems necessary
or advisable for the release of such condition upon the registration with the
Securities and Exchange Commission of Stock subject to the Award, or upon the
happening of any other contingency warranting the release of such condition.

**

12.   Adjustments Upon Changes in Capitalization or Corporation Acquisitions.

                                       8
<PAGE>

      Notwithstanding any other provisions of the Plan, the Award Agreements may
contain such provisions as the Committee shall determine to be appropriate for
the adjustment of the number and class of shares subject to each outstanding
Award and the exercise prices, if applicable, in the event of changes in the
outstanding Stock by reason of stock dividends, recapitalization, mergers,
consolidations, split-ups, combinations or exchanges of shares and the like,
and, in the event of any such change in the outstanding Stock, the aggregate
number and class of shares available under the Plan and the maximum number of
shares as to which Awards may be granted to an individual shall be appropriate
adjusted by the Committee, whose determination shall be conclusive. In the event
the Company, a Parent or a Subsidiary enters into a transaction described in
Section 424(a) of the Code with any other corporation, the Committee may grant
options to employees or former employees of such corporation in substitution of
options previously granted to them upon such terms and conditions as shall be
necessary to qualify such grant as a substitution described in Section 424(a) of
the Code.

      In the event of a Change in Control, notwithstanding any other provisions
of the Plan or an Award Agreement to the contrary, the Committee may, in its
sole discretion, provide for:

            (1)   Accelerated vesting of any outstanding Awards that are
      otherwise unexercisable or unvested as of a date selected by the
      Committee;

            (2)   Termination of an Award upon the consummation of the Change in
      Control in exchange for the payment of a cash amount; and/or

            (3)   Issuance of substitute Awards to substantially preserve the
      terms of any Awards previously granted under the Plan.

13.   Amendment and Termination.

      The Board may at any time terminate the Plan, or make such modifications
to the Plan as it shall deem advisable; provided, however, that the Board may
not, without further approval by the holders of Stock, increase the maximum
numbers of shares as to which Awards may be granted under the Plan (except under
the anti-dilution provisions of Section 12), or change the class of employees to
whom Incentive Stock Options may be granted, or withdraw the authority to
administer the Plan from a committee whose members satisfy the requirements of
Section 5. No termination or amendment of the Plan may, without the consent of
the Participant to whom any Award shall theretofore have been granted, adversely
affect the rights of such Participant under such Award.

14.   Effectiveness of the Plan.

      The Plan shall become effective upon adoption by the Board subject,
however, to its further approval by the shareholders of the Company given within
twelve (12) months of the date the Plan is adopted by the Board at a regular
meeting of the shareholders or at a special meeting duly called and held for
such purpose. Grants of Awards may be made prior to such shareholder approval
but all Award grants made prior to shareholder approval shall be subject to the
obtaining of such approval and if such approval is not obtained, such Awards
shall not be

                                       9
<PAGE>

effective for any purpose.

15.   Time of Granting of an Award.

      An Award grant under the Plan shall be deemed to be made on the date on
which the Committee, by formal action of its members duly recorded in the
records thereof, makes an Award to a Participant (but in no event prior to the
adoption of the Plan by the Board); provided that, such Award is evidenced by a
written Award Agreement duly executed on behalf of the Company and on behalf of
the Participant within a reasonable time after the date of the Committee action.

16.   Term of Plan.

      This Plan shall terminate ten (10) years after the date on which it is
approved and adopted by the Board and no Award shall be granted hereunder after
the expiration of such ten-year period. Awards outstanding at the termination of
the Plan shall continue in accordance with their terms and shall not be affected
by such termination.

17.   Severability.

      Any word, phrase, clause, sentence or other provision herein which
violates or is prohibited by any applicable law, court decree or public policy
shall be modified as necessary to avoid the violation or prohibition and so as
to make this Plan and any Award Agreement entered into pursuant to this Plan
enforceable as fully as possible under applicable law, and if such cannot be so
modified, the same shall be ineffective to the extent of such violation or
prohibition without invalidating or affecting the remaining provisions herein.

18.   Non-Waiver of Rights.

      The Company's failure to enforce at any time any of the provisions of this
Plan or any Award agreement entered into pursuant to this Plan or to require at
any time performance by Participant of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions or to affect either the
validity of this Plan, and Award agreement entered into pursuant to this Plan,
or any part hereof, or the right of the Company thereafter to enforce each and
every provision in accordance with the terms of this Plan and any Award
agreement entered into pursuant to this Plan.

19.   Assignment.

      Any Award agreement entered into pursuant this Plan shall be freely
assignable by the Company to and shall inure to the benefit of, and be binding
upon, the Company, its successors and assigns and/or any other entity which
shall succeed to the business presently being conducted by the Company.

20.   No Right To Continued Employment.

                                       10
<PAGE>

      Nothing in the Plan or in any Award granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Employer or
interfere in any way with the right of the Employer to terminate his or her
employment at any time.

21.   Choice of Law.

      The Plan shall be governed by and construed in accordance with the laws of
the State of Delaware without regard to conflicts of law.

      The foregoing Plan was approved and adopted by the Board on ____________,
________.

                                          BUILD-A-BEAR WORKSHOP, INC.

                                          By____________________________________

                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>13
<FILENAME>c86750exv10w10.txt
<DESCRIPTION>SEPARATION AGREEMENT AND GENERAL RELEASE
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.10

                    SEPARATION AGREEMENT AND GENERAL RELEASE

            THIS SEPARATION AGREEMENT AND GENERAL RELEASE ("Agreement") dated
January 31, 2004, is made and entered into by and between Brian C. Vent ("Vent")
and Build-A-Bear Workshop, Inc., a Delaware corporation ("Company").

            WHEREAS, Vent and the Company desire to end Vent's employment with
the Company effective January 31, 2004 ("Separation Date"); and

            WHEREAS, Vent and the Company desire to enter into full and final
settlement of all matters between them, including, but not limited to, any
issues that might arise out of Vent's employment with, or termination of
employment from, the Company;

            NOW, THEREFORE, for and in consideration of the mutual releases,
covenants and undertakings hereinafter set forth, and for other good and
valuable consideration, which each party hereby acknowledges, it is agreed as
follows:

      1.    Separation. Vent's employment with the Company shall cease effective
on the Separation Date. As of that date, neither the Company nor any of its
parent companies, affiliate companies, subsidiary companies, operating
divisions, predecessors or successors, including without limitation Build-A-Bear
Workshop, L.L.C., or their respective directors, shareholders, attorneys,
agents, officers, employees, successors or assigns (together, "Releasees") shall
have any further obligation to Vent for compensation or otherwise other than as
set forth below, and Vent agrees to release and discharge the Releasees from any
and all liability and obligations except as set forth below.

      2.    Severance Payment and Benefits. The Company will provide the
payments set forth in this Section 2 in consideration and exchange for Vent's
promises, agreements and obligations set out in this Agreement, so long as Vent
submits this Agreement, properly executed, to Maxine Clark, Chief Executive
Bear, within the time allowed herein, and adheres to the promises and agreements
set out in this Agreement.

            (a)   The Company shall continue Vent's base salary for a period of
six (6) months following the Separation Date. This amount will be paid in
accordance with the Company's regular payroll periods and practices, and
applicable local, state and federal taxes and other required withholdings will
be deducted.

            (b)   Notwithstanding the provisions of the loan agreement evidenced
in that Secured Promissory Note ("Note") between the parties dated September 19,
2001 and Repayment and Stock Pledge Agreement dated September 19, 2001
(together, "Loan") which require that the Note be due and payable on the
ninetieth day following the date of Vent's termination of employment with the
Company, payment of the Note shall not be accelerated as a result of Vent's
termination of employment. Rather, the term of the Loan shall be determined
under the provisions of the Note, and the principal amount of the Note shall be
due and payable to the Company by Vent in accordance with the provisions of the
Note, as if Vent had not terminated employment with the Company.

<PAGE>

            (c)   Vent may exercise his incentive stock options to the extent
provided and otherwise in accordance with the Company's 2000 Stock Option Plan
("Option Plan")and his stock option agreements dated February 28, 2001 and
September 13, 2001, provided, however, that Vent may exercise any such incentive
stock options by tendering as the exercise price, shares of Company Common Stock
issuable upon the conversion of the Series C Preferred Company Stock owned by
Vent for a period of at least six (6) months as of the date of tender, and
registered in his name. Those incentive stock options which would vest during
the first quarter of 2004 shall be deemed to be vested as of the Separation
Date. Unless otherwise revoked in writing, Vent hereby exercises such incentive
stock options with an exercise price lower than than the valuation of the
underlying Common Stock (as determined in accordance with Section 2(d)) as of
the 89th day following the Separation Date.

            (d)   Vent may exercise his nonqualified stock options to the extent
provided and otherwise in accordance with the Option Plan and his stock option
agreement dated April 3, 2000, as amended on September 13, 2001, provided,
however, that Vent may exercise any such nonqualified stock options through a
cashless exercise by tendering as the exercise price, shares of Company Common
Stock issuable upon the conversion of the Series C Preferred Company Stock owned
by Vent for a period of at least six (6) months as of the date of tender. The
Compensation Committee shall withhold a sufficient number of shares of stock to
cover the Company's withholding tax obligations incurred as a result of the
exercise. The preliminary valuation of the Company's Common Stock is $8.74 per
share, which will result in Vent recognizing income in the amount set forth on
Schedule A hereto. The final determination of the valuation of the Company's
Common Stock will be determined by the Compensation Committee based on a
third-party appraisal and the Company will promptly notify Vent of such
determination. The Company will use such valuation for purposes of determining
the number of shares needed to satisfy the exercise price and withholding
obligations. The Company will report Vent's income on a Form W-2 based on such
valuation. Vent and the Company agree to take consistent reporting positions
with respect to such income. Unless otherwise revoked in writing, Vent hereby
exercises such nonqualified stock options as of the 179th day following the
Separation Date.

            (e)   Assuming Vent exercises all of his options with an exercise
price of less than $8.74 using a cashless exercise, following the exercise
Vent's stock holdings in the Company shall be as set forth on Schedule A hereto.
All such stock holding are subject to the Stockholders Agreement dated September
19, 2001.

            (f)   Vent shall be eligible to participate in the Company's group
health plan(s) in which he currently participates for a period ending six (6)
months after the Separation Date on the same terms and conditions as available
to an active employee with the Company. After such six-month period, Vent shall
be provided with such continuation notices, rights and obligations as may be
required under federal or state law (including COBRA).

            (g)   Vent shall be entitled to all vacation accrued but unused as
of the Separation Date. He shall be entitled to no additional vacation accruals
on and after such date.

                                       2
<PAGE>

            (h)   Except as otherwise provided herein, on and after the
Separation Date, Vent shall not participate in, or accrue additional rights or
benefits under, any employee benefit plan, program or policy or any bonus plan,
program or policy of the Company.

      3.    Vent's Release and Waiver of Claims. In exchange for the payment
described herein, Vent hereby agrees to, and does, remise, release and forever
discharge the Releasees from any and all matters, claims, demands, damages,
causes of action, debts, liabilities, controversies, judgments and suits of
every kind and nature whatsoever, foreseen or unforeseen, known or unknown,
which have arisen or could arise between Vent and the Releasees from matters,
actions or inactions which occurred on or before the Separation Date other than
those continuing rights relating to Vent's stock ownership in the Company.

      4.    Vent's Agreement Not to File Suit or Claims. In exchange for the
consideration described herein, Vent agrees:

            (a)   That he will not file or otherwise submit any claim,
complaint, or action to any agency, court, organization, or judicial forum (nor
will he permit any person, group of persons, or organizations to take such
action on his behalf) against the Releasees, or anyone acting on their behalf,
arising out of any actions or non-actions by the Releasees which occurred on or
before the Separation Date.

            (b)   That his release of claims, complaints, and actions includes,
but is not limited to: (i) any claim for breach of an actual or implied contract
of employment between Vent and any of the Releasees (including any claim of
fraudulent misrepresentation or negligent misrepresentation in the making of any
actual or implied contract of employment), (ii) any claim of unjust, wrongful,
discriminatory, retaliatory or tortious discharge or other adverse employment
action (including any claim of whistleblowing), (iii) any claim of slander,
libel or other similar action for defamation, (iv) any claim of intentional tort
(including assault, battery, and intentional infliction of emotional distress),
(v) any claim of negligence (including negligent infliction of emotional
distress, negligent hiring, or negligent retention), (vi) any claim of a
violation of a statute or ordinance, including, but not limited to, the Civil
Rights Act of 1866, 42 U.S.C. Section 1981, the Civil Rights Act of 1964, 42
U.S.C. Section 2000e et seq., as amended by the Civil Rights Act of 1991, the
Age Discrimination in Employment Act, 29 U.S.C. Section 621 et. seq. (including
but not limited to the Older Worker Benefit Protection Act("OWBPA")) ("ADEA"),
the Employee Retirement Income Security Act, 29 U.S.C. Section 1001 et seq.
(including, but not limited to, COBRA), Executive Order 11246, the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et. seq., the National Labor
Relations Act, 29 U.S.C. Section 151 et. seq. the Fair Labor Standards Act of
1938, 29 U.S.C. Section 201 et seq., (including, but not limited to, the Equal
Pay Act), the Rehabilitation Act of 1973, 29 U.S.C. Section 701 et seq., the
Americans with Disabilities Act, 42 U.S.C. Section 12101 et seq., the Family and
Medical Leave Act, 29 U.S.C. Section 2601 et seq., the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Section 2101 et seq., the Missouri
Workers' Compensation Act, Section 287.010 R.S.Mo. et seq., the Missouri
Employment Security Act, Section 288.010 R.S.Mo. et seq., the Missouri Human
Rights Act, Section 213.010 R.S.Mo. et seq., the Missouri Service Letter Act,
Section 290.140, or any other relevant

                                       3
<PAGE>

federal, state, or local statutes or ordinances governing employment and the
payment of compensation.

            (c)   That he releases and waives any and all claims under or
pursuant to any employment agreement with the Company, including without
limitation the Employment, Confidentiality and Noncompete Agreement dated April
3, 2000.

            (d)   That in the event that he or any person or entity should bring
such a charge, claim, complaint, or action on his behalf, he hereby waives and
forfeits any right to recovery under said claim and will exercise every good
faith effort to have such claim dismissed.

            (e)   That if he violates this Agreement by suing or making a claim
against any of the Releasees, he agrees that he will pay all costs and expenses
of defending against the suit incurred by the respective Releasees, including,
but not limited to, reasonable attorneys' fees and shall hold the Releasees
harmless against any judgment which may be rendered against them.

            (f)   That, with the exception of challenges for compliance with the
ADEA or the OWBPA, Vent agrees not to challenge the enforceability of this
Agreement and the release and waiver of claims herein.

            (g)   For purposes of the ADEA only, this Agreement does not affect
the Equal Employment Opportunity Commission's ("EEOC") rights and
responsibilities to enforce the ADEA, nor does this Agreement prohibit Vent from
filing a charge under the ADEA (including a challenge to the validity of the
waiver of claims in this Agreement) with the EEOC, or participating in any
investigation or proceeding conducted by the EEOC. Nevertheless, Vent agrees
that the Releasees will be shielded against any recovery by Vent, provided this
Agreement is valid under applicable law.

      5.    No knowledge of injury. Vent represents and warrants that he has no
present knowledge of any injury, illness or disease to him that is or might be
compensable as a workers' compensation claim or similar claim for workplace
injuries, illnesses or diseases.

      6.    Confidentiality. Vent agrees that he will not publicize this
Agreement directly, either in specific or as to general content, to either the
public generally, to any employee of any of the Releasees, or to any other
person or entity, except to the extent he might be lawfully compelled to give
testimony by a court of competent jurisdiction or participate in an EEOC
proceeding. Any such publication shall be considered a material breach of the
Agreement and shall subject Vent to liability for damages. Vent's agreement to
keep confidential the terms of this Agreement extends to all persons other than
his immediate family, his attorneys and accountants who have a legitimate need
to know the terms in order to render professional advice or services to Vent;
otherwise, Vent agrees not to identify or reveal any other terms of the
Agreement except as otherwise provided herein. Notwithstanding any provision in
this Agreement, the Company shall be entitled to seek and obtain injunctive
relief to prevent or stop a breach of this paragraph concerning confidentiality,
and should the Company prevail in an action seeking injunctive relief, Vent
agrees to pay the Company's costs and attorneys' fees in connection with filing
and prosecuting such an action.

                                       4
<PAGE>

      7.    Nondisparagement. The parties agree that they will not in any way
disparage each other, including current or former officers, directors and
employees, nor will they make or solicit any comments, statements or the like to
the media or to others, including any claimants against each other or their
agents or representatives, that may be considered to be derogatory or
detrimental to the good name or business reputation of the other.

      8.    No Admission of Wrongdoing. The parties agree that nothing in this
Agreement is an admission by any party hereto of any wrongdoing, either in
violation of an applicable law or otherwise, and that nothing in this Agreement
is to be construed as such by any person.

      9.    Voluntary Agreement. Vent further acknowledges that he understands
this Agreement, the claims he is releasing, the promises and agreements he is
making, and the effect of his signing this Agreement. Vent further represents,
declares, and agrees that he voluntarily accepts the payment described above for
the purpose of making a full and final compromise, adjustment, and settlement of
all claims or potential claims against the Releasees from any action or inaction
taking place prior on or before the Separation Date.

      10.   Non-Competition, Confidential Information and Return of Property.

            (a)   Vent agrees to keep secret and confidential, and not to use or
disclose any of the Company's proprietary Confidential Information. Vent
acknowledges and confirms that certain data and other information (whether in
human or machine readable form) that has come into his possession or knowledge
and which was obtained from Build-A-Bear Workshop, L.L.C. ("LLC") or the
Company, or was obtained by Vent for or on behalf of the LLC or the Company, and
which is identified herein ("Confidential Information") is the secret,
confidential property of the Company. This Confidential Information includes,
but is not limited to (it being understood and agreed that references below to
the Company shall be deemed to include the LLC, as predecessor to the Company):

                  (1)   lists or other identification of customers or
      prospective customers of the Company (and key individuals employed or
      engaged by such parties);

                  (2)   lists or other identification of sources or prospective
      sources of the Company's products or components thereof (and key
      individuals employed or engaged by such parties);

                  (3)   all compilations of information, correspondence,
      designs, drawings, files, formulae, lists, machines, maps, methods,
      models, notes or other writings, plans, records and reports;

                  (4)   financial, sales and marketing data relating to the
      Company or to the industry or other areas pertaining to Company's
      activities and contemplated activities (including, without limitation,
      manufacturing, transportation, distribution and sales costs and non-public
      pricing information);

                                       5
<PAGE>

                  (5)   equipment, materials, procedures, processes, and
      techniques used in, or related to, the development, manufacture, assembly,
      fabrication or other production and quality control of the Company's
      products and services;

                  (6)   the Company's relations with its customers, prospective
      customers, suppliers and prospective suppliers and the nature and type of
      products or services rendered to such customers (or proposed to be
      rendered to prospective customers);

                  (7)   the Company's relations with its employees (including,
      without limitation, salaries, job classifications and skill levels); and

                  (8)   any other information designated by the Company to be
      confidential, secret and/or proprietary (including without limitation,
      information provided by customers or suppliers of Company).

            Vent acknowledges that any and all notes, records, sketches,
computer diskettes, training materials and other documents relating to the
Company or the LLC obtained by or provided to Vent, or otherwise made, produced
or compiled during Vent's employment, regardless of the type of medium in which
they are preserved, are the sole and exclusive property of the Company and
shall, together with any and all other Company property, be surrendered to the
Company on the Separation Date. Vent shall immediately deliver to the Company
without reproduction all Confidential Information in his possession or under his
control, regardless of whether it is in document form or electronic media or any
other form.

            Any and all ideas, inventions, discoveries, patents, patent
applications, continuation-in-part patent applications, divisional patent
applications, technology, copyrights, derivative works, trademarks, service
marks, improvements, trade secrets and the like (collectively, "Inventions"),
which were developed, conceived, created, discovered, learned, produced and/or
otherwise generated by Vent, whether individually or otherwise, during the time
that Vent was employed by the LLC or the Company, whether or not during working
hours, that relate to (i) current and anticipated businesses and/or activities
of the Company and/or the LLC, either individually or on a combined and
continuous bases, (ii) the current and anticipated research or development of
the Company and/or the LLC, either individually or on a combined and continuous
basis, or (iii) any work performed by Vent for the Company and/or the LLC,
either individually or on a combined and continuous basis, shall be the sole and
exclusive property of the Company, and the Company shall own any and all right,
title and interest to such Inventions. Vent agrees to assign to the Company
whenever so requested by the Company, any and all right, title and interest in
and to any such Inventions, at the Company's expense, and Vent agrees to execute
any and all applications, assignments or other instruments which the Company
deems desirable or necessary to protect such interests, at the Company's
expense.

            (b)   Vent recognizes that (i) the LLC and the Company have spent
substantial money, time and effort over the years in developing and solidifying
its relationships with its customers and suppliers and in developing its
Confidential Information; (ii) long-term customer relationships often can be
difficult to develop and require a significant investment of

                                       6
<PAGE>

time, effort and expense; (iii) the LLC has paid, and the Company pays its
employees to, among other things, develop and preserve business information,
customer goodwill, customer loyalty and customer contacts for and on behalf of
the Company; and (iv) the Company is hereby agreeing to provide certain benefits
to Vent based upon Vent's assurances and promises not to put himself in a
position in which the confidentiality of Company's Confidential Information
might somehow be compromised. Accordingly, Vent agrees that for the period of
time set forth below following the Separation Date, Vent will not, directly or
indirectly (whether as owner, partner, consultant, employee or otherwise):

                  (1)   for three (3) years, engage in, assist or have an
interest in, or enter the employment of or act as an agent, advisor or
consultant for, any person or entity which is engaged in, or will be engaged in,
the development, manufacture, supplying or sale of a product, process, service
or development which is competitive with a product, process, service or
development on which Vent worked or with respect to which Vent has or had access
to Confidential Information while at the Company ("Restricted Activity"), and
which is located within 100 miles of any Company retail store;

                  (2)   for three (3) years, solicit, call on or provide any
Restricted Activity to any customer or active prospective customer of the
Company which was a customer or supplier of the Company at any time during the
most recent twelve (12) months of Vent's employment by the Company, or cause or
attempt to cause such a person to divert, terminate, limit, modify or fail to
enter into any existing or potential relationship with the Company; or

                  (3)   for three (3) years, induce or attempt to induce any
employee, consultant or advisor of the Company to accept employment or an
affiliation involving Restricted Activity;

provided, however, that following the Separation Date, Vent shall be entitled to
be an employee of an entity that engages in Restricted Activity so long as: (i)
the sale of stuffed animals is not a principal business of the entity; (ii) Vent
has no direct or personal involvement in the sale of stuffed animals; and (iii)
neither Vent, his relatives, nor any other entities with which he is affiliated
own more than 1% of the entity. As used in this Section 10, "principal business"
shall mean that greater than 10% of revenues received during the twelve (12)
months preceding a dispute under this Section 10 were derived from the sale of
stuffed animals and related products, or otherwise derives revenues from a
retail concept that is similar in any material regard to the Company.

            (c)   Vent recognizes and agrees that the restraints contained in
Section 10 (both separately and in total) are reasonable and enforceable in view
of the Company's legitimate interests in protecting its Confidential Information
and customer goodwill and the limited scope of the restrictions in Section 10.

      11.   Company's Right to Injunctive Relief. In the event of a breach or
threatened breach of any of Vent's duties and obligations under the terms and
provisions of Sections 10 hereof, the Company shall be entitled, in addition to
any other legal or equitable remedies it may have in connection therewith
(including any right to damages that it may suffer), to temporary, preliminary
and permanent injunctive relief restraining such breach or threatened breach.
Vent

                                       7
<PAGE>

hereby expressly acknowledges that the harm which might result to the Company's
business as a result of any noncompliance by Vent with any of the provisions of
Section 10 would be largely irreparable. Vent specifically agrees that if there
is a question as to the enforceability of any of the provisions of Section 10
hereof, Vent will not engage in any conduct inconsistent with or contrary to
such Section until after the question has been resolved by a final judgment of a
court of competent jurisdiction.

      12.   Choice of Law and Venue. The parties agree that the Agreement shall
be interpreted and governed by the laws of the state of Missouri, without regard
for any conflict of law principles. The parties agree that any litigation
relating to or arising out of this Agreement, or regarding the interpretation,
validity and/ or enforceability of this Agreement shall be filed and conducted
in the state or federal courts for or covering St. Louis County, Missouri.

      13.   Modification. The parties hereto agree that this Agreement may not
be modified, altered, or changed except by a written agreement signed by the
parties hereto.

      14.   Entire Agreement. The parties acknowledge that this constitutes the
entire agreement between them superseding all prior written and oral agreements,
regarding Vent's separation, and that there are no other understandings or
agreements, written or oral, among them on the subject of Vent's separation.

      15.   Invalidity of Provisions / Severability. In the event that any
provision of this Agreement is adjudicated to be invalid or unenforceable under
applicable law, the validity or enforceability of the remaining provisions shall
be unaffected. To the extent that any provision of this Agreement is adjudicated
to be invalid or unenforceable because it is overbroad, that provision shall not
be void but rather shall be limited only to the extent required by applicable
law and enforced as so limited.

      16.   Effective Date. This Agreement shall become effective and binding on
the date hereof, except that Vent shall have the right to revoke his agreement
to waive claims under the ADEA at any time within eight days after the date
hereof.

      17.   Time for Consideration. By executing this Agreement, Vent
acknowledges that by being presented with this Agreement, he has been advised by
a representative of the Company that he has been given at least twenty-one (21)
days within which to consider this Agreement before his signing the same, and
that he has, in fact, been given at least twenty-one (21) days within which to
consider this Agreement prior to signing the Agreement.

      18.   Time for Revocation. By executing this Agreement, Vent acknowledges
that by being presented with this Agreement, he has been advised by a
representative of the Company that this Agreement shall not become effective
until the eighth (8th) calendar day after the date of Vent's execution of this
Agreement. During the seven (7) day period following Vent's execution of this
Agreement, Vent may freely revoke his execution of this Agreement. Upon
expiration of the seven (7) day period, Vent acknowledges that this Agreement
becomes final and binding. If Vent revokes this Agreement within the seven (7)
day period following his execution of this Agreement, it shall not be effective
or enforceable,

                                       8
<PAGE>

and Vent will not receive the consideration described in this Agreement. Any
such revocations should be made in writing and delivered to Maxine Clark, Chief
Executive Bear.

      19.   Consultation with an Attorney. By executing this Agreement, Vent
acknowledges that, by being presented with this Agreement for his consideration,
he has been advised by a representative from the Company, in writing, to consult
with an attorney about this Agreement, its meaning and effect, prior to
executing this Agreement.

      20.   No Reliance. The parties have not relied on any representations,
promises, or agreements of any kind made to them in connection with this
Agreement, except for those set forth in this Agreement.

      21.   Forfeiture. Vent agrees that in the event he breaches the terms of
this Agreement, he shall not be entitled to any of the payments or other
benefits described herein, and he shall repay any payments previously made
hereunder.

            IN WITNESS WHEREOF, the undersigned parties have executed this
Separation Agreement and General Release.

2/23/04                                           /s/ BRIAN C. VENT
------------------                                ------------------------------
Date                                              Brian C. Vent

            Subscribed and sworn to before me, a Notary Public, this 23 day
of February, 2004.


                                                  /s/ SHIRLEY HERSHBARGER
                                                  ------------------------------
                                                  NOTARY PUBLIC

My commission expires:                                                   (STAMP)
11-25-07





                                                  Build-A-Bear Workshop, Inc.

2/25/04                                           By /s/ MAXINE CLARK
------------------------                            ----------------------------
Date

            Subscribed and sworn to before me, a Notary Public, this 25 day
of February, 2004.

                                                  /s/ MARY J. BAUMGARTNER
                                                  ------------------------------
                                                  NOTARY PUBLIC

My commission expires:                                                   (STAMP)
12/3/06


                                       9
<PAGE>

My commission expires:
______________________________

                                       10
<PAGE>

                                   SCHEDULE A

<TABLE>
<S>                                              <C>             <C>
I. INCOME                                                         $   1,655,000

II. WITHHOLDING(1/)

Federal Income Tax Withholding (25%)            ($     413,750)
State Income Tax Withholding (6%)               ($      99,300)
FICA - HI (1.45%)                               ($    23,997.5)
Total Withholding Tax                                            ($  537,047.50)
                                                                  -------------

Number of Shares of Nonqualified Option            200,000.000
Total Withholding (shares) at $8.74 per share       61,447.082
Net Shares After Withholding                                        138,552.918
                                                                  -------------

III. OPTION EXERCISE PRICE

Nonqualified Option
($0.465/share x 200,000 shares)                  $      93,000

February Incentive Option
($6.04/share x 37,600 shares)                    $     227,104

September Incentive Option
($6.10/share x 18,000 shares)                    $     109,800

Total Exercise Price for All Vested Options                       $     336,997
                                                                  -------------

Total Share Equivalent ($8.74 per share)(2)/                         38,558.009 shares
                                                                  -------------

IV. NET SHAREHOLDINGS (AFTER EXERCISE)
</TABLE>

<TABLE>
<CAPTION>
Class of Stock(3)/      Number of Shares
------------------      ----------------
<S>                     <C>
Series D preferred            18,409
Series C preferred         25,941.91(4/)
Series A preferred             3,230
Series B preferred             4,881
Common                   215,443.918(5/)
</TABLE>

------------------

(1/)  Assumes that Vent has other prior wages in excess of $87,000.

(2/)  Assumes that common stock tendered resulted from conversion of Series C
preferred stock.

(3/)  The Series D preferred stock and the Series A preferred stock accrue
dividends from the initial issuance date. These amounts include accrued
dividends through [December] 2003.

(4/)  (64,500 - 38,558.09)

(5/)  (20,491 + 200,000 +37,600 + 18,800 - 61,447.082)

                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>14
<FILENAME>c86750exv10w11.txt
<DESCRIPTION>FORM OF INDEMNIFICATION AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.11

                            INDEMNIFICATION AGREEMENT

                  This Indemnification Agreement (this "Agreement"), dated as of
____________, 2004, is made by and between Build-A-Bear Workshop, Inc., a
Delaware corporation (the "Company") and _________________ (the "Indemnitee"),
an "agent" (as hereinafter defined) of the Company.

                                    RECITALS

                  A. The Company recognizes that competent and experienced
persons are reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance or indemnification, or
both, due to increased exposure to litigation costs and risks resulting from
their service to such corporations, and due to the fact that the exposure
frequently bears no reasonable relationship to the compensation of such
directors and officers;

                  B. The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors and officers with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take;

                  C. The Company and the Indemnitee recognize that plaintiffs
often seek damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense and/or
settlement of such litigation is often beyond the personal resources of
directors and officers;

                  D. The Company believes that it is unfair for its directors
and officers to assume the risk of huge judgments and other expenses which may
occur in cases in which the



<PAGE>



director or officer received no personal profit and in cases where the director
or officer was not culpable;

                  E. The Company, after reasonable investigation, has determined
that the liability insurance coverage presently available to the Company may be
inadequate to cover all possible exposure for which the Indemnitee should be
protected. The Company believes that the interests of the Company and its
stockholders would best be served by a combination of such insurance and the
indemnification by the Company of the directors and officers of the Company;

                  F. Section 145 of the General Corporation Law of Delaware
("Section 145"), under which the Company is organized, empowers the Company to
indemnify its officers, directors, employees and agents by agreement and to
indemnify persons who serve, at the request of the Company, as the directors,
officers, managers, employees or agents of other corporations or enterprises,
and expressly provides that the indemnification provided by Section 145 is not
exclusive;

                  G. The Board of Directors has determined that contractual
indemnification as set forth herein is not only reasonable and prudent but
necessary to promote the best interests of the Company and its stockholders;

                  H. The Company desires and has requested the Indemnitee to
serve or continue to serve as a director or officer of the Company free from
undue concern for claims for damages arising out of or related to such services
to the Company; and

                  I. The Indemnitee is willing to serve, or to continue to
serve, the Company, only on the condition that he or she is furnished the
indemnity provided for herein.




                                       2
<PAGE>



                                    AGREEMENT

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:

                  1. Definitions

                           (a) Agent. For purposes of this Agreement, "agent" of
the Company means any person who is or was a director, officer, manager,
employee or other agent of the Company or a subsidiary of the Company; or is or
was serving at the request of the Company or a subsidiary of the Company as a
director, officer, manager, employee or agent of another foreign or domestic
corporation, partnership, limited liability company, joint venture, trust or
other enterprise; or was a director, officer, manager, employee or agent of a
foreign or domestic corporation which was a predecessor corporation of the
Company or a subsidiary of the Company; or was a director, officer, manager,
employee or agent of another foreign or domestic corporation, partnership,
limited liability company, joint venture, trust or other enterprise at the
request of, for the convenience of, or to represent the interests of such
predecessor corporation.

                           (b) Expenses. For purposes of this Agreement,
"expenses" includes all direct and indirect costs of any type or nature
whatsoever (including, without limitation, reasonable attorneys' fees and
related disbursements, other out-of-pocket costs and reasonable compensation for
time spent by the Indemnitee for which he or she is not otherwise compensated by
the Company or any third party, provided that the rate of compensation and
estimated time involved is approved by the Board of Directors, which approval
shall not be unreasonably withheld), actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense, settlement and/or
appeal of a proceeding or establishing or enforcing a



                                       3
<PAGE>



right to indemnification under this Agreement, Section 145 or otherwise,
excluding the amount of any settlement, judgment, fine or penalty.

                           (c) Proceedings. For the purpose of this Agreement,
"proceeding" shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the giving of
testimony in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.

                           (d) Subsidiary. For purposes of this Agreement,
"subsidiary" means any foreign or domestic corporation, partnership, limited
liability company, joint venture, trust or other enterprise of which more than
50% of the outstanding voting securities (or comparable interests) are owned
directly or indirectly by the Company, by the Company and one or more other
subsidiaries, or by one or more other subsidiaries.

                           (e) Miscellaneous. For purposes of this Agreement,
"other enterprise" shall include employee benefit plans; references to "fines"
shall include any excise tax assessed with respect to any employee benefit
plans; references to "serving at the request of the Company" shall include any
service as a director, officer, manager, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer, manager,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; any person who acts in good faith and in a manner he or she
reasonably believes to be in the best interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.

                           (f) Company. "Company" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power



                                       4
<PAGE>



and authority to indemnify its directors, officers, managers, employees or
agents, so that any person who is or was a director, officer, manager, employee
or agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, manager, employee or agent
of another corporation, partnership, limited liability company, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Agreement with respect to the resulting or surviving corporation as he
or she would have with respect to such constituent corporation if its separate
existence had continued.

                  2. Agreement to Serve. The Indemnitee agrees to serve and/or
continue to serve as an agent of the Company, at its will (or under separate
agreement, if such agreement now or hereafter exists), in the capacity
Indemnitee currently serves (or in such other positions which he or she agrees
to assume) as an agent of the Company, so long as he or she is duly appointed or
elected and qualified in accordance with the applicable provisions of the Bylaws
of the Company, any subsidiary of the Company, or any applicable other foreign
or domestic corporation, partnership, limited liability company, joint venture,
trust or other enterprise, or until such time as he or she tenders his or her
resignation in writing, provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment by Indemnitee
in any capacity.

                  3. Indemnity in Third Party Proceedings. The Company shall
indemnify the Indemnitee if the Indemnitee is a party to or threatened to be
made a party to or otherwise involved in any proceeding (other than a proceeding
by or in the name of the Company to procure judgment in its favor) by reason of
the fact that the Indemnitee is or was an agent of the Company, or by reason of
any act or inaction by him or her in any such capacity, against any and all
expenses and liabilities of any type whatsoever (including, but not limited to,
settlements,



                                       5
<PAGE>



judgments, fines and penalties), actually and reasonably incurred by him or her
in connection with the investigation, defense, settlement or appeal of such
proceeding, unless it is determined that the Indemnitee did not act in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any proceeding by judgment, order of court, settlement,
conviction or on plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not act in good faith in a
manner which he or she reasonably believed to be in the best interests of the
Company, and with respect to any criminal proceedings, that such person had
reasonable cause to believe that his or her conduct was unlawful.

                  4. Indemnity in Derivative Action. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or otherwise involved in any proceeding by or in the name of the Company to
procure a judgment in its favor by reason of the fact that the Indemnitee is or
was an agent of the Company, or by reason of any act or inaction by him or her
in any such capacity, against all expenses actually and reasonably incurred by
the Indemnitee in connection with the investigation, defense, settlement and/or
appeal of such proceeding, unless it is determined that the Indemnitee did not
act in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification
under this subsection shall be made in respect of any claim, issue or matter as
to which the Indemnitee shall have been finally adjudged to be liable to the
Company by a court of competent jurisdiction, unless and only to the extent that
any court in which such proceeding was brought or another court of competent
jurisdiction shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of



                                       6
<PAGE>



the case, such person is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper.

                  5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of any
proceeding or in defense of any claim, issue or matter therein, including the
dismissal of an action without prejudice, the Company shall indemnify the
Indemnitee against all expenses actually and reasonably incurred in connection
with the investigation, defense or appeal of such proceeding.

                  6. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of any expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines or penalties), but is not entitled,
however, to indemnification for the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for the portion thereof to which the
Indemnitee is entitled.

                  7. Advancement of Expenses. Except as otherwise provided
herein, the Company shall advance all expenses incurred by the Indemnitee in
connection with the investigation, defense, settlement and/or appeal of any
proceeding to which the Indemnitee is a party or is threatened to be made a
party by reason of the fact that the Indemnitee is or was an agent of the
Company. Indemnitee hereby undertakes to repay such amounts advanced only if,
and to the extent that, it shall ultimately be finally determined that the
Indemnitee is not entitled to be indemnified by the Company as authorized by
this Agreement or otherwise. The advances to be made hereunder shall be paid by
the Company to or on behalf of the Indemnitee promptly and in any event within
thirty (30) days following delivery of a written request therefor by the
Indemnitee to the Company.



                                       7
<PAGE>



                  8. Notice and Other Indemnification Procedures.

                           (a) Promptly after receipt by the Indemnitee of
notice of the commencement of or the threat of commencement of any proceeding,
the Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement, notify the
Company of the commencement or threat of commencement thereof, provided that the
failure to provide such notification shall not diminish Indemnitee's
indemnification hereunder, except to the extent that the Company can demonstrate
that it was actually prejudiced as a result thereof.

                           (b) Any indemnification requested by the Indemnitee
under Section 3 and/or 4 hereof shall be made no later than forty-five (45) days
after receipt of the written request of Indemnitee unless a determination is
made within said forty-five (45) day period (i) by the Board of Directors of the
Company by a majority vote of a quorum thereof consisting of directors who are
not parties to such proceedings, or (ii) in the event such quorum is not
obtainable, at the election of the Company, either by independent legal counsel
in a written opinion or by a panel of arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and the last of whom
is selected by the first two arbitrators so selected, that the Indemnitee has or
has not met the relevant standard for indemnification set forth in Section 3 and
4 hereof.

                           (c) Notwithstanding a determination under Section
8(b) above that the Indemnitee is not entitled to indemnification with respect
to any specific proceeding, the Indemnitee shall have the right to apply to any
court of competent jurisdiction for the purpose of enforcing the Indemnitee's
right to indemnification pursuant to this Agreement. The burden of proving that
the indemnification or advances are not appropriate shall be on the Company.



                                       8
<PAGE>




Neither the failure of the Company (including its Board of Directors or
independent legal counsel or the panel of arbitrators) to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company
(including its Board of Directors or independent legal counsel or the panel or
arbitrators) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create any presumption that the
Indemnitee has or has not met the applicable standard of conduct.

                           (d) The Company shall indemnify the Indemnitee
against all expenses incurred in connection with any hearing or proceeding under
this Section 8 so long as such claims and/or defenses of the Indemnitee were
made or asserted in good faith.

                  9. Assumption of Defense. In the event the Company shall be
obligated to pay the expenses of any proceeding against or involving the
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel reasonably acceptable to the Indemnitee, upon
the delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the Indemnitee with respect to the same proceeding, provided that: (i) the
Indemnitee shall have the right to employ his or her counsel in such proceeding
at the Indemnitee's expense; and (ii) if (a) the employment of counsel by the
Indemnitee is subsequently authorized in writing by the Company, (b) the Company
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of such defense, or (c) the
Company shall not, in



                                       9
<PAGE>



fact, have employed counsel to assume the defense of such proceeding, the
reasonable fees and expenses of the Indemnitee's counsel shall be at the expense
of the Company.

                  10. Insurance. The Company may, but is not obligated to,
obtain directors' and officers' liability insurance ("D&O Insurance") with
respect to which the Indemnitee is named as an insured. Notwithstanding any
other provision of the Agreement, the Company shall not be obligated to
indemnify the Indemnitee for expenses, judgments, settlements, fines or
penalties, which have been paid directly to or on behalf of the Indemnitee by
D&O Insurance. If the Company has D&O Insurance in effect at the time the
Company receives from the Indemnitee any notice of the commencement of a
proceeding, the Company shall give notice of the commencement of such proceeding
to the insurer in accordance with the procedures set forth in the policy. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, to or on behalf of the Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such policy.

                  11. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

                           (a) Claims Initiated by Indemnitee. To indemnify or
advance expenses to the Indemnitee with respect to proceedings or claims
initiated or brought voluntarily by the Indemnitee and not by way of defense,
except with respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under Section 145, but such indemnification or advancement of expenses
may be provided by the Company in specific cases if the Board of Directors finds
it to be appropriate; or

                           (b) Action for Indemnification. To indemnify the
Indemnitee for any expenses incurred by the Indemnitee with respect to any
proceeding instituted by the Indemnitee



                                       10
<PAGE>



to enforce or interpret this Agreement if the material assertions made by the
Indemnitee in such proceeding were not made in good faith or were frivolous; or

                           (c) Unauthorized Settlements. To indemnify the
Indemnitee under this Agreement for any amounts paid in settlement of a
proceeding effected without the Company's written consent, provided such consent
shall not unreasonably withheld; or

                           (d) Non-compete and Non-disclosure. To indemnify the
Indemnitee in connection with proceedings or claims involving the enforcement of
non-compete and/or non-disclosure agreements or the non-compete and/or
non-disclosure provisions of employment, consulting or similar agreements the
Indemnitee may be a party to with the Company, any subsidiary of the Company or
any other applicable foreign or domestic corporation, partnership, limited
liability company, joint venture, trust or other enterprise, if any; or

                           (e) Certain Matters. To indemnify the Indemnitee on
account of any proceeding with respect to (i) remuneration paid to Indemnitee if
it is determined by final judgment or other final adjudication that such
remuneration was in violation of law, (ii) which final judgment is rendered
against the Indemnitee for an accounting of profits made by the purchase or sale
by Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions
of any federal, state or local statute, (iii) which it is determined by final
judgment or other final adjudication that the Indemnitee's conduct was knowingly
fraudulent or intentionally dishonest, or (iv) which it is determined by final
judgment or other final adjudication by a court having jurisdiction in the
matter that such indemnification is not lawful; or

                           (f) Amounts Otherwise Covered. To indemnify the
Indemnitee under this Agreement for any amounts indemnified by the Company other
than pursuant to this



                                       11
<PAGE>



Agreement or amounts paid to or for the benefit of Indemnitee by D&O Insurance
pursuant to Section 10 hereof.

                  12. Nonexclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of, but shall be in addition to and shall not be deemed to diminish or
otherwise restrict, any other rights which the Indemnitee may have under any
provision of law, the Company's Certificate of Incorporation or Bylaws, in any
court in which a proceeding is brought, the vote of the Company's stockholders
or disinterested directors, other agreements or otherwise, both as to action in
his or her official capacity and to action in another capacity while occupying
his or her position as an agent of the Company. To the extent applicable law or
the Company's Certificate of Incorporation or Bylaws permit greater
indemnification than as provided for in this Agreement, the parties hereto agree
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such law or provision of Certificate of Incorporation or Bylaws, and this
Agreement shall be deemed amended without any further action by the Company or
Indemnitee to grant such greater benefits.

                  13. Settlement. The Company shall not settle any proceeding
without the Indemnitee's written consent. Neither the Company nor Indemnitee
will unreasonably withhold consent to any proposed settlement.

                  14. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers required and
shall do everything that may reasonably be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights. The Company shall pay or
reimburse all reasonable expenses incurred by Indemnitee in connection with such
subrogation.



                                       12
<PAGE>



                  15. Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.

                  16. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of the Agreement (including without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (ii) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby, and (iii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable and to give effect to Section 12 and Section
15 hereof.

                  17. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions to this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.



                                       13
<PAGE>



                  18. Continuance of Rights; Successor and Assigns. The
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company. The terms of this Agreement shall bind, and
shall inure to the benefit of, the successor and assigns of the parties hereto.

                  19. Notice. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given (i) if delivered by hand and receipted for by the party addressee, (ii) if
mailed by certified or registered mail with postage prepaid, on the third
business day after the mailing date, or (iii) if transmitted electronically by a
means by which receipt thereof can be demonstrated. Addresses for notice to
either party are set out on the signature page hereof and may be subsequently
modified by written notice.

                  20. Supersedes Prior Agreement. This Agreement supersedes any
prior indemnification agreement between Indemnitee and the Company or its
predecessors.

                  21. Service of Process and Venue. For purposes of any claims
or proceeding to enforce this agreement, the Company consents to the
jurisdiction and venue of any federal or state court of competent jurisdiction
in the states of Delaware and Missouri, and waives and agrees not to raise any
defense that any such court is an inconvenient forum or any similar claim.

                  22. Governing Law. This Agreement shall be governed
exclusively by and construed according to the laws of the State of Delaware, as
applied to contracts between Delaware residents entered into and to be performed
entirely within Delaware. If a court of competent jurisdiction shall make a
final determination that the provisions of the law of any state other than
Delaware govern indemnification by the Company of its officers and directors,
then the indemnification provided under this Agreement shall in all instances be
enforceable to the



                                       14
<PAGE>



fullest extent permitted under such law, notwithstanding any provision of this
Agreement to the contrary.

                  The parties hereto have entered into this Indemnification
Agreement effective as of the date first above written.


                                   BUILD-A-BEAR WORKSHOP, INC.


                                   By
                                     -------------------------------------
                                   Name:
                                   Title:
                                   Address: 1954 Innerbelt Business Center Drive
                                            St. Louis, Missouri 63114


                                   Indemnitee:



                                   By
                                     -------------------------------------
                                   Name:
                                   Address:






                                       15

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>15
<FILENAME>c86750exv10w12.txt
<DESCRIPTION>THIRD AMENDED AND RESTATED LOAN AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.12

                        THIRD AMENDMENT TO LOAN DOCUMENTS

      BUILD-A-BEAR WORKSHOP, INC. ("BABWI"), successor by merger to BUILD-A-BEAR
WORKSHOP, LLC, SHIRTS ILLUSTRATED, LLC ("SHIRTS"), BUILD-A-BEAR WORKSHOP
FRANCHISE HOLDINGS, INC. ("BABWF"), BUILD-A-BEAR ENTERTAINMENT, LLC ("BABE"),
and BUILD-A-BEAR RETAIL MANAGEMENT, INC. ("BABRM"), jointly and severally
(individually and collectively, the "Borrower"), BUILD-A-BEAR WORKSHOP CANADA,
INC. ("Guarantor" or "BABWC") and U.S. BANK NATIONAL ASSOCIATION, formerly known
as FIRSTAR BANK, NATIONAL ASSOCIATION ("Lender"), hereby agree as follows
effective as of May 31, 2004 (the "Effective Date"):

1.    RECITALS.

      1.1   Lender and Build-A-Bear Workshop, LLC entered into a Loan Agreement
            and related loan and security documents dated as of March 1, 2000
            pursuant to which the Lender extended a revolving credit facility to
            the Borrower (the "Loan");

      1.2   Lender, Build-A-Bear Workshop, LLC and Build-A-Bear Workshop, Inc.
            entered into an assumption and amendment agreement dated as of April
            3, 2000, whereby Build-A-Bear Workshop, Inc. assumed all of the
            obligations of its predecessor in interest, Build-A-Bear Workshop,
            LLC;

      1.3   Lender and Borrower amended the terms of the Loan by the First
            Amended and Restated Loan Agreement and related loan and security
            documents dated as of June 1, 2001 (the "Prior Loan Agreement");

      1.4   Lender and Borrower amended and restated the Prior Loan Agreement by
            the Second Amended and Restated Loan Agreement dated as of February
            13, 2002 (the "Loan Agreement") and Borrower delivered to Lender in
            connection therewith the First Amended and Restated Revolving Credit
            Note (the "Note") and the First Amended and Restated Security
            Agreement (the "Security Agreement") (the Note, Security Agreement
            and Loan Agreement, the Guarantee of BABWC, and all other loan and
            security documents executed in connection with the Loan from time to
            time are referred to herein as the "Loan Documents");

      1.5   Lender and Borrower amended the Loan Documents pursuant to the First
            Amendment to Loan Documents effective as of May 30, 2003 to add
            additional borrowers to the Loan Documents, to revise certain
            financial covenants in the Loan Documents, and to add BABWC as a
            guarantor of the obligations under the Loan Documents.

      1.6   Lender and Borrower amended the Loan Documents pursuant to the
            Second Amendment to Loan Documents effective as of December 31, 2003
            to add an additional borrower to the Loan Documents.

<PAGE>

      1.7   Capitalized terms used herein and not otherwise defined will have
            the meanings given such terms in the Loan Agreement.

      1.8   Borrower and Lender desire to further amend the Loan Documents
            pursuant to this Third Amendment to Loan Documents ("Amendment").

2.    AMENDMENTS.

      2.1   Section 2.1.2 of the Loan Agreement is hereby deleted and replaced
            with the following:

            2.1.2 MAXIMUM AMOUNT. The maximum amount that may be outstanding
            under the Revolving Credit Note at any particular time may not
            exceed the lesser of the following (the "Maximum Amount"): (A) the
            Total Facility; or (B) in the event that Lender determines in its
            sole discretion to limit the amount to be advanced under the
            Revolving Credit Note (after 30 days prior written notice to
            Borrower of such determination by Lender), an amount equal to the
            sum of (a) up to 75% of Borrower's Eligible Receivables, plus (b) up
            to the lesser of: (i) $12,000,000; or (ii) 50% of Borrower's
            Eligible Inventory, plus (c) up to 10% of the book value of
            Borrower's net fixed assets. Notwithstanding anything to the
            contrary contained herein, Lender in its sole discretion may, but
            will never be obligated to, increase the amount of the Total
            Facility or change or suspend the limits on the Maximum Amount.

      2.2   Section 2.1 of the Loan Agreement is hereby amended to add the
            following as Section 2.1.5:

            2.1.5 COMMITMENT FEE. Borrower will pay to Lender a commitment fee
            beginning effective June 1, 2004, computed at the rate of 0.125% per
            annum, on the average daily difference between: (i) the outstanding
            amount of the Note and (ii) the Maximum Amount, such Commitment Fee
            to be payable quarterly in arrears on the last day of each June,
            September, December and March and upon the Maturity Date of the Note
            and/or the date this Agreement is terminated.

      2.3   Section 6.1 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.1   DEBT. Incur any Indebtedness other than: (a) the Loans and any
            subsequent Indebtedness to Lender; (b) open account obligations
            incurred in the ordinary course of business having maturities of
            less than 150 days; (c) lease payments for real property; (d) lease
            and rental payments for personal property whose aggregate annual
            rental payments do not exceed $100,000 during any calendar year; and
            (e) Indebtedness secured by Permitted Liens.

      2.4   Section 6.4 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.4   MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth of

                                     - 2 -

<PAGE>

            Borrower and Guarantor on a consolidated basis to be less than
            $54,000,000 at any time. Such amount shall be increased by the
            amount of all equity contributions made to the Borrower from time to
            time and shall be reduced by the amount of dividends, share
            repurchases, or any other return of capital contributions permitted
            under this Agreement; provided however, that such reductions shall
            not cause the Tangible Net Worth of Borrower and Guarantor on a
            consolidated basis to be less than $44,000,000 at any time.

      2.5   Section 6.6 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.6   DIVIDENDS. Declare or pay any dividends of any kind other than
            dividends payable solely in shares of its capital stock (including
            without limitation debt repayment, payment for goods and services);
            provided however, that Borrower may do so if such payment would not
            violate any of the other terms of this Agreement or the Security
            Documents and none of the following conditions exist or will exist
            as a result of any such payment: (i) an Event of Default or Default;
            and (ii) the difference between the Maximum Amount and the
            outstanding amount of the Revolving Credit Note is less than
            $5,000,000.

      2.6   Section 6.8 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.8   REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for
            value, directly or indirectly, any shares of its capital stock now
            or hereafter outstanding; provided however, that Borrower may do so
            if such purchase, redemption or acquisition would not violate any of
            the other terms of this Agreement or the Security Documents and none
            of the following conditions exist or will exist as a result of any
            such purchase, redemption or acquisition: (i) an Event of Default or
            Default; and (ii) the difference between the Maximum Amount and the
            outstanding amount of the Revolving Credit Note is less than
            $5,000,000.

      2.7   Section 6.11 of the Loan Agreement is hereby deleted and replaced
            with the following:

            6.11  ADVANCES AND LOANS. Except as set forth in the Disclosure
            Schedule, lend money, give credit or make advances (other than
            ordinary, reasonable advances not to exceed $50,000 in the aggregate
            at any time) to any person, firm, joint venture or corporation,
            including, without limitation, Affiliates; provided however, that
            Borrower may make advances to BABWC so long as such advances shall
            not exceed $7,000,000 outstanding in the aggregate at any time.

      2.8   Notwithstanding the terms of the Loan Agreement requiring the
            regular submission of Borrowing Base Certificates to Lender,
            Borrower shall no longer be required to submit such Borrowing Base
            Certificates to Lender unless and until such time as Lender requires
            that Borrower do so by written notice to Borrower.

                                     - 3 -

<PAGE>

      2.9   The Maturity Date set forth in Section 3 of the Note is hereby
            extended from May 31, 2004 to May 31, 2005.

3.    REPRESENTATIONS, WARRANTIES, AND COVENANTS. To induce Lender to enter into
      this Amendment, Borrower represents, warrants, and covenants as follows:

      3.1   The representations and warranties of Borrower contained in the Loan
            Documents are deemed to have been made again on and as of the date
            of execution of this Amendment.

      3.2   No Event of Default (as such term is defined in the Loan Documents)
            or Default exists on the date hereof.

      3.3   Each Borrower and Guarantor represents and warrants that it has no
            claims, counterclaims, setoffs, actions or causes of actions,
            damages or liabilities of any kind or nature whatsoever whether at
            law or in equity, in contract or in tort, whether now accrued or
            hereafter maturing (collectively, "Claims") against Lender, their
            direct or indirect parent corporations or any direct or indirect
            Affiliates of such parent corporations, or any of the foregoing's
            respective directors, officers, employees, agents, attorneys and
            legal representatives, or the heirs, administrators, successors or
            assigns of any of them (collectively, "Lender Parties") that
            directly or indirectly arise out of, are based upon or are in any
            manner connected with any Prior Related Event. As an inducement to
            Lender to enter into this Agreement, each Borrower and Guarantor on
            behalf of itself, and all of its successors and assigns hereby
            knowingly and voluntarily releases and discharges all Lender Parties
            from any and all Claims, whether known or unknown, that directly or
            indirectly arise out of, are based upon or are in any manner
            connected with any Prior Related Event. As used herein, the term
            "Prior Related Event" means any transaction, event, circumstance,
            action, failure to act, occurrence of any sort or type, whether
            known or unknown, which occurred, existed, was taken, permitted or
            begun at any time prior to the Effective Date or occurred, existed,
            was taken, was permitted or begun in accordance with, pursuant to or
            by virtue of any of the terms of the Loan Documents or any documents
            executed in connection with the Loan Documents or which was related
            to or connected in any manner, directly or indirectly to the
            extension of credit represented by the Loan Documents.

      3.4   Each Borrower and Guarantor has the full right, power and authority
            to enter into this Amendment and perform its obligations hereunder,
            and no information or material submitted to Lender in connection
            with this Amendment contains any material misstatement or
            misrepresentation nor omits to state any material fact or
            circumstance.

4.    CONDITIONS PRECEDENT. The consent of Lender to this Amendment is subject
      to the satisfaction of the following conditions precedent:

                                     - 4 -

<PAGE>

      4.1   Lender will have been furnished copies, certified by the Secretary
            of Borrower and Guarantor, of resolutions of the Board of Directors
            of Borrower and Guarantor authorizing the execution of this
            Amendment and any related documentation.

      4.2   The representations and warranties of Borrower in Section 3 herein
            will be true.

      4.3   Lender will have received an updated schedule of all locations of
            Borrower and of each Borrower's intellectual property, along with an
            executed pledge agreement of such intellectual property in form
            acceptable to Lender.

5.    GENERAL.

      5.1   Except as expressly modified herein, the Loan Documents, as amended,
            are and remain in full force and effect. Nothing contained herein
            will be construed as waiving any Default or Event of Default under
            the Loan Documents or will affect or impair any right, power or
            remedy of Lender under or with respect to the Loan Documents, as
            amended, or any agreement or instrument guaranteeing, securing or
            otherwise relating to any of the Advances.

      5.2   All representations and warranties made by Borrower herein will
            survive the execution and delivery of this Amendment.

      5.3   This Amendment will be binding upon and inure to the benefit of
            Borrower and Lender and their respective successors and assigns.

      5.4   Borrower will pay attorneys' fees and expenses of Lender incurred in
            connection with this Amendment and related documentation. Such fees,
            expenses may be charged to Borrower by Lender as a Revolving
            Advance.

      5.5   This Amendment will in all respects be governed and construed in
            accordance with the laws of the State of Ohio.

      5.6   A copy of this Amendment may be attached to the Note as an allonge.

      5.7   This Amendment and the documents and instruments to be executed
            hereunder constitute the entire agreement among the parties with
            respect to the subject matter hereof and shall not be amended,
            modified or terminated except by a writing signed by the party to be
            charged therewith.

      5.8   Borrower agrees to execute such other instruments and documents and
            provide Lender with such further assurances as Lender may reasonably
            request to more fully carry out the intent of this Amendment.

      5.9   This Amendment may be executed in a number of identical
            counterparts. If so, each such counterpart shall collectively
            constitute one agreement. Any signature delivered by a party by
            facsimile transmission shall be deemed to be an original signature
            hereto.

                                     - 5 -

<PAGE>

      5.10  No provision of this Amendment is intended or shall be construed to
            be for the benefit of any third party.

Executed as of the Effective Date.

BUILD-A-BEAR WORKSHOP, INC.                    U.S. BANK NATIONAL
                                               ASSOCIATION
BORROWER                                       LENDER

By: /s/ Maxine Clark                           By: /s/ Charles L. Thomas
    --------------------------                     --------------------------
Print Name: Maxine Clark                       Print Name: Charles L. Thomas
Title: Chief Executive Bear                    Title: Vice President

BUILD-A-BEAR                                   BUILD-A-BEAR WORKSHOP
ENTERTAINMENT, LLC                             FRANCHISE HOLDINGS, INC.
BORROWER                                       BORROWER

By: /s/ Maxine Clark                           By: /s/ Maxine Clark
    --------------------------                     --------------------------
Print Name: Maxine Clark                       Print Name: Maxine Clark
Title: Manager                                 Title: Chief Executive Bear

BUILD-A-BEAR RETAIL                            SHIRTS ILLUSTRATED, LLC
MANAGEMENT, INC.
BORROWER                                       BORROWER
                                                 By: Build-A-Bear Workshop, LLC,
                                                 its Managing Member

By: /s/ Maxine Clark                           By: /s/ Maxine Clark
    --------------------------                     --------------------------
Print Name: Maxine Clark                       Print Name: Maxine Clark
Title: Chief Executive Bear                    Title: Manager

BUILD-A-BEAR WORKSHOP
CANADA, INC.
GUARANTOR

By: /s/ Maxine Clark
    --------------------------
Print Name: Maxine Clark
Title: Chief Executive Bear

                                     - 6 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>16
<FILENAME>c86750exv10w13.txt
<DESCRIPTION>SECOND AMENDED AND RESTATED LOAN AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.13

                   SECOND AMENDED AND RESTATED LOAN AGREEMENT

      BUILD-A-BEAR WORKSHOP, INC., successor by merger to BUILD-A-BEAR WORKSHOP,
LLC, AND SHIRTS ILLUSTRATED, LLC, jointly and severally (individually and
collectively, the "Borrower"), and U.S. BANK NATIONAL ASSOCIATION, formerly
known as FIRSTAR BANK, NATIONAL ASSOCIATION ("Lender"), hereby agree as follows:

      WHEREAS, Lender and Build-A-Bear Workshop, LLC entered into a Loan
Agreement and related loan and security documents dated as of March 1, 2000;

      WHEREAS, Lender, Build-A-Bear Workshop, LLC and Build-A-Bear Workshop,
Inc. entered into an assumption and amendment agreement dated as of April 3,
2000, whereby Build-A-Bear Workshop, Inc. assumed all of the obligations of its
predecessor in interest, Build-A-Bear Workshop, LLC;

      WHEREAS, Lender and Borrower entered into a First Amended and Restated
Loan Agreement and related loan and security documents dated as of June 1, 2001
(the "Prior Loan Agreement");

      WHEREAS, Lender and Borrower now desire to amend and restate the Prior
Loan Agreement by this Second Amended and Restated Loan Agreement;

      NOW THEREFORE, in consideration of the mutual promises, conditions, and
covenants set forth herein, the receipt and/or sufficiency of which is hereby
acknowledged, Borrower and Lender agree that the Prior Loan Agreement is hereby
amended and restated in its entirety as follows (the Prior Loan Agreement, as
amended and restated hereby, being referred to as the "Loan Agreement"):

1.    DEFINITIONS. Capitalized terms used herein and not otherwise defined
      herein will have the meanings given those terms in the second to last
      section of this Agreement.

2.    CREDIT FACILITIES.

      2.1   REVOLVING CREDIT LOAN.

            2.1.1 TOTAL FACILITY. Lender will make available to Borrower a line
                  of credit of up to $15,000,000 ("Total Facility"), subject to
                  the terms and conditions and made upon the representations and
                  warranties of Borrower set forth in this Agreement. Amounts
                  outstanding under the line of credit from time to time will be
                  referred to as the "Revolving Credit Loan". The Revolving
                  Credit Loan will be represented by the First Amended and
                  Restated Revolving Credit Note of Borrower of even date
                  herewith and all amendments, extensions and renewals thereto
                  and restatements and replacements thereof ("Revolving Credit
                  Note"). The Revolving Credit Loan will bear interest and will
                  be payable in the manner set forth in the Revolving Credit
                  Note, the terms of which are incorporated herein by reference.

                                       -1-
<PAGE>

            2.1.2 MAXIMUM AMOUNT. The maximum amount that may be outstanding
                  under the Revolving Credit Note at any particular time may not
                  exceed the lesser of the following (the "Maximum Amount"): (A)
                  the Total Facility; or (B) an amount equal to the sum of (a)
                  up to 75% of Borrower's Eligible Receivables, plus (b) up to
                  the lesser of: (i) $12,000,000; or (ii) 50% of Borrower's
                  Eligible Inventory, plus (c) up to 10% of the book value of
                  Borrower's net fixed assets. Notwithstanding anything to the
                  contrary contained herein, Lender in its sole discretion may,
                  but will never be obligated to, increase the amount of the
                  Total Facility or change or suspend the limits on the Maximum
                  Amount.

            2.1.3 ADVANCES. Advances will be made as specified in the Revolving
                  Credit Note.

            2.1.4 EXTENSIONS. After the initial term of the Revolving Credit
                  Note, Lender in its sole discretion may extend or renew the
                  Total Facility and the Revolving Credit Note by accepting from
                  Borrower one or more new notes, each of which will be deemed
                  to be the Revolving Credit Note under this Agreement. In no
                  event will Lender be under any obligation to extend or renew
                  the Total Facility or the Revolving Credit Note beyond the
                  initial term thereof.

      2.2   ADDITIONAL COSTS.

            2.2.1 TAXES, RESERVE REQUIREMENTS, ETC. In the event that any
                  applicable law, treaty, rule or regulation (whether domestic
                  or foreign) now or hereafter in effect and whether or not
                  presently applicable to Lender, or any interpretation or
                  administration thereof by any governmental authority charged
                  with the interpretation or administration thereof, or
                  compliance by Lender with any guideline, request or directive
                  of any such authority (whether or not having the force of
                  law), will (a) affect the basis of taxation of payments to
                  Lender of any amounts payable by Borrower under this Agreement
                  (other than taxes imposed on the overall net income of Lender,
                  by the jurisdiction, or by any political subdivision or taxing
                  authority of any such jurisdiction, in which Lender has its
                  principal office), (b) impose, modify or deem applicable any
                  reserve, special deposit or similar requirement against assets
                  of, deposits with or for the account of, or credit extended by
                  Lender, or (c) impose any other condition with respect to this
                  Agreement, any Note executed in connection with this Agreement
                  or any of the Security Documents, and the result of any of the
                  foregoing is to increase the cost of making, funding or
                  maintaining any such Note or to reduce the amount of any sum
                  receivable by Lender thereon, then Borrower will pay to Lender
                  from time to time, upon request by Lender, additional

                                       -2-
<PAGE>

                  amounts sufficient to compensate Lender for such increased
                  cost or reduced sum receivable.

            2.2.2 CAPITAL ADEQUACY. If either: (a) the introduction of, or any
                  change in, or in the interpretation of, any United States or
                  foreign law, rule or regulation or (b) compliance with any
                  directive, guidelines or request from any central bank or
                  other United States or foreign governmental authority (whether
                  or not having the force of law) promulgated, made, or that
                  becomes effective (in whole or in part) after the date hereof
                  affects or would affect the amount of capital required or
                  expected to be maintained by Lender or any corporation
                  directly or indirectly owning or controlling Lender and Lender
                  determines that such introduction, change or compliance has or
                  would have the effect of reducing the rate of return on Lender
                  capital or on the capital of such owning or controlling
                  corporation as a consequence of its obligations hereunder or
                  under any Note or any commitment to lend thereunder to a level
                  below that which Lender or such owning or controlling
                  corporation could have achieved but for such introduction,
                  change or compliance (after taking into account Lender's
                  policies or the policies of such owning or controlling
                  corporation, as the case may be, regarding capital adequacy)
                  by an amount deemed by Lender (in its sole discretion) to be
                  material, then, from time to time, Borrower will pay to Lender
                  such additional amount or amounts as will compensate Lender
                  for such reduction.

            2.2.3 CERTIFICATE OF LENDER. A certificate of Lender setting forth
                  such amount or amounts as will be necessary to compensate
                  Lender as specified above will be delivered to Borrower and
                  will be conclusive absent manifest error. Borrower will pay
                  Lender the amount shown as due on any such certificate within
                  10 days after its receipt of the same. Failure on the part of
                  Lender to deliver any such certificate will not constitute a
                  waiver of Lender's rights to demand compensation for any
                  particular period or any future period. The protection of this
                  Section will be available to Lender regardless of any possible
                  contention of invalidity or inapplicability of the law,
                  regulation, etc., that results in the claim for compensation
                  under this Section.

3.    COLLATERAL. The Collateral for the repayment of the Obligations will be
      that granted pursuant to the Security Documents.

4.    REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
      Agreement and to make the advances herein contemplated, Borrower hereby
      represents and warrants as follows:

      4.1   ORGANIZATION. Borrower is a Delaware corporation or Missouri limited
            liability company duly organized and in good standing under the laws
            of the state of its organization, is duly qualified in all
            jurisdictions where required by the conduct of

                                       -3-
<PAGE>

            its business or ownership of its assets except where the failure to
            so qualify would not have a material adverse effect on its
            condition, financial or otherwise, and has the power and authority
            to own and operate its assets and to conduct its business as is now
            done.

      4.2   LATEST FINANCIALS. Its Current Financial Statements as delivered to
            Lender are true, complete and accurate in all material respects and
            fairly present its financial condition, assets and liabilities,
            whether accrued, absolute, contingent or otherwise and the results
            of its operations for the periods specified therein. The annual
            financial statements of all business entities included in the
            Current Financial Statements have been prepared in accordance with
            generally accepted accounting principles applied consistently with
            preceding periods subject to any comments and notes contained
            therein.

      4.3   RECENT ADVERSE CHANGES. Except as specifically disclosed in the
            Disclosure Schedule, since the dates of its Current Financial
            Statements, Borrower has not suffered any damage, destruction or
            loss which has materially and adversely affected its business or
            assets and no event or condition of any character has occurred which
            has materially and adversely affected its assets, liabilities,
            business or financial condition, and Borrower has no knowledge of
            any event or condition which may materially and adversely affect its
            assets, liabilities, business or financial condition.

      4.4   RECENT ACTIONS. Except as disclosed in the Disclosure Schedule,
            since the dates of its Current Financial Statements, its business
            has been conducted in the ordinary course and Borrower has not: (a)
            incurred any obligations or liabilities, whether accrued, absolute,
            contingent or otherwise, other than liabilities incurred and
            obligations under contracts entered into in the ordinary course of
            business and other than liabilities to Lender; (b) discharged or
            satisfied any lien or encumbrance or paid any obligations, absolute
            or contingent, other than current liabilities, in the ordinary
            course of business; (c) mortgaged, pledged or subjected to lien or
            any other encumbrance any of its assets, tangible or intangible, or
            cancelled any debts or claims except in the ordinary course of
            business; or (d) made any loans or otherwise conducted its business
            other than in the ordinary course.

      4.5   TITLE. Borrower has good and marketable title to the assets
            reflected on its Current Financial Statements, free and clear from
            all liens and encumbrances except for: (a) current taxes and
            assessments not yet due and payable, (b) liens and encumbrances, if
            any, reflected or noted on said balance sheet or notes, (c) any
            security interests, pledges or mortgages to Lender in connection
            with the closing of this Agreement, (d) assets disposed of in the
            ordinary course of business, and (e) Permitted Liens.

      4.6   LITIGATION, ETC. Except as disclosed on the Disclosure Schedule, as
            of the date hereof, there are no actions, suits, proceedings or
            governmental investigations

                                       -4-
<PAGE>

            pending or, to its knowledge, threatened against Borrower which, if
            adversely determined, could result in a material and adverse change
            in its financial condition, business or assets; and there is no
            basis known to Borrower for any such actions, suits, proceedings or
            investigations.

      4.7   TAXES. Except as to taxes not yet due and payable, Borrower has
            filed all returns and reports that are now required to be filed by
            Borrower in connection with any federal, state or local tax, duty or
            charge levied, assessed or imposed upon Borrower or its property,
            including unemployment, social security and similar taxes; and all
            of such taxes have been either paid or adequate reserve or other
            provision has been made therefor. Borrower has timely filed the
            payments of every tax and tax return with the appropriate
            governmental authorities, and Borrower has never incurred a penalty
            for failure to file or to file in a timely manner. If Borrower has
            currently filed an extension for the payment of taxes, Borrower has
            accrued sufficient funds for the payment of such tax in accordance
            with generally accepted accounting principles.

      4.8   AUTHORITY. Borrower has full power and authority to enter into the
            transactions provided for in this Agreement. The documents to be
            executed by Borrower in connection with this Agreement, when
            executed and delivered by Borrower will constitute the legal, valid
            and binding obligations of Borrower enforceable in accordance with
            their respective terms except as such enforceability may be limited
            by applicable bankruptcy, reorganization, insolvency, moratorium or
            similar laws in effect from time to time affecting the rights of
            creditors generally and except as such enforceability may be subject
            to general principles of equity (regardless of whether such
            enforceability is considered in a proceeding in law or in equity).

      4.9   OTHER DEFAULTS. There does not now exist any default or violation by
            Borrower of or under any of the terms, conditions or obligations of:
            (a) as to corporate entities only, its Articles or Certificate of
            Incorporation and Regulations or Bylaws, as applicable, or as to
            limited liability companies only, its Articles of Organization and
            Operating Agreement; (b) any material indenture, mortgage, deed of
            trust, franchise, permit, contract, agreement, or other material
            instrument to which Borrower is a party or by which Borrower is
            bound; or (c) any law, regulation, ruling, order, injunction,
            decree, condition or other requirement applicable to or imposed upon
            Borrower by any law or by any governmental authority, court or
            agency; and the transactions contemplated by this Agreement and the
            Security Documents will not result in any such default or violation.

      4.10  STOCK OF BORROWER. If Borrower is not a publicly traded entity, all
            of the issued and outstanding securities of Borrower are owned by
            the parties listed on the Disclosure Schedule in the amounts
            specified by the name of each such shareholder and except as listed
            on the Disclosure Schedule, Borrower has no outstanding options,
            warrants or contracts to issue additional securities of any kind.

                                       -5-
<PAGE>

      4.11  STOCK. Except as listed on the Disclosure Schedule, Borrower does
            not own more than one percent (1%) of the issued and outstanding
            capital stock or other ownership interests of any corporation, firm
            or entity.

      4.12  SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES. Except as listed on
            the Disclosure Schedule, Borrower has no Subsidiaries and is not a
            party to any partnership agreement or joint venture agreement.

      4.13  LICENSES, ETC. Borrower has obtained any and all licenses, permits,
            franchises or other governmental authorizations necessary for the
            ownership of its properties and the conduct of its business.
            Borrower possesses adequate licenses, patents, patent applications,
            copyrights, trademarks, trademark applications, and trade names to
            continue to conduct its business as heretofore conducted by it,
            without any conflict with the rights of any other person or entity.

      4.14  SUFFICIENT CAPITAL. Borrower now has capital sufficient to carry on
            its business, all business and transactions in which Borrower is
            about to engage, and is now solvent and able to pay its debts as
            they mature.

      4.15  NAME, PLACES OF BUSINESS AND LOCATION OF COLLATERAL. Except as
            otherwise disclosed by written notice to Lender, the address of its
            principal place of business and every other place from which
            Borrower conducts business is as specified in the Disclosure
            Schedule. Except as otherwise disclosed by written notice to Lender,
            the Collateral and all books and records pertaining to the
            Collateral are and will be located at the addresses indicated on the
            Disclosure Schedule. In the five years preceding the date hereof,
            Borrower has not conducted business under any name other than its
            current name nor maintained any place of business or any assets in
            any jurisdiction other than those disclosed on the Disclosure
            Schedule.

      4.16  ERISA. Borrower and each of its ERISA Affiliates are in compliance
            in all material respects with the applicable provisions of ERISA and
            the regulations and published interpretations thereunder. Neither
            Borrower nor any ERISA Affiliate maintains, sponsors or contributes
            to, or has ever maintained, sponsored or contributed to any Plan or
            Multiemployer Plan.

      4.17  REGULATION U. No part of the proceeds of any Loans will be used to
            purchase or carry any margin stock (as such term is defined in
            Regulation U of the Board of Governors of the Federal Reserve
            System).

      4.18  CLOSING MEMO. The information contained in each of the documents
            prepared by Borrower, executed by Borrower or provided by a third
            party at the request of Borrower listed on the Closing Memo to be
            executed or delivered by Borrower or relating to Borrower is
            complete and correct in all material respects.

      4.19  ENVIRONMENTAL MATTERS.

                                       -6-
<PAGE>

          4.19.1  Borrower and the activities or operations on any of the real
                  estate that Borrower owns or occupies (the "Property") are in
                  compliance in all material respects with all applicable
                  federal, state and local, statutes, laws, regulations,
                  ordinances, policies and orders relating to regulation of the
                  environment, health or safety, or contamination or cleanup of
                  the environment (collectively "Environmental Laws").

          4.19.2  Borrower has obtained all approvals, permits, licenses,
                  certificates, or satisfactory clearances from all governmental
                  authorities required under Environmental Laws with respect to
                  the Property and any activities or operations at the Property.

          4.19.3  To the best of Borrower's knowledge, there have not been and
                  are not now any solid waste, hazardous waste, hazardous or
                  toxic substances, pollutants, contaminants, or petroleum in,
                  on, under or about the Property. The use which Borrower makes
                  and intends to make of the Property will not result in the
                  deposit or other release of any hazardous or toxic substances,
                  solid waste, pollutants, contaminants or petroleum on, to or
                  from the Property.

          4.19.4  To the best of Borrower's knowledge, there have been no
                  complaints, citations, claims, notices, information requests,
                  orders or directives on environmental grounds or under
                  Environmental Laws (collectively "Environmental Claims") made
                  or delivered to, pending or served on, or anticipated by
                  Borrower or its agents, or of which Borrower or its agents,
                  are aware or should be aware (i) issued by any governmental
                  department or agency having jurisdiction over the Property or
                  the activities or operations at the Property, or (ii) issued
                  or claimed by any third party relating to the Property or the
                  activities or operations at the Property.

          4.19.5  To the best of Borrower's knowledge, no asbestos-containing
                  materials are installed, used or incorporated into the
                  Property, and no asbestos-containing materials have been
                  disposed of on the Property.

          4.19.6  To the best of Borrower's knowledge, no polychlorinated
                  biphenyls ("PCBs") are located at, on or in the Property in
                  the form of electrical equipment or devices, including, but
                  not limited to, transformers, capacitors, fluorescent light
                  fixtures with ballasts, cooling oils or any other device or
                  form.

          4.19.7  To the best of Borrower's knowledge, there have not been and
                  are not now any underground storage tanks located within or
                  about the Property.

                                       -7-
<PAGE>

           4.19.8 The Property does not contain any wetlands as that term is
                  defined by relevant governmental agencies under Environmental
                  Laws and, to the best of Borrower's knowledge, there has been
                  no filling of wetlands on the Property in violation of
                  Environmental Laws.

           4.19.9 Borrower has provided Lender with copies of all environmental
                  reports, audits and studies known to Borrower and accessible
                  to Borrower, whether in Borrower's possession or otherwise,
                  regarding the Property.

     4.20  LABOR MATTERS. There are no material strikes or other material labor
           disputes against Borrower pending or, to its knowledge, threatened.
           The hours worked and payment made to its employees in all material
           respects have not been in violation of the Fair Labor Standards Act
           or any other applicable law dealing with such matters. All payments
           due from it, or for which any claim may be made against it, on
           account of wages and employee health and welfare insurance and other
           benefits, have been paid or accrued as a liability on its books. The
           consummation of the transactions contemplated herein will not give
           rise to a right of termination or right of renegotiation on the part
           of any union under any collective bargaining agreement to which
           Borrower is a party or by which Borrower is bound.

5.    AFFIRMATIVE COVENANTS. From the date of execution of this Agreement until
      all Obligations to Lender have been fully paid and this Agreement
      terminated, Borrower will:

      5.1   BOOKS, RECORDS AND ACCESS TO THE COLLATERAL. Maintain proper books
            of account and other records and enter therein complete and accurate
            entries and records of all of its transactions and, upon reasonable
            advance notice, give representatives of Lender access thereto at
            all reasonable times, including permission to examine, copy and make
            abstracts from any of such books and records and such other
            information as Lender may from time to time reasonably request.
            Borrower, upon reasonable advance notice, will give Lender
            reasonable access to the Collateral for the purposes of examining
            the Collateral and verifying its existence. Borrower will make
            available to Lender for examination copies of any reports,
            statements or returns which Borrower may make to or file with any
            governmental department, bureau or agency, federal or state. In
            addition, Borrower will be available to Lender, or cause its
            officers or general partners, as applicable, to be available from
            time to time upon reasonable notice to discuss the status of the
            Loans, its business and any statements, records or documents
            furnished or made available to Lender in connection with this
            Agreement.

      5.2   MONTHLY STATEMENTS. Furnish Lender within 45 days after the end of
            each calendar month internally prepared financial statements of
            Borrower with respect to such calendar month, which financial
            statements will: (a) be in reasonable detail and in form reasonably
            satisfactory to Lender; (b) be accompanied by a compliance
            certificate and a Borrowing Base Certificate; (c) include a balance
            sheet as of the end of such period, profit and loss and surplus
            statements for such

                                       -8-
<PAGE>

            period and a statement of cash flows for such period; (d) include
            prior year comparisons; and (e) be on a consolidating and
            consolidated basis for Borrower and its Subsidiaries, if any, and
            for any entity in which Borrower's financial information is
            consolidated in accordance with generally accepted accounting
            principles.

      5.3   ANNUAL STATEMENTS. Furnish Lender within 120 days after the end of
            each fiscal year of Borrower annual audited financial statements
            which will: (a) include a balance sheet as of the end of such year,
            profit and loss and surplus statements and a statement of cash flows
            for such year; (b) be on a consolidated basis with Borrower, its
            Subsidiaries, if any, and any entity into which Borrower's financial
            information is consolidated in accordance with generally accepted
            accounting principles; (c) be accompanied by a compliance
            certificate and a Borrowing Base Certificate, and (d) contain the
            unqualified opinion of a national independent certified public
            accountant and its examination will have been made in accordance
            with generally accepted auditing standards and such opinion will
            identify any generally accepted accounting principles not
            consistently applied from year to year, to the extent such
            inconsistency is material to the financing statements.

      5.4   AUDITOR'S LETTERS, ETC. Furnish any letter, other than routine
            correspondence, directed to Borrower by its auditors or independent
            accountants, relating to its financial statements, accounting
            procedures, financial condition, tax returns or the like since the
            date of the Current Financial Statements to Lender.

      5.5   TAXES. Pay and discharge when due all indebtedness and all taxes,
            assessments, charges, levies and other liabilities imposed upon it,
            its income, profits, property or business, except those which
            currently are being contested in good faith by appropriate
            proceedings and for which Borrower has set aside adequate reserves
            or made other adequate provision with respect thereto, but any such
            disputed item will be paid forthwith upon the commencement of any
            proceeding for the foreclosure of any lien which may have attached
            with respect thereto, unless Lender has received an opinion in form
            and substance and from legal counsel acceptable to Borrower that
            such proceeding is without merit.

      5.6   OPERATIONS. Continue its business operations in substantially the
            same manner as at present, except where such operations are rendered
            impossible by a fire, strike or other events beyond its control;
            keep its real and personal properties in good operating condition
            and repair; make all necessary and proper repairs, renewals,
            replacements, additions and improvements thereto and comply with the
            provisions of all leases to which Borrower is party or under which
            Borrower occupies or holds real or personal property so as to
            prevent any loss or forfeiture thereof or thereunder.

      5.7   INSURANCE. Comply with the insurance requirements of the Security
            Documents. In addition to the foregoing, keep its insurable real and
            personal property insured

                                       -9-
<PAGE>

            with responsible insurance companies against loss or damage by fire,
            windstorm and other hazards which are commonly insured against in an
            extended coverage endorsement in an amount equal to not less than
            90% of the insurable value thereof on a replacement cost basis and
            also maintain public liability insurance in a reasonable amount. In
            addition, the parties delivering to Lender insurance certificates as
            listed on the Closing Memo will maintain extended liability
            insurance and property insurance of at least the amounts and
            coverages listed on such certificates delivered in connection with
            the Closing and in a form and with companies reasonably satisfactory
            to Lender. Notwithstanding the foregoing, such property insurance
            will at all times be in an amount so that such party will not be
            deemed a "co-insurer" under any co-insurance provisions of such
            policies. All such insurance policies will name Lender as an
            additional insured and, where applicable, as lender's loss payee
            under a loss payable endorsement satisfactory to Lender. All such
            policies will provide that ten (10) days prior written notice must
            be given to Lender before such policy is altered or cancelled.
            Schedules of all insurance will be submitted to Lender upon request.
            Such schedules will contain a description of the risks covered, the
            amounts of insurance carried on each risk, the name of the insurer
            and the cost of such insurance. Borrower will provide new schedules
            to Lender promptly to reflect any change in insurance coverage.

      5.8   COMPLIANCE WITH LAWS. Comply with all laws and regulations
            applicable to Borrower and to the operation of its business,
            including without limitation those relating to environmental and
            health matters, and do all things necessary to maintain, renew and
            keep in full force and effect all rights, permits, licenses,
            certificates, satisfactory clearances and franchises necessary to
            enable Borrower to continue its business.

      5.9   ENVIRONMENTAL VIOLATIONS.

            5.9.1 In the event that any hazardous or toxic substances,
                  pollutants, contaminants, solid waste or hazardous waste, or
                  petroleum are released (as that term is defined under
                  Environmental Laws) at or from the Property, or are otherwise
                  found to be in, on, under, about or migrating to or from the
                  Property in violation of Environmental Laws or in excess of
                  cleanup levels established under Environmental Laws, promptly
                  will notify Lender in writing and will promptly commence such
                  action as may be appropriate or required with respect to such
                  conditions, including, but not limited to, investigation,
                  removal and cleanup thereof, and deposit with Lender cash
                  collateral, letter of credit, bond or other assurance of
                  performance in form, substance and amount reasonably
                  acceptable to Lender to cover the cost of such action. Upon
                  request, Borrower will provide Lender with updates on the
                  status of Borrower's actions to resolve or otherwise address
                  such conditions, until such time as such conditions are fully
                  resolved to the satisfaction of Lender, as determined by
                  Lender in the exercise of its reasonable discretion.

                                      -10-
<PAGE>

            5.9.2 In the event Borrower receives notice of an Environmental
                  Claim from any governmental agency or other third party
                  alleging a violation of or liability under Environmental Laws
                  with respect to the Property or Borrower's activities or
                  operations at the Property, promptly notify Lender in writing
                  and will commence such action as may be appropriate or
                  required with respect to such Environmental Claim. Upon
                  request, Borrower will provide Lender with updates on the
                  status of Borrower's actions to resolve or otherwise address
                  such Environmental Claim, until such claim has been fully
                  resolved to the satisfaction of Lender, as determined by
                  Lender in the exercise of its reasonable discretion.

      5.10  ENVIRONMENTAL AUDIT AND OTHER ENVIRONMENTAL INFORMATION. Provide
            copies of all environmental reports, audits, and studies obtained by
            Borrower from work conducted by Borrower or any other person or
            entity on the Property or property adjacent thereto as soon as such
            reports, audits and studies become available to it. If the
            submissions are considered inadequate or insufficient in order for
            Lender to adequately consider the environmental condition of the
            Property or the status of Borrower's environmental compliance or if
            the submissions are in error, then Lender may require Borrower, at
            Borrower's sole expense, to engage an independent engineering or
            consulting firm acceptable to Lender to conduct a complete
            environmental report, study, or audit in as timely as fashion as is
            reasonably possible. In addition, Borrower will provide Lender with
            information related to remedial action at its Property or adjacent
            to its Property as soon as such information becomes available to it.

      5.11  BUSINESS NAMES AND LOCATIONS. Promptly notify Lender of: (a) any
            change in the name under which Borrower conducts its business; (b)
            any change in the location of the Collateral or Borrower's principal
            place of business; and (c) the opening or closing of any place from
            which Borrower conducts business.

      5.12  ACQUISITION OF ASSETS. Not acquire any assets, real or personal,
            unless such assets are automatically covered by the existing
            Security Documents or within 10 days of such acquisition, Borrower
            delivers to Lender a mortgage, pledge or security agreement to
            encumber such asset in favor of Lender.

      5.13  ACCOUNTS. So long as any of the Loans are in effect, maintain Lender
            as Borrower's primary bank of account and Borrower will maintain all
            operating accounts and all store accounts (in areas where a branch
            location of Lender or any of Lender's Affiliates is accessible to
            Borrower) with Lender or any of Lender's Affiliates.

      5.14  ERISA COMPLIANCE. Comply in all material respects with the
            applicable provisions of ERISA and furnish to Lender: (i) as soon as
            possible, and in any event within 30 days after any officer of
            Borrower or any ERISA Affiliate knows or has reason to know that any
            Reportable Event for which the thirty (30) day

                                      -11-
<PAGE>

            notice requirement has not been waived pursuant to Section 4043 of
            ERISA and the regulations promulgated thereunder has occurred that
            alone or together with any other Reportable Event could reasonably
            be expected to result in liability of Borrower to the PBGC in an
            aggregate amount exceeding $25,000, a statement of a financial
            officer setting forth details as to such Reportable Event and the
            action that Borrower proposes to take with respect thereto, together
            with a copy of the notice of such Reportable Event, if any, given to
            the PBGC, (ii) promptly after receipt thereof, a copy of any notice
            Borrower or any ERISA Affiliate may receive from the PBGC relating
            to the intention of the PBGC to terminate any Plan or Plans (other
            than a Plan maintained by an ERISA Affiliate which is considered an
            ERISA Affiliate only pursuant to subsection (m) or (o) of Code
            Section 414) or to appoint a trustee to administer any such Plan,
            (iii) within 10 days after the due date for filing with the PBGC
            pursuant to Section 412(n) of the Code of a notice of failure to
            make a required installment or other payment with respect to a Plan,
            a statement of its financial officer setting forth details as to
            such failure and the action that Borrower proposes to take with
            respect thereto together with a copy of any such notice given to the
            PBGC and (iv) promptly and in any event within 30 days after receipt
            thereof by Borrower or any ERISA Affiliate from the sponsor of a
            Multiemployer Plan, a copy of each notice received by Borrower or
            any ERISA Affiliate concerning (A) the imposition of Withdrawal
            Liability in an amount exceeding $25,000, or (B) a determination
            that a Multiemployer Plan is, or is expected to be, terminated or in
            reorganization, both within the meaning of Title IV of ERISA, and
            which, in each case, is expected to result in an increase in annual
            contributions of Borrower or an ERISA Affiliate to such
            Multiemployer Plan in an amount exceeding $25,000.

      5.15  NOTICE OF DEFAULT. Notify Lender in writing within five days after
            Borrower knows or has reason to know of the occurrence of an Event
            of Default.

      5.16  SALE AND LEASEBACK. Except to the extent related to Indebtedness
            permitted by Section 6.1, not directly or indirectly enter into any
            arrangement to sell or transfer all or any part of its assets then
            owned by Borrower and thereupon or within one year thereafter rent
            or lease any of the assets so sold or transferred.

      5.17  LINE OF BUSINESS. Not enter into any lines or areas of business
            substantially different from the business or activities in which
            Borrower is presently engaged.

      5.18  BUSINESS OPPORTUNITIES. Not divert (or permit anyone to divert) any
            of its business or opportunities to any other corporate or business
            entity in which Borrower or its Affiliates may hold a direct or
            indirect interest.

      5.19  WAIVERS. Not waive any right or rights of substantial value which,
            singly or in the aggregate, is or are material to its condition
            (financial or other), properties or business.

                                      -12-
<PAGE>

      5.20  BORROWING BASE REPORTS. Upon the request from time to time of Lender
            but in no event less often than monthly furnish Lender a Borrowing
            Base Certificate.

      5.21  LANDLORD LIEN WAIVERS. Use its commercially reasonable efforts to
            promptly deliver to Lender, in form and substance satisfactory to
            Lender, landlord lien waivers from the existing and future landlords
            of Borrower.

6.    NEGATIVE COVENANTS. From the date of execution of this Agreement until all
      of the Obligations have been fully paid, Borrower will not without
      Lender's prior written consent:

      6.1   DEBT. Incur any Indebtedness other than: (a) the Loans and any
            subsequent Indebtedness to Lender; (b) open account obligations
            incurred in the ordinary course of business having maturities of
            less than 150 days; (c) lease payments for real property; (d) lease
            and rental payments for personal property whose aggregate annual
            rental payments do not exceed $1,000,000 during calendar year 2002
            and $1,300,000 through May, 2003; (e) Indebtedness secured by
            Permitted Liens; and (f) existing unsecured Indebtedness to
            Enterprise Bank in an amount not to exceed $525,000.

      6.2   LIENS. Incur, create, assume, become or be liable in any way, or
            suffer to exist any mortgage, pledge, lien, charge or other
            encumbrance of any nature whatsoever on any of its assets, now or
            hereafter owned, other than Permitted Liens.

      6.3   GUARANTEES. Guarantee, endorse or become contingently liable for the
            obligations of any person, firm or corporation, except in connection
            with the endorsement and deposit of checks in the ordinary course of
            business for collection.

      6.4   MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth of
            Borrower on a consolidated basis to be less than the following: (a)
            $37,000,000 as of December 29, 2001 through December 27, 2002; and
            (b) $39,000,000 as of December 28, 2002 and thereafter. All such
            amounts shall be increased by the amount of all equity contributions
            made to the Borrower from time to time.

      6.5   FUNDED DEBT RATIO. Permit the ratio of: (i) Funded Debt of Borrower
            to (ii) EBTIDA of Borrower calculated on a rolling historical
            12-month basis, all on a consolidated basis to be greater than 2.00
            to 1.00 at any time.

      6.6   DIVIDENDS. Declare or pay any dividends of any kind other than
            dividends payable solely in shares of its capital stock (including
            without limitation debt repayment, payment for goods and services).

      6.7   ADDITIONAL SECURITIES. Issue any additional securities of any
            description or issue warrants, options or rights to purchase its
            securities (collectively, "Additional Securities"), provided,
            however, that so long as no Default or Event of Default

                                      -13-
<PAGE>

            has occurred and is continuing, the Borrower shall be permitted to
            issue Additional Securities to the extent that any such issuance
            (individually or in the aggregate) does not result in a transfer of
            Control of the Borrower from its current shareholders as of the date
            hereof. For purposes of this Section, "Control of the Borrower"
            shall mean the power, direct or indirect: (a) to vote 50% or more of
            the securities having ordinary voting power for the election of
            directors of Borrower; or (b) to direct or cause the direction of
            the management and policies of Borrower by contract or otherwise.

      6.8   REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for
            value, directly or indirectly, any shares of its capital stock now
            or hereafter outstanding.

      6.9   INVESTMENTS. Except as disclosed on the Disclosure Schedule,
            purchase or hold beneficially any stock, other securities or
            evidences of indebtedness of, or make any investment or acquire any
            interest whatsoever in, any other person, firm or corporation other
            than (i) obligations of the United States Treasury and agencies
            thereof, (ii) commercial paper maturing within one-year and rated
            "A-1/P-2" and better, or (iii) Certificates of Deposit of the
            Lender.

      6.10  MERGER, ACQUISITION OR SALE OF ASSETS. Except as disclosed on the
            Disclosure Schedule, merge or consolidate with or into any other
            entity or acquire all or substantially all the assets of any person,
            firm, partnership, joint venture, or corporation, or sell, lease or
            otherwise dispose of any of its assets except for dispositions in
            the ordinary course of business. Store closings from time to time
            (not in excess of ten during any 12-month period) are considered in
            the ordinary course of business

      6.11  ADVANCES AND LOANS. Except as set forth in the Disclosure Schedule,
            lend money, give credit or make advances (other than ordinary,
            reasonable advances not to exceed $550,000 in the aggregate at any
            time) to any person, firm, joint venture or corporation, including,
            without limitation, Affiliates.

      6.12  SUBSIDIARIES. Except as disclosed on the Disclosure Schedule,
            acquire any Subsidiaries, create any Subsidiaries or enter into any
            partnership or joint venture agreements.

      6.13  TRANSACTIONS WITH AFFILIATES. Enter into any transaction, including,
            without limitation, any purchase, sale, lease or exchange of
            property or the rendering of any service, with any Affiliate unless
            such transaction is otherwise permitted under this Agreement, is in
            the ordinary course of its business, and is on reasonable terms no
            less favorable to Borrower than Borrower would obtain in a
            comparable arm's length transaction with a non-Affiliate.

      6.14  POST CLOSING MATTERS. Fail to deliver to Lender in form and
            substance satisfactory to Lender the documents, if any, noted as
            post closing items on the Closing Memo on or before the date
            specified in the Closing Memo.

                                      -14-
<PAGE>

7.    EVENTS OF DEFAULT. Upon the occurrence of any of the following events with
      respect to Borrower:

      7.1   NON-PAYMENT. The non-payment of any principal amount of any Note
            when due, whether by acceleration or otherwise, or the nonpayment of
            any interest upon any Note or any other amount due Lender pursuant
            to this Agreement within 5 days of when the same is due;

      7.2   COVENANTS. The default in the due observance of any covenant or
            agreement to be kept or performed by it under the terms of this
            Agreement or any of the Security Documents and the failure or
            inability of it to cure such default within 30 days of the
            occurrence thereof; provided that such 30 day grace period will not
            apply to: (a) any default which in Lender's good faith determination
            is incapable of cure, (b) any default that has previously occurred
            more than 3 times, (c) any default in any negative covenants, or (d)
            any failure to maintain insurance or to permit inspection of the
            Collateral or of its books and records.

      7.3   REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
            by it in this Agreement, in any of the Security Documents or in any
            report, certificate, opinion, financial statement or other document
            furnished in connection with the Obligations is false or erroneous
            in any material respect or any material breach thereof has been
            committed;

      7.4   OBLIGATIONS. Except as provided in Sections 7.1, 7.2 and 7.3 above,
            the default by it in the due observance of any covenant, negative
            covenant or agreement to be kept or performed by it under the terms
            of this Agreement, the Security Documents or any document now or
            in the future executed in connection with any of the Obligations and
            the lapse of any applicable cure period provided therein with
            respect to such default, or, if so defined therein, the occurrence
            of any Event of Default or Default (as such terms are defined
            therein);

      7.5   BANKRUPTCY, ETC. It: (a) dissolves or is the subject of any
            dissolution, a winding  up or liquidation; (b) makes
            a general assignment for the benefit of creditors; or (c) files or
            has filed against it a petition in bankruptcy, for a reorganization
            or an arrangement, or for a receiver, trustee or similar creditors'
            representative for its property or assets or any part thereof, or
            any other proceeding under any federal or state insolvency law, and
            if filed against it, the same has not been dismissed or discharged
            within 60 days thereof;

      7.6   EXECUTION, ATTACHMENT. ETC. The commencement of any foreclosure
            proceedings, proceedings in aid of execution, attachment actions,
            levies against, or the filing by any taxing authority of a lien
            against it or against any of the Collateral, except those liens
            being diligently contested in good faith which in the aggregate do
            not exceed $100,000;

                                      -15-
<PAGE>

      7.7   LOSS, THEFT OR SUBSTANTIAL DAMAGE TO THE COLLATERAL. In addition to
            the rights of Lender to deal with proceeds of insurance as provided
            in the Security Documents, the loss, theft or substantial damage to
            the Collateral if the result of such occurrence (singly or in the
            aggregate) is the failure or inability to resume substantially
            normal operation of its business within 30 days of the date of such
            occurrence;

      7.8   JUDGMENTS. Unless in the opinion of Lender it is adequately insured
            or bonded, the entry of a final judgment for the payment of money
            involving more than $100,000 against it and the failure by it to
            discharge the same, or cause it to be discharged, within 10 days
            from the date of the order, decree or process under which or
            pursuant to which such judgment was entered, or to secure a stay of
            execution pending appeal of such judgment; the entry of one or more
            final monetary or non-monetary judgments or order which, singly or
            in the aggregate, does or could reasonably be expected to: (a) cause
            a material adverse change in the value of the Collateral or its
            condition (financial or otherwise), operations, properties or
            prospects, (b) have a material adverse effect on its ability to
            perform its obligations under this Agreement or the Security
            Documents, or (c) have a material adverse effect on the rights and
            remedies of Lender under this Agreement, any Note or any Security
            Document;

      7.9   IMPAIRMENT OF SECURITY. (a) The validity or effectiveness of any
            Security Document or its transfer, grant, pledge, mortgage or
            assignment by the party executing it in favor of Lender is impaired;
            (b) any party, other than Lender, to a Security Document asserts
            that any Security Document is not a legal, valid and binding
            obligation of it enforceable in accordance with its terms; (c) the
            security interest or lien purporting to be created by any of the
            Security Documents ceases to be or is asserted by any party to any
            Security Document (other than Lender) not to be a valid, perfected
            lien subject to no liens other than liens not prohibited by this
            Agreement or any Security Document; or (d) any Security Document is
            amended, subordinated, terminated or discharged, or any person is
            released from any of its covenants or obligations except to the
            extent that Lender expressly consents in writing thereto;

      7.10  OTHER INDEBTEDNESS OF LENDER'S AFFILIATES. A default with respect to
            any evidence of Indebtedness by it (other than to Lender pursuant to
            this Agreement) to any of Lender's Affiliates, if the effect of such
            default is to accelerate the maturity of such Indebtedness or to
            permit the holder thereof to cause such Indebtedness to become due
            prior to the stated maturity thereof, or if any Indebtedness of it
            for borrowed money (other than to Lender pursuant to this Loan
            Agreement) is not paid when due and payable, whether at the due date
            thereof or a date fixed for prepayment or otherwise (after the
            expiration of any applicable grace period;

      7.11  OTHER INDEBTEDNESS. A default with respect to any evidence of
            Indebtedness in excess of $100,000 by it (other than to Lender or
            Lender's Affiliate pursuant to

                                      -16-
<PAGE>

            this Agreement), if the effect of such default is to accelerate the
            maturity of such Indebtedness or to permit the holder thereof to
            cause such Indebtedness to become due prior to the stated maturity
            thereof, or if any Indebtedness of it in excess of $100,000 for
            borrowed money (other than to Lender or Lender's Affiliate pursuant
            to this Loan Agreement) is not paid when due and payable, whether at
            the due date thereof or a date fixed for prepayment or otherwise
            (after the expiration of any applicable grace period);

      7.12  LEASES. Any declared material default, that is not cured within any
            applicable cure period, existing under more than two (2) of
            Borrower's real property leases at any one time;

then immediately upon the occurrence of any of the events described in Section
7.5 and at the option of the Lender upon the occurrence of any other Event of
Default, the Loans, all Notes and all other Obligations immediately will mature
and become due and payable without presentment, demand, protest or notice of any
kind which are hereby expressly waived. After the occurrence of any Event of
Default, Lender is authorized without notice to anyone to offset and apply to
all or any part of the Obligations all moneys, credits and other property of any
nature whatsoever of Borrower now or at any time hereafter in the possession of,
in transit to or from, under the control or custody of, or on deposit with
(whether held by Borrower individually or jointly with another party), Lender or
any of Lender's Affiliates. The rights and remedies of Lender upon the
occurrence of any Event of Default will include but not be limited to all rights
and remedies provided in the Security Documents and all rights and remedies
provided under applicable law. In furtherance but not in limitation of the
foregoing, upon the occurrence of an Event of Default, Lender may refuse to make
any further advances under any Note included in the Obligations. Borrower waives
any requirement of marshalling of the assets covered by the Security Documents
upon the occurrence of any Event of Default. Upon or during the occurrence of an
Event of Default, Lender may request the appointment of a receiver of the
Collateral. Such appointment may be made without notice, and without regard to
(i) the solvency or insolvency, at the time of application for such receiver, of
the person or persons, if any, liable for the payment of the Obligations; and
(ii) the value of the Collateral at such time. Such receiver will have the power
to take possession, control and care of the Collateral and to collect all
accounts resulting therefrom. Notwithstanding the appointment of any receiver,
trustee, or other custodian, Lender will be entitled to the possession and
control of any cash, or other instruments at the time held by, or payable or
deliverable under the terms of this Loan Agreement or any Security Documents to
Lender.

8. CONDITIONS PRECEDENT.

      8.1   AT CLOSING. Lender's obligation to make any of the Loans is
            conditioned upon the receipt by Lender of all documents in form and
            substance acceptable to Lender listed on the Closing Memo, except
            for those specifically listed thereon as post-closing items.

      8.2   ADDITIONAL ADVANCES. Lender's obligations to make any Loan and/or
            any advance under any Note on any date in the future (to the extent
            that there are

                                      -17-
<PAGE>

            funds remaining to be disbursed hereunder or under any Note) are
            subject to the conditions precedent that:

            8.2.1 NO DEFAULTS. There does not exist any Event of Default, nor
                  any event which upon notice or lapse of time or both would
                  constitute an Event of Default.

            8.2.2 ACCURACY. The representations and warranties contained in this
                  Agreement, the Security Documents, and in each document listed
                  on the Closing Memo prepared by Borrower, executed by Borrower
                  or provided by a third party at the request of Borrower, and
                  in any document delivered in connection therewith will be true
                  and accurate on and as of such date, except as such warranties
                  and representations may be affected by: (a) this Agreement or
                  transactions contemplated thereby, and (b) events occurring
                  after the Closing Date as to those representations and
                  warranties relating to the Current Financial Statements.

            8.2.3 OTHER DOCUMENTS. Lender will have received such other
                  documents, instruments, opinions, certificates, or items of
                  information which it may have reasonably required in
                  connection with the transactions provided for in this
                  Agreement.

      8.3   BORROWING REPRESENTATIONS. Each borrowing by Borrower hereunder will
            constitute a representation and warranty by Borrower as of the date
            of such borrowing that the conditions set forth in Section 8.2 have
            been satisfied.

9.    CLOSING EXPENSES. Borrower will pay Lender at closing a reasonable sum for
      expenses and Attorneys Fees incurred by Lender in connection with the
      preparation, execution and delivery of this Agreement and the attendant
      documents and the consummation of the transactions contemplated hereby
      together with all: (a) recording fees and taxes; (b) survey, appraisal and
      environmental report charges; and (c) title search and title insurance
      charges, including any stamp or documentary taxes, charges or similar
      levies which arise from the payment made hereunder or from the execution,
      delivery or registration of any Security Document or this Agreement. If
      Borrower fails to pay such fees, Lender is entitled to disburse such sums
      as an advance under any Note.

10.   POST-CLOSING EXPENSES. To the extent that Lender incurs any costs or
      expenses in protecting or enforcing its rights in the Collateral or
      observing or performing any of the conditions or obligations of Borrower
      or any Guarantor thereunder, including but not limited to reasonable
      Attorneys' Fees in connection with litigation, preparation of amendments
      or waivers, present or future stamp or documentary taxes, charges or
      similar levies which arise from any payment made hereunder or from the
      execution, delivery or registration of any Security Document or this
      Agreement, such costs and expenses will be due on demand, will be included
      in the Obligations and will bear interest at the Default Rate if not paid
      within fifteen (15) days of becoming due.

                                      -18-
<PAGE>

11.   REPRESENTATIONS AND WARRANTIES TO SURVIVE. All representations,
      warranties, covenants, indemnities and agreements made by Borrower herein
      and in the Security Documents will survive the execution and delivery of
      this Agreement, the Security Documents and the issuance of any Notes.

12.   ENVIRONMENTAL INDEMNIFICATION. Lender will not be deemed to assume any
      liability or obligation for loss, damage, fines, penalties, claims or
      duties to clean-up or dispose of wastes or materials on or relating to the
      Property merely by conducting any inspections of the Property or by
      obtaining title to the Property by foreclosure, deed in lieu of
      foreclosure or otherwise. Borrower, including its successors and assigns,
      agrees to remain fully liable and will indemnify, defend and hold harmless
      Lender, its directors, officers, employees, agents, contractors,
      subcontractors, licensees, invitees, successors and assigns, from and
      against any claims, demands, judgments, damages, actions, causes of
      action, injuries, administrative orders, liabilities, costs, expenses,
      clean-up costs, waste disposal costs, litigation costs, fines, penalties,
      damages and other related liabilities arising from (i) the failure of
      Borrower to perform any obligation herein required to be performed by
      Borrower, (ii) the removal or other remediation of hazardous or toxic
      substances, hazardous wastes, pollutants or contaminants, solid waste or
      petroleum at or from the Property, (iii) any act or omission, event or
      circumstance existing or occurring resulting from or in connection with
      the ownership, construction, occupancy, operation, use and/or maintenance
      of the Property, (iv) any and all claims or proceedings (whether brought
      by private party or governmental agency) for bodily injury, property
      damage, abatement or remediation, environmental damage or impairment and
      any other injury or damage resulting from or relating to any hazardous or
      toxic substances, hazardous waste, pollutants, contaminants, solid waste,
      or petroleum located upon or migrating into, from or through the Property
      (whether or not any or all of the foregoing was caused by the Borrower or
      its tenant or subtenant, or a prior owner of the Property or its tenant or
      subtenant, or any third party and whether or not the alleged liability is
      attributable to the handling, storage, generation, transportation or
      disposal of such material or the mere presence of such material on the
      Property), and (v) Borrower's breach of any representation or warranty
      contained in this Agreement. Without limitation, the foregoing indemnities
      will apply to Lender with respect to claims, demands, losses, damages
      (including consequential damages), liabilities, causes of action,
      judgements, penalties, costs and expenses (including reasonable attorneys'
      fees and court costs) which in whole or in part are caused by or arise out
      of the negligence of Lender. Such indemnity, however, will not apply to
      Lender to the extent the subject of the indemnification is caused by or
      arises out of the gross negligence or willful misconduct of Lender. All
      environmental representations, warranties, covenants, and indemnities will
      continue indefinitely and may not be cancelled or terminated except by a
      writing signed by Lender specifically referring to this Section.
      Notwithstanding anything contained to the contrary in any Note, the Loan
      Agreement, or other Security Documents evidencing or securing the
      Obligations, the provisions of this Section will survive the termination
      or expiration of the Obligations, the full repayment of the Obligations,
      or the acquiring of title by Lender or its successors and assigns by
      foreclosure, deed in lieu of foreclosure or otherwise, and will be fully
      enforceable against Borrower and its successors and assigns. The
      provisions of this Section will constitute a separate

                                      -19-
<PAGE>

      undertaking by Borrower and will be an inducement to Lender in extending
      the Loan evidencing the Obligations to Borrower. The provisions of this
      Section will not be subject to any anti-deficiency or similar laws.

13.   DEFINITIONS. For purposes hereof;

      13.1     Each accounting term not defined or modified herein will have the
               meaning given to it under generally accepted accounting
               principles in effect on the Closing Date.

      13.2     "Affiliate" will mean any person, partnership, joint venture,
               company or business entity under common control or having similar
               equity holders owning at least ten percent (10%) thereof, whether
               such common control is direct or indirect. All of Person's direct
               or indirect parent corporations, partners, Subsidiaries, and the
               officers, shareholders, members, directors and partners of any of
               the foregoing and persons related by blood or marriage to any of
               the foregoing will be deemed to be a Person's Affiliates for
               purposes of this Agreement.

      13.3     "Attorneys Fees" will mean the reasonable value of the services
               (and all costs and expenses related thereto) of the attorneys
               (and all paralegals and other staff employed by such attorneys)
               employed by Lender from time to time to: (i) take any action in
               or with respect to any suit or proceedings (bankruptcy or
               otherwise) relating to the Collateral or this Agreement; (ii)
               protect, collect, lease or sell, any of the Collateral; (iii)
               attempt to enforce any lien on any of the Collateral or to give
               any advice with respect to such enforcement; (iv) enforce any of
               Lender's rights to collect any of the Obligations; (v) give
               Lender advice with respect to this Agreement, including but not
               limited to advice in connection with any default, workout or
               bankruptcy; (vi) prepare any amendments, restatements, amendments
               or waivers to this Agreement or any of the documents executed in
               connection with any of the Obligations.

      13.4     "Borrowing Base Certificate" will mean the Borrowing Base
               Certificate in the form delivered by Lender to Borrower in
               connection with the Closing of this Agreement and all amendments
               thereto and revisions thereof required by Lender.

      13.5     "Business Day" will mean any day excluding Saturday, Sunday and
               any other day on which banks are required or authorized to close
               in Ohio.

      13.6     "Closing" will mean the execution and delivery of the documents
               listed on the Closing Memo.

      13.7     "Closing Date" will mean the date on which this Agreement is
               executed.

      13.8     "Closing Memo" will mean the Closing Memorandum between Borrower
               and Lender in connection with the transactions represented by
               this Agreement.

      13.9     "Code" will mean the Internal Revenue Code of 1986, as amended
               from time to time.

                                      -20-
<PAGE>

         13.10    "Collateral" will mean any property, real or personal,
                  tangible or intangible, now or in the future securing the
                  Obligations, including but not limited to the property covered
                  by the Security Documents.

         13.11    Intentionally Deleted

         13.12    "Current Financial Statements" will mean the following
                  financial statements: (a) Borrower's audited balance sheet
                  dated December 31, 2000 and statement of profit, loss and
                  surplus for the fiscal year ended December 31, 2000; and (b)
                  Borrower's internally prepared balance sheet dated October 31,
                  2001 and statement of profit, loss and surplus for the period
                  January 1, 2001 through October 31, 2001. For the purposes of
                  any future date on which the representations and warranties
                  contained in Section 4 hereof are deemed to be remade, the
                  most current financial statements, tax returns or other
                  documents with respect to Borrower delivered to Lender
                  pursuant to Section 5 above will be deemed the "Current
                  Financial Statements".

         13.13    "Default Rate" will mean 4% per annum plus the highest rate of
                  interest that would otherwise be in effect under any Note but
                  not more than the highest rate permitted by applicable law.

         13.14    "Default" will mean any event or condition that with the
                  passage of time or giving of notice, or both, would constitute
                  an Event of Default.

         13.15    "Disclosure Schedule" will mean collectively, the Disclosure
                  Schedule of Borrower dated March 1, 2000 and the first and
                  second supplements thereto, now or previously delivered by the
                  Borrower to the Lender in connection with the Loan.

         13.16    "EBITDA" will mean the sum of: (i) net income (or loss), as
                  determined in accordance with generally accepted accounting
                  principles; (ii) depreciation and amortization; (iii)
                  interest; (iv) taxes. Other non-cash charges and extraordinary
                  items including, but not limited to, gain or loss from the
                  sale or disposition of capital assets, will be included or
                  excluded at the sole discretion of the Lender.

         13.17    "Eligible Receivables" will mean those amounts set forth on
                  Borrower's Current Financial Statements as "Tenant
                  Allowances", less any amounts of such "Tenant Allowances"
                  deemed by Lender, in its sole credit judgment, to be
                  ineligible.

         13.18    "Eligible Inventory" will mean Inventory which is not, in the
                  good faith opinion of Lender, in accordance with its customary
                  business practices, obsolete or unmerchantable and which
                  Lender, in its sole credit judgment, deems Eligible Inventory,
                  based on such credit and collateral considerations as Lender
                  may deem appropriate. Eligible Inventory will be valued at the
                  lower of cost or market value.

                                      -21-
<PAGE>

         13.19    "ERISA Affiliate" will mean any trade or business (whether or
                  not incorporated) that is a member of a group of which
                  Borrower is a member and which is treated as a single employer
                  under Section 414 of the Code.

         13.20    "ERISA" will mean the Employee Retirement Income Security Act
                  of 1974, or any successor statute, as amended from time to
                  time.

         13.21    "Event of Default" will mean any of the events listed in
                  Section 7.

         13.22    "Funded Debt" will mean all Indebtedness to financial
                  institutions or commercial lenders.

         13.23    "Hazardous Wastes", "hazardous substances" and "pollutants or
                  contaminants" will mean any substances, waste, pollutant or
                  contaminant now or hereafter included with any respective
                  terms under any now existing or hereinafter enacted or amended
                  federal, state or local statute, ordinance, code or
                  regulation, including but not limited to the Comprehensive
                  Environmental Response, Compensation, and Liability Act, 42
                  U.S.C. Section 9601 et seq. ("CERCLA").

         13.24    "Indebtedness" will mean, without duplication: (i) all
                  obligations (including capitalized lease obligations) which in
                  accordance with generally accepted accounting principles would
                  be shown on a balance sheet as a liability; (ii) all
                  obligations for borrowed money or for the deferred purchase
                  price of property or services; and (iii) all guarantees,
                  reimbursement, payment or similar obligations, absolute,
                  contingent or otherwise, under acceptance, letter of credit or
                  similar facilities.

         13.25    "Lender's Affiliate" will mean any person, partnership, joint
                  venture, company or business entity under common control or
                  having similar equity holders owning at least ten percent
                  (10%) thereof with Lender, whether such common control is
                  direct or indirect. All of Lender's direct or indirect parent
                  corporations, sister corporations, and subsidiaries will be
                  deemed to be a Lender's Affiliate for purposes of this
                  Agreement.

         13.26    "Loan(s)" will mean any and all advances of funds under this
                  Agreement or any of the Notes.

         13.27    "Multiemployer Plan" will mean a multiemployer plan as defined
                  in Section 4001(a)(3) of ERISA to which Borrower or any ERISA
                  Affiliate (other than one considered an ERISA Affiliate only
                  pursuant to subsection (m) or (o) of Code Section 414) is
                  making or accruing an obligation to make contributions, or has
                  within any of the preceding five plan years made or accrued an
                  obligation to make contributions.

         13.28    "Note(s)" will mean any note, now or in the future, between
                  Borrower and Lender, and will include any amendments made
                  thereto and restatements thereof, extensions and replacements.

                                      -22-
<PAGE>

         13.29    "Obligations" will mean and include all loans, advances,
                  debts, liabilities, obligations, covenants and duties owing to
                  Lender or any of Lender's Affiliates, from Borrower of any
                  kind or nature, present or future, whether or not evidenced by
                  any note, guaranty or other instrument, including but not
                  limited to those arising under: (i) this Agreement, (ii) the
                  Notes, (iii) under any other agreement, instrument or
                  document, whether or not for the payment of money, whether
                  arising by reason of an extension of credit, opening of a
                  letter of credit, loan, guaranty, indemnification or in any
                  other manner, whether direct or indirect (including those
                  acquired by assignment, participation, purchase, negotiation,
                  discount or otherwise), absolute or contingent, joint or
                  several, due or to become due, now existing or hereafter
                  arising and whether or not contemplated by Borrower or Lender
                  or any Lender's Affiliate on the Closing Date; and as to all
                  of the foregoing, including any amendments, modifications, or
                  superceding documents to each of the foregoing; and all
                  charges, expenses, fees, including but not limited to
                  reasonable Attorneys' Fees, and any other sums chargeable to
                  Borrower under any of the Obligations.

         13.30    "PBGC" will mean the Pension Benefit Guaranty Corporation
                  referred to and defined in ERISA.

         13.31    "Permitted Liens" will mean:

                  13.31.1  liens securing the payment of taxes, either not yet
                           due or the validity of which is being contested in
                           good faith by appropriate proceedings, and as to
                           which Borrower has set aside on its books adequate
                           reserves to the extent required by generally accepted
                           accounting principles;

                  13.31.2  deposits under workers' compensation, unemployment
                           insurance and social security laws, or to secure the
                           performance of bids, tenders, contracts (other than
                           for the repayment of borrowed money) or leases, or to
                           secure statutory obligations or surety or appeal
                           bonds, or to secure indemnity, performance or other
                           similar bonds in the ordinary course of business;

                  13.31.3  liens imposed by law, such as carrier's,
                           warehousemen's or mechanics' liens, incurred by
                           Borrower in good faith in the ordinary course of
                           business, and liens arising out of a judgment or
                           award against Borrower with respect to which Borrower
                           will currently be prosecuting an appeal, a stay of
                           execution pending such appeal having been secured;

                  13.31.4  liens in favor of Lender;

                  13.31.5  reservations, exceptions, encroachments and other
                           similar title exceptions or encumbrances affecting
                           real properties, provided such do not materially
                           detract from the use or value thereof as used by the
                           owner thereof;

                                      -23-
<PAGE>

                  13.31.6  attachment, judgment, and similar liens provided that
                           execution is effectively stayed pending a good faith
                           contest;

                  13.31.7  liens by a bank on deposit accounts of Borrower that
                           arise by operation of law, and that are otherwise in
                           compliance with the terms of this Agreement;

                  13.31.8  purchase money security interests limited to the
                           asset financed by Borrower and securing Indebtedness
                           not in excess of $100,000 in the aggregate at any
                           time; and

                  13.31.9  security interests arising as a result of lease
                           transactions permitted by Section 6.1(d) and limited
                           to the asset leased by Borrower.

         13.32    "Person" will include an individual, a corporation, a limited
                  liability company, an association, a partnership, a trust or
                  estate, a joint stock company, an unincorporated organization,
                  a joint venture, a government (foreign or domestic), any
                  agency or political subdivisions thereof, or any other entity.

         13.33    "Plan" will mean any pension plan subject to the provisions of
                  Title IV of ERISA or Section 412 of the Code and which is
                  maintained for employees of Borrower or any ERISA Affiliate.

         13.34    "Prime Rate" will mean the rate per annum established by
                  Lender from time to time based on its consideration of various
                  factors, including money market, business and competitive
                  factors, and it is not necessarily Lender's most favored
                  interest rate. Subject to any maximum or minimum interest rate
                  limitations specified herein or by applicable law, if and when
                  such Prime Rate changes, then in each such event, the rate of
                  interest payable under this Agreement, any Note, the Security
                  Documents or any other document evidencing the Obligations
                  that is tied to the Prime Rate will change automatically
                  without notice effective the date of such changes.

         13.35    "Reportable Event" will mean any reportable event as defined
                  in Section 4043(b) of ERISA or the regulations issued
                  thereunder with respect to a Plan (other than a Plan
                  maintained by an ERISA Affiliate which is considered an ERISA
                  Affiliate only pursuant to subsection (m) or (o) of Code
                  Section 414).

         13.36    "Security Documents" will mean this agreement and the
                  agreements, pledges, mortgages, guarantees, or other documents
                  delivered by Borrower, any Guarantor or any other person or
                  entity to Lender or Lender's Affiliate previously, now or in
                  the future to encumber the Collateral in favor of Lender or
                  Lender's Affiliate, including but not limited to those listed
                  on the Closing Memo, and all amendments thereto and
                  restatements thereof.

         13.37    "Subsidiaries" means a corporation of which shares of stock
                  having ordinary voting power (other than stock having such
                  power only by reason of the

                                      -24-
<PAGE>

                  happening of a contingency) to elect a majority of the Board
                  of Directors or other managers of such corporation are at the
                  time owned, or the management of which is otherwise
                  controlled, directly or indirectly through one or more
                  intermediaries, or both, by Borrower.

         13.38    "Tangible Net Worth" will mean the total of book net worth
                  (including the sum of common stock, preferred stock, paid-in
                  capital, subordinated debt and earned surplus) less
                  capitalized organizational or closing costs, treasury stock,
                  deferred leasing and financing costs, goodwill, and any other
                  assets generally considered as intangible.

         13.39    "Withdrawal Liability" will mean liability to a Multiemployer
                  Plan as a result of a complete or partial withdrawal from such
                  Multiemployer Plan, as such terms are defined in Part I of
                  Subtitle E of Title IV of ERISA.

         13.40    All other terms contained in this Agreement and not otherwise
                  defined herein will, unless the context indicates otherwise,
                  have the meanings provided for by the Uniform Commercial Code
                  of the State of Ohio to the extent the same are defined
                  therein.

14.      GENERAL.

         14.1     INDEMNITY. Borrower will indemnify, defend and hold harmless
                  Lender, its directors, officers, counsel and employees, from
                  and against all claims, demands, liabilities, judgments,
                  losses, damages, costs and expenses, joint or several
                  (including all accounting fees and Attorneys' Fees reasonably
                  incurred), that Lender or any such indemnified party may incur
                  arising under or by reason of this Agreement or any act
                  hereunder or with respect hereto or thereto including but not
                  limited to any of the foregoing relating to any act, mistake
                  or failure to act in perfecting, maintaining, protecting or
                  realizing on any collateral or lien thereon except the willful
                  misconduct or gross negligence of such indemnified party.
                  Without limiting the generality of the foregoing, Borrower
                  agrees that if, after receipt by Lender of any payment of all
                  or any part of the Obligations, demand is made at any time
                  upon Lender for the repayment or recovery of any amount or
                  amounts received by Borrower in payment or on account of the
                  Obligations and Lender repays all or any part of such amount
                  or amounts by reason of any judgment, decree or order of any
                  court or administrative body, or by reason of any settlement
                  or compromise of any such demand, this Agreement will continue
                  in full force and effect and Borrower will be liable, and will
                  indemnify, defend and hold harmless Lender for the amount or
                  amounts so repaid. The provisions of this Section will be and
                  remain effective notwithstanding any contrary action which may
                  have been taken by Borrower in reliance upon such payment, and
                  any such contrary action so taken will be without prejudice to
                  Lender's rights under this Agreement and will be deemed to
                  have been conditioned upon such payment having become final
                  and irrevocable. The provisions of this Section will survive
                  the expiration or termination of this Agreement.

                                      -25-
<PAGE>


         14.2     CONTINUING AGREEMENT. This Agreement is and is intended to be
                  a continuing Agreement and will remain in full force and
                  effect until the Loan is finally and irrevocably paid in full.

         14.3     NO THIRD PARTY BENEFICIARIES. Nothing express or implied
                  herein is intended or will be construed to confer upon or give
                  any person, firm, or corporation, other than the parties
                  hereto, any right or remedy hereunder or by reasons hereof.

         14.4     NO PARTNERSHIP OR JOINT VENTURE. Nothing contained herein or
                  in any of the agreements or transactions contemplated hereby
                  is intended or will be construed to create any relationship
                  other than as expressly stated herein or therein and will not
                  create any joint venture, partnership or other relationship.

         14.5     WAIVER. No delay or omission on the part of Lender to exercise
                  any right or power arising from any Event of Default will
                  impair any such right or power or be considered a waiver of
                  any such right or power or a waiver of any such Event of
                  Default or any acquiescence therein nor will the action or
                  nonaction of Lender in case of such Event of Default impair
                  any right or power arising as a result thereof or affect any
                  subsequent default or any other default of the same or a
                  different nature. No disbursement of the Loans hereunder will
                  constitute a waiver of any of the conditions to Lender's
                  obligation to make further disbursements; nor, in the event
                  that Borrower is unable to satisfy any such condition, will
                  any such disbursement have the effect of precluding Lender
                  from thereafter declaring such inability to be an Event of
                  Default.

         14.6     NOTICES. All notices, demands, requests, consents, approvals
                  and other communications required or permitted hereunder will
                  be in writing and will be conclusively deemed to have been
                  received by a party hereto and to be effective if delivered
                  personally to such party, or sent by telecopy (followed by
                  written confirmation) or by overnight courier service, or by
                  certified or registered mail, return receipt requested,
                  postage prepaid, addressed to such party at the address set
                  forth below or to such other address as any party may give to
                  the other in writing for such purpose:

                        Lender:          U.S. BANK NATIONAL ASSOCIATION
                                         425 Walnut Street, ML CN-WN-08
                                         Cincinnati, Ohio 45202
                                         Attention: Charles L. Thomas

                        To Borrower:     BUILD-A-BEAR WORKSHOP, INC.
                                         SHIRTS ILLUSTRATED, LLC
                                         1954 Innerbelt Business Center Drive
                                         St. Louis, Missouri 63114
                                         Attention: Mr. Jack Burtelow

                  All such communications, if personally delivered, will be
                  conclusively deemed to have been received by a party hereto
                  and to be effective when so delivered, or if

                                      -26-
<PAGE>

                  sent by telecopy, on the day on which transmitted, or if sent
                  by overnight courier service, on the day after deposit thereof
                  with such service, or if sent by certified or registered mail,
                  on the third Business Day after the day on which deposited in
                  the mail.

         14.7     SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
                  and inure to the benefit of Borrower and Lender and their
                  respective successors and assigns, provided, however, that
                  Borrower may not assign this Agreement in whole or in part
                  without the prior written consent of Lender and Lender at any
                  time may assign this Agreement in whole or in part.

         14.8     MODIFICATIONS. This Agreement, any Notes and the Security
                  Documents, and the documents listed on the Closing Memo,
                  constitute the entire agreement of the parties and supersede
                  all prior agreements and understandings regarding the subject
                  matter of this Agreement, including but not limited to any
                  proposal or commitment letters. No modification or waiver of
                  any provision of this Agreement, any Note, any of the Security
                  Documents or any of the documents listed on the Closing Memo,
                  nor consent to any departure by Borrower therefrom, will be
                  established by conduct, custom or course of dealing; and no
                  modification, waiver or consent will in any event be effective
                  unless the same is in writing and specifically refers to this
                  Agreement, and then such waiver or consent will be effective
                  only in the specific instance and for the purpose for which
                  given. No notice to or demand on Borrower in any case will
                  entitle Borrower to any other or further notice or demand in
                  the same, similar or other circumstance.

         14.9     REMEDIES CUMULATIVE. No single or partial exercise of any
                  right or remedy by Lender will preclude any other or further
                  exercise thereof or the exercise of any other right or remedy.
                  All remedies hereunder and in any instrument or document
                  evidencing, securing, guaranteeing or relating to any Loan or
                  now or hereafter existing at law or in equity or by statute
                  are cumulative and none of them will be exclusive of the
                  others or any other remedy. All such rights and remedies may
                  be exercised separately, successively, concurrently,
                  independently or cumulatively from time to time and as often
                  and in such order as Lender may deem appropriate.

         14.10    ILLEGALITY. If fulfillment of any provision hereof or any
                  transaction related hereto or of any provision of the Notes or
                  the Security Documents, at the time performance of such
                  provision is due, involves transcending the limit of validity
                  prescribed by law, then ipso facto, the obligation to be
                  fulfilled will be reduced to the limit of such validity; and
                  if any clause or provisions herein contained other than the
                  provisions hereof pertaining to repayment of the Obligations
                  operates or would prospectively operate to invalidate this
                  Agreement in whole or in part, then such clause or provision
                  only will be void, as though not herein contained, and the
                  remainder of this Agreement will remain operative and in full
                  force and effect; and if such provision pertains to repayment
                  of the Obligations, then, at the option of Lender, all of the
                  Obligations of Borrower to Lender will become immediately due
                  and payable.

                                      -27-
<PAGE>

         14.11    GENDER, ETC. Whenever used herein, the singular number will
                  include the plural, the plural the singular and the use of the
                  masculine, feminine or neuter gender will include all genders.

         14.12    HEADINGS. The headings in this Agreement are for convenience
                  only and will not limit or otherwise affect any of the terms
                  hereof.

         14.13    TIME. Time is of the essence in the performance of this Loan
                  Agreement.

         14.14    GOVERNING LAW AND JURISDICTION; No JURY TRIAL. THIS AGREEMENT
                  WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
                  PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
                  STATE OF OHIO, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES,
                  AND BORROWER HEREBY AGREES TO THE JURISDICTION OF ANY STATE OR
                  FEDERAL COURT LOCATED WITHIN HAMILTON COUNTY, OHIO AND
                  CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
                  DIRECTED TO BORROWER AT BORROWER'S ADDRESS SET FORTH HEREIN
                  FOR NOTICES AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED
                  FIVE (5) BUSINESS DAYS AFTER THE SAME HAS BEEN DEPOSITED IN
                  U.S. MAILS, POSTAGE PREPAID; PROVIDED THAT NOTHING CONTAINED
                  HEREIN WILL PREVENT LENDER FROM BRINGING ANY ACTION OR
                  EXERCISING ANY RIGHTS AGAINST ANY SECURITY OR AGAINST BORROWER
                  INDIVIDUALLY, OR AGAINST ANY PROPERTY OF BORROWER, WITHIN ANY
                  OTHER STATE OR NATION. BORROWER WAIVES ANY OBJECTION BASED ON
                  FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
                  INSTITUTED HEREUNDER. BORROWER AND LENDER EACH WAIVE ANY RIGHT
                  TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
                  AGREEMENT, ANY DOCUMENTS EVIDENCING ANY OF THE OBLIGATIONS, OR
                  ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH AGREEMENTS.

     Executed as of February _, 2002             BUILD-A-BEAR WORKSHOP, INC.

                                                 BY: /s/ Maxine Clark
                                                    -----------------------
                                                 PRINT NAME:  MAXINE CLARK
                                                 TITLE: PRESIDENT

                                      -28-
<PAGE>


                                                 SHIRTS ILLUSTRATED, LLC

                                                 BY: Build-A-Bear Workshop, Inc.
                                                     Its Managing Member

                                                 BY: /s/ Maxine Clark
                                                    -----------------------
                                                 PRINT NAME: Maxine Clark
                                                 TITLE: President

                                                 U.S. BANK
                                                 NATIONAL ASSOCIATION

                                                 BY: /s/ Charles L. Thomas
                                                    -----------------------
                                                 PRINT NAME: Charles L. Thomas
                                                 TITLE: Vice President

STATE OF________________)
                        )  SS.
COUNTY OF_______________)

         The foregoing instrument was acknowledged before me this February __,
2002 by Maxine Clark, the duly authorized Officer of BUILD-A-BEAR WORKSHOP,
INC., a Delware corporation, on behalf of the corporation.

                                             /s/ Marie A. Powers
                                             --------------------------------
                                             Notary Public

STATE OF________________)                              MARIE A. POWERS
                        )  SS.                   NOTARY PUBLIC - NOTARY SEAL
COUNTY OF_______________)                             STATE OF MISSOURI
                                                     ST. CHARLES COUNTY
                                             MY COMMISSION EXPIRES: MAY 24, 2003

         The foregoing instrument was acknowledged before me this
February___________, 2002 by Maxine Clark, the duly authorized Officer of
BUILD-A-BEAR WORKSHOP, INC., a Delaware corporation, the managing member of
SHIRTS ILLUSTRATED, LLC, a Missouri limited liability company, on behalf of the
company.

                                             /s/ Marie A. Powers
                                             --------------------------------
                                             Notary Public

                                                       MARIE A. POWERS
                                                 NOTARY PUBLIC - NOTARY SEAL
                                                      STATE OF MISSOURI
                                                     ST. CHARLES COUNTY
                                             MY COMMISSION EXPIRES: MAY 24, 2003

                                      -29-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>17
<FILENAME>c86750exv10w14.txt
<DESCRIPTION>FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.14

                FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE

$15,000,000                                                    Cincinnati, Ohio
                                                   Dated as of February _, 2002

         FOR VALUE RECEIVED BUILD-A-BEAR WORKSHOP, INC., successor by merger to
BUILD-A-BEAR WORKSHOP, LLC, and SHIRTS ILLUSTRATED, LLC, jointly and severally
(individually and collectively, the "Borrower") promises to pay to the order of
U.S. BANK NATIONAL ASSOCIATION, formerly known as FIRSTAR BANK, NATIONAL
ASSOCIATION ("Lender"), at its offices located at 425 Walnut Street, Cincinnati,
Ohio 45202, or at such other location as Lender may designate from time to time,
the principal sum of FIFTEEN MILLION DOLLARS (the "Total Facility") or such
lesser amount as may be advanced and outstanding hereunder, together with
interest thereon as provided below from the date of disbursement thereof until
paid, all in lawful money of the United States of America and in immediately
available funds.

1.       RATE OF INTEREST. The outstanding principal balance of this Note will
         bear interest at a rate per annum of the Prime Rate minus 0.5% per
         annum, subject to the applicability of the Default Rate. All interest
         calculations under this Note will be made based on a year of 360 days
         for the actual number of days in each interest period. In no event will
         the rate of interest hereunder exceed 25% per annum, or the equivalent
         rate for a shorter or longer period.

2.       SECURITY. This Note amends and restates the Revolving Credit Note of
         Borrower to Lender dated as of June 1, 2001. This Note is issued in
         connection with the Second Amended and Restated Loan Agreement between
         Borrower and Lender of even date herewith (the "Loan Agreement") and is
         secured by the property covered by the Security Documents as that term
         is defined in the Loan Agreement. All references to the Loan Agreement
         and the Security Documents will include all amendments thereto as made
         from time to time. The terms, covenants, conditions, stipulations and
         agreements contained in the Loan Agreement hereby are incorporated
         herein by reference. Capitalized terms used in this Note and not
         otherwise defined herein will have the meanings given such terms in the
         Loan Agreement.

3.       PAYMENTS. This Note will be payable as follows: Accrued interest will
         be due and payable monthly, commencing on March 1, 2002 and on the
         first day of each month thereafter until May 31, 2003, on which date
         the entire outstanding principal balance hereunder and all accrued and
         unpaid interest will be due and payable (the "Maturity Date").

4.       LATE PAYMENTS. If Borrower fails to make any payment of principal,
         interest or other amount coming due pursuant to the provisions of this
         Note within 5 calendar days of the date due and payable, Borrower also
         shall pay to Lender a late charge equal to five percent (5.00%) of the
         amount of such payment (but not less than $50.00) (the "Late Charge").

<PAGE>

5.       REVOLVING NATURE OF NOTE AND RECORDATION OF ADVANCES. Borrower may
         borrow, repay, and reborrow under this Note subject to the terms,
         conditions, and limits set forth herein and in the Loan Agreement,
         including without limitation, the Maximum Amount restriction set forth
         therein. Lender is authorized to record in its books and records the
         date and amount of each advance and payment hereunder, and other
         information related thereto, which books and records will constitute
         prima facie evidence of the accuracy of the information so recorded;
         provided, however, that failure of Lender to record, or any error in
         recording, any such information will not relieve Borrower of any of its
         obligations under this Note or any of the other Security Documents.
         Notwithstanding the foregoing, Lender will not make any Advance under
         this Note which would cause the outstanding principal balance under
         this Note to exceed the Maximum Amount.

6.       ADVANCES.

         6.1      Any request by Borrower for an advance hereunder must be made
                  (i) in writing received by Lender prior to 3:00 p.m., Eastern
                  Standard Time, on the proposed borrowing date or (ii) by
                  telephonic request made prior to 3:00 p.m., Eastern Standard
                  Time, on the proposed borrowing date. Each proposed borrowing
                  date must be a Business Day prior to the Maturity Date. Upon
                  the making of any request for an advance, Borrower will be
                  deemed to have made all of the representations and warranties
                  set forth in the Loan Agreement on and as of the date of such
                  request.

         6.2      Each request for an advance, whether telephonic or written,
                  will be binding upon and irrevocable by Borrower. Lender will
                  have no liability in acting upon any request that Lender
                  believes in good faith to have been given on behalf of
                  Borrower and will have no duty to verify the authenticity of
                  the signature(s) appearing on any written request and no duty
                  to verify the identity of any person making any telephonic
                  request. Any disbursement of funds pursuant to a telephonic or
                  written request for an advance under this Note will be subject
                  to all of the terms and conditions of the Loan Agreement.

         6.3      Lender hereby is authorized at any time and from time to time,
                  in its discretion, to make an advance under this Note for the
                  payment on behalf of Borrower of any interest, principal or
                  other sums due under any of the Obligations, and each such
                  advance will constitute an advance hereunder and part of the
                  Obligations. Notwithstanding the foregoing, Lender is not
                  obligated to take such action.

7.       PREPAYMENT AND APPLICATION OF PAYMENTS. Borrower may prepay all or any
         portion of this Note at any time without premium or penalty. Payments
         received will be applied in the following order: (i) to repayment of
         any amounts owed to Lender for charges, fees and expenses (including
         reasonable Attorneys' Fees), (ii) to accrued interest, and (iii) to
         principal. Additional payments may be made under this Note at any time
         without premium or penalty but each such payment will be applied in the
         foregoing order.

- 2 -
<PAGE>





8.       EVENTS OF DEFAULT. Immediately and automatically upon the filing by or
         against Borrower or any Guarantor of a petition in bankruptcy, for a
         reorganization, arrangement or debt adjustment, or for a receiver,
         trustee, or similar creditors' representative for its, his or her
         property or any part thereof, or of any other proceeding under any
         federal or state insolvency or similar law (and if such petition or
         proceeding is an involuntary petition or proceeding filed against
         Borrower or such Guarantor without his, her or its acquiescence therein
         or thereto at any time, the same is not promptly contested and, within
         60 days of the filing of such involuntary petition or proceeding,
         dismissed or discharged), or the making of any general assignment by
         Borrower or any Guarantor for the benefit of creditors, or Borrower or
         any Guarantor dissolves or is the subject of any dissolution, winding
         up or liquidation or, at the option of Lender, immediately upon the
         occurrence of any other Event of Default, in any case without demand or
         notice of any kind (which are hereby expressly waived): (i) the
         outstanding principal balance hereunder, together with all accrued and
         unpaid interest thereon, and any additional amounts secured by the
         Security Documents, will be accelerated and become immediately due and
         payable, (ii) Borrower will pay to Lender all reasonable costs and
         expenses (including but not limited to reasonable Attorneys' Fees)
         incurred by Lender in connection with Lender's efforts to collect the
         indebtedness evidenced hereby, and (iii) Lender may exercise from time
         to time any of the rights and remedies available to Lender under the
         Security Documents or applicable law. Upon and after the occurrence of
         any Event of Default or the maturity of this Note (by acceleration or
         otherwise), the principal balance under this Note, together with any
         arrearage of interest, will bear interest at the Default Rate until
         paid in full, whether before or after judgment and Lender will have no
         further obligation to make advances under this Note or any of the
         Security Documents. Borrower, all other makers, co-signers and
         indorsers waive presentment, demand, protest, and notice of demand,
         protest, non-payment and dishonor. Borrower also waives all defenses
         based on suretyship or impairment of collateral.

9.       MISCELLANEOUS.

         9.1      Both the Late Charge and the Default Rate are imposed as
                  liquidated damages for the purpose of defraying Lender's
                  expenses incident to the handling of delinquent payments, but
                  are in addition to, and not in lieu of, Lender's exercise of
                  any rights and remedies hereunder, under the other Security
                  Documents or under applicable law, and any fees and expenses
                  of any agents or any reasonable fees and expenses of any
                  attorneys which Lender may employ. In addition, the Default
                  Rate reflects the increased credit risk to Lender of carrying
                  a loan that is in default. Borrower agrees that the Late
                  Charge and Default Rate are reasonable forecasts of just
                  compensation for anticipated and actual harm incurred by
                  Lender, and that the actual harm incurred by Lender cannot be
                  estimated with certainty and without difficulty.

         9.2      Nothing contained in this Note regarding late charges or the
                  Default Rate will be construed in any way to extend the due
                  date of any payment or waive any payment default, and each
                  such right is in addition to, and not in lieu of, the other
                  and any other rights and remedies of Lender hereunder, under
                  any of the Security

- 3 -
<PAGE>

                  Documents or under applicable law (including, without
                  limitation, the right to interest, reasonable Attorneys' Fees
                  and other expenses).

         9.3      If this Note is executed by more than one person or entity as
                  "Borrower", the obligations of such parties hereunder will be
                  joint and several and, unless otherwise specified herein, each
                  reference to "Borrower" will mean each of such parties
                  individually and all of such parties collectively.

         9.4      This Note will bind Borrower and the heirs, executors,
                  administrators, successors and assigns of Borrower, and the
                  benefits hereof will inure to the benefit of Lender and its
                  successors and assigns. All references herein to the
                  "Borrower" and "Lender" will include the respective heirs,
                  administrators, successors and assigns thereof; provided,
                  however, that Borrower may not assign this Note in whole or in
                  part without the prior written consent of Lender and Lender at
                  any time may assign this Note in whole or in part (but no
                  assignment by the Lender of less than all of this Note will
                  operate to relieve Borrower from any duty to Lender with
                  respect to the unassigned portion of this Note).

         9.5      If any provision of this Note is prohibited by or invalid
                  under applicable law, such provision will be ineffective only
                  to the extent of such prohibition or invalidity without
                  invalidating the remainder of such provision and without
                  invalidating any other provision in this Note; provided,
                  however, that if the provision that is the subject of such
                  prohibition or invalidity pertains to repayment of this Note,
                  then, at the option of Lender, all of the obligations
                  hereunder will become immediately due and payable.

         9.6      Without limiting the generality of the foregoing, if from any
                  circumstances whatsoever the fulfillment of any provision of
                  this Note involves transcending the limit of validity
                  prescribed by any applicable usury statute or any other
                  applicable law with regard to obligations of like character
                  and amount, then the obligation to be fulfilled will be
                  reduced to the limit of such validity as provided in such
                  statute or law, so that in no event will any exaction of
                  interest be possible under this Note in excess of the limit of
                  such validity and the right to demand any such excess is
                  hereby expressly waived by Lender. As used in this paragraph,
                  "applicable usury statute" and "applicable law" mean such
                  statute and law in effect on the date hereof, subject to any
                  change therein that result in a higher permissible rate of
                  interest.

         9.7      No delay or failure on the part of Lender to exercise any
                  right, remedy or power hereunder, under any of the other
                  Security Documents or under applicable law will impair or
                  waive any such right, remedy or power (or any other right,
                  remedy or power), be considered a waiver of or an acquiescence
                  in any breach, Default or Event of Default or affect any other
                  or subsequent breach, Default or Event of Default of the same
                  or a different nature. No waiver of any breach, Default or
                  Event of Default, nor any modification, waiver, discharge or
                  termination of any provision of this Note, nor consent to any
                  departure by Borrower therefrom, will

- 4 -
<PAGE>

                  be established by conduct, custom or course of dealing; and no
                  modification, waiver, discharge, termination or consent will
                  in any event be effective unless the same is in writing,
                  signed by Lender and specifically refers to this Note, and
                  then such modification, waiver, discharge or termination or
                  consent will be effective only in the specific instance and
                  for the specific purpose for which given. No notice to or
                  demand on Borrower in any case will entitle Borrower to any
                  other or further notice or demand in the same or any similar
                  or other circumstance.

         9.8      No single or partial exercise of any right or remedy by Lender
                  will preclude any other or further exercise thereof or the
                  exercise of any other right or remedy. All remedies hereunder,
                  under any of the other Security Documents or now or hereafter
                  existing at law or in equity are cumulative and none of them
                  will be exclusive of the others or of any other right or
                  remedy. All such rights and remedies may be exercised
                  separately, successively, concurrently, independently or
                  cumulatively from time to time and as often and in such order
                  as Lender may deem appropriate.

         9.9      If at any time all or any part of any payment or transfer of
                  any kind received by Lender with respect to all or any part of
                  this Note is repaid, set aside or invalidated by reason of any
                  judgment, decree or order of any court or administrative body,
                  or by reason of any agreement, settlement or compromise of any
                  claim made at any time with respect to the repayment,
                  recovery, setting aside or invalidation of all or any part of
                  such payment or transfer, Borrower's obligations under this
                  Note will continue (and/or be reinstated) and Borrower will be
                  and remain liable, and will indemnify, defend and hold
                  harmless Lender for, the amount or amounts so repaid,
                  recovered, set aside or invalidated and all other claims,
                  demands, liabilities, judgments, losses, damages, costs and
                  expenses incurred in connection therewith. The provisions of
                  this Section will be and remain effective notwithstanding any
                  contrary action which may have been taken by Borrower in
                  reliance upon such payment or transfer, and any such contrary
                  action so taken will be without prejudice to Lender's rights
                  hereunder and will be deemed to have been conditioned upon
                  such payment or transfer having become final and irrevocable.
                  The provisions of this Section will survive any termination,
                  cancellation or discharge of this Note.

         9.10     Time is of the essence in the performance of this Note.

         9.11     This Note has been delivered and accepted at and will be
                  deemed to have been made at Cincinnati, Ohio and will be
                  interpreted and the rights and liabilities of the parties
                  hereto determined in accordance with the laws of the State of
                  Ohio, without regard to conflicts of law principles.

         9.12     BORROWER HEREBY IRREVOCABLY AGREES AND SUBMITS TO THE
                  EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
                  WITHIN HAMILTON COUNTY, OHIO, OR, AT THE OPTION OF LENDER IN
                  ITS SOLE DISCRETION, OF ANY STATE OR FEDERAL COURT(S) LOCATED
                  WITHIN ANY OTHER COUNTY, STATE OR JURISDICTION IN WHICH LENDER
                  AT ANY TIME OR

-5-

<PAGE>

                  FROM TIME TO TIME CHOOSES IN ITS SOLE DISCRETION TO BRING AN
                  ACTION OR OTHERWISE EXERCISE A RIGHT OR REMEDY, AND BORROWER
                  WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
                  OBJECTION TO VENUE OF ANY SUCH ACTION OR PROCEEDING. BORROWER
                  HEREBY IRREVOCABLY CONSENTS THAT ALL SERVICE OF PROCESS BE
                  MADE BY CERTIFIED MAIL DIRECTED TO BORROWER AT ITS ADDRESS SET
                  FORTH IN THE LOAN AGREEMENT FOR NOTICES AND SERVICE SO MADE
                  WILL BE DEEMED TO BE COMPLETED THE EARLIER OF BORROWER'S
                  ACTUAL RECEIPT THEREOF OR FIVE (5) BUSINESS DAYS AFTER THE
                  SAME HAS BEEN DEPOSITED IN U.S. MAILS, POSTAGE PREPAID.
                  NOTHING CONTAINED HEREIN WILL PREVENT LENDER FROM SERVING
                  PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

         9.13     BORROWER AND LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN
                  ANY ACTION OR PROCEEDING RELATING TO THIS NOTE, THE SECURITY
                  DOCUMENTS, THE COLLATERAL DESCRIBED THEREIN, OR ANY ACTUAL OR
                  PROPOSED TRANSACTION OR OTHER MATTER CONTEMPLATED IN OR
                  RELATING TO ANY OF THE FOREGOING.

                                           BUILD-A-BEAR WORKSHOP, INC.

                                           BY: /s/ Maxine Clark
                                               ---------------------------------
                                           PRINT NAME: Maxine Clark
                                           TITLE: President

                                           SHIRTS ILLUSTRATED, LLC

                                           BY: Build-A-Bear Workshop, Inc.
                                               Its Managing Member

                                           BY: /s/ Maxine Clark
                                               ---------------------------------
                                           PRINT NAME: Maxine Clark
                                           TITLE: Manager

STATE OF__________)
                  ) SS.
COUNTY OF_________)

         The foregoing instrument was acknowledged before me this February, 2002
by Maxine Clark, the duly authorized Officer of BUILD-A-BEAR WORKSHOP, INC., a
Delaware corporation, on behalf of the corporation.

                                           /s/ Marie A. Powers
                                           -------------------------------------
                                           Notary Public

My commission expires: May 24, 2003

                                                      MARIE A. POWERS
                                                NOTARY PUBLIC - NOTARY SEAL
                                                     STATE OF MISSOURI
                                                     ST. CHARLES COUNTY
                                            MY COMMISSION EXPIRES: MAY 24, 2003

- 6 -
<PAGE>

STATE OF___________)
                   ) SS.
COUNTY OF__________)

         The foregoing instrument was acknowledged before me this February, 2002
by Maxine Clark, the duly authorized Officer of BUILD-A-BEAR WORKSHOP, INC., a
Delaware corporation, the managing member of SHIRTS ILLUSTRATED, LLC, a Missouri
limited liability company, on behalf of the company.

                                           /s/ Marie A. Powers
                                           -------------------------------------
                                           Notary Public

My commission expires: May 24, 2003

                                                      MARIE A. POWERS
                                                NOTARY PUBLIC - NOTARY SEAL
                                                     STATE OF MISSOURI
                                                     ST. CHARLES COUNTY
                                            MY COMMISSION EXPIRES: MAY 24, 2003

- 7 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>18
<FILENAME>c86750exv10w15.txt
<DESCRIPTION>FIRST AMENDED AND RESTATED SECURITY AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.15

                  FIRST AMENDED AND RESTATED SECURITY AGREEMENT

      BUILD-A-BEAR WORKSHOP, INC. AND SHIRTS ILLUSTRATED, LLC (individually and
collectively, the "Debtor"), for valuable consideration, receipt of which hereby
is acknowledged, hereby transfer, assign and pledge to U.S. BANK NATIONAL
ASSOCIATION, formerly known as FIRSTAR BANK, NATIONAL ASSOCIATION ("Secured
Party"), and grant to Secured Party a security interest in, the following
collateral, wherever located, now existing and hereafter arising or coming into
existence (the "Collateral"):

1.    All of Debtor's Accounts, Inventory, Equipment, General Intangibles,
      Chattel Paper, Investment Property, Instruments, Documents, Letter of
      Credit Rights, Supporting Obligations, and Commercial Tort Claims;

2.    All moneys, credits and other property of any nature whatsoever of Debtor
      now or hereafter in the possession of, in transit to or from, under the
      custody or control of, or on deposit with (whether held by Debtor
      individually or jointly with another and including specifically but not by
      way of limitation all demand, time, savings, passbook, or other similar
      accounts) Secured Party or any Secured Party Affiliate, including but not
      limited to cash collateral accounts; and

3.    The proceeds (including insurance proceeds) and products of the foregoing
      in whatever form the same may be,

for the purpose of securing the payment to Secured Party of all of the following
("Obligations"): all loans, advances, debts, liabilities, obligations, covenants
and duties owing to Secured Party from any Debtor of any kind or nature, present
or future, whether or not evidenced by any note, guaranty or other instrument,
including but not limited to those arising under: (i) the Second Amended and
Restated Loan Agreement by and between Debtor and Secured Party dated as of even
date herewith, (ii) any International Swap and Derivatives Association Master
Agreement ("Master Agreement"), and including each Transaction (as such term is
defined in the Master Agreement), as confirmed in the applicable confirmation of
each such Transaction, (iii) any obligation of Debtor to Secured Party or any
Secured Party Affiliate under any other interest rate swap, cap, collar, floor,
option, forward, or other type of interest rate protection, foreign exchange or
derivative transaction agreement, (iv) under any other agreement, instrument or
document, whether or not for the payment of money, whether arising by reason of
an extension of credit, opening of a letter of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment, participation, purchase, negotiation, discount or
otherwise), absolute or contingent, joint or several, due or to become due, now
existing or hereafter arising and whether or not contemplated by Debtor or
Secured Party or Secured Party Affiliate on the date hereof; and, as to all of
the foregoing, including any amendments, modifications, or superceding
documents to each of the foregoing; and all charges, expenses, fees, including
but not limited to reasonable attorneys' fees, and any other sums chargeable to
Debtor under any of the Obligations. As used herein, "Secured Party Affiliate"
will mean any person, partnership, joint venture, company or business entity
under common control or having similar equity holders owning at least ten
percent (10%) thereof with Secured Party, whether such common control is direct
or indirect. All of Secured Party's direct or

<PAGE>

indirect parent corporations, sister corporations, and subsidiaries will be
deemed to be a Secured Party Affiliate for purposes of this Security Agreement
(the "Agreement"). This Agreement amends and restates the Security Agreement
between Debtor and Secured Party dated as of June 1,2001.

      Debtor further warrants to and agrees with Secured Party as follows:

1.    PRESERVATION OF COLLATERAL. Debtor will keep the Collateral in good order
      and repair at all times, will use same with reasonable care and caution,
      will not part with possession or ownership thereof nor lease or hire out
      the Collateral without the written consent of Secured Party, and will
      exhibit the Collateral to Secured Party upon reasonable request. Debtor
      will promptly notify Secured Party of any loss or damage to any material
      portion of the Collateral, Debtor will not use, or permit the Collateral
      to be used, in violation of any federal, state, county or municipal law or
      regulation or for any unlawful purpose whatsoever

2.    Execution of Appropriate Documentation with Respect to Collateral.

      2.1   With respect to any and all of the Collateral, Debtor agrees to take
            such steps as Secured Party may reasonably request to perfect,
            maintain the priority of and keep in full force and effect the
            security interest granted by Debtor to Secured Party, including, but
            not limited to, the prompt payment upon demand therefor by Secured
            Party of all reasonable fees and expenses (including documentary
            stamp, excise or intangibles taxes) incurred in connection with the
            preparation, delivery, or filing of any document or the taking of
            any action deemed necessary or appropriate by Secured Party to
            perfect, protect, or enforce a security interest in any of the
            Collateral for the benefit of Secured Party, subject only to the
            liens to which Secured Party has specifically consented in writing
            (the "Permitted Liens"). All amounts not so paid within fifteen (15)
            days of becoming due will be added to the Obligations and (in
            addition to other rights and remedies resulting from such
            non-payment) will bear interest from the date of demand until paid
            in full at the Default Rate. Debtor also authorizes Secured Party to
            file one or more financing statements, as deemed necessary or
            desirable by Secured Party, which financing statements lists or
            otherwise describes the Collateral as consisting of all of Debtor's
            assets or words to that effect, regardless of the actual description
            of the Collateral set forth in this Agreement. Debtor hereby
            ratifies any filing by Secured Party that predates the date of this
            Agreement but that was intended to perfect the security interest
            granted hereby.

      2.2   In addition to the foregoing and not in limitation thereof, Debtor
            agrees to furnish Secured Party with properly executed control
            agreements, registrar's certificates, issuer acknowledgements of
            Secured Party's interest in the Letter of Credit Rights, and
            evidence of the placement of a restrictive legend on tangible
            chattel paper (and the tangible components of electronic Chattel
            Paper), and will take all commercially reasonable action acceptable
            to Secured Party sufficient to establish Secured Party's control of
            electronic Chattel Paper (and the electronic

                                     - 2 -
<PAGE>

            components of hybrid Chattel Paper), as appropriate, with respect to
            Collateral in which either (i) a security interest can be perfected
            only by control or such restrictive legending, or (ii) a security
            interest perfected by control or accompanied by such restrictive
            legending will have priority as against a lien creditor, a purchaser
            of such Collateral from Debtor, or a security interest perfected by
            any person not having control or not accompanied by such restrictive
            legending, in each case in form and substance reasonably acceptable
            to Secured Party and sufficient under applicable law so that Secured
            Party will have a security interest in all such Collateral perfected
            by control.

      2.3   In addition to the foregoing and not in limitation thereof, Debtor
            agrees to deliver to Secured Party, or, if Secured Party has
            specifically consented in each instance, to an agent or bailee of
            Secured Party who has acknowledged such status in a properly
            executed control agreement, possession of all Collateral with
            respect to which either a security interest can be perfected only by
            possession or a security interest perfected by possession will have
            priority as against persons not having possession, and including in
            the case of Instruments, Documents, and Investment Property in the
            form of certificated securities, duly executed endorsements or stock
            powers in blank, as the case may be, all in form and substance
            reasonably acceptable to Secured Party, and subject only to
            Permitted Liens.

3.    INSURANCE. Debtor will keep its insurable real and personal property
      insured with responsible insurance companies against loss or damage by
      fire, windstorm and other hazards which are commonly insured against in an
      extended coverage endorsement in an amount equal to not less than 90% of
      the insurable value thereof on a replacement cost basis and also maintain
      public liability insurance in a reasonable amount. In addition, Debtor
      will maintain extended liability insurance covering its operations of at
      least $1,000,000 and in a form and with companies reasonably satisfactory
      to Secured Party. Notwithstanding the foregoing, such property insurance
      will at all times be in an amount so that Debtor will not be deemed a
      "co-insurer" under any co-insurance provisions of such policies. All such
      insurance policies will name Secured Party as an additional insured and,
      where applicable, as lender's loss payee under a loss payable endorsement
      satisfactory to Secured Party. All such policies will be in form and
      substance satisfactory to Secured Party and will provide that ten (10)
      days' prior written notice must be given to Secured Party before such
      policy is altered or cancelled. Schedules of all insurance of Debtor will
      be submitted to Secured Party upon request. Such schedules will contain a
      description of the risks covered, the amounts of insurance carried on each
      risk, the name of the insurer and the cost of such insurance to Debtor.
      Debtor will provide new schedules to Secured Party promptly to reflect any
      change in insurance coverage. Debtor will deliver to Secured Party
      certificates representing such insurance policies upon the execution
      hereof. All amounts payable in settlement of insurance losses may be
      applied, at Secured Party's option, to the Obligations, or used to repair,
      replace or restore the Collateral.

4.    PAVMENT OF EXPENSES BY SECURED PARTY. At its option and with reasonable
      notice to Borrower, Secured Party may discharge taxes, liens, security
      interests or such other

                                     - 3 -
<PAGE>

      encumbrances as may attach to the Collateral, may pay for required
      insurance on the Collateral and may pay for the maintenance and
      preservation of the Collateral, as determined by Secured Party to be
      necessary, and such expenditures will become a part of the Obligations.
      Debtor will reimburse Secured Party on demand for any payment so made or
      any expense incurred by Secured Party pursuant to the foregoing
      authorization, and the Collateral also will secure any advances or
      payments so made or expenses so incurred by Secured Party.

5.    INFORMATION. Debtor will furnish to Secured Party from time to time if and
      as requested current lists of the Collateral including names and addresses
      of account debtors and agings of Accounts; and, if and when requested by
      Secured Party from time to time, will furnish to it copies of all purchase
      orders, inventory lists, billings, shipping orders, correspondence and
      other instruments or writings in any way evidencing or relating to the
      Collateral or the proceeds thereof. Secured Party and its designated
      representatives and agents will have the right at all reasonable times and
      upon reasonable advance notice to examine, inspect, and audit the
      Collateral wherever located.

6.    SALE OF INVENTORY. Debtor will have the right to process and sell the
      Inventory in the regular course of its business at customary prices (but
      in no event may Debtor transfer any Inventory in satisfaction of any
      debt).

7.    RECEIPT OF PAYMENT; SET OFF. Upon and during the occurrence of an Event of
      Default and in the event that Debtor receives payment of or proceeds from
      any of the Collateral, including without limitation Accounts, monies,
      checks, notes, drafts, or any other items of payment, Debtor agrees that
      Debtor will deliver to Secured Party the same in the form received by
      Debtor without commingling with any funds belonging to Debtor, and
      promptly will deposit the same in a special collateral account with
      Secured Party. Upon and during the occurrence of an Event of Default,
      Debtor authorizes Secured Party at any time without notice to appropriate
      and apply any balances, credits, deposits or accounts or money of Debtor
      (held individually or with others) in its possession, custody or control
      or the possession, custody or control of any Secured Party Affiliate to
      the payment of the Obligations, all of which may at all times be held and
      treated as additional Collateral.

8.    NOTIFICATION OF THIRD PARTY DEBTORS. Secured Party at any time during the
      occurrence of an Event of Default, and without notice to Debtor, may
      notify any persons who are indebted to Debtor with respect to any of the
      Collateral of the assignment thereof to Secured Party and may direct such
      account debtors to make payment directly to Secured Party of the amounts
      due. At the request of Secured Party during the occurrence of an Event of
      Default, Debtor will direct any persons who are indebted to Debtor with
      respect to any of the Collateral to make payment directly to Secured
      Party. Secured Party is authorized to give receipts to such account
      debtors for any such payments and the account debtors will be protected in
      making such payments to Secured Party.

9.    REPRESENTATIONS, WARRANTIES AND COVENANTS. Debtor represents, warrants and
      covenants to Secured Party that, except for any Permitted Liens: (a)
      Debtor has not made any prior sale, pledge, encumbrance, assignment or
      other disposition of any of the

                                     - 4 -
<PAGE>


      Collateral and the same is free from all encumbrances and rights of set
      off of any kind, and Debtor has not authorized any other action or
      executed any other record that has given any other person any right to any
      of the Collateral; (b) except as herein provided, Debtor will not
      hereafter without the prior written consent of Secured Party sell, pledge,
      encumber, assign or otherwise dispose of any of the Collateral or permit
      any right of set off, lien or security interest to exist thereon except to
      Secured Party; (c) Debtor will defend the Collateral against all claims
      and demands of all persons at any time claiming the same or any interest
      therein; (d) each General Intangible is genuine and enforceable in
      accordance with its terms and Debtor will defend the same against all
      claims, demands, set offs and counterclaims at any time asserted; (e) at
      the time any Account becomes subject to this Agreement, such Account will
      be what it purports to be and a good and valid account representing a bona
      fide sale of goods or services by Debtor and such goods will have been
      shipped to the respective account debtors or the services will have been
      performed for the respective account debtors, and no Account will be
      subject to any claim for credit, allowance or adjustment by any account
      debtor or any set off, defense or counterclaim; (f) all of the information
      provided by Debtor to Secured Party on the Disclosure Schedule executed by
      Debtor of even date herewith is true and complete in all respects, and (g)
      Debtor is not involved in any consignment arrangement with regard to any
      of the Collateral.

10.   RECEIVERS. Upon or at any time during the occurrence of an Event of
      Default, Secured Party may request the appointment of a receiver of the
      Collateral. Such appointment may be made without notice, and without
      regard to (i) the solvency or insolvency, at the time of application for
      such receiver, of the person or persons, if any, liable for the payment of
      the Obligations; and (ii) the value of the Collateral at such time. Such
      receiver will have the power to take possession, control, and care of the
      Collateral and to collect all accounts resulting therefrom.
      Notwithstanding the appointment of any receiver, trustee, or other
      custodian, Secured Party will be entitled to the possession and control of
      any cash, or other instruments at the time held by, or payable or
      deliverable under the terms of this Security Agreement to Secured Party.

11.   PLACE OF BUSINESS. Except as otherwise disclosed by written notice to
      Lender, Debtor (a) now keeps and will continue to keep the Collateral at
      its principal place of business as shown on the Disclosure Schedule or any
      other place of business set forth on such Disclosure Schedule; and Debtor
      now keeps and will continue to keep its books and records concerning the
      Collateral at its principal place of business.

12.   DEBTOR'S CONSENT. Upon and during the continuance of an Event of Default
      (as defined in the Loan Agreement or any of the documents evidencing the
      Obligations), the Debtor shall be deemed to have consented to, with
      respect to any of the Collateral, to all extensions or postponements of
      time of payment thereof or any other indulgences in connection therewith,
      to the acceptance of partial payments thereon and to the settlement,
      compromise and adjustment thereof, all in such manner and at such time or
      times as Secured Party deems advisable

13.   DEFAULT.

                                     - 5 -
<PAGE>

      13.1  Upon the occurrence of any Event of Default (as defined in the Loan
            Agreement or any of the documents evidencing the Obligations),
            Secured Party may exercise any one or more of the rights and
            remedies granted pursuant to this Agreement or given to a secured
            party under applicable law, as it may be amended from time to time,
            including but not limited to the right to take possession and sell,
            lease or otherwise dispose of the Collateral and, at its option,
            operate, use or exercise any rights of ownership pertaining to the
            Collateral as the Secured Party deems necessary to preserve the
            value and receive the benefits of the Collateral and notifying all
            persons subject to a control agreement who may otherwise have
            possession or control of any of the Collateral and taking possession
            of any such Collateral. Upon the occurrence of an Event of Default,
            Secured Party may, so far as Debtor can give authority therefor,
            enter upon any premises on which the Collateral or any part thereof
            may be situated and take possession of and remove the same
            therefrom. At the request of Secured Party, Debtor agrees to store
            for a reasonable period all or any part of the Collateral in such a
            way as to prevent deterioration of any of the Collateral on property
            owned by Debtor, and Debtor will insure such Collateral for the
            benefit of Secured Party. Debtor gives permission to Secured Party
            to conduct a sale of any or all of the Collateral with prior notice
            to Debtor and conducted during normal business hours, which sale may
            be conducted on any real property owned by Debtor without charge or
            interference by Debtor. Secured Party may require Debtor to make the
            Collateral available to Secured Party at a place to be designated by
            Secured Party that is reasonably convenient to both parties. Debtor
            waives all claims for damages by reason of any seizure,
            repossession, retention, use, or sale of the Collateral under the
            terms of this Security Agreement.

      13.2  The net proceeds arising from the disposition of the Collateral
            after deducting expenses incurred by Secured Party will be applied
            to the Obligations in the order determined by Secured Party. If any
            excess remains after the discharge of all of the Obligations, the
            same will be paid to Debtor. If after exhausting all of the
            Collateral, there should be a deficiency, Debtor will be liable
            therefor to Secured Party, provided, however, that nothing contained
            herein will obligate Secured Party to proceed against the Collateral
            prior to making a claim against Debtor or any other party obligated
            under the Obligations or prior to proceeding against any other
            collateral for the Obligations.

      13.3  Whenever notice is required by law to be sent by Secured Party to
            Debtor of any sale, lease or other disposition of the Collateral,
            five days written notice sent to Debtor's address set forth below
            will be reasonable.

14.   RIGHTS OF SECURED PARTY; POWER OF ATTORNEY. Debtor hereby irrevocably
      constitutes and appoints Secured Party and any officer thereof, with full
      power of substitution, as its true and lawful attorney-in-fact with full
      irrevocable power and authority in the place and stead of Debtor or in its
      name, from time to time in Secured Party's discretion, for the purpose of
      carrying out the terms of this Agreement, to take any and all commercially
      reasonable and appropriate action and to execute any and all documents and
      instruments

                                     - 6 -
<PAGE>

      which may be necessary or desirable to accomplish the purposes of this
      Agreement and, without limiting the generality of the foregoing, Debtor
      hereby gives Secured Party the power and right, on behalf of Debtor,
      during an Event of Default, and without notice to or assent by Debtor, to
      do the following:

      14.1  to receive payment of, endorse, and receipt for, any and all monies,
            claims and other amounts due and to become due at any time in
            respect of or arising out of the Collateral;

      14.2  to commence and prosecute any suits, actions or proceeding at law or
            in equity in any court of competent jurisdiction to collect any of
            the Collateral and to enforce any other right in respect of the
            Collateral;

      14.3  to settle, compromise or adjust any suit, action or proceeding
            described above, and, in connection therewith, to give such
            discharges or releases as Secured Party may deem appropriate; and

      14.4  generally to sell, transfer, pledge, make any agreement with respect
            to or otherwise deal with any of the Collateral as fully and
            completely as though Secured Party were the absolute owner thereof
            for all purposes, and to do, at Secured Party's option, at any time,
            or from time to time, all acts and things which Secured Party deems
            necessary to protect or preserve the Collateral and Secured Party's
            security interest and rights therein in order to effect the intent
            of this Agreement, all as fully and effectively as Debtor might do.

      Debtor hereby ratifies all that such attorneys will lawfully do or cause
      to be done by virtue hereof. This power of attorney is a power coupled
      with an interest, will be irrevocable and will terminate only upon payment
      in full of the Obligations and the termination of this Agreement. The
      powers conferred upon Secured Party hereunder are solely to protect
      Secured Party's interests in the Collateral and will not impose any duty
      upon it to exercise any such powers. Secured Party will have no obligation
      to preserve any rights of any third parties in the Collateral. Secured
      Party will be accountable only for amounts that it actually receives as a
      result of the exercise of such powers, and neither it nor any of its
      officers, directors, employees or agents will be responsible to Debtor for
      any action taken or omitted to be taken in good faith or in reliance on
      the advice of counsel except for its own gross negligence or willful
      misconduct.

15.   GENERAL.

      15.1  WAIVER. No delay or omission on the part of Secured Party to
            exercise any right or power arising from any Event of Default will
            impair any such right or power or be considered a waiver of any such
            right or power or a waiver of any such Event of Default or an
            acquiescence therein nor will the action or non-action of Secured
            Party in case of such Event of Default impair any right or power
            arising as a result thereof or affect any subsequent default or any
            other default of the same or a different nature.

                                     - 7 -
<PAGE>

      15.2  NOTICES. All notices, demands, requests, consents or approvals
            required hereunder will be given in the manner specified in the Loan
            Agreement to Debtor as Borrower and Secured Party as Lender therein.

      15.3  SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
            inure to the benefit of Debtor and Secured Party and their
            respective successors and assigns, provided, however, that Debtor
            may not assign this Agreement in whole or in part without the prior
            written consent of Secured Party and Secured Party at any time
            during an Event of Default may assign this Agreement in whole or in
            part. All references herein to the "Debtor" and "Secured Party" will
            be deemed to apply to Debtor and Secured Party and their respective
            heirs, administrators, successors and assigns.

      15.4  MODIFICATIONS. No modification or waiver of any provision of this
            Agreement nor consent to any departure by Debtor therefrom, will be
            established by conduct, custom or course of dealing; and no
            modification, waiver or consent will in any event be effective
            unless the same is in writing and specifically refers to this
            Agreement, and then such waiver or consent will be effective only in
            the specific instance and for the purpose for which given. No notice
            to or demand on Debtor in any case will entitle Debtor to any other
            or further notice or demand in the same, similar or other
            circumstance.

      15.5  JOINT AND SEVERAL OBLIGATIONS. If this Security Agreement is
            executed by more than one person or entity as the "Debtor," the
            obligations of such persons or entities hereunder will be joint and
            several. Unless otherwise specified herein, any reference to
            "Debtor" will mean each such person or entity executing this
            Security Agreement individually and all of such persons or entities
            collectively.

      15.6  ILLEGALITY. If fulfillment of any provision hereof or any
            transaction related hereto or of any provision of this Agreement, at
            the time performance of such provision is due, involves transcending
            the limit of validity prescribed by law, then ipso facto, the
            obligation to be fulfilled will be reduced to the limit of such
            validity; and if any clause or provisions herein contained other
            than the provisions hereof pertaining to repayment of the
            Obligations operates or would prospectively operate to invalidate
            this Agreement in whole or in part, then such clause or provision
            only will be void, as though not herein contained, and the remainder
            of this Agreement will remain operative and in full force and
            effect.

      15.7  CONTINUING AGREEMENT. This is a continuing Security Agreement and
            will continue in effect even though all or any part of the
            Obligations have been paid in full and even though for a period of
            time Debtor may not be indebted to Secured Party.

      15.8  GENDER, ETC. Whenever used herein, the singular number will include
            the plural, the plural the singular and the use of the masculine,
            feminine or neuter gender will include all genders.

                                     - 8 -
<PAGE>

      15.9  HEADINGS. The headings in this Agreement are for convenience only
            and will not limit or otherwise affect any of the terms hereof.

      15.10 LIABILITY OF SECURED PARTY. Debtor hereby agrees that Secured Party
            will not be chargeable for any negligence, mistake, act or omission
            of any employee, accountant, examiner, agent or attorney employed by
            Secured Party (except for their willful misconduct) in making
            examinations, investigations or collections, or otherwise in
            perfecting, maintaining, protecting or realizing upon any lien or
            security interest or any other interest in the Collateral or other
            security for the Obligations.

      15.11 COUNTERPARTS. This Agreement may be executed in any number of
            counterparts and by different parties hereto in separate
            counterparts, each of which when so executed will be deemed to be an
            original and all of which taken together will constitute one and the
            same agreement. Any party so executing this Agreement by facsimile
            transmission shall promptly deliver a manually executed counterpart,
            provided that any failure to do so shall not affect the validity of
            the counterpart executed by facsimile transmission.

      15.12 DEFINITIONS. Capitalized terms used herein and not otherwise defined
            will be given the definitions set forth in the Uniform Commercial
            Code in force and effect in the State indicated in the Governing Law
            section of this Agreement.

      15.13 GOVERNING LAW. This Agreement has been delivered and accepted at and
            will be deemed to have been made at Cincinnati, Ohio and will be
            interpreted and the rights and liabilities of the parties hereto
            determined in accordance with the laws of the State of Ohio, without
            regard to conflicts of law principles.

      15.14 JURISDICTION. DEBTOR HEREBY IRREVOCABLY AGREES AND SUBMITS TO THE
            EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
            HAMILTON COUNTY, OHIO, OR, AT THE OPTION OF SECURED PARTY IN ITS
            SOLE DISCRETION, OF ANY STATE OR FEDERAL COURT(S) LOCATED WITHIN ANY
            OTHER COUNTY, STATE OR JURISDICTION IN WHICH SECURED PARTY AT ANY
            TIME OR FROM TIME TO TIME CHOOSES IN ITS SOLE DISCRETION TO BRING AN
            ACTION OR OTHERWISE EXERCISE A RIGHT OR REMEDY, AND DEBTOR WAIVES
            ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO
            VENUE OF ANY SUCH ACTION OR PROCEEDING. DEBTOR HEREBY IRREVOCABLY
            CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
            DIRECTED TO DEBTOR AT ITS ADDRESS SET FORTH HEREIN OR ANY OTHER
            NOTICE ADDRESS WHICH DEBTOR HAS PROVIDED SECURED PARTY FOR NOTICES
            AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED THE EARLIER OF
            DEBTOR'S ACTUAL RECEIPT THEREOF OR FIVE (5) BUSINESS DAYS AFTER THE
            SAME HAS BEEN DEPOSITED IN U.S. MAILS, POSTAGE PREPAID. NOTHING
            CONTAINED HEREIN WILL PREVENT SECURED PARTY FROM SERVING PROCESS IN
            ANY OTHER MANNER PERMITTED BY LAW.

      15.15 WAIVER OF JURY TRIAL. THE PARTIES HERETO EACH WAIVE ANY RIGHT TO
            TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
            AGREEMENT, THE OBLIGATIONS, THE

                                     - 9 -
<PAGE>

      COLLATERAL, OR ANY ACTUAL OR PROPOSED TRANSACTION OR OTHER MATTER
      CONTEMPLATED IN OR RELATING TO ANY OF THE FOREGOING.

Dated as of February _, 2002.

                                           DEBTOR:

                                           BUILD-A-BEAR WORKSHOP, INC.

                                           By: /s/ Maxine Clark
                                               ---------------------------------
                                           Print Name: Maxine Clark
                                           Title: President

                                           DEBTOR:

                                           SHIRTS ILLUSTRATED, LLC

                                           By: /s/ Maxine Clark
                                               ---------------------------------
                                           Print Name: Maxine Clark
                                           Title: Manager

                                           SECURED PARTY:

                                           U.S. BANK NATIONAL
                                           ASSOCIATION

                                           By: /s/ Charles L. Thomas
                                               ---------------------------------
                                           Print Name: Charles L. Thomas
                                           Title: Vice President

                                     - 10 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>19
<FILENAME>c86750exv10w16.txt
<DESCRIPTION>RESTRICTED STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.16


                           BUILD-A-BEAR WORKSHOP, INC.
                           RESTRICTED STOCK AGREEMENT
                               FOR MAXINE A. CLARK

                  THIS AGREEMENT, made as of the 3rd day of April, 2000, by and
between Build-A-Bear Workshop, Inc., a Delaware corporation (hereinafter called
the "Company"), and Maxine A. Clark (hereinafter called the "President");

                  WITNESSETH THAT:

                  WHEREAS, the Board of Directors of the Company ("Board of
Directors") desires to benefit Build-A-Bear Workshop, Inc. ("Company") by
increasing motivation on the part of Maxine A. Clark, the president of the
Company ("President"), who is materially important to the development of the
Company's business, by creating an incentive for her to remain in the employ of
the Company and to work to the very best of her abilities for the achievement of
the Company's strategic objectives; and

                  WHEREAS, to further this purpose, the Company desires to make
a restricted stock award to the President for Two Hundred Seventy Four Thousand
Eight Hundred Fifteen (274,815) shares under the terms hereinafter set forth:

                  NOW, THEREFORE, in consideration of the premises, and of the
mutual agreements hereinafter set forth, it is covenanted and agreed as follows:

                  1. Terms of Award. Pursuant to action of the Committee (as
defined in Section 6), which action was taken on April 3, 2000 ("Date of
Award"), the Company awards to the President Two Hundred Seventy Four Thousand
Eight Hundred Fifteen (274,815) shares of the common stock of the Company, of
the par value of $0.01 per share ("Common Stock"); provided, however, that (i)
40% of the shares hereby awarded are immediately transferable (subject to
Section 7) by the President and are not subject to any risk of forfeiture and
(ii) 60% the shares hereby awarded are nontransferable by the President during
the periods described below and are subject to the risk of forfeiture described
below. Prior to the time shares become transferable, the shares of Restricted
Stock shall bear a legend indicating their nontransferability, and, if the
President terminates employment prior to the time a restriction lapses, she
shall forfeit any shares of Restricted Stock which are still subject to the
restrictions at the time of her termination of employment.

                           (a) On the date ending one year after the Date of
         Award, an additional 40% of the shares of Restricted Stock shall become
         transferable by the President if the President is still employed, and
         has been continuously employed during such one-year period, by the
         Company on such date. If on the date ending one year after the Date of
         Award, the President is not employed by the Company, the 40% shares of
         Restricted Stock shall be forfeited by the President.



<PAGE>





                           (b) On the date ending two years after the Date of
         Award, an additional 20% of the shares of Restricted Stock shall become
         transferable by the President if the President is still employed, and
         has been continuously employed during such two-year period, by the
         Company on such date. If on the date ending two years after the Date of
         Award, the President is not employed by the Company, the additional 20%
         shares of Restricted Stock shall be forfeited by the President.

                           (c) Notwithstanding the foregoing, in the event of a
         Change of Control or a Public Offering (both defined below), all
         previously-granted shares of Restricted Stock not yet free of the
         restrictions of Sections 1(a) and (b) above shall become immediately
         free of such restrictions.

                                    (1) For purposes of this Agreement, a Change
                  in Control means:

                                            (A) The purchase or other
                           acquisition (other than from the Company) by any
                           person, entity or group of persons, within the
                           meaning of Section 13(d) or 14(d) of the Securities
                           Exchange Act of 1934, as amended (the "Exchange Act")
                           (excluding, for this purpose, the Company or its
                           subsidiaries or any employee benefit plan of the
                           Company or its subsidiaries), of beneficial ownership
                           (within the meaning of Rule 13d-3 promulgated under
                           the Exchange Act) of 50% or more of either the
                           then-outstanding shares of common stock of the
                           Company or the combined voting power of the Company's
                           then-outstanding voting securities entitled to vote
                           generally in the election of directors; or

                                            (B) Individuals who, as of the date
                           hereof, constitute the Board of Directors of the
                           Company (the "Board" and, as of the date hereof, the
                           "Incumbent Board") cease for any reason to constitute
                           at least a majority of the Board, provided that any
                           person who becomes a director subsequent to the date
                           hereof whose election, or nomination for election by
                           the Company's shareholders, was approved by a vote of
                           at least a majority of the directors then comprising
                           the Incumbent Board (other than an individual whose
                           initial assumption of office is in connection with an
                           actual or threatened election contest relating to the
                           election of directors of the Company, as such terms
                           are used in Rule 14a-11 of Regulation 14A promulgated
                           under the Exchange Act) shall be, for purposes of
                           this section, considered as though such person were a
                           member of the Incumbent Board; or







                                       2

<PAGE>






                                            (C) Approval by the stockholders of
                           the Company of a reorganization, merger or
                           consolidation, in each case with respect to which
                           persons who were the stockholders of the Company
                           immediately prior to such reorganization, merger or
                           consolidation do not, immediately thereafter, own
                           more than 50% of, respectively, the common stock and
                           the combined voting power entitled to vote generally
                           in the election of directors of the reorganized,
                           merged or consolidated corporation's then-outstanding
                           voting securities, or of a liquidation or dissolution
                           of the Company or of the sale of all or substantially
                           all of the assets of the Company.

                                    (2) For purposes of this Agreement, a Public
                  Offering means the creation of an active trading market in
                  Common Stock by the sale of Common Stock to the public
                  pursuant to a registration statement under the Securities Act
                  of 1933.


                  2. Death of the President. In the event of the death of the
President while she is employed by the Company (or its parent or a subsidiary),
or within three (3) months after the termination of her employment (or one year
in the case of the termination of employment of the President who is disabled),
all previously-granted shares of Restricted Stock not yet free of the
restrictions of Section 1 shall become immediately free of such restrictions and
may be exercised by a legatee or legatees of the President under her last will,
or by her personal representatives or distributees, at any time within a period
of one year after her death.


                  3. Cost of Restricted Stock. The purchase price of the shares
of Restricted Stock shall be the fair market value of such shares determined by
the Company in its sole discretion as of the Date of Award. The President may
request a loan from the Company for the purchase price in accordance with the
terms set forth in Exhibit A. Notwithstanding, the purchase price shall not be
less than $4.50 per share.

                  4. Adjustments Upon Changes in Capitalization or Corporate
Acquisitions. Notwithstanding any other provision in the Agreement, if there is
any change in the Common Stock by reason of stock dividends, spin-offs, split
ups, recapitalizations, mergers, consolidations, reorganizations, combinations
or exchanges of shares, the number of shares of Common Stock under this award of
Restricted Stock not yet vested, and the price thereof, as applicable, shall be
appropriately adjusted by the Committee.

                  5. No Right to Continued Employment. Nothing in this Agreement
shall be deemed to create any limitation or restriction on such rights as the
Company otherwise would have to terminate the employment of the President at any
time for any reason.




                                       3
<PAGE>




                  6. Committee Administration. This award has been made pursuant
to a determination made by the directors on the compensation committee of the
Board of Directors ("Committee"), and the Committee or any successor or
substitute committee authorized by the Board of Directors or the Board of
Directors itself, subject to the express terms of this Agreement, shall have
plenary authority to interpret any provision of this Agreement and to make any
determinations necessary or advisable for the administration of this Agreement
and may waive or amend any provisions hereof in any manner not adversely
affecting the rights granted to the President by the express terms hereof.

                  The Committee shall be appointed by the Board of Directors,
which may from time to time appoint members of the Committee in substitution for
members previously appointed and may fill vacancies, however caused, in the
Committee. The Board of Directors shall select one of the Committee members as
its Chairman, and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members
present at any meeting at which there is a quorum. Any decision or determination
reduced to writing and signed by all of the members shall be fully as effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary, shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall deem
advisable.

                  7. Stockholders' Agreement. This award is granted under and is
expressly subject to all the terms and provisions of the Build-A-Bear Workshop,
Inc. Stockholders' Agreement dated April 3, 2000 ("Stockholders' Agreement").
Optionee hereby acknowledges receipt of a copy of the Stockholders' Agreement
and agrees to be bound by all the terms and provisions thereof.

                  IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf and the President has signed this Agreement to
evidence her acceptance of the terms hereof, all as of the date first above
written.

                                    BUILD-A-BEAR WORKSHOP, INC.


                                    By:       /s/ Maxine Clark
                                    -------------------------------------------


                                    PRESIDENT


                                              /s/ Maxine Clark
                                    -------------------------------------------
                                    Maxine A. Clark




                                        4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>20
<FILENAME>c86750exv10w17.txt
<DESCRIPTION>SECURED PROMISSORY NOTE
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.17

                            SECURED PROMISSORY NOTE

                  FOR VALUE RECEIVED, the undersigned, Maxine Clark
("Borrower"), promises to pay to Build-A-Bear Workshop, Inc. , a Delaware
corporation ("Company"), or its order, the principal amount of One Million Two
Hundred Thirty Six Thousand Six Hundred Sixty Seven and 50/100 Dollars
($1,236,667.50) with interest from the date hereof on the unpaid principal
balance under this Note at the lower of (i) the rate equal to the semi-annual
applicable federal rate (as defined in the Internal Revenue Code of 1986, as
amended), and (ii) the highest rate per annum from time to time permitted by
applicable law. The principal amount of this Note shall be due and payable on
the earlier to occur of the following dates (the "Maturity Date"): (1) April 3,
2005 ; (2) the date on which the indebtedness under this Note is accelerated as
provided for under this Note or the Pledge Agreement (as defined below); (3) the
ninetieth day following the date of Borrower's termination of employment with
Company (or one year following the date of Borrower's termination of employment
if disabled); or (4) the first anniversary following the date of Borrower's
death while she's employed by the Company. All accrued and unpaid interest under
this Note shall be due and payable, concurrently with principal. On the Maturity
Date the entire remaining unpaid principal balance of this Note, together with
any and all accrued and unpaid interest and any and all costs and expenses
provided for under this Note and the Pledge Agreement, shall be due and payable.

                  All payments under this Note shall be made to Company or its
order, in lawful money of the United States of America and in immediately
available funds and delivered to Company by wire transfer to Company's account
as set forth in written instructions delivered by Company to Borrower prior to
the Maturity Date or at the offices of Company at its then principal place of
business or at such other place as Company or any holder hereof shall designate
in writing for such purpose from time to time. If a payment under this Note
otherwise would become due and payable on a Saturday, Sunday or legal holiday,
the due date thereof shall be extended to the next day which is not a Saturday,
Sunday or legal holiday, and interest shall be payable thereon during such
extension. All amounts due under this Note and the Pledge Agreement shall be
payable without defense, set off or counterclaim.

                  Each payment under this Note shall be applied in the following
order: (i) to the payment of costs and expenses provided for under this Note or
the Pledge Agreement; (ii) to the payment of accrued and unpaid interest; and
(iii) to the payment of outstanding principal. Company and each holder hereof
shall have the continuing and exclusive right to apply or reverse and reapply
any and all payments under this Note.

                  This Note may be prepaid in whole or in part at any time,
without penalty except that interest shall be paid to the date of payment on the
principal amount prepaid.

                  This Note shall be not assignable by either of Company or
Borrower without the written consent of the other.

                  Upon the occurrence of a default under this Note or the Pledge
Agreement, including, without limitation, failure to make any principal or
interest payment by the stated


<PAGE>


maturity (whether by acceleration, notice of prepayment or otherwise) for such
payment, interest shall thereafter accrue on the entire unpaid principal balance
under this Note, including, without limitation, any delinquent interest which
has been added to the principal amount due under this Note pursuant to the terms
hereof, at the rate set forth herein plus [5 PERCENT] per annum (on the basis of
a 360-day year and the actual number of days elapsed) or, if lower, the maximum
rate from time to time permitted by applicable law. In addition, upon the
occurrence of a default under this Note or the Pledge Agreement, the holder of
this Note may, at its option, without notice to or demand upon Borrower or any
other party, declare immediately due and payable the entire principal balance
hereof together with all accrued and unpaid interest thereon, plus any other
amounts then owing pursuant to this Note or the Pledge Agreement, whereupon the
same shall be immediately due and payable. On each anniversary of the date of
any default under this Note and while such default is continuing, all interest
which has become payable and is then delinquent shall, without curing the
default under this Note by reason of such delinquency, be added to the principal
amount due under this Note, and shall thereafter bear interest at the same rate
as is applicable to principal, with interest on overdue interest to bear
interest, in each case to the fullest extent permitted by applicable law, both
before and after default, maturity, foreclosure, judgment and the filing of any
petition in a bankruptcy proceeding. In no event shall interest be charged under
this Note which would violate any applicable law.

                  This Note is secured under that certain Repayment and Stock
Pledge Agreement, dated as of even date herewith, by and between Borrower and
Company (as amended from time to time, the "Pledge Agreement"). Reference is
hereby made to the Pledge Agreement for a description of the nature and extent
of the security for this Note and the rights with respect to such security of
the holder of this Note. Nothing herein shall be deemed to limit the rights of
Company under this Note or the Pledge Agreement, all of which rights and
remedies are cumulative.

                  No waiver or modification of any of the terms of this Note
shall be valid or binding unless set forth in a writing specifically referring
to this Note and signed by a dully authorized officer of Company or any holder
of this Note, and then only to the extent specifically set forth therein.

                  If any default occurs in any payment due under this Note,
Borrower and all guarantors and endorsers hereof, and their successors and
assigns, promise to pay all costs and expenses, including attorney's fees,
incurred by each holder hereof in collecting or attempting to collect the
indebtedness under this Note, whether or not any action or proceeding is
commenced. None of the provisions hereof and none of the holder's rights or
remedies under this Note on account of any past or future defaults shall be
deemed to have been waived by the holder's acceptance of any past due
installments or by any indulgence granted by the holder to Borrower.

                  Borrower and all guarantors and endorsers hereof, and their
successors and assigns, hereby waive presentment, demand, diligence, protest and
notice of every kind (except such notices as may be required under the Pledge
Agreement), and agree that, subject to the limitations set forth in the Pledge
Agreement, they shall remain liable for amounts due under this Note
notwithstanding any extension of time or change in the terms of payment of this
Note

                                       2
<PAGE>


granted by any holder hereof, any change, alteration or release of any property
now or hereinafter securing the payment hereof or any delay or failure by the
holder hereof to exercise any rights under this Note or the Pledge Agreement.
Borrower and all guarantors and endorsers hereof, and their successors and
assigns, hereby waive the right to plead any and all statutes of limitations as
a defense to a demand under this Note to the fullest extent permitted by law.

                  This Note shall inure to the benefit of Company, its
successors and assigns and shall bind the heirs, executors, administrators,
successors and assigns of Borrower. Each reference herein to powers or rights of
Company shall also be deemed a reference to the same power or right of such
assignee, to the extent of the interest assigned to them.

                  In the event any one or more provisions of this Note shall be
held to be illegal, invalid or otherwise unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.

                  This Note shall be governed by and construed in accordance
with the laws of the State of Missouri, without giving affect to the principles
thereof relating to conflicts of law; provided, that Company and each holder
hereof reserves any and all rights it may have under federal law, including
without limitation those relating to the charging of interest.

                                       3
<PAGE>




                  IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed the day and year first above written.


                                            /s/ Maxine Clark
                                   ---------------------------------------------
                                   Maxine Clark



                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>21
<FILENAME>c86750exv10w18.txt
<DESCRIPTION>REPAYMENT AND STOCK PLEDGE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.18

                      REPAYMENT AND STOCK PLEDGE AGREEMENT

         This Repayment and Stock Pledge Agreement (this "Agreement or "Pledge
Agreement") is made as of April 3, 2000 between Build-A-Bear Workshop, Inc., a
Delaware corporation ("Pledgee"), and Maxine A. Clark ("Pledgor").

                                    Recitals

         A. Pursuant to Pledgor's purchase of shares of Pledgee's common stock,
par value $.01 per share ("Common Stock"), under the Restricted Stock Purchase
Agreement dated April 3, 2000 (the "Purchase Agreement"), between Pledgor and
Pledgee under the Build-A-Bear Workshop, Inc. 2000 Stock Option Plan (the "Stock
Plan"), and Pledgor's payment for such shares with monies advanced pursuant to
that certain promissory note executed by Pledgor in favor of the Pledgee dated
April 3, 2000 (the "Note"), Pledgor has purchased 274,815 shares of Common Stock
(the "Shares") at a price of $4.50 per share, for a total purchase price of
$1,236,667.50.

         B. It is a condition precedent to the extension of credit pursuant to
the Note that the Pledgor shall have executed and delivered this Pledge
Agreement in favor of the Pledgee.

         NOW, THEREFORE, in consideration of the foregoing and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

1. Creation and Description of Security Interest. Pledgor hereby grants a lien
on and pledges all of the Shares (herein sometimes referred to as the
"Collateral") represented by certificate number ____, duly endorsed in blank or
with executable stock powers in form and substance satisfactory to Pledgee, and
herewith delivers said certificate to the Secretary of Pledgee (the "Escrow
Agent"), who shall hold said certificate subject to the terms and conditions of
this Pledge Agreement.

         The pledged stock shall be held by the Escrow Agent as security for the
repayment of the Note, and any costs and expenses incurred in the enforcement or
attempted enforcement of the Note, and any extensions or renewals thereof, and
the Escrow Agent shall not encumber, sell or otherwise dispose of such Shares
except in accordance with the provisions of this Pledge Agreement.

2. Pledgor's Representations and Covenants. Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:

                  (a) Pledgor will pay the principal sum of the Note secured
         hereby, together with interest thereon, at the time and in the manner
         provided in the Note.

                  (b) The Shares are free of all other encumbrances, defenses
         and liens (other than the lien granted hereunder), and Pledgor will not
         encumber or allow to be

<PAGE>

         encumbered the Shares without the prior written consent of Pledgee or
         enter into any agreement that could restrict Pledgee's exercise of its
         rights hereunder or under the Note.

                  (c) Pledgor shall pay, prior to the delinquency date, all
         taxes, liens, assessments and other charges levied against the
         Collateral, and in the event Pledgor fails to do so, Pledgee shall have
         the right, but not the obligation, to pay all or any portion of such
         taxes and charges without contesting the validity or legality thereof.
         Any payment made by Pledgee pursuant to this Section 2(c) shall become
         part of the indebtedness of Pledgor secured hereunder, and until paid
         by Pledgor, shall bear interest at the default rate per annum set forth
         in the Note.

3. Voting Rights. During the term of this pledge, Pledgor shall vote the Shares
pledged hereunder solely in accordance with the provisions of that certain
Stockholders' Agreement dated as of April 3, 2000 among the Company and certain
of its stockholders a party thereto.

4. Stock Adjustments. In the event during the term of this Agreement of any
stock dividend, reclassification, readjustment, or other changes declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Pledge Agreement in
the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Escrow Agent shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Pledge Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

5. Warrants and Rights. In the event that, during the term of this Agreement,
subscription warrants or other rights or options shall be issued in connection
with the Shares, such rights, warrants and options shall be the property of
Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the Share then held by Pledgee shall be
immediately delivered to Pledgee, to be held under the terms of this Agreement
in the same manner as the Shares pledged hereunder.

6. Repayment. Pledgor hereby agrees that at any time if Borrower shall have
received any cash payment or other distribution in respect of, or upon transfer,
sale or other disposition of, the Shares, then and in each such case, Pledgor
shall immediately deliver to Pledgee such amount as in partial or full payment
of principal and interest on the Note.

7. Default. Pledgor shall be deemed to be in default of the Note and of this
Pledge Agreement upon the occurrence of any of the following events (each such
event, an "Event of Default"):

                  (a) Payment of principal or interest on the Note shall be
         delinquent for a period of 30 days or more beyond the due date thereof;
         or

                                       2
<PAGE>

                  (b) Pledgor fails to perform any of the covenants or other
         agreements set forth in this Agreement for a period of 10 days; or

                  (c) Any representation or warranty herein shall be untrue in
         any material respect; or

                  (d) Pledgee shall cease to have valid perfected first priority
         lien on all or any part of the Collateral.

8.       Pledgee's Rights Upon or Event of Default.

                  (a) In the case of an Event of Default, Pledgee shall have the
         right to accelerate payment of the Note upon notice to Pledgor, and
         Pledgee shall thereafter be entitled to pursue all remedies available
         to a secured party under the Missouri Uniform Commercial Code in effect
         from time to time (whether or not applicable to the Collateral) or
         available at law or equity or otherwise.

                  (b) In the case of an Event of Default, in addition to any
         other rights or remedies otherwise available, Pledgee may, without
         notice and at its option, with respect to any Collateral which shall
         then be in, or shall thereafter come into, the possession or custody of
         Pledgee, Pledgee may sell or cause the same to be sold at any broker's
         board or at any public or private sale, in one or more sales or lots,
         at such price or prices as Pledgee may deem best, for cash or on credit
         or for future delivery, without assumption of any credit risk. The
         purchaser of any or all Collateral so sold shall thereafter hold the
         same absolutely, free from any lien, encumbrance or right of any kind
         whatsoever. Unless any of the Collateral threatens to decline speedily
         in value or is or becomes of a type sold on a recognized market,
         Pledgee will give Pledgor reasonable notice of the time and place of
         any public sale thereof, or of the time after which any private sale or
         other intended disposition is to be made. Any sale of the Collateral
         conducted in conformity with reasonable commercial practices of banks,
         insurance companies, commercial finance companies or other financial
         institutions disposing of property similar to the Collateral shall be
         deemed to be commercially reasonable. Any requirements of reasonable
         notice shall be met if such notice is mailed to the Pledgor at least
         ten (10) days before the time of the sale or disposition. Any other
         requirement of notice, demand or advertisement for sale is, to the
         extent permitted by law, waived. Pledgee may, in its own name or in the
         name of a designee or nominee, buy any of the Collateral at any public
         sale and, if permitted by applicable law, at any private sale. All
         expenses (including court costs and attorney's fees, expenses and
         disbursements) of, or incident to, the enforcement of any of the
         provisions hereof shall be recoverable from the proceeds of the sale of
         any of the Collateral for the period of time necessary to register such
         securities for public sale under the Securities Act of 1933, as amended
         (the "Securities Act"), or under any other applicable securities law.
         In view of the fact that the Securities Act and other applicable
         securities laws may impose certain restrictions on the method by which
         a sale of the Collateral may be effected, Pledgor agrees that upon the
         occurrence of an Event of Default, Pledgee may, from time to time,
         attempt to sell all or any part of the Collateral

                                       3
<PAGE>

         by means of a private sale, restricting the prospective purchasers to
         those who will represent and agree that they are purchasing for
         investment only and not for distribution. Pledgor acknowledges that any
         such private sales may be at prices and on terms less favorable to
         Pledgor than those obtainable through a public sale without such
         restrictions (including, without limitation, a public offering made
         pursuant to a registration statement under the Securities Act) and,
         notwithstanding such circumstances, Pledgor agrees that any such
         private sale shall be deemed to have been made in a commercially
         reasonable manner and that Pledgee shall have no obligation to engage
         in public sales and no obligation to delay the sale of any Collateral
         for the period of time necessary to permit the registration thereof for
         a form of public sale requiring registration under the Securities Act
         or under any other applicable securities laws. Pledgor waives any
         claims against Pledgee arising by reason of the fact that the price at
         any private sale was less than the price that might have been obtained
         at a public sale, even if Pledgee shall accept the first offer received
         and does not offer the Collateral to more than one prospective
         purchaser.

9. Withdrawal or Substitution of Collateral. Pledgor shall not sell, withdraw,
pledge, substitute, grant any options in or otherwise dispose of all or any part
of the Collateral without the prior written consent of Pledgee.

10. Term. The pledge of Shares set forth herein shall continue until the
indefeasible payment in full in cash of all indebtedness secured hereby, at
which time the Shares shall be promptly delivered to Pledgor, without any
representation, warranty or covenant thereto or any recourse in respect thereof.

11. Recourse. In addition to the Collateral pledged hereunder, as additional
security for the payment and performance of all obligations of Pledgor hereunder
and under the Note, Pledgor hereby agrees that the Company shall have recourse
to personal assets of Pledgor (other than the Collateral) in an amount not to
exceed six hundred eighteen thousand three hundred thirty-three dollars and
seventy-five cents ($618,333.75); provided, however, that Pledgee shall have
recourse to Pledgor's personal assets pursuant to this Section 11 only in the
event that the Fair Market Value of the Collateral in possession of Pledgee at
the Maturity Date is less than fifty percent (50%) of the outstanding unpaid
principal balance of the Note on such date. For purposes of this Section 11,
"Fair Market Value" shall be determined pursuant to the Plan except in the event
the Common Stock is not publicly traded on an exchange or quoted on NASDAQ or a
successor quotation system, in which case the "Fair Market Value" for purposes
hereof shall be the value of the Collateral (determined without additional
premiums for control or discounts for minority interests or restrictions on
transfer) determined by an independent valuation consultant or appraiser of
recognized national standing selected by Pledgee and consented to by Pledgor,
which consent shall not be unreasonably withheld.

12. Insolvency. Pledgor agrees that if a bankruptcy or insolvency proceeding is
instituted by or against her or if a receiver is appointed for the property of
Pledgor, or if Pledgor makes an assignment for the benefit of creditors, or the
Pledgor shall take any action in furtherance of any of the foregoing, or the
Pledgor shall generally not, or shall be unable to, or shall admit in writing
her inability to, pay her debts as they become due, the entire amount unpaid on
the Note shall

                                       4
<PAGE>
become immediately due and payable, and Pledgee may proceed as provided in the
case of an Event of Default.

13. Invalidity of Particular Provisions. Pledgor and Pledgee agree that the
enforceability of invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions herein contained
unenforceable or invalid.

14. Successors or Assigns. Pledgor and Pledgee agree that all of the terms of
this Agreement shall be binding on their respective permitted successors and
assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall
be deemed to include, for all purposes, the respective designees, successors,
assigns, heirs, executors and administrators. Pledgor shall not assign or
otherwise transfer all or any of her rights and obligations hereunder without
the prior written consent of Pledgee, in its sole discretion. This Agreement
shall be freely assignable by Pledgee.

15. Defined Terms. Capitalized terms used herein without definition shall have
the meanings ascribed to such terms under the Purchase Agreement or the Stock
Plan.

16. Governing Law. This Pledge Agreement shall be interpreted and governed by
the internal laws of the State of Missouri.

                                       5
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed this Repayment and
Stock Pledge Agreement as of the day and year first above written.


         "PLEDGOR"                       Maxine A. Clark

                                         /s/ Maxine Clark
                                         ---------------------------------------
                                                       Address
                                         12 Greenbriar, St. Louis, MO 63124
                                         ---------------------------------------


         "PLEDGEE"                        BUILD-A-BEAR WORKSHOP, INC.


                                         /s/ Maxine Clark
                                         ---------------------------------------
                                         By:  Maxine Clark
                                         ---------------------------------------
                                         Its:   President
                                         ---------------------------------------


                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>22
<FILENAME>c86750exv10w19.txt
<DESCRIPTION>RESTRICTED STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.19

                          BUILD-A-BEAR WORKSHOP, INC.
                       RESTRICTED STOCK PURCHASE AGREEMENT
                                 FOR BRIAN VENT

      THIS AGREEMENT, is made as of the 19th day of September, 2001, by and
between Build-A-Bear Workshop, Inc., a Delaware corporation (hereinafter called
the "Company"), and Brian Vent (hereinafter called "Purchaser").

      WITNESSETH THAT:

      WHEREAS, the Board of Directors of the Company ("Board of Directors")
desires to benefit the Company by increasing motivation on the part of
Purchaser, Chief Operating Bear of the Company, who is materially important to
the development of the Company's business, by creating an incentive for him to
remain in the employ of the Company and to work to the very best of his
abilities for the achievement of the Company's strategic objectives; and

      WHEREAS, to further this purpose, the Company desires to make a restricted
stock award to Purchaser for Twenty Thousand Four Hundred Ninety-One (20,491)
shares under the terms hereinafter set forth:

      NOW, THEREFORE, in consideration of the premises, and of the mutual
agreements hereinafter set forth, it is covenanted and agreed as follows:

      1. Terms of Award. Pursuant to action of the Committee (as defined in
Section 4), which action was taken on September 19th 2001 ("Date of Award"), the
Company awards to Purchaser Twenty Thousand Four Hundred Ninety-One (20,491)
shares of the common stock of the Company, of the par value of $0.01 per share
("Common Stock").

      2. Cost of Restricted Stock. The purchase price of the shares of
Restricted Stock shall be equal to Six Dollars and Ten/One Hundredths ($6.10)
per share. Purchaser may make payment for the Common Stock by executing the
Secured Promissory Note and Repayment and Stock Pledge Agreement attached hereto
as Exhibit A and Exhibit B respectively.

      3. No Right to Continued Employment. Nothing in this Agreement shall be
deemed to create any limitation or restriction on such rights as the Company
otherwise would have to terminate the employment of Purchaser at any time for
any reason.

      4. Committee Administration. This award has been made pursuant to a
determination made by the members of the compensation committee of the Board of
Directors ("Committee"), and the Committee or any successor or substitute
committee authorized by the Board of Directors or the Board of Directors itself,
subject to the express terms of this Agreement, shall have plenary authority to
interpret any provision of this Agreement and to make any determinations
necessary or advisable for the administration of this Agreement and may waive or
amend any provisions hereof in any manner not adversely affecting the rights
granted to Purchaser by the express terms hereof.



<PAGE>



      5. Stockholders' Agreement. This award is granted under and is expressly
subject to all the terms and provisions of the Build-A-Bear Workshop, Inc.
Amended and Restated Stockholders' Agreement dated September 21, 2001
("Stockholders' Agreement"). Purchaser hereby acknowledges receipt of a copy of
the Stockholders' Agreement and agrees to be bound by all the terms and
provisions thereof.

      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf and Purchaser has signed this Agreement to evidence his acceptance
of the terms hereof, all as of the date first above written.

                                    BUILD-A-BEAR WORKSHOP, INC.


                                    By:  /s/ Maxine Clark
                                       ---------------------------------------

                                    PURCHASER

                                    /s/ Brian Vent
                                    ------------------------------------------
                                    Brian Vent

                                        2

<PAGE>



                                    EXHIBIT A

                             SECURED PROMISSORY NOTE

See Attached.

                                       3
<PAGE>



                                    EXHIBIT B

                      REPAYMENT AND STOCK PLEDGE AGREEMENT

See Attached.

                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>23
<FILENAME>c86750exv10w20.txt
<DESCRIPTION>SECURED PROMISSORY NOTE
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.20

                             SECURED PROMISSORY NOTE

         FOR VALUE RECEIVED, the undersigned, Brian Vent ("Borrower"), promises
to pay to Build-A-Bear Workshop, Inc. , a Delaware corporation ("Company"), or
its order, the principal amount of One Hundred Twenty-Four Thousand Nine Hundred
Ninety-Five and No/100 Dollars ($124,995) with interest from the date hereof on
the unpaid principal balance under this Note at 4.82% per annum. The principal
amount of this Note shall be due and payable on the earlier to occur of the
following dates (the "Maturity Date"): (1) September 19, 2006; (2) the date on
which the indebtedness under this Note is accelerated as provided for under this
Note or the Pledge Agreement (as defined below); (3) the ninetieth day following
the date of Borrower's termination of employment with Company (or one year
following the date of Borrower's termination of employment if disabled); or (4)
the first anniversary following the date of Borrower's death while he is
employed by the Company. All accrued and unpaid interest under this Note shall
be due and payable, concurrently with principal. On the Maturity Date the entire
remaining unpaid principal balance of this Note, together with any and all
accrued and unpaid interest and any and all costs and expenses provided for
under this Note and the Pledge Agreement, shall be due and payable.

         All payments under this Note shall be made to Company or its order, in
lawful money of the United States of America and in immediately available funds
and delivered to Company by wire transfer to Company's account as set forth in
written instructions delivered by Company to Borrower prior to the Maturity Date
or at the offices of Company at its then principal place of business or at such
other place as Company or any holder hereof shall designate in writing for such
purpose from time to time. If a payment under this Note otherwise would become
due and payable on a Saturday, Sunday or legal holiday, the due date thereof
shall be extended to the next day which is not a Saturday, Sunday or legal
holiday, and interest shall be payable thereon during such extension. All
amounts due under this Note and the Pledge Agreement shall be payable without
defense, set off or counterclaim.

         Each payment under this Note shall be applied in the following order:
(i) to the payment of costs and expenses provided for under this Note or the
Pledge Agreement; (ii) to the payment of accrued and unpaid interest; and (iii)
to the payment of outstanding principal. Company and each holder hereof shall
have the continuing and exclusive right to apply or reverse and reapply any and
all payments under this Note.

         This Note shall be not assignable by either of Company or Borrower
without the written consent of the other.

         Upon the occurrence of a default under this Note or the Pledge
Agreement, including, without limitation, failure to make any principal or
interest payment by the stated maturity (whether by acceleration, notice of
prepayment or otherwise) for such payment, interest shall thereafter accrue on
the entire unpaid principal balance under this Note, including, without
limitation, any delinquent interest which has been added to the principal amount
due under this Note pursuant to the terms hereof, at the rate set forth herein
plus 5 percent per annum (on the basis of a 360-day year and the actual number
of days elapsed). In addition, upon the occurrence

<PAGE>



of a default under this Note or the Pledge Agreement, the holder of this Note
may, at its option, without notice to or demand upon Borrower or any other
party, declare immediately due and payable the entire principal balance hereof
together with all accrued and unpaid interest thereon, plus any other amounts
then owing pursuant to this Note or the Pledge Agreement, whereupon the same
shall be immediately due and payable. On each anniversary of the date of any
default under this Note and while such default is continuing, all interest which
has become payable and is then delinquent shall, without curing the default
under this Note by reason of such delinquency, be added to the principal amount
due under this Note, and shall thereafter bear interest at the same rate as is
applicable to principal, with interest on overdue interest to bear interest, in
each case to the fullest extent permitted by applicable law, both before and
after default, maturity, foreclosure, judgment and the filing of any petition in
a bankruptcy proceeding. In no event shall interest be charged under this Note
which would violate any applicable law.

         This Note is secured under that certain Repayment and Stock Pledge
Agreement, dated as of even date herewith, by and between Borrower and Company
(as amended from time to time, the "Pledge Agreement"). Reference is hereby made
to the Pledge Agreement for a description of the nature and extent of the
security for this Note and the rights with respect to such security of the
holder of this Note. This is a non-recourse note and, anything herein to the
contrary notwithstanding, Company agrees for itself, its representatives,
successors, endorsees and assigns that (a) neither Borrower nor his
representatives, successors or assignees shall be personally liable on this Note
and (b) in the event of default under this Note, Company (and any such
representative, successor, endorsee or assign) shall seek payment of amounts due
under this Note solely in accordance with the rights and remedies set forth in
the Pledge Agreement.

         No waiver or modification of any of the terms of this Note shall be
valid or binding unless set forth in a writing specifically referring to this
Note and signed by a duly authorized officer of Company or any holder of this
Note, and then only to the extent specifically set forth therein.

         If any default occurs in any payment due under this Note, Borrower and
all guarantors and endorsers hereof, and their successors and assigns, promise
to pay all costs and expenses, including attorney's fees, incurred by each
holder hereof in collecting or attempting to collect the indebtedness under this
Note, whether or not any action or proceeding is commenced. None of the
provisions hereof and none of the holder's rights or remedies under this Note on
account of any past or future defaults shall be deemed to have been waived by
the holder's acceptance of any past due installments or by any indulgence
granted by the holder to Borrower.

         Borrower and all guarantors and endorsers hereof, and their successors
and assigns, hereby waive presentment, demand, diligence, protest and notice of
every kind (except such notices as may be required under the Pledge Agreement).
Borrower and all guarantors and endorsers hereof, and their successors and
assigns, hereby agree that failure of Company to exercise any of its rights
hereunder in any instance shall not constitute a waiver thereof in that or any
other instance. Borrower and all guarantors and endorsers hereof, and their
successors and assigns, hereby waive the right to plead any and all statutes of
limitations as a defense to a demand under this Note to the fullest extent
permitted by law.


                                       2

<PAGE>




         This Note shall inure to the benefit of Company, its successors and
assigns and shall bind the heirs, executors, administrators, successors and
assigns of Borrower. Each reference herein to powers or rights of Company shall
also be deemed a reference to the same power or right of such assignee, to the
extent of the interest assigned to them.

         In the event any one or more provisions of this Note shall be held to
be illegal, invalid or otherwise unenforceable, the same shall not affect any
other provision of this Note and the remaining provisions of this Note shall
remain in full force and effect.

         This Note shall be governed by and construed in accordance with the
laws of the State of Missouri, without giving affect to the principles thereof
relating to conflicts of law; provided, that Company and each holder hereof
reserves any and all rights it may have under federal law, including without
limitation those relating to the charging of interest.



                                       3

<PAGE>




         IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
the day and year first above written.


                                  /s/ Brian Vent
                                  ---------------------------------------------
                                  Brian Vent










                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>24
<FILENAME>c86750exv10w21.txt
<DESCRIPTION>REPAYMENT AND STOCK PLEDGE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.21

                      REPAYMENT AND STOCK PLEDGE AGREEMENT

                  This Repayment and Stock Pledge Agreement (this "Agreement or
"Pledge Agreement") is made as of September 19, 2001 between Build-A-Bear
Workshop, Inc., a Delaware corporation ("Pledgee"), and Brian Vent ("Pledgor").

                                    Recitals

                  A. Pursuant to Pledgor's purchase of shares of Pledgee's
common stock, par value $.01 per share ("Common Stock"), under the Restricted
Stock Purchase Agreement dated September 19, 2001 (the "Purchase Agreement"),
between Pledgor and Pledgee, and Pledgor's payment for such shares with monies
advanced pursuant to that certain Secured Promissory Note executed by Pledgor in
favor of the Pledgee dated September 19, 2001 (the "Note"), Pledgor has
purchased 20,491 shares of Common Stock (the "Shares") at a price of $6.10 per
share, for a total purchase price of $124,995.

                  B. It is a condition precedent to the extension of credit
pursuant to the Note that the Pledgor shall have executed and delivered this
Pledge Agreement in favor of the Pledgee.

                  NOW, THEREFORE, in consideration of the foregoing and for
other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

1. Creation and Description of Security Interest. Pledgor hereby grants a lien
on and pledges all of the Shares (herein sometimes referred to as the
"Collateral") represented by certificate number 9, duly endorsed in blank or
with executable stock powers in form and substance satisfactory to Pledgee, and
herewith delivers said certificate to the Secretary of Pledgee (the "Escrow
Agent"), who shall hold said certificate subject to the terms and conditions of
this Pledge Agreement.

                  The pledged stock shall be held by the Escrow Agent as
security for the repayment of the Note, and any costs and expenses incurred in
the enforcement or attempted enforcement of the Note, and any extensions or
renewals thereof, and the Escrow Agent shall not encumber, sell or otherwise
dispose of such Shares except in accordance with the provisions of this Pledge
Agreement.

2. Pledgor's Representations and Covenants. Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:

                  (a) Pledgor will pay the principal sum of the Note secured
         hereby, together with interest thereon, at the time and in the manner
         provided in the Note.

                  (b) The Shares are free of all other encumbrances, defenses
         and liens (other than the lien granted hereunder), and Pledgor will not
         encumber or allow to be

<PAGE>



         encumbered the Shares without the prior written consent of Pledgee or
         enter into any agreement that could restrict Pledgee's exercise of its
         rights hereunder or under the Note.

                  (c) Pledgor shall pay, prior to the delinquency date, all
         taxes, liens, assessments and other charges levied against the
         Collateral, and in the event Pledgor fails to do so, Pledgee shall have
         the right, but not the obligation, to pay all or any portion of such
         taxes and charges without contesting the validity or legality thereof.
         Any payment made by Pledgee pursuant to this Section 2(c) shall become
         part of the indebtedness of Pledgor secured hereunder, and until paid
         by Pledgor, shall bear interest at the default rate per annum set forth
         in the Note.

3. Voting Rights. During the term of this pledge, Pledgor shall vote the Shares
pledged hereunder solely in accordance with the provisions of that certain
Amended and Restated Stockholders' Agreement dated as of September 21, 2001
among the Company and certain of its stockholders a party thereto.

4. Stock Adjustments. In the event during the term of this Agreement of any
stock dividend, reclassification, readjustment, or other changes declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Pledge Agreement in
the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Escrow Agent shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Pledge Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

5. Warrants and Rights. In the event that, during the term of this Agreement,
subscription warrants or other rights or options shall be issued in connection
with the Shares, such rights, warrants and options shall be the property of
Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the Share then held by Pledgee shall be
immediately delivered to Pledgee, to be held under the terms of this Agreement
in the same manner as the Shares pledged hereunder.

6. Repayment. Pledgor hereby agrees that at any time if Borrower shall have
received any cash payment or other distribution in respect of, or upon transfer,
sale or other disposition of, the Shares, then and in each such case, Pledgor
shall immediately deliver to Pledgee such amount as in partial or full payment
of principal and interest on the Note.

7. Default. Pledgor shall be deemed to be in default of the Note and of this
Pledge Agreement upon the occurrence of any of the following events (each such
event, an "Event of Default"):

                  (a) Payment of principal or interest on the Note shall be
         delinquent for a period of 30 days or more beyond the due date thereof;
         or


                                       2

<PAGE>



                  (b) Pledgor fails to perform any of the covenants or other
         agreements set forth in this Agreement for a period of 10 days; or

                  (c) Any representation or warranty herein shall be untrue in
         any material respect; or

                  (d) Pledgee shall cease to have valid perfected first priority
         lien on all or any part of the Collateral.

8. Pledgee's Rights Upon or Event of Default.

                  (a) In the case of an Event of Default, Pledgee shall have the
         right to accelerate payment of the Note upon notice to Pledgor, and
         Pledgee shall thereafter be entitled to pursue all remedies available
         to a secured party under the Missouri Uniform Commercial Code in effect
         from time to time (whether or not applicable to the Collateral) or
         available at law or equity or otherwise.

                  (b) In the case of an Event of Default, in addition to any
         other rights or remedies otherwise available, Pledgee may, without
         notice and at its option, with respect to any Collateral which shall
         then be in, or shall thereafter come into, the possession or custody of
         Pledgee, Pledgee may sell or cause the same to be sold at any broker's
         board or at any public or private sale, in one or more sales or lots,
         at such price or prices as Pledgee may deem best, for cash or on credit
         or for future delivery, without assumption of any credit risk. The
         purchaser of any or all Collateral so sold shall thereafter hold the
         same absolutely, free from any lien, encumbrance or right of any kind
         whatsoever. Unless any of the Collateral threatens to decline speedily
         in value or is or becomes of a type sold on a recognized market,
         Pledgee will give Pledgor reasonable notice of the time and place of
         any public sale thereof, or of the time after which any private sale or
         other intended disposition is to be made. Any sale of the Collateral
         conducted in conformity with reasonable commercial practices of banks,
         insurance companies, commercial finance companies or other financial
         institutions disposing of property similar to the Collateral shall be
         deemed to be commercially reasonable. Any requirements of reasonable
         notice shall be met if such notice is mailed to the Pledgor at least
         ten (10) days before the time of the sale or disposition. Any other
         requirement of notice, demand or advertisement for sale is, to the
         extent permitted by law, waived. Pledgee may, in its own name or in the
         name of a designee or nominee, buy any of the Collateral at any public
         sale and, if permitted by applicable law, at any private sale. All
         expenses (including court costs and attorney's fees, expenses and
         disbursements) of, or incident to, the enforcement of any of the
         provisions hereof shall be recoverable from the proceeds of the sale of
         any of the Collateral for the period of time necessary to register such
         securities for public sale under the Securities Act of 1933, as amended
         (the "Securities Act"), or under any other applicable securities law.
         In view of the fact that the Securities Act and other applicable
         securities laws may impose certain restrictions on the method by which
         a sale of the Collateral may be effected, Pledgor agrees that upon the
         occurrence of an Event of Default, Pledgee may, from time to time,
         attempt to sell all or any part of the Collateral

                                       3
<PAGE>



         by means of a private sale, restricting the prospective purchasers to
         those who will represent and agree that they are purchasing for
         investment only and not for distribution. Pledgor acknowledges that any
         such private sales may be at prices and on terms less favorable to
         Pledgor than those obtainable through a public sale without such
         restrictions (including, without limitation, a public offering made
         pursuant to a registration statement under the Securities Act) and,
         notwithstanding such circumstances, Pledgor agrees that any such
         private sale shall be deemed to have been made in a commercially
         reasonable manner and that Pledgee shall have no obligation to engage
         in public sales and no obligation to delay the sale of any Collateral
         for the period of time necessary to permit the registration thereof for
         a form of public sale requiring registration under the Securities Act
         or under any other applicable securities laws. Pledgor waives any
         claims against Pledgee arising by reason of the fact that the price at
         any private sale was less than the price that might have been obtained
         at a public sale, even if Pledgee shall accept the first offer received
         and does not offer the Collateral to more than one prospective
         purchaser.

9. Withdrawal or Substitution of Collateral. Pledgor shall not sell, withdraw,
pledge, substitute, grant any options in or otherwise dispose of all or any part
of the Collateral without the prior written consent of Pledgee.

10. Term. The pledge of Shares set forth herein shall continue until the
indefeasible payment in full in cash of all indebtedness secured hereby, at
which time the Shares shall be promptly delivered to Pledgor, without any
representation, warranty or covenant thereto or any recourse in respect thereof.

11. Insolvency. Pledgor agrees that if a bankruptcy or insolvency proceeding is
instituted by or against him or if a receiver is appointed for the property of
Pledgor, or if Pledgor makes an assignment for the benefit of creditors, or the
Pledgor shall take any action in furtherance of any of the foregoing, or the
Pledgor shall generally not, or shall be unable to, or shall admit in writing
his inability to, pay his debts as they become due, the entire amount unpaid on
the Note shall become immediately due and payable, and Pledgee may proceed as
provided in the case of an Event of Default.

12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that the
enforceability of invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions herein contained
unenforceable or invalid.

13. Successors or Assigns. Pledgor and Pledgee agree that all of the terms of
this Agreement shall be binding on their respective permitted successors and
assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall
be deemed to include, for all purposes, the respective designees, successors,
assigns, heirs, executors and administrators. Pledgor shall not assign or
otherwise transfer all or any of her rights and obligations hereunder without
the prior written consent of Pledgee, in its sole discretion. This Agreement
shall be freely assignable by Pledgee.

14. Defined Terms. Capitalized terms used herein without definition shall have
the meanings ascribed to such terms under the Purchase Agreement.

                                       4
<PAGE>




15. Governing Law. This Pledge Agreement shall be interpreted and governed by
the internal laws of the State of Missouri.

                                       5
<PAGE>





         IN WITNESS WHEREOF, the parties hereto have executed this Repayment and
Stock Pledge Agreement as of the day and year first above written.


         "PLEDGOR"                     Brian Vent

                                            /s/ Brian Vent
                                      -----------------------------------
                                                  Address
                                          35 Picardy Ln St. Louis, MO
                                      -----------------------------------


         "PLEDGEE"                     BUILD-A-BEAR WORKSHOP, INC.


                                              /s/ Maxine Clark
                                       ----------------------------------
                                       By:    Maxine Clark
                                            -----------------------------
                                       Its:   President
                                            -----------------------------

                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>25
<FILENAME>c86750exv10w22.txt
<DESCRIPTION>RESTRICTED STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.22

                           BUILD-A-BEAR WORKSHOP, INC.
                       RESTRICTED STOCK PURCHASE AGREEMENT
                                 FOR TINA KLOCKE

     THIS AGREEMENT, is made as of the 19th day of September, 2001, by and
between Build-A-Bear Workshop, Inc., a Delaware corporation (hereinafter called
the "Company"), and Tina Klocke (hereinafter called "Purchaser").

     WITNESSETH THAT:

     WHEREAS, the Board of Directors of the Company ("Board of Directors")
desires to benefit the Company by increasing motivation on the part of
Purchaser, Chief Financial Bear of the Company, who is materially important to
the development of the Company's business, by creating an incentive for her to
remain in the employ of the Company and to work to the very best of her
abilities for the achievement of the Company's strategic objectives; and

     WHEREAS, to further this purpose, the Company desires to make a restricted
stock award to Purchaser for Twenty Thousand Four Hundred Ninety-One (20,491)
shares under the terms hereinafter set forth:

     NOW, THEREFORE, in consideration of the premises, and of the mutual
agreements hereinafter set forth, it is covenanted and agreed as follows:

     1. Terms of Award. Pursuant to action of the Committee (as defined in
Section 4), which action was taken on September 19th 2001 ("Date of Award"), the
Company awards to Purchaser Twenty Thousand Four Hundred Ninety-One (20,491)
shares of the common stock of the Company, of the par value of $0.01 per share
("Common Stock").

     2. Cost of Restricted Stock. The purchase price of the shares of Restricted
Stock shall be equal to Six Dollars and Ten/One Hundredths ($6.10) per share.
Purchaser may make payment for the Common Stock by executing the Secured
Promissory Note and Repayment and Stock Pledge Agreement attached hereto as
Exhibit A and Exhibit B respectively.

     3. No Right to Continued Employment. Nothing in this Agreement shall be
deemed to create any limitation or restriction on such rights as the Company
otherwise would have to terminate the employment of Purchaser at any time for
any reason.

     4. Committee Administration. This award has been made pursuant to a
determination made by the members of the compensation committee of the Board of
Directors ("Committee"), and the Committee or any successor or substitute
committee authorized by the Board of Directors or the Board of Directors itself,
subject to the express terms of this Agreement, shall have plenary authority to
interpret any provision of this Agreement and to make any determinations
necessary or advisable for the administration of this Agreement and may waive or
amend any provisions hereof in any manner not adversely affecting the rights
granted to Purchaser by the express terms hereof.

<PAGE>

     5. Stockholders' Agreement. This award is granted under and is expressly
subject to all the terms and provisions of the Build-A-Bear Workshop, Inc.
Amended and Restated Stockholders' Agreement dated September 21, 2001
("Stockholders' Agreement"). Purchaser hereby acknowledges receipt of a copy of
the Stockholders' Agreement and agrees to be bound by all the terms and
provisions thereof.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf and Purchaser has signed this Agreement to evidence her acceptance of
the terms hereof, all as of the date first above written.

                                       BUILD-A-BEAR WORKSHOP, INC.

                                       By: /s/ Maxine Clark
                                           -------------------------------------

                                       PURCHASER

                                       /s/ Tina Klocke
                                       -----------------------------------------
                                       Tina Klocke

                                       2
<PAGE>

                                    EXHIBIT A

                             SECURED PROMISSORY NOTE

See Attached.


                                       3
<PAGE>

                                    EXHIBIT B

                      REPAYMENT AND STOCK PLEDGE AGREEMENT

See Attached.


                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>26
<FILENAME>c86750exv10w23.txt
<DESCRIPTION>SECURED PROMISSORY NOTE
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.23

                             SECURED PROMISSORY NOTE

     FOR VALUE RECEIVED, the undersigned, Tina Klocke ("Borrower"), promises to
pay to Build-A-Bear Workshop, Inc. , a Delaware corporation ("Company"), or its
order, the principal amount of One Hundred Twenty-Four Thousand Nine Hundred
Ninety-Five and No/100 Dollars ($124,995) with interest from the date hereof on
the unpaid principal balance under this Note at 4.82% per annum. The principal
amount of this Note shall be due and payable on the earlier to occur of the
following dates (the "Maturity Date"): (1) September 19, 2006 ; (2) the date on
which the indebtedness under this Note is accelerated as provided for under this
Note or the Pledge Agreement (as defined below); (3) the ninetieth day following
the date of Borrower's termination of employment with Company (or one year
following the date of Borrower's termination of employment if disabled); or (4)
the first anniversary following the date of Borrower's death while she is
employed by the Company. All accrued and unpaid interest under this Note shall
be due and payable, concurrently with principal. On the Maturity Date the entire
remaining unpaid principal balance of this Note, together with any and all
accrued and unpaid interest and any and all costs and expenses provided for
under this Note and the Pledge Agreement, shall be due and payable.

     All payments under this Note shall be made to Company or its order, in
lawful money of the United States of America and in immediately available funds
and delivered to Company by wire transfer to Company's account as set forth in
written instructions delivered by Company to Borrower prior to the Maturity Date
or at the offices of Company at its then principal place of business or at such
other place as Company or any holder hereof shall designate in writing for such
purpose from time to time. If a payment under this Note otherwise would become
due and payable on a Saturday, Sunday or legal holiday, the due date thereof
shall be extended to the next day which is not a Saturday, Sunday or legal
holiday, and interest shall be payable thereon during such extension. All
amounts due under this Note and the Pledge Agreement shall be payable without
defense, set off or counterclaim.

     Each payment under this Note shall be applied in the following order: (i)
to the payment of costs and expenses provided for under this Note or the Pledge
Agreement; (ii) to the payment of accrued and unpaid interest; and (iii) to the
payment of outstanding principal. Company and each holder hereof shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments under this Note.

     This Note shall be not assignable by either of Company or Borrower without
the written consent of the other.

     Upon the occurrence of a default under this Note or the Pledge Agreement,
including, without limitation, failure to make any principal or interest payment
by the stated maturity (whether by acceleration, notice of prepayment or
otherwise) for such payment, interest shall thereafter accrue on the entire
unpaid principal balance under this Note, including, without limitation, any
delinquent interest which has been added to the principal amount due under this
Note pursuant to the terms hereof, at the rate set forth herein plus 5 percent
per annum (on the basis of a 360-day year and the actual number of days
elapsed). In addition, upon the occurrence

<PAGE>

of a default under this Note or the Pledge Agreement, the holder of this Note
may, at its option, without notice to or demand upon Borrower or any other
party, declare immediately due and payable the entire principal balance hereof
together with all accrued and unpaid interest thereon, plus any other amounts
then owing pursuant to this Note or the Pledge Agreement, whereupon the same
shall be immediately due and payable. On each anniversary of the date of any
default under this Note and while such default is continuing, all interest which
has become payable and is then delinquent shall, without curing the default
under this Note by reason of such delinquency, be added to the principal amount
due under this Note, and shall thereafter bear interest at the same rate as is
applicable to principal, with interest on overdue interest to bear interest, in
each case to the fullest extent permitted by applicable law, both before and
after default, maturity, foreclosure, judgment and the filing of any petition in
a bankruptcy proceeding. In no event shall interest be charged under this Note
which would violate any applicable law.

     This Note is secured under that certain Repayment and Stock Pledge
Agreement, dated as of even date herewith, by and between Borrower and Company
(as amended from time to time, the "Pledge Agreement"). Reference is hereby made
to the Pledge Agreement for a description of the nature and extent of the
security for this Note and the rights with respect to such security of the
holder of this Note. This is a non-recourse note and, anything herein to the
contrary notwithstanding, Company agrees for itself, its representatives,
successors, endorsees and assigns that (a) neither Borrower nor his
representatives, successors or assignees shall be personally liable on this Note
and (b) in the event of default under this Note, Company (and any such
representative, successor, endorsee or assign) shall seek payment of amounts due
under this Note solely in accordance with the rights and remedies set forth in
the Pledge Agreement.

     No waiver or modification of any of the terms of this Note shall be valid
or binding unless set forth in a writing specifically referring to this Note and
signed by a duly authorized officer of Company or any holder of this Note, and
then only to the extent specifically set forth therein.

     If any default occurs in any payment due under this Note, Borrower and all
guarantors and endorsers hereof, and their successors and assigns, promise to
pay all costs and expenses, including attorney's fees, incurred by each holder
hereof in collecting or attempting to collect the indebtedness under this Note,
whether or not any action or proceeding is commenced. None of the provisions
hereof and none of the holder's rights or remedies under this Note on account of
any past or future defaults shall be deemed to have been waived by the holder's
acceptance of any past due installments or by any indulgence granted by the
holder to Borrower.

     Borrower and all guarantors and endorsers hereof, and their successors and
assigns, hereby waive presentment, demand, diligence, protest and notice of
every kind (except such notices as may be required under the Pledge Agreement).
Borrower and all guarantors and endorsers hereof, and their successors and
assigns, hereby agree that failure of Company to exercise any of its rights
hereunder in any instance shall not constitute a waiver thereof in that or any
other instance. Borrower and all guarantors and endorsers hereof, and their
successors and assigns, hereby waive the right to plead any and all statutes of
limitations as a defense to a demand under this Note to the fullest extent
permitted by law.

                                       2
<PAGE>

     This Note shall inure to the benefit of Company, its successors and assigns
and shall bind the heirs, executors, administrators, successors and assigns of
Borrower. Each reference herein to powers or rights of Company shall also be
deemed a reference to the same power or right of such assignee, to the extent of
the interest assigned to them.

     In the event any one or more provisions of this Note shall be held to be
illegal, invalid or otherwise unenforceable, the same shall not affect any other
provision of this Note and the remaining provisions of this Note shall remain in
full force and effect.

     This Note shall be governed by and construed in accordance with the laws of
the State of Missouri, without giving affect to the principles thereof relating
to conflicts of law; provided, that Company and each holder hereof reserves any
and all rights it may have under federal law, including without limitation those
relating to the charging of interest.

                                       3
<PAGE>

     IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed the
day and year first above written.

                                       /s/ Tina Klocke
                                       -----------------------------------------
                                       Tina Klocke

                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>27
<FILENAME>c86750exv10w24.txt
<DESCRIPTION>REPAYMENT AND STOCK PLEDGE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.24

                      REPAYMENT AND STOCK PLEDGE AGREEMENT

          This Repayment and Stock Pledge Agreement (this "Agreement or "Pledge
Agreement") is made as of September 19, 2001 between Build-A-Bear Workshop,
Inc., a Delaware corporation ("Pledgee"), and Tina Klocke ("Pledgor").

                                    Recitals

          A. Pursuant to Pledgor's purchase of shares of Pledgee's common stock,
par value $.01 per share ("Common Stock"), under the Restricted Stock Purchase
Agreement dated September 19, 2001 (the "Purchase Agreement"), between Pledgor
and Pledgee, and Pledgor's payment for such shares with monies advanced pursuant
to that certain Secured Promissory Note executed by Pledgor in favor of the
Pledgee dated September 19, 2001 (the "Note"), Pledgor has purchased 20,491
shares of Common Stock (the "Shares") at a price of $6.10 per share, for a total
purchase price of $124,995.

          B. It is a condition precedent to the extension of credit pursuant to
the Note that the Pledgor shall have executed and delivered this Pledge
Agreement in favor of the Pledgee.

          NOW, THEREFORE, in consideration of the foregoing and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

1. Creation and Description of Security Interest. Pledgor hereby grants a lien
on and pledges all of the Shares (herein sometimes referred to as the
"Collateral") represented by certificate number 10, duly endorsed in blank or
with executable stock powers in form and substance satisfactory to Pledgee, and
herewith delivers said certificate to the Secretary of Pledgee (the "Escrow
Agent"), who shall hold said certificate subject to the terms and conditions of
this Pledge Agreement.

          The pledged stock shall be held by the Escrow Agent as security for
the repayment of the Note, and any costs and expenses incurred in the
enforcement or attempted enforcement of the Note, and any extensions or renewals
thereof, and the Escrow Agent shall not encumber, sell or otherwise dispose of
such Shares except in accordance with the provisions of this Pledge Agreement.

2. Pledgor's Representations and Covenants. Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:

          (a) Pledgor will pay the principal sum of the Note secured hereby,
     together with interest thereon, at the time and in the manner provided in
     the Note.

          (b) The Shares are free of all other encumbrances, defenses and liens
     (other than the lien granted hereunder), and Pledgor will not encumber or
     allow to be

<PAGE>

     encumbered the Shares without the prior written consent of Pledgee or
     enter into any agreement that could restrict Pledgee's exercise of its
     rights hereunder or under the Note.

          (c) Pledgor shall pay, prior to the delinquency date, all taxes,
     liens, assessments and other charges levied against the Collateral, and in
     the event Pledgor fails to do so, Pledgee shall have the right, but not the
     obligation, to pay all or any portion of such taxes and charges without
     contesting the validity or legality thereof. Any payment made by Pledgee
     pursuant to this Section 2(c) shall become part of the indebtedness of
     Pledgor secured hereunder, and until paid by Pledgor, shall bear interest
     at the default rate per annum set forth in the Note.

3. Voting Rights. During the term of this pledge, Pledgor shall vote the Shares
pledged hereunder solely in accordance with the provisions of that certain
Amended and Restated Stockholders' Agreement dated as of September 21, 2001
among the Company and certain of its stockholders a party thereto.

4. Stock Adjustments. In the event during the term of this Agreement of any
stock dividend, reclassification, readjustment, or other changes declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Pledge Agreement in
the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Escrow Agent shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Pledge Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.

5. Warrants and Rights. In the event that, during the term of this Agreement,
subscription warrants or other rights or options shall be issued in connection
with the Shares, such rights, warrants and options shall be the property of
Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the Share then held by Pledgee shall be
immediately delivered to Pledgee, to be held under the terms of this Agreement
in the same manner as the Shares pledged hereunder.

6. Repayment. Pledgor hereby agrees that at any time if Borrower shall have
received any cash payment or other distribution in respect of, or upon transfer,
sale or other disposition of, the Shares, then and in each such case, Pledgor
shall immediately deliver to Pledgee such amount as in partial or full payment
of principal and interest on the Note.

7. Default. Pledgor shall be deemed to be in default of the Note and of this
Pledge Agreement upon the occurrence of any of the following events (each such
event, an "Event of Default"):

          (a) Payment of principal or interest on the Note shall be delinquent
     for a period of 30 days or more beyond the due date thereof; or

                                       2
<PAGE>

          (b) Pledgor fails to perform any of the covenants or other agreements
     set forth in this Agreement for a period of 10 days; or

          (c) Any representation or warranty herein shall be untrue in any
     material respect; or

          (d) Pledgee shall cease to have valid perfected first priority lien on
     all or any part of the Collateral.

8. Pledgee's Rights Upon or Event of Default.

          (a) In the case of an Event of Default, Pledgee shall have the right
     to accelerate payment of the Note upon notice to Pledgor, and Pledgee shall
     thereafter be entitled to pursue all remedies available to a secured party
     under the Missouri Uniform Commercial Code in effect from time to time
     (whether or not applicable to the Collateral) or available at law or equity
     or otherwise.

          (b) In the case of an Event of Default, in addition to any other
     rights or remedies otherwise available, Pledgee may, without notice and at
     its option, with respect to any Collateral which shall then be in, or shall
     thereafter come into, the possession or custody of Pledgee, Pledgee may
     sell or cause the same to be sold at any broker's board or at any public or
     private sale, in one or more sales or lots, at such price or prices as
     Pledgee may deem best, for cash or on credit or for future delivery,
     without assumption of any credit risk. The purchaser of any or all
     Collateral so sold shall thereafter hold the same absolutely, free from any
     lien, encumbrance or right of any kind whatsoever. Unless any of the
     Collateral threatens to decline speedily in value or is or becomes of a
     type sold on a recognized market, Pledgee will give Pledgor reasonable
     notice of the time and place of any public sale thereof, or of the time
     after which any private sale or other intended disposition is to be made.
     Any sale of the Collateral conducted in conformity with reasonable
     commercial practices of banks, insurance companies, commercial finance
     companies or other financial institutions disposing of property similar to
     the Collateral shall be deemed to be commercially reasonable. Any
     requirements of reasonable notice shall be met if such notice is mailed to
     the Pledgor at least ten (10) days before the time of the sale or
     disposition. Any other requirement of notice, demand or advertisement for
     sale is, to the extent permitted by law, waived. Pledgee may, in its own
     name or in the name of a designee or nominee, buy any of the Collateral at
     any public sale and, if permitted by applicable law, at any private sale.
     All expenses (including court costs and attorney's fees, expenses and
     disbursements) of, or incident to, the enforcement of any of the provisions
     hereof shall be recoverable from the proceeds of the sale of any of the
     Collateral for the period of time necessary to register such securities for
     public sale under the Securities Act of 1933, as amended (the "Securities
     Act"), or under any other applicable securities law. In view of the fact
     that the Securities Act and other applicable securities laws may impose
     certain restrictions on the method by which a sale of the Collateral may be
     effected, Pledgor agrees that upon the occurrence of an Event of Default,
     Pledgee may, from time to time, attempt to sell all or any part of the
     Collateral

                                       3
<PAGE>

     by means of a private sale, restricting the prospective purchasers to those
     who will represent and agree that they are purchasing for investment only
     and not for distribution. Pledgor acknowledges that any such private sales
     may be at prices and on terms less favorable to Pledgor than those
     obtainable through a public sale without such restrictions (including,
     without limitation, a public offering made pursuant to a registration
     statement under the Securities Act) and, notwithstanding such
     circumstances, Pledgor agrees that any such private sale shall be deemed to
     have been made in a commercially reasonable manner and that Pledgee shall
     have no obligation to engage in public sales and no obligation to delay the
     sale of any Collateral for the period of time necessary to permit the
     registration thereof for a form of public sale requiring registration under
     the Securities Act or under any other applicable securities laws. Pledgor
     waives any claims against Pledgee arising by reason of the fact that the
     price at any private sale was less than the price that might have been
     obtained at a public sale, even if Pledgee shall accept the first offer
     received and does not offer the Collateral to more than one prospective
     purchaser.

9. Withdrawal or Substitution of Collateral. Pledgor shall not sell, withdraw,
pledge, substitute, grant any options in or otherwise dispose of all or any part
of the Collateral without the prior written consent of Pledgee.

10. Term. The pledge of Shares set forth herein shall continue until the
indefeasible payment in full in cash of all indebtedness secured hereby, at
which time the Shares shall be promptly delivered to Pledgor, without any
representation, warranty or covenant thereto or any recourse in respect thereof.

11. Insolvency. Pledgor agrees that if a bankruptcy or insolvency proceeding is
instituted by or against him or if a receiver is appointed for the property of
Pledgor, or if Pledgor makes an assignment for the benefit of creditors, or the
Pledgor shall take any action in furtherance of any of the foregoing, or the
Pledgor shall generally not, or shall be unable to, or shall admit in writing
his inability to, pay his debts as they become due, the entire amount unpaid on
the Note shall become immediately due and payable, and Pledgee may proceed as
provided in the case of an Event of Default.

12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that the
enforceability of invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions herein contained
unenforceable or invalid.

13. Successors or Assigns. Pledgor and Pledgee agree that all of the terms of
this Agreement shall be binding on their respective permitted successors and
assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall
be deemed to include, for all purposes, the respective designees, successors,
assigns, heirs, executors and administrators. Pledgor shall not assign or
otherwise transfer all or any of her rights and obligations hereunder without
the prior written consent of Pledgee, in its sole discretion. This Agreement
shall be freely assignable by Pledgee.

14. Defined Terms. Capitalized terms used herein without definition shall have
the meanings ascribed to such terms under the Purchase Agreement.

                                       4
<PAGE>

15. Governing Law. This Pledge Agreement shall be interpreted and governed by
the internal laws of the State of Missouri.

                                       5
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Repayment and
Stock Pledge Agreement as of the day and year first above written.

     "PLEDGOR"                         /s/ Tina Klocke
                                       -----------------------------------------
                                       Tina Klocke

                                       5736 Beddeford
                                       -----------------------------------------
                                                       Address

                                       St. Louis, MO 63128
                                       -----------------------------------------

     "PLEDGEE"                         BUILD-A-BEAR WORKSHOP, INC.

                                       /s/ Maxine Clark
                                       -----------------------------------------
                                       By: Maxine Clark
                                           -------------------------------------
                                       Its: President
                                            ------------------------------------

                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>28
<FILENAME>c86750exv10w25.txt
<DESCRIPTION>PUBLIC WAREHOUSE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.25

JS LOGISTICS

                                                      PUBLIC WAREHOUSE AGREEMENT
                                                       CONTRACT RATE AND CHARGES

<Table>
<S>                      <C>                                                <C>
CORPORATE LOCATION
COMPANY NAME             BUILD A BEAR
CLIENT ADDRESS           1964 INNERBELT BUSINESS CTR DR                     CONTRACT ISSUE DATE  February 1, 2002
CITY STATE ZIP           ST LOUIS MO  63114
CONTACT NAME             JOHN MATTHEWS                                      CONTRACT EFFECTIVE DATE  March 31, 2002
CONTACT PHONE NUMBER     314-423-8000
CONTACT FAX NUMBER                                                          CONTRACT TERM PERIOD   2 YEAR
BILLING ADDRESS          SAME AS ABOVE
ADDRESS                  SAME AS ABOVE                                      QUOTED BY    RICH REKOWSKI
CITY STATE ZIP           SAME AS ABOVE
ATTENTION                JOHN MATTHEWS                                      TYPE OF BUSINESS   RETAIL
TITLE
</Table>


SUBJECT TO THE TERMS AND CONDITIONS IN THE SIX PAGES OF THIS DOCUMENT, JS
LOGISTICS, INC. WILL PROVIDE SERVICES AS STATED HEREIN ON PAGE 2 OF THIS
CONTRACT.

--------------------------------------------------------------------------------

SPECIAL INSTRUCTIONS, TERMS OR CONDITIONS:
PRIOR TO RECEIPT OF FREIGHT, AN EXECUTED CONTRACT MUST BE RETURNED TO JS
LOGISTICS.

IN SUCH CASES WHEREAS THIS PERTAINS TO A RENEWAL OF AN EXISTING CONTRACT, THE
RATES SHALL BE IMPOSED COMMENCING SIXTY (60) DAYS AFTER ISSUE DATE UNLESS AN
EXTENSION IN WRITING IS EXECUTED BY JS LOGISTICS, INC.

--------------------------------------------------------------------------------

  MERCHANDISE SHOULD BE CONSIGNED TO YOU IN CARE OF JS WAREHOUSE, INC. AT THE
                               FOLLOWING ADDRESS

                    4550 GUSTINE AVENUE, ST. LOUIS, MO 63116

--------------------------------------------------------------------------------

INVOICES FOR HANDLING, STORAGE, LABOR, SUPPLIES, EQUIPMENT, FREIGHT AND
MANAGEMENT FEES ARE DUE WITHIN 30 DAYS OF INVOICE DATE. MONTHLY STORAGE FEES ARE
DUE THE FIRST DAY OF THE MONTH TO WHICH THEY APPLY. JS LOGISTICS, INC. SHALL
ASSESS A 1-1/2 % SERVICE CHARGE PER MONTH ON THE OUTSTANDING AMOUNT.


<PAGE>



                  THIS PUBLIC WAREHOUSE AGREEMENT ("Agreement"), which includes
the terms and conditions contained in Exhibit A and Exhibit B attached hereto,
has been duly executed by the parties as of the date indicated below:

<Table>
<S>          <C>                                               <C>          <C>
FOR          BUILD-A-BEAR WORKSHOP, INC.                       FOR          JS LOGISTICS, INC.
SIGNATURE        /s/ John F. Burtelow                          SIGNATURE       /s/ Richard A Rekowski
             -----------------------------------------                      ----------------------------------------------
PRINT NAME   JOHN F. BURTELOW                                  PRINT NAME   RICHARD A. REKOWSKI
             -----------------------------------------
PRINT TITLE  CHIEF BANKER BEAR                                 PRINT TITLE  DIRECTOR LOGISTICS
             -----------------------------------------
DATED        4-5-02                                            DATED        3/29/02
             -----------------------------------------                      ----------------------------------------------
</Table>




<PAGE>
                                    EXHIBIT A

<Table>
<Caption>
STANDARD SERVICES                                RATE                     PER                                         2ND YEAR RATES
-----------------                                ----                     ---                                         --------------
<S>                                           <C>                    <C>                                              <C>
INBOUND HANDLING                                $0.46                     CASE                                            $0.475
INBOUND HANDLING                                $4.30                    PALLET                                            $4.44
OUTBOUND HANDLING                               $0.46                  INTER PACK                                         $0.475
OUTBOUND HANDLING                               $0.46                     CASE                                            $0.475
OUTBOUND HANDLING                               $4.30                    PALLET                                            $4.44
RECURRING STORAGE                             $65888.00                  MONTH                                           $65888.00
185600sf
SPECIAL SHIPMENTS                               $0.46                  PER PIECE                                          $0.475
$5.00 Minimum)
BILL OF LADING                                  $5.75                BILL OF LADING                                        $5.75
PHYSICAL INVENTORIES                        PER RATE ABOVE             INVENTORY              1 FREE/YEAR             PER RATE ABOVE
PALLETS SUPPLIED BY
JS                                              $4.25                    PALLET                                            $4.25
SUPPLIES-SHRINK WRAP                        15% OVER COST                                                              15% OVER COST
TAPE, BANDING ETC
FREIGHT                                     15% OVER COST                                                              15% OVER COST
CROSS DOCKING                                   $4.30                    PALLET                                            $4.44
CROSS DOCKING                                   $0.46                    PIECE                                            $0.475
</Table>

SUPPLEMENTAL SERVICES

WAREHOUSEMAN WILL PROVIDE ADDITIONAL SERVICES AT CUSTOMER REQUEST AT THE
CLERICAL AND WAREHOUSE LABOR RATES INDICATED BELOW. UNLESS THE SERVICE IS
SPECIFICALLY IDENTIFIED ABOVE, IN WHICH CASE THE RATE SHOWN FOR THAT SPECIFIC
SERVICE WILL APPLY.

<Table>
<Caption>
                                                                AFTER REGULAR
                                    REGULAR MON-FRI            BUSINESS HOURS
LABOR SERVICES                        8AM-4:30 PM             (4:30 PM-7:59 AM)              OVERTIME                   SUN/HOLIDAY
--------------                      ---------------           -----------------              ---------                  -----------
<S>                                 <C>                       <C>                            <C>                        <C>
LABOR                                   $25/HR                    $30.00/HR                  $30.00/HR                    $40/HR
</Table>

WAREHOUSE OVERTIME REQUIRES SUPERVISION. THIS TIME WILL BE CHARGED AT THE LABOR
RATE LISTED ABOVE. WEEKEND AND HOLIDAY OVERTIME REQUIRES A FOUR-HOUR MINIMUM.

PASS THROUGH EXPENSES
GOODS AND SERVICES PURCHASED DIRECTLY BY WAREHOUSEMAN AT CUSTOMERS' REQUEST AND
THEN INVOICED BY WAREHOUSEMAN TO CUSTOMER WILL BE ASSESSED AN UPCHARGE OF 15%.


<PAGE>


                                    Exhibit B
                              Terms and Conditions

ACCEPTANCE -- SEC. 1

(a) This contract and rate quotation including accessorial charges endorsed on
or attached hereto must be accepted within 30 days from the proposal date by
signature of depositor on the first page of the contract. In the absence of
written acceptance, the act of tendering goods described herein for storage or
other services by warehouseman within 30 days from the proposal date shall
constitute such acceptance by depositor.

(b) In the event that goods tendered for storage or other services do not
conform to the description contained herein, or conforming goods are tendered
after 30 days from the proposal date without prior written acceptance by
depositor as provided in paragraph (a) of this section, warehouseman may refuse
to accept such goods. If warehouseman accepts such goods, depositor agrees to
rates and charges as may be assigned and invoiced by warehouseman and to all
terms of this contract.

(c) This contract may be canceled by either party upon 60 days written notice
and is canceled if no storage or other services are performed under this
contract for a period of 180 days. In addition, Depositor may terminate this
Agreement immediately upon the insolvency of Warehouseman, any assignment of
Warehouseman for the benefit of its creditors, or the failure of Warehouseman to
vacate the appointment of a receiver or trustee for any part or interest of its
business within 30 days from the date of such appointment.

SHIPPING -- SEC. 2

Depositor agrees not to ship goods to warehouseman as the named consignee. If,
in violation of this agreement, goods are shipped to warehouseman as named
consignee, depositor agrees to notify carrier, with copy of such notice to the
warehouseman, that warehouseman named as consignee is a warehouseman and has no
beneficial title or interest in such property. Depositor further agrees to
indemnify and hold harmless warehouseman from any and all claims for unpaid
transportation charges, including undercharges, demurrage, detention or charges
of any nature, in connection with goods so shipped. Depositor further agrees
that, if it fails to notify carrier as required by the preceding sentence,
warehouseman shall have the right to refuse such goods and shall not be liable
or responsible for any loss, injury, or damage of any nature to, or related to,
such goods.

TENDER FOR STORAGE -- SEC. 3

All goods for storage shall be delivered at the warehouse properly marked and
packaged for handling. The depositor shall furnish at or prior to such delivery,
a manifest showing marks, brands, or sizes to be kept and accounted for
separately, and the class of storage and other services desired.

STORAGE PERIOD AND CHARGES -- SEC. 4

Storage charges are billed in advance on the first day of each month. Should the
Depositor elect to not use Warehouseman's 4550 Gustine location or any other
warehouseman's facility as its sole location of central storage and handling,
the storage charge in Exhibit A will be adjusted to a mutually agreeable amount.

TRANSFER, TERMINATION OF STORAGE, REMOVAL OF GOODS -- SEC. 5

(a) Instructions to transfer goods on the books of the warehouseman are not
effective until delivered to and received by warehouseman, and all charges up to
the time transfer is made are chargeable to the depositor of record. If a
transfer involves rehandling the goods, such rehandling will be subject to a
charge at warehouseman's standard rates set forth on Exhibit A attached hereto.

(b) The warehouseman reserves the right to move, at his expense, 14 days after
notice is sent by certified or registered mail to the depositor of record or to
the last known holder of the negotiable warehouse receipt, any goods in storage
from the warehouse in which they may be stored to any other of his warehouses
located outside the warehouse complex identified on the first page of this
agreement. Warehouseman will store the goods at, and may without notice move the
goods within and between, any one or more of the warehouse buildings which
comprise the warehouse complex identified on the first page of this agreement.

(c) If as a result of a quality or condition of the goods of which the
warehouseman had no notice at the time of deposit the goods are a hazard to
other property or to the warehouse or to persons, the warehouseman may sell the
goods at public or private sale without advertisement on reasonable notification
to all persons known to claim an interest in the goods and such action cannot
occur within fifteen (15) days from the date of notice to Depositor. If the
warehouseman after a reasonable effort is unable to sell the goods, he may
dispose of them in any lawful manner and shall incur no liability by reason of
such disposition. Pending such disposition, sale, or return of the goods, the
warehouseman may remove the goods from the warehouse and shall incur no
liability by reason of such removal.




<PAGE>
HANDLING -- SEC. 6

(a) The handling charge covers the ordinary labor involved in receiving goods at
warehouse door, placing goods in storage, and returning goods to warehouse door.
Handling charges shall be invoiced monthly to depositor and are due and payable
within 15 days of invoice date.

(b) Unless otherwise agreed, labor for unloading and loading goods will be
subject to a charge at the rates set forth in Exhibit A. Additional expenses
incurred by the warehouseman in receiving and handling damaged goods, and
additional expense in unloading from or loading into cars or other vehicles not
at warehouse door will be charged to the depositor at the rates set forth in
Exhibit A.

(c) Labor and materials used in loading rail cars or other vehicles are
chargeable to the depositor at the rates set forth in Exhibit A.

(d) When goods are ordered out in quantities less than in which received, the
warehouseman may make an additional charge at the rates set forth in Exhibit A
for each order or each item of an order.

(e) The warehouseman shall not be liable for demurrage or detention, delays in
unloading inbound cars, trailers or other containers, or delays in obtaining and
loading cars; trailers or other containers for outbound shipment unless
warehouseman has failed to exercise reasonable care.

DELIVERY REQUIREMENTS -- SEC. 7

(a) No goods shall be delivered or transferred except upon receipt by the
warehouseman of complete written instructions. Written instructions shall
include, but are not limited to, FAX, EDI, Email, or similar communication.
However, when no negotiable receipt is outstanding, goods may be delivered upon
instruction by telephone in accordance with a prior written authorization, but
the warehouseman shall not be responsible for loss or error occasioned thereby.

(b) When depositor requests goods from the warehouse, a reasonable time shall be
given the warehouseman to carry out the applicable instructions, and if he is
unable because of acts of God, war, public enemies, seizure under legal process,
riots and civil commotion, or any reason beyond the warehouseman's control, or
because of loss or destruction of goods for which warehouseman is not liable, or
because of any other excuse provided by law, the warehouseman shall not be
liable for failure to carry out such instructions.

EXTRA SERVICES (SPECIAL SERVICES) -- SEC. 8

(a) Warehouse labor required for services other than ordinary handling and
storage will be charged to the depositor at the rates set forth on Exhibit A
attached hereto.

(b) Special services requested by depositor, including but not limited to,
compiling of special stock statements, reporting marked weights, serial numbers
or other data from packages, physical check of goods, and handling transit
billing will be subject to a charge at the rates set forth on Exhibit A attached
hereto.

(c) Dunnage, bracing, packing materials or other special supplies, may be
provided for the depositor at warehouseman's cost plus 15%.

(d) By prior arrangement, goods may be received or delivered during other than
usual business hours, subject to a charge at the rates set forth on Exhibit A
attached hereto.

(e) Communication expense including postage, teletype, telegram, or telephone
will be charged to the depositor at cost if such concern more than normal
inventory reporting or if, at the request of the depositor, communications are
made by other than regular United States Mail.

BONDED STORAGE -- SEC. 9

(a) A charge in addition to regular rates will be made for merchandise in bond
at the rates set forth on Exhibit A attached hereto.

(b) Where a warehouse receipt covers goods in U.S. Customs bond, such receipt
shall be void upon the termination of the storage period fixed by law.

LIABILITY AND LIMITATION OF DAMAGES -- SEC. 10

(a) The warehouseman shall not be liable for any damage to goods stored however
caused unless such damaged resulted for the failure by the warehouseman to
exercise such care in regard to them as a reasonably careful man would exercise
under like circumstances and warehouseman is not liable for damages which could
not have been avoided by the exercise of such care.

(b) Goods are not insured by the warehouseman against loss or damage however
caused.

(c) The depositor declares that damages are limited to the cost of the
merchandise.

(d) Where damage occurs to stored goods, for which the warehouseman is not
liable, the depositor shall be responsible for the cost of removing and
disposing of such goods and the cost of any environmental cleanup and site
remediation resulting from the loss or injury of goods.

NOTICE OF CLAIM AND FILING OF SUIT -- SEC. 11

(a) Claims by the depositor and all other persons must be presented in writing
to the warehouseman within a reasonable time, and in no event longer than 90
days after delivery or notification by the depositor that loss or injury to part
or all of the goods has occurred, whichever time is shorter.
<PAGE>


(b) No action may be maintained by the depositor or others against the
warehouseman for loss or injury to the goods stored unless such action is
commenced nine months after delivery or notification by the depositor that loss
or injury to part or all of the goods has occurred, whichever time is shorter.

(c) When goods have not been delivered, notice may be given of known loss or
injury to the goods by mailing of a registered or certified letter to the
depositor of record or to the last known holder of a negotiable warehouse
receipt. Time limitations for presentation of claim in writing and maintaining
of action after notice begin on the date of mailing of such notice by
warehouseman.

LIABILITY FOR CONSEQUENTIAL DAMAGES -- SEC. 12

Neither party shall be liable for any loss of profit or special, indirect, or
consequential damages of any kind.

LIABILITY FOR MISSHIPMENT -- SEC. 13

If warehouseman negligently misships goods, the warehouseman shall pay the
reasonable transportation charges incurred to return the misshipped goods to the
warehouse. If the consignee fails to return the goods, warehouseman's maximum
liability shall be for the lost or damaged goods as specified in Section 10
above, and warehouseman shall have no liability for damages due to the
consignee's acceptance or use of the goods whether such goods be those of the
depositor or another.

MYSTERIOUS DISAPPEARANCE -- SEC. 14

Warehouseman shall not be liable for loss of goods due to inventory shortage or
unexplained or mysterious disappearance of goods unless depositor establishes
such loss occurred because of warehouseman's failure to exercise the care
required of warehouseman under Section 10 above and merchandise shortages are
less than 0.625% of the cost of merchandise received by the Warehouseman.
Warehouseman shall be liable for any merchandise shortage in excess of 0.625% of
the cost of merchandise received, such shortage determined by periodic physical
inventory(s).

RIGHT TO STORE GOODS -- SEC. 15

Depositor represents and warrants that depositor is lawfully possessed of the
goods and has the right and authority to store them with warehouseman. Depositor
agrees to indemnify and hold harmless the warehouseman from all loss, cost and
expense (including reasonable attorneys' fees) which warehouseman pays or incurs
as a result of any dispute or litigation, whether instituted by warehouseman or
others, respecting depositor's right, title or interest in the goods. Such
amounts shall be charges in relation to the goods and subject to warehouseman's
lien.

ACCURATE INFORMATION -- SEE. 16

Depositor will provide warehouseman with information concerning the stored
goods, which is accurate, complete and sufficient to allow warehouseman to
comply with all laws and regulations concerning the storage, handling and
transporting of the stored goods. Depositor will indemnify and hold warehouseman
harmless from all loss, cost, penalty and expense (including reasonable
attorneys' fees) which warehouseman pays or incurs as a result of depositor
failing to fully discharge this obligation.

SEVERABILITY and WAIVER -- SEC. 17

(a) If any provision of this receipt, or any application thereof, should be
construed or held to be void, invalid or unenforceable, by order, decree or
judgment of a court of competent jurisdiction, the remaining provisions of this
receipt shall not be affected thereby but shall remain in full force and effect.

(b) Warehouseman's failure to require strict compliance with any provision of
the Warehouse Receipt shall not constitute a waiver or estoppel to later demand
strict compliance with that or any other provision(s) of this Warehouse Receipt.

(c) The provisions of this Warehouse Receipt shall be binding upon the
depositor's heirs, executors, successors and assigns; contain the sole agreement
governing goods stored with the warehouseman; and, cannot be modified except by
a writing signed by warehouseman.

COMPLIANCE WITH UNIFORM COMMERCIAL CODE -- SEC. 18

Unless otherwise expressly set forth herein, all of warehouseman's acts carried
out in its performance of services hereunder and any liability hereunder shall
be governed by the provisions of the Uniform Commercial Code, Mo. Rev. Stat.
Section 400.7-101 et seq.


<PAGE>


                           FIRST AMENDMENT TO CONTRACT

The following represents the first amendment to the contract dated February 1,
2002 between JS Logistics, Inc. ("JS") and Build-A-Bear Workshop, Inc. ("BABW")
whereby JS provides warehousing and distribution services to BABW. The contract
is hereby amended as follows:

      1.    The Contract termination date is extended to March 31, 2005 from
            March 31, 2004.

      2.    Either party may terminate the contract at any time after March 31,
            2004 by providing five months notice.

      3.    In the event of termination of the contract and the transfer of BABW
            items from JS's warehouse(s), such bulk transfers will be charged to
            BABW at $25 per hour. This charge is in lieu of the carton contract
            rates for normal distributions to BABW stores. JS will also charge
            BABW for the contract rate for pallets used to move such items.

      4.    Effective May 25, 2003 and for the remainder of the contract, the
            recurring monthly storage fee will be $55,888 per month and all
            other inbound/outbound fees currently being assessed at $.475 per
            carton will be assessed at $.46 per carton. Carton is defined as a
            master pack carton when there are no inner pack cartons within the
            master carton and as inner pack cartons when such master carton
            contains inner pack cartons (which is the current billing practice).

      5.    BABW will have use of the entire warehouse located at 4550 Gustine
            Ave, including the main warehouse facility (approx 186,000 square
            feet) and the detached warehouse space (approximately 14,000 square
            feet) but will not have use of the open dock space between these two
            facilities. Should BABW and JS mutually decide that additional
            storage space is required for BABW in addition to the existing
            200,000 square feet, such determination will take in to account
            operational needs, regulatory requirements and local building codes
            and such additional space's rental will be negotiated at such future
            time.

Build-A-Bear Workshop, Inc.                               JS Logistics, Inc.
By: /s/ John F. Burtelow                                  By: /s/ John Cody
It's: Chief Banker Bear                                   It's: President
Date: 5/20/03                                             Date: 5/20/03


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.26
<SEQUENCE>29
<FILENAME>c86750exv10w26.txt
<DESCRIPTION>AGREEMENT FOR LOGISTICS SERVICES
<TEXT>
<PAGE>
Regional contract                                                  EXHIBIT 10.26

                        AGREEMENT FOR LOGISTICS SERVICES

         This Agreement for Logistics Services ("Agreement") is dated as of
February 24, 2002, by and among Build-A-Bear Workshop, Inc., a Delaware
corporation ("Build-A-Bear"), located at 1954 Innerbelt Business Center Drive,
St Louis, Missouri 63114 and HA Logistics, Inc. located at 7172 Regional Street,
PMB #362, Dublin, California 94568.

                                    RECITALS

         WHEREAS, Build-A-Bear is requiring logistics services of the kind
offered by HA Logistics; and

         WHEREAS, Build-A-Bear desires HA Logistics to provide logistics
services to Build-A-Bear; and

         WHEREAS, HA Logistics will provide services under this agreement
(hereinafter the business units will not be referred to separately, but rather
will be called by the operating corporate name, HA Logistics); and

         WHEREAS, the parties believe the distinctive logistics service needs of
Build-A-Bear can best be satisfied through contractual agreement.

         NOW THEREFORE, Build-A-Bear and HA Logistics, in consideration of the
premises and mutual agreements hereafter set forth, agree as follows:

1. Scope. HA Logistics shall provide logistics services (the "Services") as
described in Exhibit A.

2. Performance. The Services shall be performed in a professional and
workmanlike manner, in accordance with the highest industry standards. HA
Logistics and Build-A-Bear agree that HA Logistics' performance as it relates to
the Services shall be measured according to the corresponding performance
metrics set forth on Exhibit C attached hereto and incorporated herein by
reference ("Metrics"). If HA Logistics fails to meet the Metrics for two
consecutive months, Build-A-Bear shall have the right to terminate this
Agreement on thirty days notice.

3. Meetings. Build-A-Bear and HA Logistics agree to schedule meetings, no more
than once annually, for the purposes of discussing ongoing operations and future
direction, and reviewing the Metrics. These meetings will be scheduled by
Build-A-Bear and HA Logistics on a mutually agreed upon date and time in a
mutually agreed upon location.

4. Independent Contractor Relationship. HA Logistics shall, for all purposes, be
deemed an independent contractor and shall be fully independent in performing
any authorized services and shall not act or hold itself out as an agent,
servant, or employee of Build-A-Bear. It is expressly understood and agreed that
all services provided under the terms of this Agreement shall be performed by
the employees or independent contractors of HA Logistics and that no employee or
independent contractor of HA Logistics shall be considered an employee of
Build-A-Bear for any purpose whatsoever. HA Logistics will be responsible for
its own expenses, wages, employee benefits, and all taxes, contributions and
withholdings under all applicable federal,





<PAGE>

Regional contract


state, or local laws or regulations, and insurance coverage (including workers'
compensations) related thereto. HA Logistics also shall have the responsibility
to comply with all civil rights and labor laws as may be applicable. HA
Logistics shall be fully responsible for its own employees and its
subcontractors (including hiring, discipline, and termination) while in the
process of fulfilling its obligations and services under the terms of this
Agreement. In addition, HA Logistics employees are not eligible for any benefit
programs available to Build-A-Bear's employees or any of its affiliates,
subsidiaries, divisions, or other related corporate entities. Except for the
enforcement of personnel and property safety rules and regulations at
Build-A-Bear's sites, Build-A-Bear shall not have the authority to control
and/or direct the details of the performance of this Agreement by the employees
or subcontractors of HA Logistics. HA Logistics agrees that if any person,
government agency, or court should ever allege, claim or determine that
Build-A-Bear is an employer or joint employer (for any purpose) of any person
assigned by HA Logistics to perform services pursuant to this Agreement, HA
Logistics will indemnify, defend and hold Build-A-Bear harmless from and against
any and all Claims (as defined in Section 8 hereof) related thereto.

5. Rates, Fees, and Charges

         (a) In consideration of the services to be performed by HA Logistics,
Build-A-Bear shall pay HA Logistics the fees set forth in Exhibit B attached
hereto.

         (b) Build-A-Bear acknowledges that HA Logistics will subcontract the
performance of some or all of the Services, and that the rates charged correlate
to the rates currently charged by such subcontractors. Therefore, the
aforementioned rates, fees, charges, and rules are subject to change due to
corresponding changes imposed by the subcontractors, but no more frequently than
once every 6 months. Any such changes in the rates attached as Exhibit B of this
Agreement must be made in writing and authorized by a representative of both
parties. Additional rates and charges can be negotiated between HA Logistics and
Build-A-Bear and must be confirmed in writing.

6. Payments. HA Logistics and Build-A-Bear agree that Build-A-Bear shall be
responsible for payment of all of HA Logistics' rates, fees, and charges under
this Agreement as defined in Exhibit B. HA Logistics shall invoice Build-A-Bear
on a monthly basis, and Build-A-Bear (or its agent) shall pay such invoices
directly to HA Logistics within 15 days of the invoice date.

7. Claims for Non-Payment. Provided Build-A-Bear has met the payment obligations
contained herein, HA Logistics shall indemnify Build-A-Bear and hold
Build-A-Bear harmless from and against any Claims (as defined in Section 8) for
non-payment or underpayment by a vendor used by HA Logistics for logistics
services hereunder.

8. Indemnification.

         (a) HA Logistics shall indemnify and hold harmless Build-A-Bear from
and against all loss, damage, fines, expenses, actions and claims for injury to
persons (including injury resulting in death) and damage to property ("Claims")
arising out of or in connection with HA Logistics', its agents' or employees'
discharge of its duties and responsibilities as specified in this Agreement
(including, without limitation, third party Claims and Claims by HA Logistics




                                       2
<PAGE>
Regional contract



subcontractors in respect of non-payment of such subcontractor's fees) except to
the extent such injury or damage is caused or contributed to by the negligence
of Build-A-Bear, its agents or employees.

         (b) Build-A-Bear shall indemnify and hold harmless HA Logistics from
and against all Claims arising out of or in connection with Build-A-Bear's, its
agents' or employees' discharge of its duties and responsibilities as specified
in this Agreement, except to the extent such injury or damage is caused by or
contributed to by the negligence of HA Logistics, its agents or employees.

         (c) The provisions of this Section 8 shall survive termination of the
Agreement.

9. Insurance. During the term of this Agreement, HA Logistics, at its sale
expense, shall maintain liability insurance with an insurer insuring HA
Logistics against liability and claims for injuries or death of persons and
damage to property in combined single limits of not less than $1,000,000. HA
Logistics shall also maintain at its sole cost and expense with a reputable
insurer any additional insurance required by applicable laws, rules and
regulations for the term of this Agreement. Upon request, HA Logistics shall
furnish to Build-A-Bear a copy of such insurance policy and written certificates
of insurance. HA Logistics agrees to only utilize carriers in connection with
shipments that maintain cargo insurance coverage limits of at least $100,000 per
shipment.

10. Term and Termination.

         (a) The terms and conditions of this Agreement commence on the date of
the Agreement. This Agreement shall continue for a period of 3 years from the
date hereof. During the 3 years mentioned, the rates in Exhibit B will be
negotiated annually on February 1. HA Logistics will provide to Build-A-Bear
written notice sixty (60) days in advance of any annual rate increases. New
store rates will be given in writing thirty (30) days prior to shipment.

         (b) Either party may terminate this Agreement:

                  (i) immediately following written notice of a material default
of its obligations hereunder provided that (1) the defaulting party receives
notice of termination containing a complete description of the default and (2)
the defaulting party fails to cure such default within thirty (30) days of
written notice or ten (10) days of such notice if the default is nonpayment;

                  (ii) upon not less than 90 days written notice;

                  (iii) immediately upon the insolvency of the other party, any
assignment of the other party for the benefit of its creditors, or the failure
of the other party to vacate the appointment of a receiver or trustee for any
part or interest of its business within 30 days from the date of such
appointment;

                  (iv) as provided in Section 2.




                                       3
<PAGE>
Regional contract



         Upon termination of this Agreement, HA Logistics shall promptly return
to Build-A-Bear all copies of any data, records, or materials of whatever nature
or kind, belonging to Build-A-Bear, including all materials incorporating the
proprietary information of Build-A-Bear.

11. Notices. Notices given by one party to the other under this Agreement shall
be in writing and shall be delivered personally, sent by facsimile, express
delivery service, certified mail or first class U.S. mail postage prepaid and
addressed to the respective parties as follows:

         If to HA Logistics:                If to Build-A-Bear:
         President                          President
         7172 Regional St PMB 362           1954 Innerbelt Business Ctr. Dr
         Dublin Ca 94568                    St Louis Mo 63114
         (925) 828-0471                     (314) 423-8000
         (925) 828-9658 Fax                 (314) 423-8188 Fax

         or to such other address as either party shall designate by proper
         notice. Notices will be deemed given as of the earlier of a) the date
         of actual receipt, b) the next business day when notice is sent via
         express mail, personal delivery or facsimile or c) three (3) days after
         mailing in the case of first class or certified U.S. mail.

12. Nonexclusive Agreement.

         (a) It is agreed and understood between the parties hereto, that HA
Logistics is free to provide similar services to customers other than
Build-A-Bear pursuant to any separate agreements.

         (b) It is agreed and understood between the parties hereto that
Build-A-Bear is free to procure similar services from vendors other than HA
Logistics pursuant to any separate agreements.

13. Force Majeure. If any party to this Agreement is unable to meet its
obligations under this Agreement as a result of flood, earthquake, storm, other
acts of God including; fire, derailment, accident, strike, lockout, explosion,
war, insurrection, riot, embargo, terrorist activity, act of government or
governmental agency or other similar cause beyond the reasonable control ("Force
Majeure") of the parties, such party will be excused from performing its
obligations (except Build-A-Bear's obligations to pay indebtedness hereunder)
for the duration of the Force Majeure.

14. Complete Agreement. This Agreement sets forth the entire understanding of
the parties and supersedes all prior and contemporaneous verbal and written
agreements between the parties relating to the subject matter contained herein
and merges all prior and contemporaneous discussions between them. To the extent
any terms and conditions contained on applicable bills of lading conflict with
or contradicts this Agreement, the terms of this Agreement shall control, and
such bills of lading shall serve solely as delivery receipt.



                                       4
<PAGE>

Regional contract


15. Successors and Assigns: Waiver. This Agreement shall apply to and bind the
successors and assigns of the parties hereto; provided, however, neither this
Agreement nor any right or obligation hereunder is assignable in whole or in
part, whether by operation of law or otherwise, by HA Logistics or Build-A-Bear,
without the prior written consent of the other party. The terms and conditions
of this Agreement may not be waived or modified unless in writing signed by both
parties. The failure at any time to require the other party's performance of any
obligation under this Agreement shall not affect the right subsequently to
require performance of that obligation.

16. Confidential Information. Each party shall protect the confidentiality of
information provided by the other party, or to which the receiving party obtains
access by virtue of its performance under this Agreement, that either has been
identified as confidential by the disclosing party or by its nature warrants
confidential treatment. The receiving party shall use such information only for
the purposes of this Agreement and shall not disclose it to anyone except its
employees who have a need to know the information. These nondisclosure
obligations shall not apply to information that is or becomes public through no
breach of this Agreement, is received from a third party free to disclose it, is
independently developed by the receiving party or is required by law to be
disclosed, provided that in the event disclosure is required by law, the
receiving party shall provide the disclosing party with prompt written notice of
the disclosure required, and shall assist the disclosing party, at the
disclosing party's request, in obtaining a protective order in respect of such
disclosure. Confidential information shall be returned to the disclosing party
upon its request, except that each party may retain one copy in its legal files
solely for purposes of documenting its compliance with its obligations
hereunder. The parties agree and acknowledge that money damages would not be an
adequate remedy for any breach or threatened breach of this Section 16, and that
the non-breaching party shall, in addition to any other available remedies, be
entitled to specific performance or injunctive relief in order to prevent the
other party from violating the terms of this Section 16.

17. Intellectual Property. Neither party shall, by virtue of this Agreement,
acquire any ownership licensed or any other rights in any pre-existing software,
documentation, or intellectual or technological property of the other party.

18. Severability. If any of the terms or conditions in this Agreement are held
invalid for any reason by a court or other tribunal of competent jurisdiction,
then such terms or conditions shall be deemed severed from this Agreement and
the remaining terms and conditions shall continue in full force and effect.

19. Captions. The captions are inserted merely for the convenience of the
parties and shall not be deemed as part of this Agreement.

20. Arbitration, Damages and Attorneys Fees.

         (a) Except as set forth in this Section 20, the parties agree that any
disputes between Build-A-Bear and HA Logistics concerning the meaning of this
Agreement or concerning their rights, obligations or performance hereunder,
shall, at the request of any of them, be submitted to binding arbitration
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). Disputes shall be decided by an arbitrator chosen in
accordance with the






                                       5
<PAGE>

Regional contract


AAA rules then in effect, such arbitrator to have knowledge and experience in
the logistics industry.

         (b) The sole right of the arbitrator shall be to enforce and interpret
the terms of this Agreement and not to expand the rights or obligations of the
parties. The arbitrator shall have the right to award actual, out of pocket
damages only, and they shall not have the right to award special, consequential
or punitive damages to either side, except as provided herein. In any action
decided by arbitration, the prevailing side shall be entitled to recover
reasonable attorney's fees and arbitration costs, including the fees and
expenses of the arbitrator, from the losing side. The decision of the arbitrator
shall be final and binding on the parties, and each party shall be entitled to
seek enforcement of any such decision in any court of competent jurisdiction.

         (c) Any dispute under this Agreement shall be decided with reference to
Missouri law or the laws of the United States of America, whichever is
applicable, and the forum for such arbitration shall be a mutually agreeable
location in Missouri, unless the parties agree to hold it elsewhere.

         (d) Nothing contained in this Section 20 shall prevent either party
from seeking relief in court (including, without limitation, injunctive or
equitable relief) with respect to breach of Section 16 in any court of competent
jurisdiction, as the parties recognize that the breach of such Sections would
result in irreparable harm to the non-breaching party, for which monetary
damages would be inadequate. In the event of a breach of either Section 16, the
parties shall be entitled to receive special, consequential damages to the
extent awarded by a court or the arbitrator.

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

<Table>
<S>                                                  <C>
         BUILD-A-BEAR                                HA LOGISTICS, INC.


         By:      /s/ Maxine Clark                   By:      /s/ Alan Huttman
              ------------------------------              ------------------------------


         Title:  President                           Title:  President
                 ---------------------------                 ---------------------------


         Date:  2/24/02                              Date:  2/24/02
                ----------------------------                -----------------------------
</Table>




                                       6
<PAGE>

Regional contract



                                    EXHIBIT A

                                    Services

1.       The following duties and responsibilities are assumed by HA Logistics
         in service to Build-A-Bear:

<Table>
<Caption>
         Service                       Description of Service
         -------                       ----------------------

<S>                            <C>
         Line Haul             Movement of product from distribution center
                               (St Louis, MO) to 3rd party warehouses.

         Delivery to Store     Movement of product from 3rd party warehouse
                               to store location. Normal delivery hours are
                               7:00 am to 5:00 pm.

         Handling              Will be based on the in/out rate and
                               includes the labor services related to the
                               process of unloading product from carrier,
                               placing the product in the warehouse and
                               moving the product from the warehouse to
                               carrier and loading trucks. Normal hours of
                               warehouse operations are Monday through
                               Friday - 7:00 am to 5:00 pm.

         Storage               Storage Charges will be based on the total
         and Materials         number of each item(s) multiplied by the rate.
                               Materials/supplies used for the process of
                               storing, receiving, and/or shipping will be
                               billed at the rates set forth on Exhibit B.
                               (Any other supplies used but not listed
                               above will be charged as Misc. Materials and
                               will be based on HA Logistics, Inc.'s Cost
                               (+) 20%.)

         Bills of Lading       For compiling and processing Bills of Lading
                               the rates set forth on Exhibit B apply. (When
                               additional labor is requested for
                               compiling/processing and/or copying reports such
                               as Bill of Lading, Receivers, Faxes, etc., labor
                               rates will apply base on a 15-minute minimum.)
</Table>



<PAGE>


Regional contract


                                    EXHIBIT C

                               Performance Metrics

A.       On time delivery to the stores -


         - Target - 98%

B.       Damages/Claims -

         -

         - Target - .5%

C.       Total Savings -

         - Target 1st year - 14%

         -

         - 2nd and 3rd year - Savings metric resets on February 1 of the
           following year based on sales and economic conditions.




<PAGE>


Regional contract


                                    EXHIBIT D

                               Accessorial Charges

<Table>
<S>                                                         <C>
Warehouse supervisor labor rate.............................Included in regional delivery charges
Forklift labor rate.........................................Included in regional delivery charges
Driver per man..............................................Included in regional delivery charges
Emergencies/rush/hot/emergency deliveries...................$95.00 Per hour 4 hour min.
Inside delivery charge......................................Included in regional delivery charges
Banding bales to the carts..................................Included in regional delivery charges
Loading and unloading time 2.5 hours free...................$65.00 per hour per man there after.
Storage Charge..............................................$10.00 per pallet I to 15th, $7.00 per
                                                            pallet 16th to the end of current month.
</Table>

Rates applicable only for the account of Build-A-Bear.

The charge for each stop-in-transit for partial loading or unloading exclusive
of those at initial origin and final destination will be $65.00 all stops.

                              Fuel Surcharge Index

The base fuel price will be established between $1.35 and $1.40 per gallon. The
weekly price issued each Monday by the Department of Energy (DOE) will be used
to determine the fuel surcharge applicable for the next seven (7) days. Any
adjustments in the fuel surcharge will become effective 12:01 a.m., Tuesday and
remain in effect through 11:59 p.m. on the following Monday. The table below
provides the applicable fuel surcharge amount in six cent per gallon increments.

<Table>
<Caption>
                   DOE NATIONAL                                   FUEL SURCHARGE
               POSTED PRICE/GALLON                         (AS A PERCENT OF LINE HAUL)
               -------------------                         ---------------------------
<S>                                                        <C>
                  $1.351   $1.40                                       1%
                  $1.401   $1.45                                       2%
                  $1.451   $1.50                                       3%
                  $1.501   $1.55                                       4%
</Table>


         o        For fuel prices in excess of $1.55 per gallon, add one % for
                  each five cent per gallon increase in fuel price.

The current DOE index price can be viewed at www.eia.doe.gov or by calling (202)
586-6966




                                       9





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.28
<SEQUENCE>30
<FILENAME>c86750exv10w28.txt
<DESCRIPTION>AMENDMENT AND RESTATEMENT OF SUBLEASE
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.28

                      AMENDMENT AND RESTATEMENT OF SUBLEASE

         This Amendment and Restatement of Sublease is made and entered into as
of the 14th day of June, 2000, by and between NewSpace, Inc., a Missouri
corporation ("Landlord"), and Build-A-Bear Workshop, Inc., a Delaware
corporation, the successor to Build-A-Bear Workshop, L.L.C., a Missouri limited
liability company ("Tenant").

         WITNESSETH THAT:

         WHEREAS, Landlord and Tenant entered into a Sublease dated as of
February 15, 2000, a copy of which is attached hereto as Exhibit A (the
"Sublease"); and

         WHEREAS, Landlord and Tenant entered into a Sublease as of April 10,
2000, a copy of which is attached hereto as Exhibit B (the "Space 1990
Sublease"); and

         WHEREAS, Landlord has entered into an Amended and Restated Industrial
Lease with State of California Public Employees Retirement System (the "Prime
Lessor") dated as of June 14, 2000, a copy of which is attached hereto as
Exhibit C (the "New Prime Lease") for Landlord's interest in the Building; and

         WHEREAS, Landlord and Tenant desire to Amend and Restate their
Sublease.

         NOW, THEREFORE, in consideration of the premises, the mutual covenants,
promises and conditions set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Landlord and Tenant agree as follows:

         1.       Section 1 of the Sublease and Section 1 of the Space 1990
Sublease be and hereby are amended to acknowledge by Tenant that Landlord's
interest in the Building is as a tenant under the New Prime Lease. Except as
provided in the Sublease or the Space 1990 Sublease, the Sublease and the Space
1990 Sublease are expressly made subject to all of the terms and conditions of
the New Prime Lease insofar as they relate to the Premises of the Sublease or
the Space 1990 Sublease or the use and occupancy thereof, Tenant agrees to
comply with all covenants and obligations of Landlord under the New Prime Lease.

         2.       Except as herein amended, Landlord and Tenant reaffirm and
restate all of the terms and conditions of the Sublease and the Space 1990
Sublease and all of the terms and conditions therein shall remain unaltered and
in full force and effect and are hereby ratified and confirmed.

         IN WITNESS WHEREOF, Landlord and Tenant have executed this Amended and
Restated Sublease as of the day and year first above written.

LANDLORD:                                  NEWSPACE, INC.,
                                           a Missouri corporation

                                           By: /s/ Robert Fox
                                               ---------------------------------
                                           Its: CEO

TENANT:                                    BUILD-A-BEAR WORKSHOP, INC.
                                           a Delaware corporation

                                           BY: /s/ Maxine Clark
                                               ---------------------------------
                                           Its: President

                                       1
<PAGE>

                                    EXHIBIT A

                                    SUBLEASE

         THIS SUBLEASE ("Sublease") is made and entered into as of the 15th day
of February, 2000, by and between NewSpace, Inc., a Missouri corporation
("Landlord"), and Build-A-Bear Workshop, L.L.C., a Missouri limited liability
company ("Tenant").

         WITNESSETH, THAT;

         WHEREAS, Landlord is the tenant of the property known as 1954 Innerbelt
Business Center Drive, located in St. Louis County, Missouri, as more
particularly shown on Exhibit A attached hereto and incorporated herein by
reference (the "Building"); and

         WHEREAS, Landlord hag agreed to sublease the portion of the Building
outlined in pink on Exhibit A attached hereto and incorporated herein by
reference (the "Premises") to Tenant.

         NOW, THEREFORE, in consideration of the premises, the mutual covenants,
promises and conditions set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows:

         1.       Sublease. Landlord hereby subleases the Premises to Tenant and
Tenant hereby subleases the Premises from Landlord for the term, at the rental,
and upon all the conditions set forth herein. This agreement constitutes a
sublease, and Tenant acknowledges that Landlord interest in the Building is as
a tenant under a written lease with State of California Public Employees
Retirement System (the "Prime Lessor"), dated July 26, 1986 and amended seven
(7) times (the "Prime Lease"), a copy of which along with all amendments is
attached hereto, marked Exhibit B and incorporated herein by reference. Except
as provided herein, this Sublease is expressly made subject to all the terms and
conditions of the Prime Lease, and, insofar as they relate to the Premises or
the use and occupancy thereof, Tenant agrees to observe and comply with all
covenants and obligations of Landlord under the Prime Lease.

         2.       Term. The term of this Sublease (the "Term") shall commence
February 15, 2000, and expire on June 30, 2008.

         3.       Option to Renew. Subject to the terms and conditions set
forth herein, Tenant shall have the option to renew this Sublease for an
additional term of five (5) years commencing on the first day following the
expiration of the Term. So long as Tenant is not in default of a material
covenant under this Sublease, Tenant may renew this Sublease as provided
hereinabove upon giving Landlord written notice of such renewal not less than
nine (9) months prior to the expiration of the Term. Any renewal of this
Sublease shall be on the, same terms and conditions of this Sublease except
that the base rent payable during such renewal shall be determined pursuant to
Exhibit D to the Amended and Restated Lease attached as an exhibit to the 6th
Amendment to the Prime Lease.

         4.       Rental. Tenant shall pay to Landlord as base rent, commencing
on June 14, 2000 (the "Rental Commencement Date"), without deduction, setoff,
notice or demand, at c/o Robert Fox, NewSpace, Inc., 1960 Innerbelt Business
Center Drive, St. Louis, Missouri 63114 or at such other place as Landlord shall
designate from time to time by notice to Tenant, Thirteen Thousand Four Hundred
Fifty-Seven Dollars ($13,457.00) per month (based on $10,765 per square foot per
year) for each month during the first twelve (12) months of this Sublease
(prorated for the first partial month); Thirteen Thousand six Hundred Fourteen
($13,614.00) per month (based on $10.89) per square foot per year) for each
month from the thirteenth (13th) through the thirty-sixth (36th) months of the
term of this Sublease; Thirteen Thousand Nine Hundred Twenty Dollars
($13,920.00) per month (based on $11.136 per square foot per year) from the
thirty-seventh (37th) through the sixtieth (60th) months of the term of this
Sublease; and Fourteen Thousand Seventy-Five Dollars ($14,075.00) per month
(based on $11,26 per square foot per year) for each month from the sixty-first
(61st) month of the term of this Sublease through the Termination Date. For the
period commencing on the Rental Commencement Date and ending on the last day of
the month in which the Rental Commencement Date occurs, rental shall be
apportioned on the basis of the number of days in said month.

         5.       Additional Rent. As and for additional rent (the "Additional
Rent") for the Premises, Tenant shall pay Landlord, commencing on the Rental
commencement Date, CAM Expenses, increases, if any, in Property Taxes of the
Property Taxes paid by the Landlord under the Prime Lease in 2000, the Base
Year, and Insurance Costs incurred by the Landlord under the Prime Lease over
Insurance Costs incurred in 2000 (collectively, "Operating Costs"). Tenant shall
pay to Landlord as additional rent a prorata portion of the amounts payable by
Landlord as Operating Costs under the Prime Lease. The prorata amount shall be
determined by multiplying the total amount of Operating Costs that Landlord is
required to

                                       1
<PAGE>

pay under the Prime Lease by a fraction, the numerator of which is 15,000 and
the denominator of which is 40,749. Such additional rent shall be payable as and
when Operating Costs are payable by Landlord. If the Prime Lease provides for
the payment by Landlord of Operating Costs on the basis of an estimate thereof,
then as and when adjustments between estimated and actual operating Costs are
made under the Prime Lease, the obligations of Landlord and Tenant hereunder
shall be adjusted in a like manner; and if any such adjustment shall occur after
the expiration or earlier termination of the Term, then the obligations of
Landlord and Tenant under this Subsection 5 shall survive such expiration or
termination. Landlord shall, upon request by Tenant, furnish Tenant with copies
of all statements submitted to Landlord of actual or estimated Operating Costs
during the Term.

      In addition to the foregoing, Tenant shall pay Landlord as additional rent
the sum of Three Hundred Dollars ($300.00) on the Rental Commencement Date and
on each anniversary of the Rental Commencement Date during the term of this
Sublease in lieu of a security deposit. Additional Rent shall be due thirty (30)
days following Tenant's receipt thereof.

      6.    Quiet Enjoyment. So long as Tenant shall observe and perform the
covenants and agreements binding on it hereunder, Tenant shall, at all times
during the Term, peacefully and quietly have and enjoy possession of the
Premises without any encumbrance and hindrance by, from or through Landlord, or
anyone else lawfully claiming an interest in the Premises, subject, however, to
the terms and conditions of this Sublease.

      7.    Use of the Premises. Tenant warrants and represents to Landlord that
the Premises shall be used and occupied only for office, warehouse and
distribution purposes. Tenant shall occupy the Premises, conduct its business
and control its employees, agents and invitees in such a manner as is lawful and
reputable and without creating any nuisance. Tenant shall neither permit any
waste on the Premises, nor allow anything to be stored in the Premises which
would, in the reasonable opinion of Landlord, be extra hazardous on account of
fire, or which would in any way increase or render void the fire insurance on
the Premises.

      8.    Mechanic's Liens. Tenant shall have no authority, expressed or
implied, to create or place any lien or encumbrance of any kind or nature
whatsoever on, or in any manner to bind the interest of Landlord or Prime Lessor
in the Premises or to charge the rentals payable hereunder for any claim in
favor of any person dealing with the Tenant, including those who may furnish
materials or perform labor for any of Tenant's construction or repairs, and each
such claim shall affect and each such lien shall attach to, if at all, only the
leasehold interest granted to the Tenant herein. Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises, and that it will save and hold the Landlord and
Prime Lessor harmless from any and all liability, loss, damage, cost and expense
arising out of asserted claims or liens against the leasehold estate or against
the right, title and interest of Landlord and the Prime Lessor in the Building.

      9.    Estoppel Certificates. Upon delivery of the Premises to Tenant, and
thereafter within ten (10) days following the written request of Landlord or the
Prime Lessor, from time to time Tenant shall execute, acknowledge, and deliver
to Landlord or to Prime Lessor or Prime Lessor's mortgagee, proposed mortgagee
or proposed purchaser of the Building, an estoppel certificate stating whether
this Sublease is in full force and effect and whether any changes may have been
made to the original Sublease; whether there are any defaults by Landlord and,
if so, the nature of such defaults; whether rent has been paid more than thirty
(30) days in advance; whether there are any security deposits; and such other
matters pertaining to the status of this Sublease as Landlord or the Prime
Lessor may reasonably request.

      10.   Indemnification By Tenant. Tenant hereby releases Landlord and Prime
Lessor from any liability for any loss or damage of any kind or for any injury
or death of persons or damage to property of Tenant or any other person from any
cause whatsoever by reason of the use, occupancy or enjoyment of the Premises by
Tenant or any person therein holding under Tenant. Tenant shall indemnify,
defend and save harmless Landlord and Prime Lessor, and each of their officers,
directors, agents and employees, from all claims, actions, demands, damages,
costs, expenses and liabilities whatsoever, including reasonable attorneys'
fees, on account of any real or claimed loss, damage or liability occurring in
or at the Premises, or arising out of the use, occupancy or enjoyment of the
Premises, or occasioned in whole or in part by the act or omission of Tenant or
its agents, contractors, employees, guests or invitees; provided, however,
notwithstanding the foregoing, Tenant shall not be responsible for any of the
foregoing to the extent directly attributable to the gross negligence or
intentional misconduct of Landlord or Prime Lessor.

                                       2

<PAGE>

      11.   Insurance/Release

      (a)   Insurance Coverages and Amounts. Tenant shall, at all times during
the term of this Lease and at Tenant's sole cost and expense, obtain and keep
in force the insurance coverages and amounts set forth in this section. Tenant
shall maintain commercial general liability insurance, including contractual
liability, broad form property damage liability, fire legal liability, premises
and completed operations, and medical payments, with limits not less than one
million dollars ($1,000,000) per occurrence and aggregate, insuring against
claims for bodily injury, personal injury and property damage arising from the
use, occupancy or maintenance of the Premises and the Building. The policy shall
contain an exception to any pollution exclusion which insures damage or injury
arising out of heat, smoke or fumes from a hostile fire. Any general aggregate
shall apply on a per location basis. Tenant shall maintain business auto
liability insurance with limits not less than one million dollars ($1,000,000)
per accident covering owned, hired and non-owned vehicles used by Tenant. Tenant
shall maintain umbrella excess liability insurance on a following form basis in
excess of the required commercial general liability, business auto and employers
liability insurance with limits not less than two million dollars ($2,000,000)
per occurrence and aggregate. Tenant shall carry workers' compensation insurance
for all of its employees in statutory limits in the state in which the Property
is located and employers liability insurance which affords not less than five
hundred thousand dollars ($500,000) for each coverage. Tenant shall maintain all
risk property insurance for all personal property of Tenant and improvements,
fixtures and equipment constructed or installed by Tenant in the Premises in an
amount not less than the full replacement cost, which shall include business
income and extra expense coverage with limits not less than fifty percent (50%)
of gross revenues for a period of twelve (12) months. If required by Landlord,
Tenant shall maintain plate glass insurance coverage against breakage of plate
glass in the Premises. Any deductibles selected by Tenant shall be the sole
responsibility of Tenant.

      (b)   Insurance Requirements. All insurance and renewals thereof shall be
issued by companies with a rating of at least "A-" "VIII" or better in the
current edition of Best's Insurance Report and be licensed to do and doing
business in the state in which the Property is located. Each policy shall
expressly provide that the policy shall not be canceled or materially altered
without thirty (30) days prior written notice to Landlord and shall remain in
effect notwithstanding any such cancellation or alteration until such notice
shall have been given to Landlord and such thirty (30) days shall have expired.
All liability insurance (except employers liability) shall name Landlord and
any other parties designated by Landlord (including any investment manager,
asset manager or property manager) as an additional insured, shall be primary
and noncontributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on any act, omission, event or condition
that occurred or arose ) or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to Landlord. All property insurance shall name Landlord
as loss payee as respects Landlord's interest in any improvements and
betterments. Tenant shall deliver certificates of insurance, acceptable to
Landlord, to Landlord at least ten (10) days before the Commencement Date and at
least ten (10) days before expiration of each policy. If Tenant fails to insure
or fails to furnish any such insurance certificate, Landlord shall have the
right from time to time to effect such insurance for the benefit of Tenant or
Landlord or both of them, and Tenant shall pay to Landlord on written demand, as
additional rent, all premiums paid by Landlord.

      (c)   Subrogation. Tenant waives, on behalf of all insurers, under all
policies of property insurance now or hereafter carried by Tenant insuring or
covering the Premises, or any portion or any contents thereof, or any operations
therein, all rights of subrogation which any such insurer might otherwise, if at
all, have to any claims of Tenant against Landlord. Landlord waives, on behalf
of all insurers under all policies of property insurance now or hereafter
carried by Landlord insuring or covering the Property, or any portion or any
contents thereof, or any operations therein, all rights of subrogation which any
insurer might otherwise, if at all, have to any claims of Landlord against
Tenant. Tenant shall procure from each of the insurers under all policies of
property insurance now or hereafter carried by Tenant insuring or covering the
Premises, or any portion or any contents thereof, or any operations therein, a
waiver of all rights of subrogation which the insurer might otherwise, if at
all, have to any claims of Tenant against Landlord as required by this section
11.

      12.   Holding Over. Unless otherwise agreed to in writing by Landlord and
Tenant, if Tenant retains possession of the Premises, or any part thereof, after
termination or expiration of the Term, Tenant shall be deemed to be in default
hereunder, Landlord shall have any and all remedies provided for in this
Sublease and at law or in equity, and Tenant shall pay Landlord rent for the
time Tenant remains in possession at double the monthly rate in effect
immediately prior to such termination or expiration. The provisions of this

                                       3

<PAGE>

Section 14 do not exclude Landlord's right of re-entry or any other right
hereunder and such holding over shall be deemed to constitute a renewal or
extension of the Term.

      13.   Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be given on the date which is three
(3) days after being deposited in the United States Mail, registered or
certified mail, return receipt requested, postage prepaid, or if personally
delivered, upon actual receipt, addressed as follows:

      If to Landlord:       NewSpace, Inc.
                            1360 Innerbelt Business Center Drive
                            St. Louis, MO 63114

      If to Tenant:         Build-A-Bear Workshop, L.L.C.
                            1954 Innerbelt Business Center Drive
                            St. Louis, MO 63114

subject to the right of either party to designate a different address or notice
person by notice similarly given in accordance with the provision of this
paragraph 15.

      14.   Repairs and Maintenance. Tenant shall, at all times during the
term of this Sublease and at Tenant's sole cost and expense, maintain and repair
the Premises and every part thereof (except only the parts for which expressly
made the responsibility of the Landlord under the Prime Lease) and all
equipment, fixtures and improvements therein (including walls, floors, heating
and air conditioning systems, dock boards, truck doors, dock bumpers, plumbing
fixtures and equipment, electrical components and mechanical systems) and keep
all of the foregoing clean and in good order and operating condition, ordinary
wear and tear excepted. Tenant shall not damage the Premises or disturb the
integrity and support provided by any wall. Tenant shall, at Tenant's expense,
promptly repair any damage to the Premises caused by Tenant or any agent,
officer, employee, contractor, licensee or invitee of Tenant. Tenant shall take
good care of the Premises and keep the Premises free from dirt, rubbish, waste
and debris at all times. Tenant shall not overload the floors in the Premises
or exceed the load-bearing capacity of the floors in the Premises. Tenant shall,
at Tenant's expense, enter into a regularly scheduled preventive maintenance and
service contract with a maintenance contractor approved in writing by Landlord
for servicing all hot water, heating and air conditioning systems and equipment
in the Premises. The maintenance and service contract shall include all services
suggested by the equipment manufacturer and shall become effective (and Tenant
shall deliver a copy to Landlord) within thirty (30) days after the Commencement
Date. Sublessee shall, at the end of the term of this Sublease, surrender to
Landlord the Premises and all alterations, additions, fixtures and improvements
therein or thereto in the same condition as when received, ordinary wear and
tear excepted. Notwithstanding anything to the contrary contained in this
section, Tenant's obligation under this section shall not include making (i) any
repair or improvement necessitated by the negligence or willful misconduct of
Landlord, its agents, employees, servants or contractors; or (ii) any repair or
improvement caused by Landlord's failure to perform its obligations under the
Prime Lease or this Sublease, as the case may be.

      15.   Utility Services. Tenant shall pay, directly to the appropriate
supplier before delinquency, for all water, gas, heat, light, power, telephone,
sewer, refuse disposal and other utilities and services supplied to the
Premises, together with all taxes, assessments, surcharges and similar expenses
relating to such utilities and service. Tenant shall, at its expense, install
separate meters for such services. If any such utilities or services are jointly
metered with the Premises and the adjoining premises occupied by Landlord,
Landlord shall determine Tenant's share of the cost as such jointly metered
utilities and services based on Landlord's estimate of usage, and Tenant shall
pay as additional rent Tenant's share of the cost of such jointly metered
utilities and services to Landlord within twenty (20) days after receipt of
Landlord's written statement for such cost. Tenant shall furnish the Premises
with all telephone service, window washing, security service, janitor, scavenger
and disposal services, and other services required by Tenant for the use of the
Premises permitted by this Sublease. Tenant shall furnish all electric light
bulbs and tubes and restroom supplies used in the Premises. Landlord shall not
be in default under this Sublease or be liable for any damage or loss directly
or indirectly resulting from, nor shall the rent be abated or a constructive or
other eviction be deemed to have occurred by reason of, any interruption of or
failure to supply or delay in supplying any such utilities and services or any
limitation, curtailment, rationing or restriction on use of water, electricity,
gas or any resource or form of energy or other service serving the Premises,
whether such results from mandatory restrictions or voluntary compliance with
guidelines.

      16.   Eminent Domain. In the event title to the whole or a material part
of the Premises shall be lawfully condemned or taken in any manner for any
public or quasi-public use, this Sublease and estate hereby granted shall
forthwith cease and terminate as of the

                                        4
<PAGE>

date of vesting of title. Tenant hereby assigns to Prime Lessor Tenant's
interest in any award granted pursuant to this Section 17; provided, however,
nothing herein shall be deemed to give Prime Lessor any interest in or to
require Tenant to assign to Prime Lessor any award made to Tenant for the taking
of personal property or fixtures belonging to Tenant or for the interruption of
or damage to Tenant's business or for any funds awarded for Tenant's relocation.

      17.   Landlord's Remedies. All rights and remedies of Landlord herein
enumerated shall be cumulative, and none shall exclude any other right or remedy
allowed by law. In addition to the other remedies in this Sublease provided,
Landlord shall be entitled to the restraint by injunction of the violation or
attempted violation of any of the covenants, agreements or conditions of this
Sublease or the Prime Lease, and Landlord shall be entitled to recover all
direct and consequential damages arising out of or caused by Tenant's violation
of any of the covenants, agreements or conditions of this Sublease or the Prime
Lease.

      (a)   If Tenant shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of Tenant or of all or a substantial part of its
assets, (ii) file a voluntary petition in bankruptcy, (iii) make a general
assignment for the benefit of creditors, (iv) file a petition or an answer
seeking reorganization or arrangement with creditors or to take advantage of any
insolvency law, or (v) file an answer admitting the material allegations of a
petition filed against Tenant in any bankruptcy, reorganization or insolvency
proceeding, or if an order, judgment or decree shall be entered by any court of
competent jurisdiction adjudicating Tenant a bankrupt or insolvent or approving
a petition seeking reorganization of Tenant or appointing a receiver, trustee or
liquidator of Tenant or of all or a substantial part of its assets, then, in any
of such events, Landlord may terminate this Sublease by giving written notice to
Tenant, and upon the giving of such notice the term of this Sublease and all
right, title and interest of Tenant hereunder shall expire as fully and
completely as if that day were the date herein specifically fixed for the
expiration of the term.

      (b)   If Tenant defaults in the payment of rent or Additional Rent and
such default continues for ten (10) days after written notice to Tenant, or if
Tenant defaults in the prompt and full performance of any other provision of
this Sublease, and if such other default continues for thirty (30) days after
written notice, or if the leasehold interest of Tenant be levied upon under
execution or be attached by process of law, then, and in any such event,
Landlord may, at its election, either terminate this Sublease and Tenant's right
to possession of the Premises, or, without terminating this Sublease, re-enter
and endeavor to relet the Premises. Nothing herein shall relieve Tenant of any
obligation, including the payment of rent and Additional Rent, as provided in
this Sublease.

      (c)   Upon any termination of this Sublease, Tenant shall surrender
possession and vacate the Premises immediately, and deliver possession thereof
to Landlord, and Tenant hereby grants to Landlord full and free license to enter
into and upon the Premises in such event and to repossess the Premises, and to
expel or remove Tenant and any others who may be occupying or within the
Premises, and to remove any and all property therefrom, using such force as may
be allowed by law, without being deemed in any manner guilty of trespass,
eviction or forcible entry or detainer, and without relinquishing Landlord's
right to rent and Additional Rent, or any other right given to Landlord
hereunder or by operation of law.

      (d)   If Landlord elects, without terminating the Sublease, to endeavor to
relet the Premises, Landlord may, at Landlord's option, enter into the Premises
and take and hold possession thereof, without such entry and possession
terminating the Sublease or releasing Tenant, in whole or in part, from Tenant's
obligation to pay rent and Additional Rent hereunder for the full Term as
hereinafter provided. Upon and after entry into possession without termination
of the Sublease, Landlord shall endeavor in good faith (but without being
obligated to incur out of pocket costs as part of such endeavor) to relet the
Premises for the account of Tenant to any person, firm or corporation other than
Tenant for such rent, for such time and upon such terms as Landlord shall
determine to be reasonable. In any such case, Landlord may make repairs in or to
the Premises as are necessary to restore the Premises to as good a condition as
existed at the commencement date of this Sublease, and Tenant shall, upon
demand, pay the cost thereof, together with Landlord's expenses of the
reletting. If the consideration collected by Landlord upon any such reletting
for Tenant's account is not sufficient to pay monthly the full amount of the
rent and Additional Rent reserved in this Sublease, together with the cost of
repairs and Landlord's expenses, Tenant shall pay to Landlord the amount of each
monthly deficiency upon demand.

      (e)  If Landlord elects to terminate this Sublease pursuant to this
Section 19, it being understood that Landlord may elect to terminate the
Sublease after and notwithstanding its election to terminate Tenant's right to
possession provided in Section 19(b) above. Landlord shall forthwith upon such
termination be entitled to recover an amount equal to the

                                       5

<PAGE>

damages sustained by Landlord as a result of Tenant's default hereunder, and in
addition thereto, an amount equal to the rent provided in this Sublease for the
residue of the Term, less the current rental value of the Premises for the
residue of the Term.

      (f)   Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of this Sublease or of law, to which Tenant
is or may be entitled, may be handled, removed or stored by Landlord at the
risk, cost and expense of Tenant, and Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof, Tenant shall pay to
Landlord, upon demand, any and all expenses incurred in such removal and all
storage charges against such property so long as the same shall be in Landlord's
possession or under Landlord's control. Any such property of Tenant not removed
from the Premises or retaken from storage by Tenant within thirty (30) days
after the end of the Term or of Tenant's right to possession of the Premises,
however terminated, shall be conclusively deemed to have been forever abandoned
by Tenant and either may be retained by Landlord as its property, or may be
disposed of in such manner as Landlord may see fit.

      18.   Subordination of Sublease. This Sublease is and shall be subject and
subordinate to any and all mortgages, deeds of trust or land leases now existing
upon or that may be hereafter placed upon the Premises, and to all advances made
or to be made thereon, and all renewals, modifications, consolidations,
replacements or extensions thereof, and the lien of any such mortgages, deeds of
trust and land leases shall be superior to all rights hereby or hereunder vested
in Tenant, to the full extent of all sums secured thereby. This provision shall
be self-operative, and no further instrument of subordination shall be
necessary to effectuate such subordination; and the recording of any such
mortgage, deed of trust or land lease shall have preference and precedence and
be superior and prior in lien to this Sublease, irrespective of the date of
recording. In confirmation of such subordination, Tenant shall within ten (10)
days after request of Landlord, Prime Lessor, or the holder of any such
mortgage, deed of trust, or land lease, execute and deliver to Landlord, Prime
Lessor or such holder, as the case may be, any instrument acknowledging such
subordination that Landlord, Prime Lessor or such holder may reasonably request.
Tenant agrees to attorn to any person or entity who may acquire title to the
Building by way of transfer or foreclosure provided that such transferee or
purchaser agrees to recognize Tenant's rights under this Sublease so long as
Tenant is not in default in any of its obligations hereunder. Tenant shall also,
within twenty (20) days after Landlord's or Prime Lessor's request, execute an
attornment agreement evidencing the obligations of Tenant herein to attorn to
such mortgagee in the event of a future succession of the rights of Landlord
herein to any mortgagee, deed of trust holder or land lessor of the Premises. In
the event of any act or omission of Landlord constituting a default by Landlord,
Tenant shall not exercise any remedy until Tenant has given Landlord, Prime
Lessor and any mortgagee, deed of trust holder or land lessor of the Building a
prior thirty (30) day written notice of such act or omission; provided, however,
if such act or omission cannot, with due diligence and in good faith, be
remedied within such thirty (30) day period, Landlord, Prime Lessor and any
mortgagee, deed of trust holder or land lessor shall be allowed such further
period of time as may be reasonably necessary provided that it commences
remedying the same with due diligence and in good faith within said thirty (30)
day period.

      19.   Prevailing Party. In the event of litigation between Landlord and
Tenant in connection with this Sublease, in addition to any other relief therein
granted, the prevailing party shall be entitled to judgment for reasonable
attorneys' fees, costs of litigation, and court costs incurred therein.

      20.   Governing Law. This sublease has been made and executed in the
County of St. Louis, State of Missouri, and shall be governed and construed in
accordance with the laws of the State of Missouri without regard to its conflict
of laws provisions.

      21.   Act of God or Force Majeure. Landlord or Tenant shall not be
required to perform any covenant or obligation in this Sublease or be liable in
damages for its nonperformance, so long as the performance or non-performance of
the covenant or obligation is delayed, caused or prevented by an act of God or
force majeure or by the other party. An "act of God" or "force majeure" is
defined for purposes of this Sublease as strikes, lockouts, sitdowns, material
or labor restrictions by any governmental authority, unusual transportation
delays, riots, floods, washouts, explosions, earthquakes, fire, storms, weather
(including wet grounds or inclement weather which prevents construction), acts
of the public enemy, wars, insurrections and any other cause not reasonably
within the control of the party required to perform and which by the exercise of
due diligence the party required to perform is unable to prevent or overcome.
The foregoing provisions of this Section 23 shall not apply, however, to
Tenant's obligation to timely pay rent, Additional Rent or any other monies
payable by Tenant under this Sublease.

                                       6
<PAGE>

      22. Severability. The invalidity of any provision of this Sublease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.

      23. Assignment and Sublease. Tenant shall not voluntarily or by operation
of law assign or encumber any interest in this Sublease, or sublet any part of
the Premises, without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed.

      IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of
the day and year first above written.

LANDLORD:                               NEWSPACE, INC.,
                                        a Missouri corporation

                                        By: /s/ [ILLEGIBLE]
                                            -----------------------------------
                                        Its: CEO

TENANT:                                 BUILD-A-BEAR WORKSHOP, L.L.C.,
                                        a Missouri limited liability company

                                        By: Maxine Clark
                                            -----------------------------------
                                        Its: Manager



                                       7
<PAGE>

                                    EXHIBIT B

                                    SUBLEASE

                                  (SPACE 1990)

      THIS SUBLEASE ("Sublease") is made and entered into as of the 4/10 day of
April, 2000, by and between NewSpace, Inc., a Missouri corporation ("Landlord"),
and Build-A-Bear Workshop, Inc., a Delaware corporation ("Tenant").

      WITNESSETH, THAT;

      WHEREAS, Landlord is the tenant of the property known as 1990 Innerbelt
Business Center Drive, located in St. Louis County, Missouri (the "Premises");
and

      WHEREAS, Landlord has agreed to sublease the Premises to Tenant.

      NOW, THEREFORE, in consideration of the premises, the mutual covenants,
promises and conditions set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows:

      1. Sublease. Landlord hereby subleases the Premises to Tenant and Tenant
hereby subleases the Premises from Landlord for the term, at the rental, and
upon all the conditions set forth herein. This agreement constitutes a sublease,
and Tenant acknowledges that Landlord's interest in the Building is as a tenant
under a written lease with state of California Public Employees Retirement
System (the "Prime Lessor"), dated July 26, 1986 and amended eight (8) times
(the "Prime Lease"), a copy of which along with all amendments is attached
hereto, marked Exhibit B and incorporated herein by reference. Except as
provided herein, this Sublease is expressly made subject to all the terms and
conditions of the Prime Lease, and, insofar as they relate to the Premises or
the use and occupancy thereof, Tenant agrees to observe and comply with all
covenants and obligations of Landlord under the Prime Lease.

      2. Term. The term of this Sublease (the "Term") shall commence April 10,
2000, and expire on June 30, 2003 unless extended as hereinafter provided.

      3. Option to Renew. Subject to the terms and conditions set forth herein,
Tenant shall have the option to renew this Sublease for two additional terms of
five (5) years each commencing on the first day following the expiration of the
immediately preceding Term. So long as Tenant is not in default of a material
covenant under this Sublease, Tenant may renew this Sublease as provided
hereinabove upon giving Landlord written notice of such renewal not less than
nine (9) months prior to the expiration of the initial Term or the renewal term,
as appropriate. Any renewal of this Sublease shall be on the same terms and
conditions of this Sublease except that the base rent payable during such
renewal shall be the Fair Market Rental Rate determined in accordance with
Paragraph 16(d) of the Amended and Restated Lease attached as Exhibit 4 to the
6th Amendment to the Prime Lease with respect to the Premises.

      4. Rental. Tenant shall pay to Landlord as base rent, commencing on June
14, 2000 (the "Rental Commencement Date"), without deduction, setoff, notice or
demand, at c/o Robert Fox, NewSpace, Inc., 1960 Innerbelt Business Center Drive,
St. Louis, Missouri 63114 or at such other place as Landlord shall designate
from time to time by notice to Tenant, Two Thousand Six Hundred Seventy-Nine and
63/100 Dollars ($2,679.63) per month for each month during Term of this
Sublease. For the period commencing on the Rental Commencement Date and ending
on the last day of the month in which the Rental Commencement Date occurs,
rental shall be apportioned on the basis of the number of days in said month.

      5. Additional Rent. As and for additional rent (the "Additional Rent") for
the Premises, Tenant shall pay Landlord, commencing on the Rental Commencement
Date, CAM Expenses, increases, if any, in Property Taxes of the Property Taxes
paid by the Landlord under the Prime Lease in 2000, the Base Year, and Insurance
Costs incurred by the Landlord under the Prime Lease over Insurance Costs
incurred in 2000 (collectively, "Operating Costs"). The Tenant's prorata amount
of Operating Costs shall be determined by multiplying the total amount of
Operating Coats that Landlord is required to pay under the Prime Lease by a
fraction, the numerator of which is 4,946 and the denominator of which is
45,696. Such additional rent shall be payable as and when Operating Costs are
payable by Landlord under the Prime Lease. If the Prime Lease provides for the
payment by Landlord of operating Costs on the basis of an estimate thereof, then
as and when adjustments between estimated and actual Operating Costs are made
under the Prime Lease, the obligations of Landlord and Tenant hereunder shall be
adjusted in a like manner; and if any such adjustment shall occur after the
expiration or earlier termination of the Term, then the obligations of Landlord
and Tenant under this Subsection 5 shall survive such expiration or termination.
Landlord shall,

                                       1

<PAGE>

upon request by Tenant, furnish Tenant with copies of all statements submitted
to Landlord of actual or estimated Operating Costs during the Term.

      6. Quiet Enjoyment. So long as Tenant shall observe and perform the
covenants and agreements binding on it hereunder, Tenant shall, at all times
during the Term, peacefully and quietly have and enjoy possession of the
Premises without any encumbrance and hindrance by, from or through Landlord, or
anyone else lawfully claiming an interest in the Premises, subject, however, to
the terms and conditions of this Sublease.

      7. Use of the Premises. Tenant warrants and represents to Landlord that
the Premises shall be used and occupied for the repository of goods to be sold
on the Internet (but not for retail sales to the public from the Premises).
Tenant shall occupy the Premises, conduct its business and control its
employees, agents and invitees in such a manner as is lawful and reputable and
without creating any nuisance. Tenant shall neither permit any waste on the
Premises, nor allow anything to be stored in the Premises which would, in the
reasonable opinion of Landlord, be extra hazardous on account of fire, or which
would in any way increase or render void the fire insurance on the Premises.

      8. As-Is Condition. Tenant acknowledges that it has inspected the Premises
or has had the Premises inspected by professional consultants retained by
Tenant. Tenant is familiar with the condition of the Premises, and the Premises
is acceptable to Tenant and Tenant accepts the Premises "AS IS". Tenant agrees
to remove all alterations, additions, fixtures and improvements made by it to
the Premises upon the expiration or earlier termination of this Sublease and
restore the Premises to the condition in which the Premises existed before such
alterations, additions, fixtures and improvements were made by Tenant to the
Premises.

      9. Mechanic's Liens. Tenant shall have no authority, expressed or
implied, to create or place any lien or encumbrance of any kind or nature
whatsoever on, or in any manner to bind the interest of Landlord or Prime Lessor
in the Premises or to charge the rentals payable hereunder for any claim in
favor of any person dealing with the Tenant, including those who may furnish
materials or perform labor for any of Tenant's construction or repairs, and each
such claim shall affect and each such lien shall attach to, if at all, only the
leasehold interest granted to the Tenant herein. Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises, and that it will save and hold the Landlord and
Prime Lessor harmless from any and all liability, loss, damage, cost and expense
arising out of asserted claims or liens against the leasehold estate or against
the right, title and interest of Landlord and the Prime Lessor in the Building.

      10. Estoppel Certificates. Upon delivery of the Premises to Tenant, and
thereafter within ten (10) days following the written request of Landlord or the
Prime Lessor, from time to time Tenant shall execute, acknowledge, and deliver
to Landlord or to Prime Lessor or Prime Lessor's mortgagee, proposed mortgagee
or proposed purchaser of the Building, an estoppel certificate stating whether
this Sublease is in full force and effect and whether any changes may have been
made to the original Sublease; whether there are any defaults by Landlord and,
if so, the nature of such defaults; whether rent has been paid more than thirty
(30) days in advance; whether there are any security deposits; and such other
matters pertaining to the status of this Sublease as Landlord or the Prime
Lessor may reasonably request.

      11. Indemnification By Tenant. Tenant hereby releases Landlord and Prime
Lessor from any liability for any loss or damage of any kind or for any injury
or death of persons or damage to property of Tenant or any other person from any
cause whatsoever by reason of the use, occupancy or enjoyment of the Premises by
Tenant or any person therein holding under Tenant. Tenant shall indemnify,
defend and save harmless Landlord and Prime Lessor, and each of their officers,
directors, agents and employees, from all claims, actions, demands, damages,
costs, expenses and liabilities whatsoever, including reasonable attorneys'
fees, on account of any real or claimed loss, damage or liability occurring in
or at the Premises, or arising out of the use, occupancy or enjoyment of the
Premises, or occasioned in whole or in part by the act or omission of Tenant or
its agents, contractors, employees, guests or invitees; provided, however,
notwithstanding the foregoing, Tenant shall not be responsible for any of the
foregoing to the extent directly attributable to the gross negligence or
intentional misconduct of Landlord or Prime Lessor.

      12. Insurance/Release

      (a) Insurance Coverages and Amounts. Tenant shall, at all times during
the term of this Lease and at Tenant's sole cost and expense, obtain and keep in
force the insurance

                                       2

<PAGE>

coverages and amounts set forth in this section. Tenant shall maintain
commercial general liability insurance, including contractual liability, broad
form property damage liability, fire legal liability, premises and completed
operations, and medical payments, with limits not less than one million dollars
($1,000,000) per occurrence and aggregate, insuring against claims for bodily
injury, personal injury and property damage arising from the use, occupancy or
maintenance of the Premises and the Building. The policy shall contain an
exception to any pollution exclusion which insures damage or injury arising out
of heat, smoke or fumes from a hostile fire. Any general aggregate shall apply
on a per location basis. Tenant shall maintain business auto liability insurance
with limits not less than one million dollars ($1,000,000) per accident covering
owned, hired and non-owned vehicles used by Tenant. Tenant shall maintain
umbrella excess liability insurance on a following form basis in excess of the
required commercial general liability, business auto and employers liability
insurance with limits not less than two million dollars ($2,000,000) per
occurrence and aggregate. Tenant shall carry workers' compensation insurance for
all of its employees in statutory limits in the state in which the Property is
located and employers liability insurance which affords not less than five
hundred thousand dollars ($500,000) for each coverage. Tenant shall maintain all
risk property insurance for all personal property of Tenant and improvements,
fixtures and equipment constructed or installed by Tenant in the Premises in an
amount not less than the full replacement cost, which shall include business
income and extra expense coverage with limits not less than fifty percent (50%)
of gross revenues for a period of twelve (12) months. If required by Landlord,
Tenant shall maintain plate glass insurance coverage against breakage of plate
glass in the Premises. Any deductibles selected by Tenant shall be the sole
responsibility of Tenant.

      (b) Insurance Requirements. All insurance and renewals thereof shall be
issued by companies with a rating of at least "A-" "VIII" or better in the
current edition of Best's Insurance Report and be licensed to do and doing
business in the state in which the Property is located. Each policy shall
expressly provide that the policy shall not be canceled or materially altered
without thirty (30) days prior written notice to Landlord and shall remain in
effect notwithstanding any such cancellation or alteration until such notice
shall have been given to Landlord and such thirty (30) days shall have expired.
All liability insurance (except employers liability) shall name Landlord and any
other parties designated by Landlord (including any investment manager, asset
manager or property manager) as an additional insured, shall be primary and
noncontributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on any act, omission, event or condition
that occurred or arose )or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to Landlord. All property insurance shall name Landlord
as loss payee as respects Landlord's interest in any improvements and
betterments. Tenant shall deliver certificates of insurance, acceptable to
Landlord, to Landlord at least ten (10) days before the Commencement Date and at
least ten (10) days before expiration of each policy. If Tenant fails to insure
or fails to furnish any such insurance certificate, Landlord shall have the
right from time to time to effect such insurance for the benefit of Tenant or
Landlord or both of them, and Tenant shall pay to Landlord on written demand, as
additional rent, all premiums paid by Landlord.

      (c) Subrogation. Tenant waives, on behalf of all insurers, under all
policies of property insurance now or hereafter carried by Tenant insuring or
covering the Premises, or any portion or any contents thereof, or any operations
therein, all rights of subrogation which any such insurer might otherwise, if at
all, have to any claims of Tenant against Landlord. Landlord waives, on behalf
of all insurers under all policies of property insurance now or hereafter
carried by Landlord insuring or covering the Property, or any portion or any
contents thereof, or any operations therein, all rights of subrogation which any
insurer might otherwise, if at all, have to any claims of Landlord against
Tenant. Tenant shall procure from each of the insurers under all policies of
property insurance now or hereafter carried by Tenant insuring or covering the
Premises, or any portion or any contents thereof, or any operations therein, a
waiver of all rights of subrogation which the insurer might otherwise, if at
all, have to any claims of Tenant against Landlord as required by this section
11.

      13. Holding Over. Unless otherwise agreed to in writing by Landlord and
Tenant, if Tenant retains possession of the Premises, or any part thereof, after
termination or expiration of the Term, Tenant shall be deemed to be in default
hereunder, Landlord shall have any and all remedies provided for in this
Sublease and at law or in equity, and Tenant shall pay Landlord rent for the
time Tenant remains in possession at double the monthly rate in effect
immediately prior to such termination or expiration. The provisions of this
Section 14 do not exclude Landlord's right of re-entry or any other right
hereunder and such holding over shall be deemed to constitute a renewal or
extension of the Term.

                                       3

<PAGE>

      14. Notices. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be given on the date which is three (3)
days after being deposited in the United States Mail, registered or certified
mail, return receipt requested, postage prepaid, or if personally delivered,
upon actual receipt, addressed as follows:

        If to Landlord:       NewSpace, Inc.
                              1960 Innerbelt Business Center Drive
                              St. Louis, MO 63114

        If to Tenant:         Build-A-Bear Workshop, L.L.C.
                              1954 Innerbelt Business Center Drive
                              St. Louis, MO 63114

subject to the right of either party to designate a different address or notice
person by notice similarly given in accordance with the provision of this
paragraph 15.

      15. Repairs and Maintenance. Tenant shall, at all times during the term
of this Sublease and at Tenant's sole cost and expense, maintain and repair the
Premises and every part thereof (except only the parts for which expressly made
the responsibility of the Landlord under the Prime Lease) and all equipment,
fixtures and improvements therein (including walls, floors, heating and air
conditioning systems, dock boards, truck doors, dock bumpers, plumbing fixtures
and equipment, electrical components and mechanical systems) and keep all of the
foregoing clean and in good order and operating condition, ordinary wear and
tear excepted. Tenant shall not damage the Premises or disturb the integrity and
support provided by any wall. Tenant shall, at Tenant's expense, promptly repair
any damage to the Premises caused by Tenant or any agent, officer, employee,
contractor, licensee or invitee of Tenant. Tenant shall take good care of the
Premises and keep the Premises free from dirt, rubbish, waste and debris at all
times. Tenant shall not overload the floors in the Premises or exceed the
load-bearing capacity of the floors in the Premises. Tenant shall, at Tenant's
expense, enter into a regularly scheduled preventive maintenance and service
contract with a maintenance contractor approved in writing by Landlord for
servicing all hot water, heating and air conditioning systems and equipment in
the Premises. The maintenance and service contract shall include all services
suggested by the equipment manufacturer and shall become effective (and Tenant
shall deliver a copy to Landlord) within thirty (30) days after the Commencement
Date. Sublessee shall, at the end of the term of this Sublease, surrender to
Landlord the Premises and all alterations, additions, fixtures and improvements
therein or thereto in the same condition as when received, ordinary wear and
tear excepted. Notwithstanding anything to the contrary contained in this
section, Tenant's obligation under this section shall not include making (i) any
repair or improvement necessitated by the negligence or willful misconduct of
Landlord, its agents, employees, servants or contractors; or (ii) any repair or
improvement caused by Landlord's failure to perform its obligations under the
Prime Lease or this Sublease, as the case may be.

      16. Utility Services. Tenant shall pay, directly to the appropriate
supplier before delinquency, for all water, gas, heat, light, power, telephone,
sewer, refuse disposal and other utilities and services supplied to the
Premises, together with all taxes, assessments, surcharges and similar expenses
relating to such utilities and service. Tenant shall, at its expense, install
separate meters for such services. If any such utilities or services are jointly
metered with the Premises and the adjoining premises occupied by Landlord,
Landlord shall determine Tenant's share of the cost as such jointly metered
utilities and services based on Landlord's estimate of usage, and Tenant shall
pay as additional rent Tenant's share of the cost of such jointly metered
utilities and services to Landlord within twenty (20) days after receipt of
Landlord's written statement for such cost. Tenant shall furnish the Premises
with all telephone service, window washing, security service, janitor, scavenger
and disposal services, and other services required by Tenant for the use of the
Premises permitted by this Sublease. Tenant shall furnish all electric light
bulbs and tubes and restroom supplies used in the Premises. Landlord shall not
be in default under this Sublease or be liable for any damage or loss directly
or indirectly resulting from, nor shall the rent be abated or a constructive or
other eviction be deemed to have occurred by reason of, any interruption of or
failure to supply or delay in supplying any such utilities and services or any
limitation, curtailment, rationing or restriction on use of water, electricity,
gas or any resource or form of energy or other service serving the Premises,
whether such results from mandatory restrictions or voluntary compliance with
guidelines.

      17. Eminent Domain. In the event title to the whole or a material part of
the Premises shall be lawfully condemned or taken in any manner for any public
or quasi-public use, this Sublease and estate hereby granted shall forthwith
cease and terminate as of the date of vesting of title. Tenant hereby assigns to
Prime Lessor Tenant's interest in any award granted pursuant to this Section 17;
provided, however, nothing herein shall be deemed to give Prime Lessor any
interest in or to require Tenant to assign to Prime Lessor any award

                                       4

<PAGE>

made to Tenant for the taking of personal property or fixtures belonging to
Tenant or for the interruption of or damage to Tenant's business or for any
funds awarded for Tenant's relocation.

      18. Landlord's Remedies. All rights and remedies of Landlord herein
enumerated shall be cumulative, and none shall exclude any other right or remedy
allowed by law. In addition to the other remedies in this Sublease provided,
Landlord shall be entitled to the restraint by injunction of the violation or
attempted violation of any of the covenants, agreements or conditions of this
Sublease or the Prime Lease, and Landlord shall be entitled to recover all
direct and consequential damages arising out of or caused by Tenant's violation
of any of the covenants, agreements or conditions of this Sublease or the Prime
Lease.

      (a) If Tenant shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of Tenant or of all or a substantial part of its
assets, (ii) file a voluntary petition in bankruptcy, (iii) make a general
assignment for the benefit of creditors, (iv) file a petition or an answer
seeking reorganization or arrangement with creditors or to take advantage of any
insolvency law, or (v) file an answer admitting the material allegations of a
petition filed against Tenant in any bankruptcy, reorganization or insolvency
proceeding, or if an order, judgment or decree shall be entered by any court of
competent jurisdiction adjudicating Tenant a bankrupt or insolvent or approving
a petition seeking reorganization of Tenant or appointing a receiver, trustee or
liquidator of Tenant or of all or a substantial part of its assets, then, in any
of such events, Landlord may terminate this Sublease by giving written notice to
Tenant, and upon the giving of such notice the term of this Sublease and all
right, title and interest of Tenant hereunder shall expire as fully and
completely as if that day were the date herein specifically fixed for the
expiration of the term.

      (b) If Tenant defaults in the payment of rent or Additional Rent and such
default continues for ten (10) days after written notice to Tenant, or if Tenant
defaults in the prompt and full performance of any other provision of this
Sublease, and if such other default continues for thirty (30) days after written
notice, or if the leasehold interest of Tenant be levied upon under execution or
be attached by process of law, then, and in any such event, Landlord may, at its
election, either terminate this Sublease and Tenant's right to possession of the
Premises, or, without terminating this Sublease, re-enter and endeavor to relet
the Premises. Nothing herein shall relieve Tenant of any obligation, including
the payment of rent and Additional Rent, as provided in this Sublease.

      (c) Upon any termination of this Sublease, Tenant shall surrender
possession and vacate the Premises immediately, and deliver possession thereof
to Landlord, and Tenant hereby grants to Landlord full and free license to enter
into and upon the Premises in such event and to repossess the Premises, and to
expel or remove Tenant and any others who may be occupying or within the
Premises, and to remove any and all property therefrom, using such force as may
be allowed by law, without being deemed in any manner guilty of trespass,
eviction or forcible entry or detainer, and without relinquishing Landlord's
right to rent and Additional Rent, or any other right given to Landlord
hereunder or by operation of law.

      (d) If Landlord elects, without terminating the Sublease, to endeavor to
relet the Premises, Landlord may, at Landlord's option, enter into the Premises
and take and hold possession thereof, without such entry and possession
terminating the Sublease or releasing Tenant, in whole or in part, from Tenant's
obligation to pay rent and Additional Rent hereunder for the full Term as
hereinafter provided. Upon and after entry into possession without termination
of the Sublease, Landlord shall endeavor in good faith (but without being
obligated to incur out of pocket costs as part of such endeavor) to relet the
Premises for the account of Tenant to any person, firm or corporation other than
Tenant for such rent, for such time and upon such terms as Landlord shall
determine to be reasonable. In any such case, Landlord may make repairs in or to
the Premises as are necessary to restore the Premises to as good a condition as
existed at the commencement date of this Sublease, and Tenant shall, upon
demand, pay the cost thereof, together with Landlord's expenses of the
reletting. If the consideration collected by Landlord upon any such reletting
for Tenant's account is not sufficient to pay monthly the full amount of the
rent and Additional Rent reserved in this Sublease, together with the cost of
repairs and Landlord's expenses, Tenant shall pay to Landlord the amount of each
monthly deficiency upon demand.

      (e) If Landlord elects to terminate this Sublease pursuant to this Section
19, it being understood that Landlord may elect to terminate the Sublease after
and notwithstanding its election to terminate Tenant's right to possession
provided in Section 19 (b) above, Landlord shall forthwith upon such termination
be entitled to recover an amount equal to the damages sustained by Landlord as a
result of Tenant's default hereunder, and in addition thereto, an amount equal
to the rent provided in this Sublease for the residue of the Term, less the
current rental value of the Premises for the residue of the Term.

                                       5

<PAGE>

      (f) Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of this Sublease or of law, to which Tenant
is or may be entitled, may be handled, removed or stored by Landlord at the
risk, cost and expense of Tenant, and Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof. Tenant shall pay to
Landlord, upon demand, any and all expenses incurred in such removal and all
storage charges against such property so long as the same shall be in Landlord's
possession or under Landlord's control. Any such property of Tenant not removed
from the Premises or retaken from storage by Tenant within thirty (30) days
after the end of the Term or of Tenant's right to possession of the Premises,
however terminated, shall be conclusively deemed to have been forever abandoned
by Tenant and either may be retained by Landlord as its property, or may be
disposed of in such manner as Landlord may see fit.

      19. Subordination of Sublease. This Sublease is and shall be subject and
subordinate to any and all mortgages, deeds of trust or land leases now existing
upon or that may be hereafter placed upon the Premises, and to all advances made
or to be made thereon, and all renewals, modifications, consolidations,
replacements or extensions thereof, and the lien of any such mortgages, deeds of
trust and land leases shall be superior to all rights hereby or hereunder vested
in Tenant, to the full extent of all sums secured thereby. This provision shall
be self-operative, and no further instrument of subordination shall be necessary
to effectuate such subordination; and the recording of any such mortgage, deed
of trust or land lease shall have preference and precedence and be superior and
prior in lien to this Sublease, irrespective of the date of recording. In
confirmation of such subordination, Tenant shall within ten (10) days after
request of Landlord, Prime Lessor, or the holder of any such mortgage, deed of
trust, or land lease, execute and deliver to Landlord, Prime Lessor or such
holder, as the case may be, any instrument acknowledging such subordination that
Landlord, Prime Lessor or such holder may reasonably request. Tenant agrees to
attorn to any person or entity who may acquire title to the Building by way of
transfer or foreclosure provided that such transferee or purchaser agrees to
recognize Tenant's rights under this Sublease so long as Tenant is not in
default in any of its obligations hereunder. Tenant shall also, within twenty
(20) days after Landlord's or Prime Lessor's request, execute an attornment
agreement evidencing the obligations of Tenant herein to attorn to such
mortgagee in the event of a future succession of the rights of Landlord herein
to any mortgagee, deed of trust holder or land lessor of the Premises. In the
event of any act or omission of Landlord constituting a default by Landlord,
Tenant shall not exercise any remedy until Tenant has given Landlord, Prime
Lessor and any mortgagee, deed of trust holder or land lessor of the Building a
prior thirty (30) day written notice of such act or omission; provided, however,
if such act or omission cannot, with due diligence and in good faith, be
remedied within such thirty (30) day period, Landlord, Prime Lessor and any
mortgagee, deed of trust holder or land lessor shall be allowed such further
period of time as may be reasonably necessary provided that it commences
remedying the same with due diligence and in good faith within said thirty (30)
day period.

      20. Prevailing Party. In the event of litigation between Landlord and
Tenant in connection with this Sublease, in addition to any other relief
therein granted, the prevailing party shall be entitled to judgment for
reasonable attorneys' fees, costs of litigation, and court costs incurred
therein.

      21. Governing Law. This Sublease has been made and executed in the County
of St. Louis, State of Missouri, and shall be governed and construed in
accordance with the laws of the State of Missouri without regard to its conflict
of laws provisions.

      22. Act of God or Force Majeure. Landlord or Tenant shall not be required
to perform any covenant or obligation in this Sublease or be liable in damages
for its nonperformance, so long as the performance or non-performance of the
covenant or obligation is delayed, caused or prevented by an act of God or force
majeure or by the other party. An "act of God" or "force majeure" is defined for
purposes of this Sublease as strikes, lockouts, sitdowns, material or labor
restrictions by any governmental authority, unusual transportation delays,
riots, floods, washouts, explosions, earthquakes, fire, storms, weather
(including wet grounds or inclement weather which prevents construction), acts
of the public enemy, wars, insurrections and any other cause not reasonably
within the control of the party required to perform and which by the exercise of
due diligence the party required to perform is unable Co prevent or overcome.
The foregoing provisions of this Section 23 shall not apply, however, to
Tenant's obligation to timely pay rent, Additional Rent or any other monies
payable by Tenant under this Sublease.

      23. Severability. The invalidity of any provision of this Sublease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.

                                       6

<PAGE>

      24. Assignment and Sublease. Tenant shall not voluntarily or by operation
of law assign or encumber any interest in this Sublease, or sublet any part of
the Premises, without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed.

      IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of
the day and year first above written.

LANDLORD:                                  NEWSPACE, INC.,
                                           a Missouri corporation

                                           By: /s/ Robert Fox
                                               --------------------------------
                                           Its: CEO

TENANT:                                    BUILD-A-BEAR WORKSHOP, INC.,
                                           a Delaware corporation

                                           By: /s/ Brian Vent
                                               --------------------------------
                                           Its: Manager

                                       7

<PAGE>

                                    EXHIBIT C

                              AMENDED AND RESTATED
                                INDUSTRIAL LEASE

                            BASIC LEASE INFORMATION

Date: June 14, 2000

Landlord: State of California Public Employees' Retirement System, a unit of the
State and Consumer Services Agency of the State of California

Tenant: NewSpace, Inc., a Missouri corporation

Guarantor: None

Premises (section 1.1): The spaces in the buildings outlined in Exhibit A,
containing approximately 45,696 square feet (more or less) of building area, the
street addresses of which are known as Suite 1950-54 (13,362 square feet, more
or less), Suite 1956 (6,186 square feet, more or less), Suite 1958 (5,309 square
feet, more or less), Suite 1960-62 (7,943 square feet, more or less), Suite 1964
(7,949 square feet, more or less) and Suite 1990 (4,947 square feet, more or
less)

Property (section 1.1): The land and the building(s) outlined in Exhibit A,
containing approximately 192,963 square feet (more or less) of total building
area, located in Overland, Missouri and known as Innerbelt Business Center

Term (section 2.1): 96 months

Commencement Date (section 2.1): June 14, 2000

Expiration Date (section 2.1): June 30, 2008

Monthly Base Rent (dollars
 per month) (section 3.1(a)): Months 1-12: $30,179.63 per month
                              Months 13-36: $30,596.30 per month
                              Months 37-60: $28,750.00 per month (subject to
                                  adjustment if Tenant elects to renew the Lease
                                  with respect to Suite 1990)
                              Months 61-96: $29,166.67 per month (subject to
                                  adjustment if Tenant elects to renew the Lease
                                  with respect to Suite 1990)

Tenant's Percentage
 Share (section 3.1(b)):      Months 1-36: 23.68%
                              Months 37-96: 21.12% (unless Tenant
                                  elects to renew the Lease with
                                  respect to Suite 1990, in which event
                                  the Percentage Share shall remain at 23.68%)

Property Taxes Base Year (section 3.1(b)): 2000

Insurance Costs Base Year (section 3.1(b)): 2000

Initial Additional Monthly Rent Estimate (dollars per month) (section 3.2(a)):
$3,389.12

Security Deposit (section 3.3): $28,251.67 Letter of Credit

Rent Payment Address (section 3.7): LaSalle Investment Management, Inc.
                                    St. Louis- MidCounty
                                    P.O. Box 73564
                                    Chicago, Illinois 60673-7584

Permitted Use of the Premises (section 4.1): General Office and Warehousing and
Light Manufacturing

Landlord's Address (section 14.1): State of California Public Employees'
      Retirement System, c/o LaSalle Investment Management, Inc., 3424 Peachtree
      Road NE, Suite 300, Atlanta, GA 30326 Attn: Rebecca S. Smith and a copy
      simultaneously c/o Trammell Crow Company, 8000 Maryland Avenue, Suite
      850, St. Louis, Missouri 63105

Tenant's Address (section 14.1): NewSpace, Inc., 1960 Innerbelt Business Center
Drive, Overland, Missouri 63114

Guarantor's Address (section 14.1): None

Real Estate Broker(s) (section 15.5): Crow Brokerage Co., Inc. (d/b/a Trammell
Crow Company)

                                      (i)

<PAGE>

Exhibit A - Plan(s) Outlining the Premises and the Property

Exhibit B - Description of Landlord's work

Exhibit C - Form of Memorandum Confirming Term

Exhibit D - Addendum

      The foregoing Basic Lease Information is incorporated in and made a part
of the Lease to which it is attached. If there is any conflict between the Basic
Lease Information and the Lease, the Basic Lease Information shall control.

NEWSPACE, INC.,              STATE OF CALIFORNIA PUBLIC EMPLOYEES'
a Missouri corporation       RETIREMENT SYSTEM, a unit of the State and
                             Consumer Services Agency of the State of California

                             By:  CalEast Industrial Investors, LLC.
By:_______________________        Its: Duly authorized agent
   Name __________________
   Title _________________        By:  LaSalle Investment Management, Inc.
                                  Its: Manager

                                  By:______________________________________
                                       Rebecca S. Smith
                                  Its: Vice President

                                      (ii)
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                                 PAGE
-------                                                                                 ----
<S>                                                                                     <C>
ARTICLE I Premises..............................................................          1
      1.1 Lease of Premises.....................................................          1

ARTICLE 2 Term..................................................................          1
      2.1 Term of Lease.........................................................          1
      2.2 Improvements..........................................................          1
      2.3 Adjustment of Commencement Date.......................................          2
      2.4 Holding Over..........................................................          2

ARTICLE 3 Rent..................................................................          2
      3.1 Base Rent and Additional Rent.........................................          2
      3.2 Procedures............................................................          2
      3.3 Security Deposit......................................................          3
      3.4 Late Payment..........................................................          3
      3.5 Other Taxes Payable by Tenant.........................................          3
      3.6 Certain Definitions...................................................          4
      3.7 Rent Payment Address..................................................          4

ARTICLE 4 Use of the Premises...................................................          4
      4.1 Permitted Use.........................................................          4
      4.2 Environmental Definitions.............................................          5
      4.3 Environmental Requirements............................................          5
      4.4 Compliance With Law...................................................          6
      4.5 Rules and Regulations.................................................          6
      4.6 Entry By Landlord.....................................................          6

ARTICLE 5 Utilities and Services................................................          6
      5.1 Tenant's Responsibilities.............................................          6

ARTICLE 6 Maintenance and Repairs...............................................          6
      6.1 Obligations of Landlord...............................................          6
      6.2 Obligations of Tenant.................................................          7

ARTICLE 7 Alteration of the Premises............................................          7
      7.1 No Alterations by Tenant..............................................          7
      7.2 Landlord's Property...................................................          8

ARTICLE 8 Indemnification and Insurance.........................................          8
      8.1 Damage or Injury......................................................          8
      8.2 Insurance Coverage and Amounts........................................          8
      8.3 Insurance Requirements ...............................................          8
      8.4 Subrogation ..........................................................          9
      8.5 Landlord Insurance Requirements ......................................          9

ARTICLE 9 Assignment or Sublease ...............................................          9
      9.1 Prohibition ..........................................................          9
      9.2 Landlord's Consent or Termination ....................................         10
      9.3 Completion ...........................................................         10
      9.4 Tenant Not Released ..................................................         10

ARTICLE 10 Events of Default and Remedies ......................................         10
      10.1 Default by Tenant ...................................................         10
      10.2 Termination .........................................................         11
      10.3 Continuation ........................................................         11
      10.4 Remedies Cumulative..................................................         11
      10.5 Tenant's Primary Duty ...............................................         11
      10.6 Abandoned Property ..................................................         11
      10.7 Landlord Default.....................................................         11

ARTICLE 11 Damage or Destruction ...............................................         12
      11.1 Restoration .........................................................         12
      11.2 Termination of Lease ................................. ..............         12

ARTICLE 12 Eminent Domain ......................................................         12
      12.1 Condemnation ........................................................         12
      12.2 Award .......................... ....................................         12
</TABLE>

                                     (iii)

<PAGE>

<TABLE>
<S>                                                                                      <C>
      12.3 Temporary Use........................................................         12
      12.4 Definition of Taking.................................................         13

ARTICLE 13 Subordination and Sale...............................................         13
      13.1 Subordination........................................................         13
      13.2 Sale of the Property.................................................         13
      13.3 Estoppel Certificate.................................................         13

ARTICLE 14 Notices..............................................................         13
      14.1 Method...............................................................         13

ARTICLE 15 Miscellaneous........................................................         14
      15.1 General..............................................................         14
      15.2 No Waiver............................................................         14
      15.3 Attorneys' Fees......................................................         14
      15.4 Exhibits.............................................................         14
      15.5 Broker(s)............................................................         14
      15.7 Entire Agreement.....................................................         14
</TABLE>

Lease Guaranty

Exhibit A - Plan(s) Outlining the Premises and the Property

Exhibit B - Description of Landlord's Work

Exhibit C - Form of Memorandum Confirming Term

Exhibit D - Addendum

Other Attachments (if any)

                                      (iv)

<PAGE>

                      AMENDED AND RESTATED INDUSTRIAL LEASE

            THIS AMENDED AND RESTATED LEASE, made as of the date specified in
the BASIC LEASE INFORMATION, by and between STATE Of CALIFORNIA PUBLIC
EMPLOYEES' RETIREMENT SYSTEM, a unit of the State and Consumer Services Agency
of the State of California ("Landlord"), and the tenant specified in the BASIC
LEASE INFORMATION ("Tenant"),

                                   WITNESSETH:

                                   ARTICLE I
                                    Premises

            1.1 Lease of Premises. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, for the term and subject to the covenants
hereinafter set forth, to all of which Landlord and Tenant hereby agree, the
space(s) in the building(s) specified in the BASIC LEASE INFORMATION (the
"Premises") located on the real property specified in the BASIC LEASE
INFORMATION (the "Property"), all as outlined on the plan(s) attached hereto as
Exhibit A. The Property includes the land and the building(s) in which the
Premises is located. Landlord and Tenant agree that, for purposes of this Lease,
the Premises and the Property, respectively, each contains the number of square
feet of building area specified in the BASIC LEASE INFORMATION and Tenant's
Percentage Share specified in the BASIC LEASE INFORMATION is the ratio of such
building area of the Premises to such building area of the Property. During the
term of this Lease, Tenant shall have the nonexclusive right, in common with
other tenants of the Property, to use only for their intended purposes the
common areas (such as driveways, sidewalks, parking areas, loading areas and
access roads) in the Property that are designated by Landlord as common areas
and not leased to or allocated for the exclusive use of another tenant of the
Property. Landlord shall have the right from time to time to change the size,
location, configuration, character or use of any such common areas, construct
additional improvements or facilities in any such common areas, or close any
such common areas. Tenant shall not interfere with the rights of Landlord and
other tenants of the Property to use such common areas.

                                    ARTICLE 2
                                      Term

            2.1 Term of Lease. The term of this Lease shall be the term
specified in the BASIC LEASE INFORMATION, which shall commence on the
commencement date specified in the BASIC LEASE INFORMATION (the "Commencement
Date") and, unless sooner terminated as hereinafter provided, shall end on the
expiration date specified in the BASIC LEASE INFORMATION (the "Expiration
Date"). If Landlord, for any reason whatsoever, does not deliver possession of
the Premises to Tenant on the Commencement Date, this Lease shall not be void or
voidable and Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom, but, in such event, the Commencement Date shall be
postponed until the date on which Landlord delivers possession of the Premises
to Tenant and the Expiration Date shall be extended for an equal period (subject
to adjustment in accordance with section 2.3 hereof). Tenant acknowledges that
Tenant has inspected the Premises and the Property or has had the Premises and
the Property inspected by professional consultants retained by Tenant. Tenant is
familiar with the condition of the Premises and the Property, the Premises and
the Property are suitable for Tenant's purposes, and, except for the
improvements to be constructed or installed by Landlord pursuant to Exhibit B
(if any), the condition of the Premises and the Property is acceptable to
Tenant. Except for the improvements to be constructed or installed by Landlord
pursuant to Exhibit B (if any), Landlord shall have no obligation to construct
or install any improvements in the Premises or the Property or to remodel,
renovate, recondition, alter or improve the Premises or the Property in any
manner, and Tenant shall accept the Premises "as is" on the Commencement Date.

            2.2 Improvements. This section 2.2 shall apply only if Landlord is
required to construct or install improvements in the Premises or the Property
pursuant to Exhibit B. Landlord shall construct or install the improvements to
be constructed or installed by Landlord pursuant to Exhibit B. Landlord shall
deliver possession of the Premises to Tenant on the Commencement Date or the
date of substantial completion of the improvements, whichever is later, and
Tenant shall accept such delivery of the Premises. Notwithstanding section 2.1
hereof, the term of this Lease shall not commence until Landlord has
substantially completed the improvements pursuant to Exhibit B attached hereto
and delivered possession of the Premises to Tenant. The date of substantial
completion of the improvements shall be the date on which construction is
sufficiently complete, substantially in accordance with the plans and
specifications, so the improvements may be used or occupied for their intended
purpose as permitted under this Lease. If Landlord is delayed in substantially
completing the improvements by any cause of delay for which Tenant is
responsible, then Tenant shall pay to Landlord, as additional rent, the monthly
Base Rent (based on the first month for which the Base Rent is to be paid) and
the additional monthly rent payable under section 3.1 hereof, calculated on a
per diem basis, multiplied by the number of days of such delay, which shall be
due and payable on the Commencement Date specified in the BASIC LEASE
INFORMATION for such delay before such date and monthly in arrears on the first
day of each month thereafter for such delay after such date. If the improvements
are substantially complete and the Premises is ready for occupancy by Tenant
prior to the Commencement Date, Tenant shall have the right to take early
occupancy of the Premises prior to the Commencement Date and the term of this
Lease shall commence on such date of early occupancy by Tenant, in which event
the Commencement Date shall be advanced to such date of early occupancy and the
Expiration Date shall be advanced by an equal period (subject to adjustment in
accordance with section 2.3 hereof). Tenant shall give Landlord written notice
of Tenant's determination to take early occupancy of the Premises at least ten
(10) days in advance, which notice shall specify the date of such early
occupancy.

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<PAGE>

            2.3 Adjustment of Commencement Date. If the Commencement Date as
determined in accordance with section 2.1 or section 2.2 hereof would not be the
first day of the month and the Expiration Date would not be the last day of the
month, then the actual Commencement Date shall be the first day of the next
calendar month following the date so determined and the actual Expiration Date
shall be the last day of the appropriate calendar month so the term of this
Lease shall be the full term specified in the Basic Lease Information. The
period of the fractional month between the date so determined and the actual
Commencement Date shall be on and subject to all of the covenants in this Lease
and, on the actual Commencement Date, Tenant shall pay to Landlord, as
additional rent, the monthly Base Rent (based on the first month for which the
Base Rent is to be paid) and the additional monthly rent payable under section
3.1 hereof, calculated on a per diem basis, for such period. Landlord and Tenant
each shall, promptly after the actual Commencement Date and the actual
Expiration Date have been determined, execute and deliver to the other a
Memorandum Confirming Term in the form of Exhibit C attached hereto, which shall
set forth the actual Commencement Date and the actual Expiration Date for this
Lease, but the term of this Lease shall commence and end in accordance with this
Lease whether or not the Memorandum Confirming Term is executed.

            2.4 Holding Over. In the event that Tenant shall continue in
occupancy of the Premises after the expiration of the Term, such occupancy shall
not be deemed to extend or renew the term of this Lease, but such occupancy
shall continue as a month-to-month tenancy at will upon the covenants,
provisions and conditions herein contained at a monthly Base Rental equal to one
hundred fifty percent (150%) of the monthly Base Rental in effect at the
expiration of the term of this Lease.

                                    ARTICLE 3
                                      Rent

            3.1 Base Rent and Additional Rent. Tenant shall pay to Landlord the
following amounts as rent for the Premises:

            (a) During the term of this Lease, Tenant shall pay to Landlord, as
base monthly rent, the amount of monthly Base Rent specified in the Basic Lease
Information.

            (b) During each calendar year (or part thereof) during the term of
this Lease, Tenant shall pay to Landlord, as additional monthly rent:

                  (i) Tenant's Percentage Share specified in the Basic Lease
Information of all CAM Expenses paid or incurred by Landlord in such year;

                  (ii) Tenant's Percentage Share specified in the Basic Lease
Information of the total dollar increase, if any, in all Property Taxes paid or
incurred by Landlord in such year over all Property Taxes paid or incurred by
Landlord in the Base Year for Property Taxes specified in the Basic Lease
Information; and

                  (iii) Tenant's Percentage Share specified in the Basic Lease
Information of the total dollar increase, if any, in all Insurance Costs paid or
incurred by Landlord in such year over all Insurance Costs paid or incurred by
Landlord in the Base Year for Insurance Costs specified in the Basic Lease
Information.

            (c) Throughout the term of this Lease, Tenant shall pay, as
additional rent, all other amounts of money and charges required to be paid by
Tenant under this Lease, whether or not such amounts of money or charges are
designated "additional rent". As used in this Lease, "rent" shall mean and
include all Base Rent, additional monthly rent and additional rent payable by
Tenant in accordance with this Lease.

            3.2 Procedures. The additional monthly rent payable by Tenant
pursuant to section 3.1(b) hereof (CAM Expenses, Property Taxes and Insurance
Costs) shall be calculated and paid in accordance with the following procedures:

            (a) On or before the Commencement Date, or as soon thereafter as
practicable, and on or before the first day of each subsequent calendar year
during the term of this Lease, or as soon thereafter as practicable, Landlord
shall give Tenant written notice of Landlord's estimate of the amounts payable
under section 3.1(b) hereof for the balance of the first calendar year after the
Commencement Date or for the ensuing calendar year, as the case may be.
Landlord's estimate of the initial monthly rent payable by Tenant under section
3.1(b) hereof each month for the balance of the first calendar year after the
Commencement Date is specified in the Basic Lease Information. Tenant shall pay
such estimated amounts to Landlord in equal monthly installments, in advance, on
or before the Commencement Date and on or before the first day of each month
during such balance of the first calendar year after the Commencement Date or
during such ensuing calendar year, as the case may be. If such notice is not
given for any calendar year, Tenant shall continue to pay on the basis of the
prior year's estimate until the month after such notice is given, and subsequent
payments by Tenant shall be based on Landlord's current estimate. If, at any
time, Landlord determines that the amounts payable under section 3.1(b) hereof
for the current calendar year will vary from Landlord's estimate. Landlord may,
by giving written notice to Tenant, revise Landlord's estimate for such year,
and subsequent payments by Tenant for such year shall be based on such revised
estimate.

            (b) Within a reasonable time after the end of each calendar year,
Landlord shall give Tenant a written statement of the amounts payable by Tenant
under section 3.1(b) hereof for such calendar year certified by Landlord. If
such statement shows a total amount owing by Tenant that is less than the
estimated payments for such

                                       2

<PAGE>

calendar year previously made by Tenant, Landlord shall credit the excess to the
next monthly installments of the amounts payable by Tenant under section 3.1(b)
hereof (or, if the term of this Lease has ended, Landlord shall refund the
excess to Tenant with such statement). If such statement shows a total amount
owing by Tenant that is more than the estimated payments for such calendar year
previously made by Tenant, Tenant shall pay the deficiency to Landlord within
fifteen (15) days after delivery of such statement (notwithstanding any
assertion by Tenant that the written statement contains errors). Tenant or
Tenant's authorized agent or representative shall have the right once each
calendar year to inspect the books of Landlord relating to CAM Expenses,
Property Taxes and Insurance Costs for the prior calendar year, after giving
reasonable prior written notice to Landlord and during the business hours of
Landlord at the office of Landlord's property manager for the Property, for the
purpose of verifying the information in such statement. Unless Tenant asserts
specific errors in writing to Landlord within forty-five (45) days after the
date of the written statement received from Landlord, the statement shall be
deemed conclusively correct. Landlord and Tenant shall attempt in good faith to
resolve any timely objection made by Tenant to the written statement with
respect to Landlord's calculation of the additional monthly rent payable by
Tenant pursuant to Section 3.1(b) hereof for any fiscal year within sixty (60)
days after Landlord's receipt of Tenant's written objection. If the dispute
cannot be resolved by Landlord and Tenant within such period, the decision of
Landlord's accountant, whose decision shall be based upon generally accepted
accounting principals, shall be final and binding upon the parties. If the
written statement is determined to overstate Tenant's additional monthly rent
payable pursuant to Section 3.1(b) by more than five percent (5%), Landlord
shall pay Tenant its reasonable costs and expenses incurred in connection with
such audit within thirty (30) days after written notice of said determination is
delivered to Landlord with an invoice therefor. Failure by Landlord to give any
notice or statement to Tenant under this section 3.2 shall not waive Landlord's
right to receive, or Tenant's obligation to pay, the amounts payable by Tenant
under section 3.1(b) hereof.

            (c) If the term of this Lease commences or ends on a day other than
the first or last day of a calendar year, respectively, the amounts payable by
Tenant under section 3.1(b) hereof applicable to the calendar year in which such
term commences or ends shall be prorated according to the ratio which the number
of days during the term of this Lease in such calendar year bears to three
hundred sixty-five (365). Termination of this Lease shall not affect the
obligations of Landlord and Tenant pursuant to section 3.2(b) hereof to be
performed after such termination.

            3.3 Security Deposit. Upon signing this Lease, Tenant shall pay to
Landlord the amount of the security deposit specified in the Basic Lease
Information (the "Security Deposit"). The Security Deposit shall be held by
Landlord as security for the performance by Tenant of all of the covenants of
this Lease to be performed by Tenant, and Tenant shall not be entitled to
interest thereon. If Tenant fails to perform any of the covenants of this Lease
to be performed by Tenant, then Landlord shall have the right, but no
obligation, to apply the Security Deposit, or so much thereof as may be
necessary, to cure any such failure by Tenant. If Landlord applies the Security
Deposit or any part thereof to cure any such failure by Tenant, then Tenant
shall immediately pay to Landlord the sum necessary to restore the Security
Deposit to the full amount required by this section 3.3. Landlord shall return
any remaining portion of the Security Deposit to Tenant within 30 days after
termination of this Lease. Upon termination of the original Landlord's or any
successor owner's interest in the Premises, the original Landlord or such
successor owner shall be released from further liability with respect to the
Security Deposit upon the original Landlord's or such successor owner's
transferring the Security Deposit to the new owner and shall provide Tenant with
an acknowledgment of receipt thereof by the successor owner.

            3.4 Late Payment. Tenant acknowledges that the late payment by
Tenant of any monthly installment of Base Rent or additional monthly rent will
cause Landlord to incur costs and expenses, the exact amount of which is
extremely difficult and impractical to fix. Such costs and expenses will include
administration and collection costs and processing and accounting expanses.
Therefore, if any monthly installment of Base Rent or additional monthly rent is
not received by Landlord within five (5) days after such installment is due,
Tenant shall immediately pay to Landlord a late charge equal to five percent
(5%) of such delinquent installment. Landlord and Tenant agreed that such late
charge represents a reasonable estimate of such costs and expenses and is fair
reimbursement to Landlord. In no event shall such late charge be deemed to grant
to Tenant a grace period or extension of time within which to pay any monthly
rent or prevent Landlord from exercising any right or enforcing any remedy
available to Landlord upon Tenant's failure to pay each installment of monthly
rent due under this Lease when due, including the right to terminate this Lease
and recover all damages from Tenant. All amounts of money payable by Tenant to
Landlord hereunder, if not paid when due, shall bear interest from the due date
until paid at the rate of ten percent (10%) per annum, and Tenant shall pay such
interest to Landlord on written demand.

            3.5 Other Taxes Payable by Tenant. Tenant shall reimburse Landlord
upon written demand for all taxes, assessments, excises, levies, fees and
charges, including all payments related to the cost of providing facilities or
services, whether or not now customary or within the contemplation of Landlord
and Tenant, that are payable by Landlord and levied, assessed, charged,
confirmed or imposed by any public or government authority upon, or measured by,
or reasonably attributable to (a) the cost or value of Tenant's furniture,
fixtures, equipment and other personal property located in the Premises or the
cost or value of any improvements made in or to the Premises by or for Tenant,
regardless of whether title to such improvements is vested in Tenant or
Landlord, (b) any rent payable under this Lease, including any gross income tax
or excise tax levied by any public or government authority with respect to the
receipt of any such rent so long as such tax is a tax on rent, (c) the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, exclusive of any gross income tax or
excise tax levied by any public or government authority with respect to the
same, or (d) this transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the Premises. Such taxes,
assessments, excises, levies, fees and charges shall not include net income
(measured by the income of Landlord from all sources or from sources other than
solely rent) or franchise taxes of Landlord, unless

                                       3

<PAGE>

levied or assessed against Landlord in whole or in part in lieu of, as a
substitute for, or as an addition to any such taxes, assessments, excises,
levies, fees and charges. All taxes, assessments, excises, levies, fees and
charges payable by Tenant under this section 3.5 shall be deemed to be, and
shall be paid as, additional rent.

            3.6 Certain Definitions. As used in this Lease, certain words are
defined as follows:

            (a) "CAM Expenses" shall mean all direct and indirect costs and
expenses paid or incurred by Landlord in connection with the ownership,
management, operation, maintenance or repair of the Property or providing
services in accordance with this Lease, including license, permit and inspection
fees; electricity, gas, fuel, steam, heat, light, power, water, sewer and other
utilities; management fees and expenses; security, guard, extermination, water
treatment, garbage and waste disposal, rubbish removal, plumbing and other
services; snow and ice removal; maintenance of the fire suppression systems;
landscape maintenance; supplies, tools, materials and equipment; accounting and
other professional fees and expenses; painting the exterior of the Property;
maintaining and repairing the foundations, the exterior walls and roof, the
parking and loading areas, the sidewalks, landscaping and common areas, and the
other parts of the Property; costs and expenses required by or resulting from
compliance with any laws, ordinances, rules, regulations or orders applicable to
the Property; and costs and expenses of contesting by appropriate proceedings
any matter concerning managing, operating, maintaining or repairing the
Property, or the validity or applicability of any law, ordinance, rule,
regulation or order relating to the Property, or the amount or validity of any
Property Taxes. CAM Expenses shall not include Property Taxes, Insurance Costs,
charges payable by Tenant pursuant to section 3.5 hereof, depreciation on the
Property, costs of tenants' improvements, real estate brokers' commissions,
interest, or capital costs for major roof or major parking lot replacement or
restoration work necessitated by fire or other casualty damage to the extent of
net insurance proceeds received by Landlord with respect thereto; attorney's
fees, accounting fees and expenditures incurred in connection with negotiations,
disputes and claims of other tenants or occupants of the Property, or with
other third parties except as specifically provided in this Lease; advertising
expenses and other costs incurred in leasing or procuring new tenants; expenses
for which the Landlord is or will be reimbursed by another source, excluding
Tenant reimbursement for amounts payable under Section 3.1(b) hereof, including,
but not limited to, repair or replacement of any item covered by warranty;
expenses for the defense of the Landlord's title to the Property; structural
repairs and replacement, depreciation and amortization of the Property or
financing costs, including interest and principal amortization of debts;
charitable and political contributions; costs to correct original or latent
defects in the design, construction or equipment of the Property; the costs of
alteration of any tenant's premises, except for any alterations required by law;
or expenses in connection with services or other benefits of a type which are
not provided or available to Tenant but which are provided to another tenant of
the Property or which are paid to Landlord by such other tenant.

            (b) "Property Taxes" shall mean all taxes, assessments, excises,
levies, fees and charges (and any tax, assessment, excise, levy, fee or charge
levied wholly or partly in lieu thereof or as a substitute therefor or as an
addition thereto) of every kind and description, general or special, ordinary or
extraordinary, foreseen or unforeseen, secured or unsecured, whether or not now
customary or within the contemplation of Landlord and Tenant, that are levied,
assessed, charged, confirmed or imposed by any public or government authority on
or against, or otherwise with respect to, the Property or any part thereof or
any personal property used in connection with the Property. Property Taxes shall
not include net income (measured by the income of Landlord from all sources or
from sources other than solely rent) or franchise taxes of Landlord, unless
levied or assessed against Landlord in whole or in part in lieu of, as a
substitute for, or as an addition to any Property Taxes. Property Taxes shall
not include charges payable by Tenant pursuant to section 3.5 hereof.

            (c) "Insurance Costs" shall mean all premiums and other charges for
all property, earthquake, flood, loss of rental income, business interruption,
liability and other insurance relating to the Property carried by Landlord.

            3.7 Rent Payment Address. Tenant shall pay all Base Rent and
additional monthly rent under section 3.1 hereof to Landlord, in advance, on or
before the first day of each and every calendar month during the term of this
Lease. Tenant shall pay all rent to Landlord without notice, demand, deduction
or offset, in lawful money of the United States of America, at the address for
the payment of rent specified in the Basic Lease Information, or to such other
person or at such other place as Landlord may from time to time designate in
writing.

                                    ARTICLE 4
                              Use of the Premises

            4.1 Permitted Use. Tenant shall use the Premises only for the
Permitted Use of the Premises specified in the Basic Lease Information and for
lawful purposes incidental thereto, and no other purpose whatsoever. Tenant
shall not do or permit to be done in, on or about the Premises, nor bring or
keep or permit to be brought or kept therein, anything which is prohibited by or
will in any way conflict with any law, ordinance, rule, regulation or order now
in force or which may hereafter be enacted, or which is prohibited by any
insurance policy carried by Landlord for the Property, or will in any way
increase the existing rate of. or disallow any fire rating or sprinkler credit,
or cause a cancellation of, or affect any insurance for the Property. If Tenant
causes any increase the premium for any insurance covering the Property carried
by Landlord, Tenant shall pay to Landlord, on written demand as additional rent,
the entire amount of such increase. Tenant shall not do or permit anything to be
done in or about the Premises which will in any way obstruct or interfere with
the rights of Landlord or other tenants of the Property, or injure or annoy
them. Tenant shall not use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable activity, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Premises or commit or suffer to be
committed any waste in, on or about the Premises. Tenant shall not store any

                                       4

<PAGE>

materials, equipment or vehicles outside the Premises, provided, however, that
Tenant shall be permitted to park its trucks on the parking lot overnight, and
agrees that no washing of any type (including washing vehicles) shall take place
in or outside the Premises, provided, however, that Tenant shall have the right
to wash its vehicles, but only in the truck court area located behind the
Premises. Tenant shall not receive, store or otherwise handle any product or
material that is explosive or highly inflammable. Notwithstanding the foregoing,
Tenant shall be entitled to use paints and adhesives which from time to time are
customary in the operation of Tenant's business provided that such paints and
adhesives shall only be used for Tenant's business (and Tenant shall not produce
said paints or adhesives and the Premises) and no such paints or adhesives shall
be stored in bulk at the Premises. Tenant's use, storage and disposal of all
such paints and adhesives shall be in accordance with all laws, ordinances,
rules, regulations, orders and other requirements of any government or public
authority now in force or which may hereafter be in force, provided that Tenant
shall pay to Landlord, on written demand, all cost and expense incurred by
Landlord and attributable to Tenant's use, storage or disposal of such paints
and/or adhesives including by way of example and not limitation, any additional
sprinkler installations in the Premises. Landlord's consent to the use of such
paints and adhesives does not relieve Tenant of any obligations or indemnities
under this Lease, including, but not limited to, any obligations and indemnities
under Article 4 of this Lease, with respect to the use, storage or disposal of
such paints and/or adhesives or release Tenant from the obligation to pay any
increased insurance premiums that may be attributable to the use, storage or
disposal of such paints and/or adhesives by Tenant at the Premises. Tenant shall
not install any signs on the Premises without the prior written consent of
Landlord. Tenant shall, at Tenant's expense, remove all such signs prior to or
upon termination of this Lease, repair any damage caused by the installation or
removal of such signs, and restore the Premises to the condition that existed
before installation of such signs.

            4.2 Environmental Definitions. As used in this Lease, "Hazardous
Material" shall mean any substance that is (a) defined under any Environmental
Law as a hazardous substance, hazardous waste, hazardous material, pollutant or
contaminant, (b) a petroleum hydrocarbon, including crude oil or any fraction or
mixture thereof, (c) hazardous, toxic, corrosive, flammable, explosive,
infectious, radioactive, carcinogenic or a reproductive toxicant, or (d)
otherwise regulated pursuant to any Environmental Law. As used in this Lease,
"Environmental Law" shall mean all federal, state and local laws, statutes,
ordinances, regulations, rules, judicial and administrative orders and decrees,
permits, licenses, approvals, authorizations and similar requirements of all
federal, state, and local governmental agencies or other governmental
authorities pertaining to the protection of human health and safety or the
environment, now existing or later adopted during the term of this Lease. As
used in this Lease, "Permitted Activities" shall mean the lawful activities of
Tenant that are part of the ordinary course of Tenant's business in accordance
with the Permitted Use specified in the Basic Lease Information. As used in this
Lease, "Permitted Materials" shall mean the materials handled by Tenant in the
ordinary course of conducting Permitted Activities.

            4.3 Environmental Requirements. Tenant hereby agrees that: (a)
Tenant shall not conduct, or permit to be conducted, on the Premises any
activity which is not a Permitted Activity; (b) Tenant shall not use, store or
otherwise handle, or permit any use, storage or other handling of, any Hazardous
Material which is not a Permitted Material on or about the Premises; (c) Tenant
shall obtain and maintain in effect all permits and licenses required pursuant
to any Environmental Law for Tenant's activities on the Premises, and Tenant
shall at all times comply with all applicable Environmental Laws; (d) Tenant
shall not engage in the storage, treatment or disposal on or about the Premises
of any Hazardous Material except for any temporary accumulation of waste
generated in the course of Permitted Activities; (e) Tenant shall not install
any aboveground or underground storage tank or any subsurface lines for the
storage or transfer of any Hazardous Material, except for the lawful discharge
of waste to the sanitary sewer, and Tenant shall store all Hazardous Materials
in a manner that protects the Premises, the Property and the environment from
accidental spills and releases; (f) Tenant shall not cause or permit to occur
any release of any Hazardous Material or any condition of pollution or nuisance
on or about the Premises, whether affecting surface water or groundwater, air,
the land or the subsurface environment; (g) Tenant shall promptly remove from
the Premises any Hazardous Material introduced, or permitted to be introduced,
onto the Premises by Tenant which is not a Permitted Material and, on or before
the date Tenant ceases to occupy the Premises, Tenant shall remove from the
Premises all Hazardous Materials and all Permitted Materials handled by or
permitted on the Premises by Tenant; and (h) if any release of a Hazardous
Material to the environment, or any condition of pollution or nuisance, occurs
on or about or beneath the Premises as a result of any act or omission of Tenant
or its agents, officers, employees, contractors, invitees or licensees. Tenant
shall, at Tenant's sole cost and expense, promptly undertake all remedial
measures required to clean up and abate or otherwise respond to the release,
pollution or nuisance in accordance with all applicable Environmental Laws.
Landlord and Landlord's representatives shall have the right, but not the
obligation, to enter the Premises at any reasonable time for the purpose of
inspecting the storage, use and handling of any Hazardous Material on the
Premises in order to determine Tenant's compliance with the requirements of this
Lease and applicable Environmental Law. If Landlord gives written notice to
Tenant that Tenant's use, storage or handling of any Hazardous Material on the
Premises may not comply with this Lease or applicable Environmental Law, Tenant
shall correct any such violation within five (5) days after Tenant's receipt of
such notice from Landlord. Tenant shall indemnify and defend Landlord against
and hold Landlord harmless from all claims, demands, actions, judgments,
liabilities, costs, expenses, losses, damages, penalties, fines and obligations
of any nature (including reasonable attorneys' fees and disbursements incurred
in the investigation, defense or settlement of claims) that Landlord may incur
as a result of, or in connection with, claims arising from the presence, use,
storage, transportation, treatment, disposal, release or other handling, on or
about or beneath the Premises, of any Hazardous Material introduced or permitted
on or about or beneath the Premises by any act or omission of Tenant or its
agents, officers, employees, contractors, invitees or licensees. The liability
of Tenant under this section 4.3 shall survive the termination of this Lease
with respect to acts or omissions that occur before such termination.
Notwithstanding anything to the contrary herein, in the event any governmental
authorities require the removal of any Hazardous Materials located and existing
on the Premises prior to July 29, 1986 and, with respect to Suites

                                       5

<PAGE>

1950-1954 and Suite 1956 prior to the date of Tenant's possession of such
portion of the Premises. Landlord shall be solely responsible for the payment of
all costs in connection therewith, including the costs of removal or
encapsulation and the costs of repair and restoration of the Premises to the
condition existing immediately prior to such required removal or encapsulation
and Tenant's rent shall abate proportionately to Tenant's ability to continue
the operation of its business from the Premises during the period of such work.
In the event a governmental authority requires the removal of any Hazardous
Materials brought, stored or discharged upon the Premises by Tenant, its
contractors, subcontractors, agents, employees or servants, Tenant shall be
solely responsible for all such costs including, but not limited to, removal,
encapsulation and fines levied by such governmental authorities.

            4.4 Compliance with Law. Tenant shall, at Tenant's sole cost and
expense, promptly comply with all laws, ordinances, rules, regulations, orders
and other requirements of any government or public authority now in force or
which may hereafter be in force, with all requirements of any board of fire
underwriters or other similar body now or hereafter constituted, and with all
directions and certificates of occupancy issued pursuant to any law by any
governmental agency or officer, insofar as any thereof relate to or are required
by the condition, use or occupancy of the Premises or the operation, use or
maintenance of any personal property, fixtures, machinery, equipment or
improvements in the Premises, but Tenant shall not be required to make
structural changes unless structural changes are related to or required by
Tenant's acts or use of the Premises or by improvements made by or for Tenant.

            4.5 Rules and Regulations. Tenant shall faithfully observe and fully
comply with all rules and regulations (the "Rules and Regulations") from time to
time made in writing by Landlord for the safety, care, use and cleanliness of
the Property or the common areas of the Property and the preservation of good
order therein. If there is any conflict, this Lease shall prevail over the Rules
and Regulations.

            4.6 Entry by Landlord. Landlord shall have the right to enter the
Premises at any time to (a) inspect the Premises upon three (3) days' prior
written notice, during normal business hours, expect in case of emergency, (b)
exhibit the Premises to prospective purchasers, lenders or tenants, (c)
determine whether Tenant is performing all of Tenant's obligations, (d) supply
any service to be provided by Landlord (e) post notices of nonresponsibility,
and (f) make any repairs to the Premises, or make any repairs to any adjoining
space or utility services, or make any repairs, alterations or improvements to
any other portion of the Property, provided all such work shall be done as
promptly as reasonably practicable and so as to cause as little interference to
Tenant as reasonably practicable. Tenant waives all claims for damages for any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises or any other loss occasioned by
such entry. Landlord shall have the right to use any and all means which
Landlord may deem proper to open such doors in an emergency to obtain entry to
the Premises. Any entry to the Premises obtained by Landlord by any of such
means shall not under any circumstances be construed or deemed to be a forcible
or unlawful entry into or a detainer of the Premises or an eviction, actual or
constructive, of Tenant from the Premises or any portion thereof.

                                    ARTICLE 5
                             Utilities and Services

            5.1 Tenant's Responsibilities. Tenant shall pay, directly to the
appropriate supplier before delinquency, for all water, gas, heat, light, power,
telephone, sewer, refuse disposal and other utilities and services supplied to
the Premises, together with all taxes, assessments, surcharges and similar
expenses relating to such utilities and services. If any such utilities or
services are jointly metered with the Premises and another part of the Property,
Landlord shall determine Tenant's share of the cost of such jointly metered
utilities and services based on Landlord's estimate of usage, and Tenant shall
pay as additional rent, Tenant's share of the cost of such jointly metered
utilities and services to Landlord within twenty (20) days after receipt of
Landlord's written statement for such cost. Tenant shall furnish the Premises
with all telephone service, window washing, security service, janitor, scavenger
and disposal services, and other services required by Tenant for the use of the
Premises permitted by this Lease. Tenant shall furnish all electric light bulbs
and tubes and restroom supplies used in the Premises. Landlord shall not be in
default under this Lease or be liable for any damage or loss directly or
indirectly resulting from, nor shall the rent be abated or a constructive or
other eviction be deemed to have occurred by reason of, any interruption of or
failure to supply or delay in supplying any such utilities and services or any
limitation, curtailment, rationing or restriction on use of water, electricity,
gas or any resource or form of energy or other service serving the Premises or
the Property, whether such results from mandatory restrictions or voluntary
compliance with guidelines.

                                    ARTICLE 6
                             Maintenance and Repairs

            6.1 Obligations of Landlord. Landlord shall maintain and repair only
the foundations, the exterior walls (which shall not include windows, glass or
plate glass, doors, special fronts, entries, or the interior surfaces of
exterior walls, all of which shall be the responsibility of Tenant), the roof
and other structural components of the Premises and the common areas of the
Property and keep them in good condition, reasonable wear and tear excepted.
Tenant shall give Landlord written notice of the need for any maintenance or
repair for which Landlord is responsible, after which Landlord shall have a
reasonable opportunity to perform the maintenance or make the repair, and
Landlord shall not be liable for any failure to do so unless such failure
continues for an unreasonable time after Tenant gives such written notice to
Landlord. Tenant waives any right to perform maintenance or make repairs for
which Landlord is responsible at Landlord's expense. Landlord's liability with
respect to any maintenance or repair for which Landlord is responsible shall be
limited to the cost of the maintenance or repair. Any damage to any part of the
Property for which Landlord is responsible that is caused by Tenant or any
agent, officer, employee, contractor, licensee or invitee of Tenant shall be
repaired by Landlord at

                                       6

<PAGE>

Tenant's expense and Tenant shall pay to Landlord, upon billing by Landlord, as
additional rent, the cost of such repairs incurred by Landlord.

            6.2 Obligations of Tenant. Tenant shall, at all times during the
term of this Lease and at Tenant's sole cost end expense, maintain and repair
the Premises and every part thereof (except only the parts for which Landlord is
expressly made responsible under this Lease) and all equipment, fixtures and
improvements therein (including windows, glass, plate glass, doors, special
fronts, entries, the interior surfaces of exterior walls, interior walls,
floors, heating and air conditioning systems, dock boards, truck doors, dock
bumpers, plumbing fixtures and equipment, electrical components and mechanical
systems) and keep all of the foregoing clean and in good order and operating
condition, ordinary wear and tear excepted. Tenant shall not damage the Premises
or disturb the integrity and support provided by any wall. Tenant shall, at
Tenant's expense, promptly repair any damage to the Premises caused by Tenant or
any agent, officer, employee, contractor, licensee or invitee of Tenant. Tenant
shall take good care of the Premises and keep the Premises free from dirt,
rubbish, waste and debris at all times. Tenant shall not overload the floors in
the Premises or exceed the load-bearing capacity of the floors in the Premises.
Tenant shall, at Tenant's expense, enter into a regularly scheduled preventative
maintenance and service contract with a maintenance contractor approved in
writing by Landlord for servicing all hot water, heating and air conditioning
systems and equipment in the Premises. The maintenance and service contract
shall include all services suggested by the equipment manufacturer and shall
become effective (and Tenant shall deliver a copy to Landlord) within thirty
(30) days after the Commencement Date. Tenant shall, at the end of the term of
this Lease, surrender to Landlord the Premises and all alterations, additions,
fixtures and improvements therein or thereto in the same condition as when
received, ordinary wear and tear excepted. Notwithstanding anything to the
contrary contained in this Article 6, Tenant's obligation under this Section 6
shall not include making (i) any repair or improvement necessitated by the
negligence or willful misconduct of Landlord, its agents, employees, servants or
contractors; or (ii) any repair or improvement caused by Landlord's failure to
perform its obligations under this Lease.

                                    ARTICLE 7
                           Alteration of the Premises

            7.1 No Alterations by Tenant. Tenant shall not make any
alterations, additions or improvements in or to the Premises or any part
thereof, or attach any fixtures or equipment thereto, without Landlord's prior
written consent. Notwithstanding the preceding sentence, Tenant may make such
alterations, additions or improvements without Landlord's consent only if the
total cost of such alterations, additions or improvements is ten thousand
dollars ($10,000) or less and such alterations, additions or improvements will
not affect in any way the structural, exterior or roof elements of the Property
or the mechanical, electrical, plumbing or life safety systems of the Property,
but Tenant shall give prior written notice of any such alterations, additions or
improvements to Landlord. All alterations, additions and improvements (except
improvements made by Landlord pursuant to Exhibit B. if any, in or to the
Premises to which Landlord consents shall be made by Tenant at Tenant's sole
cost and expense as follows:

            (a) Tenant shall submit to Landlord, for Landlord's written
approval, which shall not be unreasonably withheld or delayed, complete plans
and specifications for all work to be done by Tenant. Such plans and
specifications shall be prepared by responsible licensed architect(s) and
engineer(s), shall comply with all applicable codes, laws, ordinances, rules and
regulations, shall not adversely affect any systems, components or elements of
the Property, shall be in a form sufficient to secure the approval of all
government authorities with jurisdiction over the Property, and shall be
otherwise satisfactory to Landlord in Landlord's reasonable discretion.

            (b) Tenant shall obtain all required permits for the work. Tenant
shall engage responsible licensed contractor(s) to perform all work. Tenant
shall perform all work in accordance with the plans and specifications approved
by Landlord, which shall not be unreasonably withheld or delayed, in a good and
workmanlike manner, in full compliance with all applicable laws, codes,
ordinances, rules and regulations, and free and clear of any mechanics' liens.
Tenant shall pay for all work (including the cost of all utilities, permits,
fees, taxes, and property and liability insurance premiums in connection
therewith) required to make the alterations, additions and improvements. Tenant
shall pay to Landlord all direct costs and shall reimburse Landlord for all
expenses incurred by Landlord in connection with the review, approval and
supervision of any alterations, additions or improvements made by Tenant. Under
no circumstances shall Landlord be liable to Tenant for any damage, loss, cost
or expense incurred by Tenant on account of design of any work, construction of
any work, or delay in completion of any work.

            (c) Tenant shall give written notice to Landlord of the date on
which construction of any work will be commenced at least five (5) days prior to
such date. Tenant shall keep the Premises and the Property free from mechanics',
material men's and all other liens arising out of any work performed, labor
supplied, materials furnished or other obligations incurred by Tenant. Tenant
shall promptly and fully pay and discharge all claims on which any such lien
could be based. Tenant shall have the right to contest the amount or validity of
any such lien, provided Tenant gives prior written notice of such contest to
Landlord, prosecutes such contest by appropriate proceedings in good faith and
with diligence, and, upon request by Landlord, furnishes such bond as may be
required by law or such security as Landlord may require to protect the Premises
and the Property from such lien. Landlord shall have the right to post and keep
posted on the Premises any notices that may be provided by law or which Landlord
may deem to be proper for the protection of Landlord, the Premises and the
Property from such liens, and to take any other action Landlord deems necessary
to remove or discharge liens or encumbrances at the expense of Tenant.

                                       7
<PAGE>

            7.2   Landlord's Property. All alterations, additions, fixtures and
improvements, including improvements made pursuant to Exhibit B (if any),
whether temporary or permanent in character, made in or to the Premises by
Landlord or Tenant, shall become pan of the Property and Landlord's property.
Upon termination of this Lease, Landlord shall have the right, at Landlord's
option, by giving written notice to Tenant at any time before or within sixty
(60) days after such termination, to retain all such alterations, additions,
fixtures, built-ins, and improvements in the Premises (provided said
alterations, additions, fixtures, built-ins, and improvements, including any
built-in items, have been paid for by Landlord pursuant to any tenant
improvement or construction allowance), without compensation to Tenant, or to
remove all such alterations, additions, fixtures, built-ins and improvements
from the Premises, repair all damage caused by any such removal, and restore the
Premises to the condition in which the Premises existed before such alterations,
additions, fixtures, built-ins and improvements were made, and in the latter
case Tenant shall pay to Landlord, upon billing by Landlord, the cost of such
removal, repair and restoration (including a reasonable charge for Landlord's
overhead and profit), Notwithstanding the foregoing, all built-in movable
furniture (paid for exclusively by Tenant), equipment, trade fixtures,
computers, office machines and other personal property shall remain the properly
of Tenant. Upon termination of this Lease, Tenant shall, at Tenant's expense,
remove all such built-in movable furniture, equipment, trade fixtures,
computers, office machines and other personal property from the Property and
repair all damage caused by any such removal. Termination of this Lease shall
not affect the obligations of Tenant pursuant to this section 7.2 to be
performed after such termination.

                                    ARTICLE 8
                          Indemnification and Insurance

            8.1   Damage or Injury. Landlord shall not be liable to Tenant, and
Tenant hereby waives all claims against Landlord, for any damage to or loss or
theft of any property or for any bodily or personal injury, illness or death of
any person in, on or about the Premises or the Property arising at any time and
from any cause whatsoever, except to the extent caused by the gross negligence
or willful misconduct of Landlord. Tenant shall indemnify and defend Landlord
against and hold Landlord harmless from all claims, demands, liabilities,
damages, losses, costs and expenses, including reasonable attorneys' fees and
disbursements, arising from or related to any use or occupancy of the Premises,
or any condition of the Premises, or any default in the performance of Tenant's
obligations under this Lease, or any damage 10 any property (including property
of employees and invitees of Tenant) or any bodily or personal injury, illness
or death of any person (including employees and invitees of Tenant) occurring
in, on or about the Premises or any part thereof arising at any time and from
any cause whatsoever (except to the extent caused by the gross negligence or
willful misconduct of Landlord) or occurring in, on or about any part of the
Property other than the Premises when such damages, bodily or personal injury,
illness or death is caused by any act or omission of Tenant or its agents,
officers, employees, contractors, invitees or licensees. Landlord shall
indemnify and defend Tenant against and hold Tenant harmless from all claims,
demands, liabilities, damages, losses, costs and expenses, including reasonable
attorneys' fees and disbursements, arising from or related to the willful
misconduct or gross negligence of Landlord with respect to the common areas of
the Property resulting in any damage to property (subject to Section 8.4
hereof), or any bodily or personal injury, illness or death of any person
(including employees and invitees of Tenant) (except to the extent such damage
to property, bodily or personal injury, illness or death is caused by any act or
omission of Tenant or its agents, officers, employees, contractors, invitees or
licensees). This section 8.1 shall survive the termination of this Lease with
respect to any damage, bodily or personal injury, illness or death occurring
prior 10 such termination.

            8.2   Insurance Coverage and Amounts. Tenant shall, at all times
during the term of this Lease and at Tenant's sole cost and expense, obtain and
keep in force the insurance coverages and amounts set forth in this section 8.2.
Tenant shall maintain commercial general liability insurance, including
contractual liability, broad form property damage liability, fire legal
liability, premises and completed operations, and medical payments, with limits
not less than one million dollars ($1,000,000) per occurrence and aggregate,
insuring against claims for bodily injury, personal injury and property damage
arising from the use, occupancy or maintenance of the Premises and the Property.
The policy shall contain an exception to any pollution exclusion which insures
damage or injury arising out of heat, smoke or fumes from a hostile fire. Any
general aggregate shall apply on a per location basis. Tenant shall maintain
business auto liability insurance with limits not less than one million dollars
($1,000,000) per accident covering owned, hired and non-owned vehicles used by
Tenant. Tenant shall maintain umbrella excess liability insurance on a following
form basis in excess of the required commercial general liability, business auto
and employers liability insurance with limits not less than two million dollars
($2,000,000) per occurrence and aggregate. Tenant shall carry workers'
compensation insurance for all of its employees in statutory limits in the state
in which the Property is located and employers liability insurance which affords
not less than five hundred thousand dollars ($500,000) for each coverage. Tenant
shall maintain all risk property insurance for all personal property of Tenant
and improvements, fixtures and equipment constructed or installed by Tenant in
the Premises in an amount not less than the full replacement cost, which shall
include business income and extra expense coverage with limits not less than
fifty percent (50%) of gross revenues for a period of twelve (12) months. If
required by Landlord, Tenant shall maintain plate glass insurance coverage
against breakage of plate glass in the Premises. Any deductibles selected by
Tenant shall be the sole responsibility of Tenant.

            8.3   Insurance Requirements. All insurance and all renewals thereof
shall be issued by companies with a rating of at least "A-" "VIII" or better in
the current edition of Best's Insurance Reports and be licensed to do and doing
business in the state in which the Property is located. Each policy shall
expressly provide that the policy shall not be canceled or materially altered
without thirty (30) days prior written notice to Landlord and shall remain in
effect notwithstanding any such cancellation or alteration until such notice
shall have been given to Landlord and such period of thirty (30) days shall have
expired. All liability insurance (except employers liability) shall name
Landlord and any oilier parties designated by Landlord (including any investment
manager,

                                       8

<PAGE>

asset manager or property manager) as an additional insured, shall be primary
and noncontributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on any act, omission, event or condition
that occurred or arose (or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to Landlord. All property insurance shall name Landlord
as loss payee as respects Landlord's interest in any improvements and
betterments. Tenant shall deliver certificates of insurance, acceptable to
Landlord, to Landlord at least ten (10) days before the Commencement Date and at
least ten (10) days before expiration of each policy. If Tenant fails to insure
or fails to furnish any such insurance certificate, Landlord shall have the
right from time to time to effect such insurance for the benefit of Tenant or
Landlord or both of them, and Tenant shall pay to Landlord on written demand, as
additional rent, all premiums paid by Landlord.

            8.4   Subrogation. Tenant waives, on behalf of all insurers, under
all policies of property insurance now or hereafter carried by Tenant insuring
or covering the Premises, or any portion or any contents thereof, or any
operations therein, all rights of subrogation which any such insurer might
otherwise, if at all, have to any claims of Tenant against Landlord. Landlord
waives, on behalf of all insurers under all policies of property insurance now
or hereafter carried by Landlord insuring or covering the Property, or any
portion or any contents thereof, or any operations therein, all rights of
subrogation which any such insurer might otherwise, if at all, have to any
claims of Landlord against Tenant. Tenant shall procure from each of the
insurers under all policies of property insurance now or hereafter carried by
Tenant insuring or covering the Premises, or any portion or any contents
thereof, or any operations therein, a waiver of all rights of subrogation which
the insurer might otherwise, if at all, have to any claims of Tenant against
Landlord as required by this section 8.4.

            8.5   Landlord Insurance Requirements. Landlord shall, at all times
during the term of this Lease, secure and maintain:

            (a)   All risk property insurance coverage on the Property. Landlord
shall not be obligated to insure any furniture, equipment, trade fixtures,
machinery, goods, or supplies which Tenant may keep or maintain in the Premises
or any alteration, addition or improvement which Tenant may make upon the
Premises. In addition, Landlord shall secure and maintain rental income
insurance. Landlord may elect to self-insure for the coverage's required under
this Section 8.5. If the annual cost to Landlord for such property or rental
income insurance exceeds the standard rates because of the nature of Tenant's
operations, Tenant shall, upon the receipt of appropriate invoices, reimburse
Landlord for such increased cost.

            (b)   Commercial general liability insurance with limits not less
than 55,000,000 per occurrence and aggregate. Such insurance shall be in
addition to, and not in lieu of, insurance required to be maintained by Tenant.
Landlord may elect to self-insure for this coverage. Tenant shall not be named
as an additional insured on any policy of liability insurance maintained by
Landlord.

                                    ARTICLE 9
                             Assignment or Sublease

            9.1   Prohibition. Tenant shall not, directly or indirectly, without
the prior written consent of Landlord (which consent shall not be unreasonably
withheld or delayed), assign this Lease or any interest herein, or sublease the
Premises or any part thereof, or permit the use or occupancy of the Premises by
any person or entity other than Tenant. Tenant shall not, directly or
indirectly, without the prior written consent of Landlord, which shall not be
unreasonably withheld or delayed, pledge, mortgage or hypothecate this Lease or
any interest herein. Notwithstanding the foregoing grammatical sentence,
Landlord hereby consents to the sublease from time to time of all or any portion
of the Premises to Build-A-Bear Workshop, L.L.C., a Missouri limited liability
company ("Build-A-Bear"). This Lease shall not, nor shall any interest herein,
be assignable as to the interest of Tenant involuntarily or by operation of law
without the prior written consent of Landlord. For purposes of this Lease, any
of the following transfers on a cumulative basis shall constitute an assignment
of this Lease that requires the prior written consent of Landlord: if Tenant is
a corporation, the transfer of more than forty-nine percent (49%) of the stock
of the corporation if Tenant is a partnership, the transfer of more than
forty-nine percent (49%) of the capital or profits interest in the partnership;
and if Tenant is a trust, the transfer of more than forty-nine (49%) of the
beneficial interest under the trust. Any of the foregoing acts, without such
prior written consent of Landlord, shall be void and shall, at the option of
Landlord, constitute a default that entitles Landlord to terminate this Lease.
Tenant agrees that the instrument by which any assignment or sublease to which
Landlord consents is accomplished shall expressly provide that the assignee or
subtenant will perform all of the covenants to be performed by Tenant under this
Lease (in the case of a sublease, only insofar as such covenants relate to the
portion of the Premises subject to such sublease and provided further, that only
in the event of a sublease of all or a portion of the Premises to Build-A-Bear,
Build-A-Bear shall not be required to carry business income and extra expense
insurance) as and when performance is due after the effective date of the
assignment or sublease and that Landlord will have the right to enforce such
covenants directly against such assignee or subtenant. Any purported assignment
or sublease without an instrument containing the foregoing provisions shall be
void. Tenant shall in all cases remain liable for the performance by any
assignee or subtenant of all such covenants.

            Without first obtaining Landlord's written consent, the Tenant named
herein may, at any time and from time to time, assign its interest under this
Lease or sublet all or any part of the Premises to a Related Corporation (as
hereinafter defined) to the Tenant named herein or a Successor Corporation (as
hereinafter defined) to the Tenant named herein (provided said Related
Corporation or Successor Corporation, as the case may be, has a net worth as of
the date of said assignment or transfer equal to or greater than that of Tenant,
expressly assumes this Lease and Tenant's obligations hereunder, without release
of the Tenant named herein, and delivers to Landlord

                                       9

<PAGE>

such assumption in writing prior to the effective date of such assignment or
sublease). The term "Related Corporation" means a corporation, partnership, or
other business entity, which, directly or indirectly controls, is controlled by,
or is under common control with, another corporation, partnership, or other
business entity. If more than fifty percent (50%) of the voting stock of a
corporation shall be owned by another corporation or by any partnership or other
business entity, the corporation whose stock is 50 owned shall be deemed to be
controlled by the corporation, partnership, or business entity owning such
stock. The term "Successor Corporation" means a corporation or other business
entity into or with which another corporation or other business entity shall be
merged or consolidated or to which all or substantially all of the assets of
such other corporation or other business entity shall be transferred.

            9.2   Landlord's Consent or Termination. If Tenant wishes to assign
this Lease or sublease all or any part of the Premises. Tenant shall give
written notice to Landlord identifying the intended assignee or subtenant by
name and address and specifying all of the terms of the intended assignment or
sublease. Tenant shall give Landlord such additional information concerning the
intended assignee or subtenant (including complete financial statements and a
business history) or the intended assignment or sublease (including true copies
thereof) as Landlord requests. Except for a sublease to Build-A-Bear and the
assignments permitted without consent pursuant to Section 9.1 above, for a
period of thirty (30) days after such written notice is given by Tenant,
Landlord shall have the right, by giving written notice to Tenant, (a) to
consent in writing to the intended assignment or sublease, unless Landlord
determines not to consent, or (b) in the case of an assignment of this Lease or
sublease of substantially the entire Premises for substantially the balance of
the term of this Lease, to terminate this Lease, which termination shall be
effective as of the date on which the intended assignment or sublease would have
been effective if Landlord had not exercised such termination right.

            9.3   Completion. If Landlord consents in writing, Tenant may
complete the intended assignment or sublease subject to the following covenants:
(a) the assignment or sublease shall be on the same terms as set forth in the
written notice given by Tenant to Landlord, (b) no assignment or sublease shall
be valid and no assignee or subtenant shall take possession of the Premises or
any part thereof until an executed duplicate original of such assignment or
sublease, in compliance with section 9.1 hereof, has been delivered to Landlord,
(c) no assignee or subtenant shall have a right further to assign or sublease,
and (d) all "excess rent" (as hereinafter defined) derived from such assignment
or sublease shall be paid to Landlord. Such excess rent shall be deemed to be,
and shall be paid by Tenant to Landlord as additional rent. Tenant shall pay
such excess rent to Landlord immediately as and when such excess rent becomes
due and payable to Tenant. As used in this section 9.3, "excess rent" shall mean
the amount by which the total money and other economic consideration to be paid
by the assignee or subtenant as a result of an assignment or sublease, whether
denominated rent or otherwise, exceeds, in the aggregate, the total amount of
rent which Tenant is obligated to pay to Landlord under this Lease (prorated to
reflect the rent allocable to the portion of the Premises subject to such
assignment or sublease), less only the reasonable costs paid by Tenant for
additional improvements installed in the portion of the Premises subject to such
assignment or sublease by Tenant at Tenant's sole cost and expense for the
specific assignee or subtenant in question and reasonable leasing commissions
paid by Tenant in connection with such assignment or sublease, without deduction
for carrying costs due to vacancy or otherwise. Such costs of additional
improvements and leasing commissions shall be amortized without interest over
the term of such assignment or sublease.

            9.4   Tenant Not Released. No assignment or sublease whatsoever
shall release Tenant from Tenant's obligations and liabilities under this Lease
or alter the primary liability of Tenant to pay all rent and to perform all
obligations to be paid and performed by Tenant. No assignment or sublease shall
amend or modify this Lease in any respect, and every assignment and sublease
shall be subject and subordinate to this Lease. The acceptance of rent by
Landlord from any other person or entity shall not be deemed to be a waiver by
Landlord of any provision of this Lease. Consent to one assignment or sublease
shall not be deemed consent to any subsequent assignment or sublease. Tenant
shall pay to Landlord all direct costs and shall reimburse Landlord for all
expenses incurred by Landlord in connection with any assignment or sublease
requested by Tenant. If any assignee, subtenant or successor of Tenant defaults
in the performance of any obligation to be performed by Tenant under this Lease,
Landlord may proceed directly against Tenant without the necessity of
exhausting remedies against such assignee, subtenant or successor. Landlord may
consent to subsequent assignments or subleases or amendments or modifications to
this Lease with assignees, subtenants or successors of Tenant, without notifying
Tenant or any successor of Tenant and without obtaining any consent thereto from
Tenant or any successor of Tenant, and such action shall not release Tenant from
liability under this Lease.

                                   ARTICLE 10
                         Events of Default and Remedies

            10.1  Default by Tenant. The occurrence of any one or more of the
following events ("Event of Default") shall constitute a breach of this Lease by
Tenant:

            (a)   Tenant fails to pay any Base Rent, or any additional monthly
rent under section 3.1 hereof, or any additional rent or other amount of money
or charge payable by Tenant hereunder as and when such rent becomes due and
payable and such failure continues for more than five (5) days after Landlord
gives written notice thereof to Tenant, provided, however, that after the second
such failure in a calendar year, only the passage of time, but no further
written notice, shall be required to establish an Event of Default in the same
calendar year; or

            (b)   Tenant fails to perform or breaches any other agreement or
covenant of this Lease to be performed or observed by Tenant as and when
performance or observance is due and such failure or breach continues for more
than twenty (20) days after Landlord gives written notice thereof to Tenant;
provided, however,

                                       10

<PAGE>

that if, by the nature of such agreement or covenant, such failure or breach
cannot reasonably be cured within such period of twenty (20) days, an Event of
Default shall not exist as long as Tenant commences with due diligence and
dispatch the curing of such failure or breach within such period of twenty (20)
days and, having so commenced, thereafter prosecutes with diligence and dispatch
and completes the curing of such failure or breach; or

            (c)   Tenant (i) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy, insolvency or other debtors' relief law of any jurisdiction, (ii)
makes an assignment for the benefit of its creditors, or (iii) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of Tenant or of any substantial part of Tenant's property; or

            (d)   Without consent by Tenant, a court or government authority
enters an order, and such order is not vacated within thirty (30) days, (i)
appointing a custodian, receiver, trustee or other officer with similar powers
with respect to Tenant or with respect to any substantial part of Tenant's
property, or (ii) constituting an order for relief or approving a petition for
relief or reorganization or arrangement or any other petition in bankruptcy or
for liquidation or to take advantage of any bankruptcy, insolvency or other
debtors' relief law of any jurisdiction, or (iii) ordering the dissolution,
winding-up or liquidation of Tenant; or

            (e)   This Lease or any estate of Tenant hereunder is levied upon
under any attachment or execution and such attachment or execution is not
vacated within thirty (30) days; or

            (f)   Tenant abandons the Premises.

            10.2  Termination. If an Event of Default occurs, Landlord shall
have the right at any time to give a written termination notice to Tenant and,
on the date specified in such notice, Tenant's right to possession shall
terminate and this Lease shall terminate. Upon such termination, Landlord shall
have the full and immediate right to possession of the Premises and Landlord
shall have the right to recover from Tenant all unpaid rent which had been
earned at the time of termination, all unpaid rent for the balance of the term
of this Lease after termination, and all other amounts necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
all of Tenant's obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom.

            10.3  Continuation. If an Event of default occurs, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's right to
possession, and Landlord shall have the right to enforce all its rights and
remedies under this Lease, including the right to recover all rent as it becomes
due under this Lease. Acts of maintenance or preservation or efforts to relet
the Premises or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession unless written notice of termination is given by
Landlord to Tenant.

            10.4  Remedies Cumulative. Upon the occurrence of an Event of
Default, Landlord shall have the right to exercise and enforce all rights and
remedies granted or permitted by law. The remedies provided for in this Lease
are cumulative and in addition to all other remedies available to Landlord at
law or in equity by statute or otherwise. Exercise by Landlord of any remedy
shall not be deemed to be an acceptance of surrender of the Premises by Tenant,
either by agreement or by operation of law. Surrender of the Premises can be
effected only by the written agreement of Landlord and Tenant.

            10.5  Tenant's Primary Duty. All agreements and covenants to be
performed or observed by Tenant under this Lease shall be at Tenant's sole cost
and expense and without any abatement of rent. If Tenant fails to pay any sum of
money to be paid by Tenant or to perform any other act to be performed by Tenant
under this Lease. Landlord shall have the right, but shall not be obligated, and
without waiving or releasing Tenant from any obligations of Tenant, to make any
such payment or to perform any such other act on behalf of Tenant in accordance
with this Lease. All sums so paid by Landlord and all costs incurred or paid by
Landlord shall be deemed additional rent hereunder and Tenant shall pay the same
to Landlord on written demand, together with interest on all such sums and costs
from the date of expenditure by Landlord to the date of repayment by Tenant at
the rate of ten percent (10%) per annum.

            10.6  Abandoned Property. If Tenant abandons the Premises, or is
dispossessed by process of law or otherwise, any movable furniture, equipment,
trade fixtures or personal property belonging to Tenant and left in the Premises
shall be deemed to be abandoned, at the option of Landlord, and Landlord shall
have the right to sell or otherwise dispose of such personal property in any
commercially reasonable manner.

            10.7  Landlord Default. If Landlord defaults under this Lease,
Tenant shall give written notice to Landlord specifying such default with
particularity, and Landlord shall have thirty (30) days after receipt of such
notice within which to cure such default. In the event of any default by
Landlord, Tenant's exclusive remedy shall be an action for damages.
Notwithstanding any other provision of this Lease, Landlord shall not have any
personal liability under this Lease. In the event of any default by Landlord
under this Lease, Tenant agrees to look solely to the equity or interest then
owned by Landlord in the Property, and in no event shall any deficiency judgment
or personal money judgment of any kind be sought or obtained against Landlord.

                                       11

<PAGE>

                                   ARTICLE 11
                             Damage or Destruction

            11.1  Restoration. If the Property or the Premises, or any part
thereof, is damaged by fire or other casually before the Commencement Date or
during the term of this Lease, and this Lease is not terminated pursuant to
section 11.2 hereof, Landlord shall repair such damage and restore the Property
and the Premises to substantially the same condition in which the Property and
the Premises existed before occurrence of such fire or other casualty and
this Lease shall, subject to this section 11.1, remain in full force and effect.
If such fire or other casualty damages the Premises or common areas of the
Property necessary for Tenant's use and occupancy of the Premises and if such
damage is not the result of the negligence or willful misconduct of Tenant or
Tenant's agents, officers, employees, contractors, licensees or invitees, then,
during the period the Premises is rendered unusable by such damage, Tenant shall
be entitled to a reduction in Base Rent in the proportion that the area of the
Premises rendered unusable by such damage bears to the total area of the
Premises. Landlord shall not be obligated to repair any damage to, or to make
any replacement of, any movable furniture, equipment, trade fixtures or personal
property in the Premises. Tenant shall, at Tenant's sole cost and expense,
repair and replace all such movable furniture, equipment, trade fixtures and
personal property.

            11.2  Termination of Lease. If the Property or the Premises, or any
part thereof, is damaged by fire or other casualty before the Commencement Date
or during the term of this Lease and (a) such fire or other casualty occurs
during the last twelve (12) months of the term of this Lease and the repair and
restoration work to be performed by Landlord in accordance with section 11.1
hereof cannot, as reasonably estimated by Landlord, be completed within sixty
(60) days after the occurrence of such fire or other casualty, or (b) the
insurance proceeds received by Landlord in respect of such damage are not
adequate to pay the entire cost, as reasonably estimated by Landlord, of the
repair and restoration work to be performed by Landlord in accordance with
section 11.1 hereof (including inadequacy resulting from the requirement of the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises that the insurance proceeds be applied to such indebtedness), or (c)
the repair and restoration work to be performed by Landlord in accordance with
section 11.1 hereof cannot, as reasonably estimated by Landlord, be completed
within one hundred twenty (120) days after the occurrence of such fire or other
casualty, then, in any such event, Landlord or Tenant shall have the right, by
giving written notice to the other party hereto within sixty (60) days after the
occurrence of such fire or other casualty, to terminate this Lease as of the
date of such notice. If Landlord or Tenant does not exercise the right to
terminate this Lease in accordance with this section 11.2, Landlord shall repair
such damage and restore the Property and the Premises in accordance with section
11.1 hereof and this Lease shall, subject to section 11.1 hereof, remain in full
force and effect.

                                   ARTICLE 12
                                 Eminent Domain

            12.1  Condemnation. Landlord shall have the right to terminate this
Lease if any part of the Premises or any substantial part of the Property
(whether or not it includes the Premises) is taken by exercise of the power of
eminent domain before the Commencement Date or during the term of this Lease.
Tenant shall have the right to terminate this Lease if a substantial portion of
the Premises is taken by exercise of the power of eminent domain before the
Commencement Date or during the term of this Lease and the remaining portion of
the Premises is not reasonably suitable for Tenant's purposes. In each such
case, Landlord or Tenant shall exercise such termination right by giving
written notice to the other within thirty (30) days after the date of such
taking. If either Landlord or Tenant exercises such right to terminate this
Lease in accordance with this section 12.1, this Lease shall terminate as of the
date of such taking. If neither Landlord nor Tenant exercises such right to
terminate this Lease in accordance with this section 12.1, this Lease shall
terminate as to the portion of the Premises so taken as of the date of such
taking and shall remain in full force and effect as to the portion of the
Premises not so taken, and the Base Rent and Tenant's Percentage Share shall be
reduced as of the date of such taking in the proportion that the area of the
Premises so taken bears to the total area of the Premises. If all of the
Premises is taken by exercise of the power of eminent domain before the
Commencement Date or during the term of this Lease, this Lease shall terminate
as of the date of such taking.

            12.2  Award. If all or any part of the Premises is taken by exercise
of the power of eminent domain, all awards, compensation, damages, income, rent
and interest payable in connection with such taking shall, except as expressly
set forth in this section 12.2, be paid to and become the property of Landlord,
and Tenant hereby assigns to Landlord all of the foregoing. Without limiting the
generality of the foregoing, Tenant shall have no claim against Landlord or the
entity exercising the power of eminent domain for the value of the leasehold
estate created by this Lease or any unexpired term of this Lease. Tenant shall
have the right to claim and receive directly from the entity exercising the
power of eminent domain only the share of any award determined to be owing to
Tenant for the taking of improvements installed in the portion of the Premises
so taken by Tenant at Tenant's sole cost and expense based on the unamortized
cost actually paid by Tenant for such improvements, for the taking of Tenant's
movable furniture, equipment, trade fixtures and personal property, for loss of
goodwill, for interference with or interruption of Tenant's business, or for
removal and relocation expenses.

            12.3  Temporary Use. Notwithstanding sections 12.1 and 12.2 hereof
to the contrary, if the use of all or any part of the Premises is taken by
exercise of the power of eminent domain during the term of this Lease on a
temporary basis for a period less than the term of this Lease remaining after
such taking, this Lease shall continue in full force and effect. Tenant shall
continue to pay all of the rent and to perform all of the covenants of Tenant in
accordance with this Lease, to the extent reasonably practicable under the
circumstances, and the condemnation proceeds in respect of such temporary taking
shall be paid to Tenant.

                                       12

<PAGE>

            12.4 Definition of Taking. As used herein, a "taking" means the
acquisition of all or part of the Property for a public use by exercise of the
power of eminent domain or voluntary conveyance in lieu thereof and the taking
shall be considered to occur as of the earlier of the date on which possession
of the Property (or part so taken) by the entity exercising the power of eminent
domain is authorized as stated in an order for possession or the date on which
title to the Properly (or part so taken) vests in the entity exercising the
power of eminent domain.

                                   ARTICLE 13
                             Subordination and Sale

            13.1 Subordination. This Lease shall be subject and subordinate at
all times to the lien of all mortgages and deeds of trust securing any amount or
amounts whatsoever which may now exist or hereafter be placed on or against the
Property or on or against Landlord's interest or estate therein, all without the
necessity of having further instruments executed by Tenant to effect such
subordination. Notwithstanding the foregoing, in the event of a foreclosure of
any such mortgage or deed of trust or of any other action or proceeding for the
enforcement thereof, or of any sale thereunder, this Lease shall not be
terminated or extinguished, nor shall the rights and possession of Tenant
hereunder be disturbed, if no Event of Default (beyond any applicable cure
period) then exists under this Lease, and Tenant shall attorn to the person who
acquires Landlord's interest hereunder through any such mortgage or deed of
trust. Tenant agrees to execute, acknowledge and deliver upon demand such
further instruments evidencing such subordination of this Lease to the lien of
all such mortgages and deeds of trust as may reasonably be required by Landlord.
Notwithstanding the foregoing, if the holder of any such mortgage or deed of
trust requests that this Lease be made superior, rather than subordinate to such
deed of trust or mortgage, then Tenant agrees to execute, acknowledge and
deliver upon demand such instruments effectuating such priority.

            13.2 Sale of the Property. If the original Landlord hereunder, or
any successor owner of the Property, sells or conveys the Property, all
liabilities and obligations on the part of the original Landlord, or such
successor owner, under this Lease accruing after such sale or conveyance shall
terminate and the original Landlord, or such successor owner, shall
automatically be released therefrom, and thereupon all such liabilities and
obligations shall be binding upon the new owner, Tenant agrees to attorn to such
new owner.

            13.3 Estoppel Certificate. At any time and from time to time,
Landlord or Tenant shall, within thirty (30) days after written request by
Landlord, execute, acknowledge and deliver to the other party hereto a
certificate certifying; (a) that this Lease is unmodified and in full force and
effect (or, if there have been modifications, that this Lease is in full force
and effect as modified, and stating the date and nature of each modification);
(b) the Commencement Date and the Expiration Date determined in accordance with
Article 2 hereof and the date, if any, to which all rent and other sums payable
hereunder have been paid; (c) that no notice has been received of any default
hereunder which has not been cured, except as to defaults specified in such
certificate; (d) that there is no default under this Lease, except as to
defaults specified in such certificate; and (e) such other matters as may be
reasonably requested by the requesting party or any actual or prospective
purchaser or mortgage lender. Landlord shall not be required to give any such
estoppel certificate more than once per calendar year. Any such certificate may
be relied upon by the requesting party and any actual or prospective purchaser
or mortgage lender of the Property or any part thereof. At any time and from
time to time, Tenant shall, within ten (10) days after written request by
Landlord, deliver to Landlord copies of all current financial statements
(including a balance sheet, an income statement, and an accumulated retained
earnings statement), annual reports, and other financial and operating
information and data of Tenant prepared by Tenant in the course of Tenant's
business, which Tenant has already prepared at the time of such, request. Unless
available to the public, Landlord shall disclose such financial statements,
annual reports and other information or data only to actual or prospective
purchasers or mortgage lenders of the Property or any part thereof, and
otherwise keep them confidential unless other disclosure is required by law.

                                   ARTICLE 14
                                     Notices

            14.1 Method. All requests, approvals, consents, notices and other
communications given by Landlord or Tenant under this Lease shall be properly
given only if made in writing and either deposited in the United States mail,
postage prepaid, certified with return receipt requested, or delivered by hand
(which may be through a messenger or recognized delivery, courier or air express
service, which obtains a receipt for delivery) and addressed as follows: To
Landlord at the address of Landlord specified in the Basic Lease Information, or
at such other place as Landlord may from time to time designate in a written
notice to Tenant; to Tenant at the address of Tenant specified in the Basic
Lease Information, or at such other place as Tenant may from time to time
designate in a written notice to Landlord; and to Guarantor at the address of
Guarantor specified in the Basic Lease information, or at such other place as
Guarantor may from time to time designate in a written notice to Landlord. Such
requests, approvals, consents, notices and other communications shall be
effective on the date of receipt (evidenced by the certified mail receipt) if
mailed or on the date of hand delivery if hand delivered. If any such request,
approval, consent, notice or other communication is not received or cannot be
delivered due to a change in the address of the receiving party of which notice
was not previously given to the sending party or due to a refusal to accept by
the receiving party, such request, approval, consent, notice or other
communication shall be effective on the date delivery is attempted. Any request,
approval, consent, notice or other communication under this Lease may be given
on behalf of a party by the attorney for such party.

                                       13
<PAGE>

                                   ARTICLE 15
                                  Miscellaneous

            15.1  General. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". If there is more than one Tenant, the obligations hereunder imposed
upon Tenant shall be joint and several. Time is of the essence of this Lease and
each and all of its provisions. This Lease shall benefit and bind Landlord and
Tenant and the permitted personal representatives, heirs, successors and assigns
of Landlord and Tenant. If any provision of this Lease is determined to be
illegal or unenforceable, such determination shall not affect any other
provision of this Lease and all such other provisions shall remain in full force
and effect. Tenant shall not record this Lease or any memorandum or short form
of it. This Lease shall be governed by and construed in accordance with the laws
of the state in which the Property is located.

            15.2  No Waiver. The waiver by Landlord or Tenant of any breach of
any covenant in this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or any other covenant in this Lease, nor shall any custom or
practice which may grow up between Landlord and Tenant in the administration of
this Lease be construed to waive or to lessen the right of Landlord or Tenant to
insist upon the performance by Landlord or Tenant in strict accordance with
this Lease. The subsequent acceptance of rent hereunder by Landlord or the
payment of rent by Tenant shall not waive any preceding breach by Tenant of any
covenant in this Lease, nor cure any Event of Default, nor waive any forfeiture
of this Lease or unlawful detainer action, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's or Tenant's
knowledge of such preceding breach at the time of acceptance or payment of such
rent.

            15.3  Attorneys' Fees. If there is any legal action or proceeding
between Landlord and Tenant to enforce this Lease or to protect or establish any
right or remedy under this Lease, the unsuccessful party to such action or
proceeding shall pay to the prevailing party all costs and expenses, including
reasonable attorneys' fees and disbursements incurred by such prevailing party
in such action or proceeding and in any appeal in connection therewith. If such
prevailing party recovers a judgment in any such action, proceeding or appeal,
such costs, expenses and attorneys' fees and disbursements shall be included in
and as a part of such judgment.

            15.4  Exhibits. Exhibit A (Plan(s) Outlining the Premises and the
Property), Exhibit B (Description of Landlord's Work), Exhibit C (Form of
Memorandum Confirming Term), Exhibit D (Renewal Option) and any other
attachments specified in the BASIC LEASE INFORMATION, are attached to and made a
part of this Lease.

            15.5  Broker(s). Tenant warrants and represents to Landlord that
Tenant has negotiated this Lease directly with the real estate broker(s)
specified in the BASIC LEASE INFORMATION and has not authorized or employed, or
acted by implication to authorize or to employ, any other real estate broker to
act for Tenant in connection with this Lease. Landlord agrees to pay any all
brokerage fees and commissions to the real estate broker(s) specified in the
BASIC LEASE INFORMATION.

            15.6  Waivers of Jury Trial and Certain Damages. Landlord and Tenant
each hereby expressly, irrevocably, fully and forever releases, waives and
relinquishes any and all right to trial by jury and any and all right to receive
punitive, exemplary and consequential damages from the other (or any past,
present or future board member, trustee, director, officer, employee, agent,
representative, or advisor of the other) in any claim, demand, action, suit,
proceeding or cause of action in which Landlord and Tenant are parties, which in
any way (directly or indirectly) arises out of, results from or relates to any
of the following, in each case whether now existing or hereafter arising and
whether based on contract or tort or any other legal basis: This Lease; any
past, present, or future act, omission, conduct or activity with respect to this
Lease; any transaction, event or occurrence contemplated by this Lease; the
performance of any obligation or the exercise of any right under this Lease; or
the enforcement of this Lease. Landlord and Tenant reserve the right to recover
actual or compensatory damages, with interest, attorneys' fees, costs and
expenses as provided in this Lease, for any breach of this Lease.

            15.7  Entire Agreement. There are no oral agreements between
Landlord and Tenant affecting this Lease, and this Lease supersedes and cancels
any and all previous negotiations, arrangements, brochures, offers, agreements,
and understandings, oral or written, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease, the Premises or the Property. There are no commitments, representations
or assurances between Landlord and Tenant or between any real estate broker and
Tenant other than those expressly set forth in this Lease and all reliance with
respect to any commitments, representations or assurances is solely upon
commitments, representations and assurances expressly set forth in this Lease.
This Lease may not be amended or modified in any respect whatsoever except by an
agreement in writing signed by Landlord and Tenant.

                                       14

<PAGE>

            IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as
of the date specified in the Basic Lease Information.

NEWSPACE, INC.,                   STATE OF CALIFORNIA PUBLIC EMPLOYEES'
a Missouri corporation            RETIREMENT SYSTEM, a unit of the State
                                  and Consumer Services Agency of the State
                                  of California

                                  By:  CalEast Industrial Investors, LLC.
By: ___________________________   Its: Duly authorized agent
    Name_______________________
    Title______________________        By:   LaSalle Investment Management, Inc.
                                       Its:  Manager

                                       By: _____________________________________
                                             Rebecca S. Smith
                                       Its:  Vice President

                                       15

<PAGE>

                                    EXHIBIT A

                 Plan(s) Outlining the Premises and the Property

Premises: Suites 1950-54, 1956, 1958, 1960-62, 1964, and 1990, comprising.
          45,696 total square feet.

                                  [FLOOR PLAN]

<TABLE>
<S>                    <C>                     <C>                 <C>             <C>                    <C>
Building Name         [ILLEGIBLE] Business    Description         Marketing       State of California     TRAMMELL
                      Center                                      Plan            Public Employee's       CROW
Building Code         BIBC                    Date                [ILLEGIBLE]     Retirement System       COMPANY
Building [ILLEGIBLE]  [ILLEGIBLE]             Project No.         [ILLEGIBLE]     Advisor:                GRAY
                                                                                  LaSelle Advisors LTD.
</TABLE>

This site plan or floor plan is used solely for the purpose of identifying the
approximate location and size of the Premises. Building sizes, site dimensions,
access, common and parking areas, and existing tenants and locations are subject
to change at Landlord's discretion.

                                  Exhibit A-1
<PAGE>

                                   EXHIBIT B

                         Description of Landlord's Work

                                      NONE

<PAGE>

                                    EXHIBIT C

                           MEMORANDUM CONFIRMING TERM

      THIS MEMORANDUM, made as of June 14, 2000, by and between STATE OF
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, a unit of the State and Consumer
Services Agency of the State of California ("Landlord"), and NEWSPACE, INC., a
Missouri corporation, ("Tenant").

                                   WITNESSETH:

      Recital of Facts:

      Landlord and Tenant entered into the Industrial Lease (the "Lease") dated
June 14, 2000. Words defined in the Lease have the same meanings in this
Memorandum.

      NOW, THEREFORE, in consideration of the covenants in the Lease, Landlord
and Tenant agree as follows:

      1.    Landlord and Tenant hereby confirm that:

      (a)   The Commencement Date under the Lease is June 14, 2000

      (b)   The Expiration Date under the Lease is June 30, 2008

      (c)   Landlord has delivered possession of the Premises to Tenant as
         required by the Lease, and Tenant's obligation to pay rent begins under
         the Lease is June 14, 2000.

      2.    Tenant hereby confirms that:

      (a)   All commitments, representations and assurances made to induce
         Tenant to enter into the Lease have been fully satisfied;

      (b)   All improvements to the Property and in the Premises to be
         constructed or installed by Landlord have been completed and furnished
         in accordance with the Lease to the satisfaction of Tenant; and

      (c)   Tenant has accepted and is in full and complete possession of the
         Premises.

      3.    This Memorandum shall be binding upon and inure to the benefit of
         Landlord and Tenant and their permitted successors and assigns under
         the Lease. The Lease is in full force and effect.

      IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as
of the date first hereinabove written.

NEWSPACE, INC.               STATE OF CALIFORNIA PUBLIC EMPLOYEES'
a Missouri corporation       RETIREMENT SYSTEM, a unit of the State and
                             Consumer Services Agency of the State of California

                             By: CalEast Industrial Investors, LLC.
By: _______________________      Its: Duly authorized agent
   Name____________________
   Title___________________            By:  LaSalle Investment Management, Inc.
                                       Its: Manager

                                       By:______________________________________
                                            Rebecca S. Smith
                                       Its: Vice President

<PAGE>

                                   EXHIBIT D

               ADDENDUM ATTACHED TO AND MADE A PART OF INDUSTRIAL
                                  LEASE BETWEEN
                      STATE OF CALIFORNIA PUBLIC EMPLOYEES'
                        RETIREMENT SYSTEM, LANDLORD, AND
                                 NEWSPACE, INC.

16. Suite 1990. The term of the Lease with respect to Suite 1990 (approximately
4,947 square feet, more or less) shall terminate and be of no further force or
effect on June 30, 2003. Tenant shall vacate and surrender possession of Suite
1990 in accordance with the terms of the Lease on or before June 30, 2003.
Provided there is no outstanding Event of Default beyond any applicable cure
period by Tenant under this Lease and subject to the terms and conditions of
this Section. Tenant shall have two (2) options to renew ("Option to Renew") the
term of the Lease with respect to Suite 1990 for two (2) periods of five (5)
years each ("Option Terms"). If the Options to Renew are exercised during any
applicable cure period following an event, which with the passage of time or the
giving of notice, or both, would constitute an Event of Default, then such
exercise shall be void and of no further force or effect unless the cure is
fully completed within the applicable cure period, but in no event later than
the expiration or earlier termination of the Lease. Except as set forth in this
Section, all terms and conditions shall remain the same during the Option Terms
except the Base Rent for Suite 1990 shall be adjusted to the then Fair Market
Rental Rate. Unless otherwise agreed, there shall be no rent concessions or
tenant improvements. "Fair Market Rental Rate" shall mean the market rental then
being offered for comparable space in comparable location and condition to Suite
1990, computed as described in the remainder of this Section. If Tenant fails to
notify Landlord in writing of its intent to exercise its Options to Renew as set
forth in the preceding paragraph, the Options to Renew shall terminate, and
Landlord shall be free to enter into a Lease with a third party. If Tenant fails
to exercise the first five year Option to Renew for Suite 1990, then the second
five year Option to Renew shall terminate.

            Tenant shall give Landlord written notice of Its intent to exercise
the Options to Renew at least six (6) months but not more than fifteen (15)
months prior to June 30, 2003 with respect to the first five (5) year Option to
Renew and at least six (6) months but not more than fifteen (15) months prior to
June 30, 2008 with respect to the second five (5) year Option to Renew. Within
twenty (20) days after Landlord receives the notice described in the previous
sentence. Landlord will provide Tenant with Landlord's determination of the Fair
Market Rental Rate for comparable space as of the end of the expiring Lease Term
with respect to Suite 1990. Tenant shall have thirty (30) days from Landlord's
notification of the proposed Base Rent to accept Landlord's determination of
Base Rent for the Option Term(s) or provide its own determination of Base Rent
based upon comparable space for Landlord's consideration. Such Fair Market
Rental Rate shall be determined by agreement between Landlord and Tenant.

            If Landlord and Tenant do not agree on the Fair Market Rental Rate
for Suite 1990 by the date seven (7) months prior to the first day of the Option
Term(s), such Fair Market Rental Rate shall be determined as follows: Landlord
and Tenant each shall appoint one (1) appraiser within fifteen (15) days after
such date. If either Landlord or Tenant fails to appoint its appraiser within
such period of fifteen (15) days, such appraiser shall be appointed by the
following process; Landlord shall make application to the president of the Real
Estate Board of Metropolitan St. Louis to name three qualified appraisers for
consideration; then Landlord and Tenant will each strike one of those
appraisers, with the appraiser that was not struck becoming the previously
unnamed appraiser. Each such appraiser shall appraise such Fair Market Rental
Rate for Suite 1990 and complete and submit his written appraisal setting forth
the appraised value to Landlord and Tenant within thirty (30) days after the
appointment of both such appraisers. If the higher appraised value in such two
(2) appraisals is not more than one hundred ten percent (110%) of the lower
appraised value, such Fair Market Rental Rate for Suite 1990 shall be the
average of the two (2) appraised values. If the higher appraised value is more
than one hundred ten percent (110%) of the lower appraised value, Landlord and
Tenant shall agree upon and appoint a neutral third appraiser within fifteen
(15) days after both of the first two (2) appraisals have been submitted to
Landlord and Tenant. If Landlord and Tenant do not agree upon and fail to
appoint such neutral third appraiser within such period of fifteen (15) days,
such neutral third appraiser shall be appointed by the following process:
Landlord shall make application to the president of the Real Estate Board of
Metropolitan St. Louis to name three qualified appraisers for consideration;
then Landlord and Tenant will each strike one of those appraisers, with the
appraiser that was not struck becoming the neutral third appraiser. The neutral
third appraiser shall appraise such Fair Market Rental Rate for Suite 1990 and
complete and submit his written appraisal setting forth the appraised value to
Landlord and Tenant within thirty (30) days after his appointment. Such Fair
Market Rental Rate for Suite 1990 shall be the average of the two (2) appraised
values in such three (3) appraisals that are closest to each other. If the
middle appraised rental is the average of the other two, the then middle rental
shall be such Fair Market Rental Rate. The Fair Market Rental Rate for Suite
1990, determined in accordance with this Section, shall be conclusive and
binding upon Landlord and Tenant. All appraisers so appointed, shall be members
of the American Institute of Real Estate Appraisers of the National Association
of Realtors or real estate professionals qualified by appropriate training or
experience and having at least ten (10) years of experience dealing with
commercial real estate. The appraisers shall have no power or authority to amend
or modify this Lease in any respect and their jurisdiction is limited
accordingly. Landlord and Tenant each shall pay the fee and expenses charged by
its appraiser plus one-half of the fee and expenses charged by the neutral third
appraiser. If the Fair Market Rental Rate for Suite 1990 has not been determined
in accordance with this Section by the first day of the Option Term, Tenant
shall pay as Base Rent the average of the amount of Base Rent proposed by
Landlord and the amount of Base Rent proposed by Tenant, but not less than the
monthly Base Rent for the month immediately preceding the Option Term, effective
on the first day of the Option Term and Tenant shall continue to pay such
average until the Fair Market Rental Rate for Suite 1990 has been determined, at
which time any adjustment in the Base Rent resulting therefrom shall be made
retroactively within ten (10) days after such determination.

17. Option to Extend Term of Lease.

            (a) Option. Provided there is no outstanding Event of Default beyond
any applicable cure period by Tenant under this Lease and subject to the terms
and conditions of this Section, Tenant shall have one (1) option to renew

<PAGE>


("Option to Renew") the term of the Lease for one (1) period of five (5) years
("Option Term"). If the Option to Renew is exercised during any applicable cure
period following an event, which with the passage of time or the giving of
notice, or both, would constitute an Event of Default, then such exercise shall
be void and of no further force or effect unless the cure is fully completed
within the applicable cure period, but in no event later than the expiration or
earlier termination of the Lease. Except as set forth in this Section, all terms
and conditions shall remain the same during the Option Term except the Base Rent
at the end of the initial term, as defined in Base Lease Information of the
Lease, shall be adjusted to the then Fair Market Rental Rate. Unless otherwise
agreed, there shall be no rent concessions or tenant improvements. "Fair Market
Rental Rate" shall mean the market rental then being offered for comparable
space in comparable location and condition to the Premises, computed as
described in the remainder of this Section. If Tenant fails to notify Landlord
in writing of its intent to exercise its Option to Renew as set forth in the
preceding paragraph, the Option to Renew shall terminate, and Landlord shall be
free to enter into a Lease with a third party. The Option to Renew shall be
effective regardless of whether Tenant elects to exercise its Options to Renew
with respect to Suite 1990.

            (b) Notice of Exercise. Tenant shall give Landlord written notice of
its intent to exercise the Option to Renew at least six (6) months but not more
than fifteen (15) months prior to the expiration of the expiring Lease Term.
Within twenty (20) days after Landlord receives the notice described in the
previous sentence, Landlord will provide Tenant with Landlord's determination of
the Fair Market Rental Rate for comparable space as of the end of the expiring
Lease Term. Tenant shall have thirty (30) days from Landlord's notification of
the proposed Base Rent to accept Landlord's determination of Base Rent for the
Option Term(s) or provide its own determination of Base Rent based upon
comparable space for Landlord's consideration. Such Fair Market Rental Rate
shall be determined by agreement between Landlord and Tenant.

            (c) Determination of Fair Market Value. If Landlord and Tenant do
not agree on the Fair Market Rental Rate of the Premises by the date seven (7)
months prior to the first day of the Option Term, such Fair Market Rental Rate
shall be determined as follows: Landlord and Tenant each shall appoint one (1)
appraiser within fifteen (15) days after such date. If either Landlord or Tenant
fails to appoint its appraiser within such period of fifteen (15) days, such
appraiser shall be appointed by the following process: Landlord shall make
application to the president of the Real Estate Board of Metropolitan St. Louis
to name three qualified appraisers for consideration; then Landlord and Tenant
will each strike one of those appraisers, with the appraiser that was not struck
becoming the previously unnamed appraiser. Each such appraiser shall appraise
such Fair Market Rental Rate of the Premises and complete and submit his written
appraisal setting forth the appraised value to Landlord and Tenant within thirty
(30) days after the appointment of both such appraisers. If the higher appraised
value in such two (2) appraisals is not more than one hundred ten percent (110%)
of the lower appraised value, such Fair Market Rental Rate of the Premises shall
be the average of the two (2) appraised values. If the higher appraised value is
more than one hundred ten percent(110%) of the lower appraised value, Landlord
and Tenant shall agree upon and appoint a neutral third appraiser within fifteen
(15) days after both of the first two (2) appraisals have been submitted to
Landlord and Tenant. If Landlord and Tenant do not agree upon and fail to
appoint such neutral third appraiser within such period of fifteen (15) days,
such neutral third appraiser shall be appointed by the following process:
Landlord shall make application to the president of the Real Estate Board of
Metropolitan St. Louis to name three qualified appraisers for consideration;
then Landlord and Tenant will each strike one of those appraisers, with the
appraiser that was not struck becoming the neutral third appraiser. The neutral
third appraiser shall appraise such Fair Market Rental Rate of the Premises and
complete and submit his written appraisal setting forth the appraised value to
Landlord and Tenant within thirty (30) days after his appointment. Such Fair
Market Rental Rate of the Premises shall be the average of the two (2) appraised
values in such three (3) appraisals that are closest to each other. If the
middle appraised rental is the average of the other two, the then middle rental
shall be such Fair Market Rental Rate. The Fair Market Rental Rate of the
Premises, determined in accordance with this Section, shall be conclusive and
binding upon Landlord and Tenant. All appraisers so appointed, shall be members
of the American Institute of Real Estate Appraisers of the National Association
of Realtors or real estate professionals qualified by appropriate training or
experience and having at least ten (10) years of experience dealing with
commercial real estate. The appraisers shall have no power or authority to amend
or modify this Lease in any respect and their jurisdiction is limited
accordingly. Landlord and Tenant each shall pay the fee and expenses charged by
its appraiser plus one-half of the fee and expenses charged by the neutral third
appraiser. If the Fair Market Rental Rate of the Premises has not been
determined in accordance with this Section by the first day of the Option Term,
Tenant shall pay as Base Rent the average of the amount of Base Rent proposed by
Landlord and the amount of Base Rent proposed by Tenant, but not less than the
monthly Base Rent for the month immediately preceding the Option Term, effective
on the first day of the Option Term and Tenant shall continue to pay such
average until the Fair Market Rental Rate of the Premises has been determined,
at which time any adjustment in the Base Rent resulting therefrom shall be made
retroactively within ten (10) days after such determination.

18. Letter of Credit. Prior to the date of this Lease, Tenant shall deliver to
Landlord an unconditional and irrevocable stand-by letter of credit ("Letter of
Credit") in favor of Landlord in the face amount of $28,251.67, effective for a
period commencing on or prior to the date of the Lease and ending on the date
one month after the estimated Expiration Date of the Lease (as reasonably
estimated by Landlord). The Letter of Credit shall be issued by a bank in St.
Louis City or St. Louis County, Missouri, acceptable to Landlord, shall provide
for payment without condition upon presentation of a sight draft, and shall
otherwise be in form and substance satisfactory to Landlord in Landlord's sole
and absolute discretion. The Letter of Credit shall secure all obligations of
Tenant under the Lease. If, at any time during the Term, any of the Base Rent or
additional rent shall be overdue and Tenant shall be in default under the Lease
by virtue of such Base Rent or additional rent being overdue beyond any
applicable cure period, or if Tenant fails to perform any of the other terms,
covenants or conditions to be performed by Tenant under the Lease and Tenant
shall be in default under the Lease by virtue of such failure beyond any
applicable cure period, then Landlord, at its option, may draw and apply all or
any portion of the Letter of Credit to the payment of any such overdue Base Rent
or additional rent and to the compensation of Landlord for loss or damage
sustained by Landlord due to such default by Tenant, including, without
limitation, fees, expenses or other costs incurred by the Landlord in connection
with any collection efforts relating to the Lease. Any draw on the Letter of
Credit is without prejudice to Landlord's older rights or remedies under the
Lease, at law or in equity. In the event of any drawing under the Letter of
Credit as a result of a default by Tenant under the Lease, Landlord shall be
entitled to draw' the entire face amount of the Letter of Credit and hold the
same as a cash security deposit in accordance with Section 3.3 of the Lease.
Should all or any part of the Letter of Credit or additional letters of

<PAGE>

credit remitted to Landlord as hereinafter provided, be drawn and applied by
Landlord as provided above, then Tenant shall, upon demand of Landlord,
forthwith remit to Landlord an additional one or more letters of credit in an
amount in the aggregate equal to the amount applied by Landlord to such default
to restore the credit line (less any cash converted to a security deposit
pursuant to a draw on the entire face amount of the Letter of Credit as
permitted above) available to Landlord to the full amount specified in the
Letter of Credit. The Letter of Credit shall be transferable by Landlord as
beneficiary (at Tenant's cost, if any), and Landlord may deliver the Letter of
Credit delivered hereunder to a purchaser of Landlord's interest in the Property
in the event that such interest is sold, and thereupon Landlord shall be
discharged from any further liability with respect to the Letter of Credit.

            If the termination date for the Letter of Credit is prior to one
month after the Expiration Date, Tenant covenants and agrees to take any and all
such action as is necessary to maintain such Letter of Credit continuously in
full force and effect at all times through and including such date, and
specifically covenants with Landlord to provide Landlord with a renewal or
replacement letter of credit (which, upon delivery to and acceptance by
Landlord, shall then constitute the Letter of Credit) at a time not less than
sixty (60) days prior to the termination date of such existing Letter of Credit
such that the protections afforded Landlord are maintained continuously in full
force and effect without loss or diminution in value, and Tenant's failure to do
so in a timely manner shall entitle Landlord to effect a full drawing upon,
prior to its termination date, the then effective Letter of Credit, and shall
constitute a specific and immediate occurrence of default under the Lease. Any
amounts so drawn by Landlord shall be applied to the obligations of Tenant under
the Lease as such obligations become due and payable, including, without
limitation, fees, expenses, or other costs incurred by Landlord in connection
with any collection efforts relating to the Lease by Landlord in the manner
described in the preceding paragraph.

19. Termination of July 29, 1986 Lease Agreement. The Lease Agreement for the
Premises, dated July 29, 1986, as amended by eight addenda thereto (the "1986
Lease Agreement"), between Landlord, as successor to St. Louis Industrial
Properties Ltd. #7. d/b/a Trammell Crow Company, and Tenant (formerly known as
New Space Closet Interiors, Inc.) is hereby terminated effective June 14, 2000;
provided, however, that (i) the terms and conditions of the 1986 Lease Agreement
which have not been performed as of June 14, 2000 shall survive the termination
of the 1986 Lease Agreement; (ii) Tenant shall continue to indemnify Landlord
under the 1986 Lease Agreement with respect to acts and occurrences arising on
or before June 14, 2000 in accordance with the indemnifications set forth in the
1986 Lease Agreement and (iii) Tenant shall remove all alterations, additions,
fixtures and improvements (whether such alterations, additions, fixtures and
improvements were made pursuant to the 1986 Lease Agreement or pursuant to the
terms of the Lease) upon the Expiration Date of the Lease in accordance with
Section 7.2 of the Lease and restore the Premises to the condition such Premises
existed before such alterations, additions, fixtures and improvements were made
to the Premises (unless Landlord paid for any such alterations, additions,
fixtures and improvements, in which event Landlord may elect, in its sole
discretion, to retain such alterations, additions, fixtures or improvements).

<PAGE>

                                    SUBLEASE

      THIS SUBLEASE ("Sublease") is made and entered into as of the 15th day of
February, 2000, by and between NewSpace, Inc., a Missouri corporation
("Landlord"), and Build-A-Bear Workshop, L.L.C., a Missouri limited liability
company ("Tenant").

      WITNESSETH, THAT:

      WHEREAS, Landlord is the tenant of the property known as 1954 Innerbelt
Business Center Drive, located in St. Louis County, Missouri, as more
particularly shown on Exhibit A attached hereto and incorporated herein by
reference (the "Building") and

      WHEREAS, Landlord has agreed to sublease the portion of the Building
outlined in pink on Exhibit A attached hereto and incorporated herein by
reference (the "Premises") to Tenant.

      NOW, THEREFORE, in consideration of the premises, the mutual covenants,
promises and conditions set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows:

      1. Sublease. Landlord hereby subleases the Premises to Tenant and Tenant
hereby subleases the Premises from Landlord for the term, at the rental, and
upon all the conditions set forth herein. This agreement constitutes a sublease,
and Tenant acknowledges that Landlord's interest in the Building is as a tenant
under a written lease with State of California Public Employees Retirement
System (the "Prime Lessor"), dated July 26, 1986 and amended seven (7) times
(the "Prime Lease"), a copy of which along with all amendments is attached
hereto, marked Exhibit B and incorporated herein by reference. Except as
provided herein, this Sublease is expressly made subject to all the terms and
conditions of the Prime Lease, and, insofar as they relate to the Premises or
the use and occupancy thereof, Tenant agrees to observe and comply with all
covenants and obligations of Landlord under the Prime Lease.

      2. Term. The term of this Sublease (the "Term") shall commence February
15, 2000, and expire on June 30, 2008.

      3. Option to Renew. Subject to the terms and conditions set forth herein,
Tenant shall have the option to renew this Sublease for an additional term of
five (5) years commencing on the first day following the expiration of the Term.
So long as Tenant is not in default of a material covenant under this
Sublease, Tenant may renew this Sublease as provided hereinabove upon giving
Landlord written notice of such renewal not less than nine (9) months prior to
the expiration of the Term. Any renewal of this Sublease shall be on the same
terms and conditions of this Sublease except that the base rent payable during
such renewal shall be determined pursuant to Exhibit D to the Amended and
Restated Lease attached as an exhibit to the 6th Amendment to the Prime Lease.

      4. Rental. Tenant shall pay to Landlord as base rent, commencing on June
14, 2000 (the "Rental Commencement Date"), without deduction, setoff, notice or
demand, at c/o Robert Fox, NewSpace, Inc., 1960 Innerbelt Business Center Drive,
St. Louis, Missouri 63114 or at such other place as Landlord shall designate
from time to time by notice to Tenant, Thirteen Thousand Four Hundred
Fifty-Seven Dollars ($13,457.00Q) per month (based on $10.765 per square foot
per year) for each month during the first twelve (12) months of this Sublease
(prorated for the first partial month); Thirteen Thousand Six Hundred Fourteen
($13,614.00) per month (based on $10.89) per square foot per year) for each
month from the thirteenth (13th) through the thirty-sixth (36th) months of the
term of this Sublease; Thirteen Thousand Nine Hundred Twenty Dollars
($13,920.00) per month (based on $11.135 per square foot per year) from the
thirty-seventh (37th) through the sixtieth (60th) months of the term of this
Sublease; and Fourteen Thousand Seventy-Five Dollars ($14,075.00) per month
(based on $11.26 per square foot per year) for each month from the sixty-first
(61st) month of the term of this Sublease through the Termination Date. For the
period commencing on the Rental Commencement Date and ending on the last day of
the month in which the Rental Commencement Date occurs, rental shall be
apportioned on the basis of the number of days in said month.

      5. Additional Rent. As and for additional rent (the "Additional Rent") for
the Premises, Tenant shall pay Landlord, commencing on the Rental Commencement
Date, CAM Expenses, increases, if any, in Property Taxes of the Property Taxes
paid by the Landlord under the Prime Lease in 2000, the Base Year, and Insurance
Costa incurred by the Landlord under the Prime Lease over Insurance Costs
incurred in 2000 (collectively, "Operating Costs"). Tenant shall pay to Landlord
as additional rent a prorata portion of the amounts payable by Landlord as
Operating Costs under the Prime Lease. The prorata amount shall be determined
by multiplying the total amount of Operating Costs that Landlord is required to

                                       1

<PAGE>

pay under the Prime Lease by a fraction, the numerator of which is 15,000 and
the denominator of which is 40,749, Such additional rent shall be payable as and
when Operating Costs are payable by Landlord. If the Prime Lease provides for
the payment by Landlord of Operating Costs on the basis of an estimate thereof,
then as and when adjustments between estimated and actual Operating Costs are
made under the Prime Lease, the obligations of Landlord and Tenant hereunder
shall be adjusted in a like manner; and if any such adjustment shall occur
after the expiration or earlier termination of the Term, then the obligations of
Landlord and Tenant under this subsection 5 shall survive such expiration or
termination. Landlord shall, upon request by Tenant, furnish Tenant with copies
of all statements submitted to Landlord of actual or estimated Operating Costs
during the Term.

       In addition to the foregoing, Tenant shall pay Landlord as additional
rent the sum of Three Hundred Dollars ($300.00) on the Rental Commencement Date
and on each anniversary of the Rental commencement Date during the term of this
Sublease in lieu of a security deposit. Additional Rent shall be due thirty (30)
days following Tenant's receipt thereof.

      6. Quiet Enjoyment. So long as Tenant shall observe and perform the
covenants and agreements binding on it hereunder, Tenant shall, at all times
during the Term, peacefully and quietly have and enjoy possession of the
Premises without any encumbrance and hindrance by, from or through Landlord, or
anyone else lawfully claiming an interest in the Premises, subject, however, to
the term and conditions of this Sublease.

      7. Use of the Premises. Tenant warrants and represents to Landlord that
the Premises shall be used and occupied only for office, warehouse and
distribution purposes. Tenant shall occupy the Premises, conduct its business
and control its employees, agents and invitees in such a manner as is lawful and
reputable and without creating any nuisance; Tenant shall neither permit any
waste on the Premises, nor allow anything to be stored in the Premises which
would, in the reasonable opinion of Landlord, be extra hazardous on account of
fire, or which would in any way increase or render void the fire insurance on
the Premises.

      8. Mechanic's Liens. Tenant shall have no authority, expressed or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever on,
or in any manner to bind the interest of Landlord or Prime Lessor in the
Premises or to charge the rentals payable hereunder for any claim in favor of
any person dealing with the Tenant, including those who may furnish materials or
perform labor for any of Tenant's construction or repairs, and each such claim
shall affect and each such lien shall attach to, if at all, only the leasehold
interest granted to the Tenant herein. Tenant covenants and agrees that it will
pay or cause to be paid all sums legally due and payable by it on account of any
labor performed or materials furnished in connection with any work performed on
the Premises, and that it will save and hold the Landlord and Prime Lessor
harmless from any and all liability, loss, damage, cost and expense arising out
of asserted claims or liens against the leasehold estate or against the right,
title and interest of Landlord and the Prime Lessor in the Building.

      9. Estoppels Certificates. Upon delivery of the Premises to Tenant, and
thereafter within ten (10) days following the written request of Landlord or the
Prime Lessor, from time to time Tenant shall execute, acknowledge, and deliver
to Landlord or to Prime Lessor or Prime Lessor's mortgagee, proposed mortgagee
or proposed purchaser of the Building, an estoppel certificate stating whether
this Sublease is in full force and effect and whether any changes may have been
made to the original Sublease; whether there are any defaults by Landlord and,
if so, the nature of such defaults; whether rent has been paid more than thirty
(30) days in advance; whether there are any security deposits; and such other
matters pertaining to the status of this Sublease as Landlord or the Prime
Lessor may reasonably request.

      10. Indemnification By Tenant. Tenant hereby releases Landlord and Prime
Lessor from any liability for any loss or damage of any kind or for any injury
or death of persons or damage to property of Tenant or any other person from any
cause whatsoever by reason of the use, occupancy or enjoyment of the Premises by
Tenant or any person therein holding under Tenant. Tenant shall indemnify,
defend and save harmless Landlord and Prime Lessor, and each of their officers,
directors, agents and employees, from all claims, actions, demands, damages,
costs, expenses and liabilities whatsoever, including reasonable attorneys'
fees, on account of any real or claimed loss, damage or liability occurring in
or at the Premises, or arising out of the use, occupancy or enjoyment of the
Premises, or occasioned in whole or in part by the act or omission of Tenant or
its agents, contractors, employees, guests or invitees; provided, however,
notwithstanding the foregoing, Tenant shall not be responsible for any of the
foregoing to the extent directly attributable to the gross negligence or
intentional misconduct of Landlord or Prime Lessor.

                                       2

<PAGE>

      11. Insurance/Release

      (a) Insurance Coverages and Amounts. Tenant shall, at all times during the
term of this Lease and at Tenant's sole cost and expense, obtain and keep in
force the insurance coverages and amounts set forth in this section. Tenant
shall maintain commercial general liability insurance, including contractual
liability, broad form property damage liability, fire legal liability, premises
and completed operations, and medical payments, with limits not less than one
million dollars ($1,000,000) per occurrence and aggregate, insuring against
claims for bodily injury, personal injury and property damage arising from the
use, occupancy or maintenance of the Premises and the Building. The policy shall
contain an exception to any pollution exclusion which insures damage or injury
arising out of heat, smoke or fumes from a hostile fire Any general aggregate
shall apply on a per location basis. Tenant shall maintain business auto
liability insurance with limits not less than one million dollars ($1,000,000)
per accident covering owned, hired and non-owned vehicles used by Tenant. Tenant
shall maintain umbrella excess liability insurance on a following form basis in
excess of the required commercial general liability, business auto and employers
liability insurance with limits not leas than two million dollars ($2,000,000)
per occurrence and aggregate. Tenant shall carry workers' compensation insurance
for all of its employees in statutory limits in the state in which the Property
is located and employers liability insurance which affords not less than five
hundred thousand dollars ($500,000) for each coverage. Tenant shall maintain all
risk property insurance for all personal property of Tenant and improvements,
fixtures and equipment constructed or installed by Tenant in the Premises in an
amount not less than the full replacement cost, which shall include business
income and extra expense coverage with limits not less than fifty percent (50%)
of gross revenues for a period of twelve (12) months. If required by Landlord,
Tenant shall maintain plate glass insurance coverage against breakage of plate
glass in the Premises. Any deductibles selected by Tenant shall be the sole
responsibility of Tenant,

      (b) Insurance Requirements. All insurance and renewals thereof shall be
issued by companies with a rating of at least "A-" "VIII" or better in the
current edition of Best's Insurance Report and be licensed to do and doing
business in the state in which the Property is located. Each policy shall
expressly provide that the policy shall not be canceled or materially altered
without thirty (30) days prior written notice to Landlord and shall remain in
effect notwithstanding any such cancellation or alteration until such notice
shall have bean given to Landlord and such thirty (30) days shall have expired.
All liability insurance (except employers liability) shall name Landlord and any
other parties designated by Landlord (including any investment manager, asset
manager or property manager) as an additional insured, shall be primary and
noncontributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on any act, omission, event or condition
that occurred or arose) or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to Landlord. All property insurance shall name Landlord
as loss payee as respects Landlord's interest in any improvements and
betterments. Tenant shall deliver certificates of insurance, acceptable to
Landlord, to Landlord at least ten (10) days before the Commencement Date and at
least ten (10) days before expiration of each policy. If Tenant fails to insure
or fails to furnish any such insurance certificate, Landlord shall have the
right from time to time to effect such insurance for the benefit of Tenant or
Landlord or both of them, and Tenant shall pay to Landlord on written demand, as
additional rent, all premiums paid by Landlord.

      (c) Subrogation. Tenant waives, on behalf of all insurers, under all
policies of property insurance now or hereafter carried by Tenant insuring or
covering the Premises, or any portion or any contents thereof, or any operations
therein, all rights of subrogation which any such insurer might otherwise, if at
all, have to any claims of Tenant against Landlord. Landlord waives, on behalf
of all insurers under all policies of property insurance now or hereafter
carried by Landlord insuring or covering the Property, or any portion or any
contents thereof, or any operations therein, all rights of subrogation which any
insurer might otherwise, if at all, have to any claims of Landlord against
Tenant. Tenant shall procure from each of the insurers under all policies of
property insurance now or hereafter carried by Tenant insuring or covering the
Premises, or any portion or any contents thereof, or any operations therein, a
waiver of all rights of subrogation which the insurer might otherwise, if at
all, have to any claims of Tenant against Landlord as required by this section
11.

      12. Holding Over. Unless otherwise agreed to in writing by Landlord and
Tenant, if Tenant retains possession of the Premises, or any part thereof, after
termination or expiration of the Term, Tenant shall be deemed to be in default
hereunder, Landlord shall have any and all remedies provided for in this
Sublease and at law or in equity, and Tenant shall pay Landlord rent for the
time Tenant remains in possession at double the monthly rate in effect
immediately prior to such termination or expiration. The provisions of this

                                       3

<PAGE>

Section 14 do not exclude Landlord's right of re-entry or any other right
hereunder and such holding over shall be deemed to constitute a renewal or
extension of the Term.

      13. Notices. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be given on the date which is three (3)
days after being deposited in the United States Mail, registered or certified
mail, return receipt requested, postage prepaid, or it personally delivered,
upon actual receipt, addressed as follows:

      If to Landlord:       NewSpace, Inc.
                            1960 Innerbelt Business Center Drive
                            St. Louis, MO 63114

      If to Tenant:         Build-A-Bear Workshop, L.L.C.
                            1954 Innerbelt Business Center Drive
                            St. Louis, MO 63114

subject to the right of either party to designate a different address or notice
person by notice similarly given in accordance with the provision of this
paragraph 15.

      14. Repairs and Maintenance. Tenant shall, at all times during the term of
this Sublease and at Tenant's sole cost and expense, maintain and repair the
Premises and every part thereof (except only the parts for which expressly made
the responsibility of the Landlord under the Prime Lease) and all equipment,
fixtures and improvements therein (including walls, floors, heating and air
conditioning systems, dock boards, truck doors, dock bumpers, plumbing fixtures
and equipment, electrical components and mechanical systems) and keep all of the
foregoing clean and in good order and operating condition, ordinary wear and
tear excepted, Tenant shall not damage the Premises or disturb the integrity and
support provided by any wall. Tenant shall, at Tenant's expense, promptly repair
any damage to the Premises caused by Tenant or any agent, officer, employee,
contractor, licensee or invitee of Tenant. Tenant shall take good care of the
Premises and keep the Premises free from dirt, rubbish, waste and debris at all
times. Tenant shall not overload the floors in the Premises or exceed the
load-bearing capacity of the floors in the Premises. Tenant shall, at Tenant's
expense, enter into a regularly scheduled preventive maintenance and service
contract with a maintenance contractor approved in writing by Landlord for
servicing all hot water, heating and air conditioning systems and equipment in
the Premises. The maintenance and service contract shall include all services
suggested by the equipment manufacturer and shall become effective (and Tenant
shall deliver a copy to Landlord) within thirty (30) days after the
Commencement Date. Sublessee shall, at the end of the term of this Sublease,
surrender to Landlord the Premises and all alterations, additions, fixtures and
improvements therein or thereto in the same condition as when received,
ordinary wear and tear excepted. Notwithstanding anything to the contrary
contained in this section, Tenant's obligation under this section shall not
include making (i) any repair or improvement necessitated by the negligence or
willful misconduct of Landlord, its agents, employees, servants or contractors;
or (ii) any repair or improvement caused by Landlord's failure to perform its
obligations under the Prime Lease or this Sublease, as the case may be.

      15. Utility Services. Tenant shall pay, directly to the appropriate
supplier before delinquency, for all water, gas, heat, light, power, telephone,
sewer, refuse disposal and other utilities and services supplied to the
Premises, together with all taxes, assessments, surcharges and similar expenses
relating to such utilities and service. Tenant shall, at its expense, install
separate meters for such services. If any such utilities or services are jointly
matered with the Premises and the adjoining premises occupied by Landlord,
Landlord shall determine Tenant's share of the cost as such jointly metered
utilities and services based on Landlord's estimate of usage, and Tenant shall
pay as additional rent Tenant's share of the cost of such jointly metered
utilities and services to Landlord within twenty (20) days after receipt of
Landlord's written statement for such cost. Tenant shall furnish the Premises
with all telephone service, window washing, security service, janitor, scavenger
and disposal services, and other services required by Tenant for the use of the
Premises permitted by this Sublease. Tenant shall furnish all electric light
bulbs and tubes and restroom supplies used in the Premises. Landlord shall not
be in default under this Sublease or be liable for any damage or loss directly
or indirectly resulting from, nor shall the rent be abated or a constructive or
other eviction be deemed to have occurred by reason of, any interruption of or
failure to supply or delay in supplying any such utilities and services or any
limitation, curtailment, rationing or restriction on use of water, electricity,
gas or any resource or form of energy or other service serving the Premises,
whether such results from mandatory restriction or voluntary compliance with
guidelines.

      16. Eminent Domain. In the event title to the whole or a material part of
the Premises shall be lawfully condemned or taken in any manner for any public
or quasi-public use, this Sublease and estate hereby granted shall forthwith
cease and terminate as of the

                                       4

<PAGE>

date of vesting of title. Tenant hereby assigns to Prime Lessor Tenant's
interest in any award granted pursuant to this Section 17; provided, however,
nothing herein shall be deemed to give Prime Lessor any interest in or to
require Tenant to assign to Prime Lessor any award made to Tenant for the taking
of personal property or fixtures belonging to Tenant or for the interruption of
or damage to Tenant's business or for any funds awarded for Tenant's relocation.

      17. Landlord's Remedies. All rights and remedies of Landlord herein
enumerated shall be cumulative, and none shall exclude any other right or remedy
allowed by law. In addition to the other remedies in this Sublease provided,
Landlord shall be entitled to the restraint by injunction of the violation or
attempted violation of any of the covenants, agreements or conditions of this
Sublease or the Prime Lease, and Landlord shall be entitled to recover all
direct and consequential damages arising out of or caused by Tenant's violation
of any of the covenants, agreements or conditions of this Sublease or the Prime
Lease.

      (a) if Tenant shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of Tenant or of all or a substantial part of its
assets, (ii) file a voluntary petition in bankruptcy, (iii) make a general
assignment for the benefit of creditors, (iv) file a petition or an answer
seeking reorganization or arrangement with creditors or to take advantage of any
insolvency law, or (v) file an answer admitting the material allegations of a
petition filed against Tenant in any bankruptcy, reorganization or insolvency
proceeding, or if an order, judgment or decree shall be entered by any court of
competent jurisdiction adjudicating Tenant a bankrupt or insolvent or approving
a petition seeking reorganization of Tenant or appointing a receiver, trustee or
liquidator of Tenant or of all or a substantial part of its assets, then, in any
of such events, Landlord may terminate this Sublease by giving written notice to
Tenant, and upon the giving of such notice the term of this Sublease and all
right, title and interest of Tenant hereunder shall expire as fully and
completely as if that day were the date herein specifically fixed for the
expiration of the term.

      (b) If Tenant defaults in the payment of rent or Additional Rent and such
default continues for ten (10) days after written notice to Tenant, or if Tenant
defaults in the prompt and full performance of any other provision of this
Sublease, and if such other default continues for thirty (30) days after written
notice, or if the leasehold interest of Tenant be levied upon under execution or
be attached by process of law, then, and in any such event. Landlord may, at its
election, either terminate this Sublease and Tenant's right to possession of the
Premises, or, without terminating this Sublease, re-enter and endeavor to relate
the Premises. Nothing herein shall relieve Tenant of any obligation, including
the payment of rent and Additional Rent, as provided in this Sublease.

      (c) Upon any termination of this Sublease, Tenant shall surrender
possession and vacate the Premises immediately, and deliver possession thereof
to Landlord, and Tenant hereby grants to Landlord full and free license to enter
into and upon the Premises in such event and to repossess the Premises, and to
expel or remove Tenant and any others who may be occupying or within the
Premises, and to remove any and all property therefrom, using such force as may
be allowed by law, without being deemed in any manner guilty of trespass,
eviction or forcible entry or detainer, and without relinquishing Landlord's
right to rent and Additional Rent, or any other right given to Landlord
hereunder or by operation of law.

      (d) if Landlord elects, without terminating the Sublease, to endeavor to
relet the Premises, Landlord may, at Landlord's option, enter into the Premises
and take and hold possession thereof, without such entry and possession
terminating the Sublease or releasing Tenant, in whole or in part, from Tenant's
obligation to pay rent and Additional Rent hereunder for the full Term as
hereinafter provided. Upon and after entry into possession without termination
of the Sublease, Landlord shall endeavor in good faith (but without being
obligated to incur out of pocket costs as part of such endeavor) to relet the
Premises for the account of Tenant to any person, firm or corporation other than
Tenant for such rent, for such time and upon such terms as Landlord shall
determine to be reasonable. In any such case, Landlord may make repairs in or to
the Premises as are necessary to restore the Premises to as good a condition as
existed at the commencement date of this Sublease, and Tenant shall, upon
demand, pay the cost thereof, together with Landlord's expenses of the
reletting, If the consideration collected by Landlord upon any such reletting
for Tenant's account is not sufficient to pay monthly the full amount of the
rent and Additional Rent reserved in this Sublease, together with the cost of
repairs and Landlord's expenses, Tenant shall pay to Landlord the amount of each
monthly deficiency upon demand.

      (e) If Landlord elects to terminate this Sublease pursuant to this Section
19, it being understood that Landlord may elect to terminate the Sublease after
and notwithstanding its election to terminate Tenant's right to possession
provided in Section 19 (b) above, Landlord shall forthwith upon such termination
be entitled to recover an amount equal to the

                                       5
<PAGE>

damages sustained by Landlord as a result of Tenant's default hereunder, and in
addition thereto, an amount equal to the rent provided in this Sublease for the
residue of the Term, less the current rental value of the Premises for the
residue of the Term.

            (f)   Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of this Sublease or of law, to which Tenant
is or may be entitled, may be handled, removed or stored by Landlord at the
risk, cost and expense of Tenant, and Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof. Tenant shall pay to
Landlord, upon demand, any and all expenses incurred in such removal and all
storage charges against such property so long as the same shall be in Landlord's
possession or under Landlord's control. Any such property of Tenant not removed
from the Premises or retaken from storage by Tenant within thirty (30) days
after the end of the Term or of Tenant's right to possession of the Premises,
however terminated, shall be conclusively deemed to have been forever abandoned
by Tenant and either may be retained by Landlord as its property, or may be
disposed of in such manner as Landlord may see fit.

            18.   Subordination of Sublease. This Sublease is and shall be
subject and subordinate to any and all mortgages, deeds of trust or land leases
now existing upon or that may be hereafter placed upon the Premises, and to all
advances made or to be made thereon, and all renewals, modifications,
consolidations, replacements or extensions thereof, and the lien of any such
mortgages, deeds of trust and land leases shall be superior to all rights hereby
or hereunder vested in Tenant, to the full extent of all sums secured thereby.
This provision shall be self-operative, and no further instrument of
subordination shall be necessary to effectuate such subordination; and the
recording of any such mortgage, deed of trust or land lease shall have
preference and precedence and be superior and prior in lien to this Sublease,
irrespective of the date of recording. In confirmation of such subordination,
Tenant shall within ten (10) days after request of Landlord, Prime Lessor, or
the holder of any such mortgage, deed of trust, or land lease, execute and
deliver to Landlord, Prime Lessor or such holder, as the case may be, any
instrument acknowledging such subordination that Landlord, Prime Lessor or such
holder may reasonably request. Tenant agrees to attorn to any person or entity
who may acquire title to the Building by way of transfer or foreclosure provided
that such transferee or purchaser agrees to recognize Tenant's rights under this
Sublease so long as Tenant is not in default in any of its obligations
hereunder. Tenant shall also, within twenty (20) days after Landlord's or Prime
Lessor's request, execute an attornment agreement evidencing the obligations of
Tenant herein to attorn to such mortgagee in the event of a future succession
of the rights of Landlord herein to any mortgagee, deed of trust holder or land
lessor of the Premises. In the event of any act or omission of Landlord
constituting a default by Landlord, Tenant shall not exercise any remedy until
Tenant has given Landlord, Prime Lessor and any mortgagee, deed of trust holder
or land lessor of the Building a prior thirty (30) day written notice of such
act or omission; provided, however, if such act or omission cannot, with due
diligence and in good faith, be remedied within such thirty (30) day period,
Landlord, Prime Lessor and any mortgagee, deed of trust holder or land lessor
shall be allowed such further period of time as may be reasonably necessary
provided that it commences remedying the same with due diligence and in good
faith within said thirty (30) day period.

            19.   Prevailing Party. In the event of litigation between Landlord
and Tenant in connection with this Sublease, in addition to any other relief
therein granted, the prevailing party shall be entitled to judgment for
reasonable attorneys' fees, costs of litigation, and court costs incurred
therein.

            20.   Governing Law. This Sublease has been made and executed in the
County of St. Louis, State of Missouri, and shall be governed and construed in
accordance with the laws of the State of Missouri without regard to its conflict
of laws provisions.

            21.   Act of God or Force Majeure. Landlord or Tenant shall not be
required to perform any covenant or obligation in this Sublease or be liable in
damages for its nonperformance, so long as the performance or non-performance of
the covenant or obligation is delayed, caused or prevented by an act of God or
force majeure or by the other party. An "act of God" or "force majeure" is
defined for purposes of this Sublease as strikes, lockouts, sitdowns, material
or labor restrictions by any governmental authority, unusual transportation
delays, riots, floods, washouts, explosions, earthquakes, fire, storms, weather
(including wet grounds or inclement weather which prevents construction), acts
of the public enemy, wars, insurrections and any other cause not reasonably
within the control of the party required to perform and which by the exercise of
due diligence the party required to perform is unable to prevent or overcome.
The foregoing provisions of this Section 23 shall not apply, however, to
Tenant's obligation to timely pay rent, Additional Rent or any other monies
payable by Tenant under this Sublease.

                                       6

<PAGE>
            22.   Saverability. The invalidity of any provision of this Sublease
as determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.

            23.   Assignment and Sublease. Tenant shall not voluntarily or by
operation of law assign or encumber any interest in this Sublease, or sublet any
part of the Premises, without obtaining the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed.

            IN WITNESS WHEREOF, the parties hereto have executed this Sublease
as of the day and year first above written.

LANDLORD:                            NEWSPACE, INC.,
                                     a Missouri corporation

                                     By: /s/ Robert Fox
                                         -------------------------
                                     Its: CEO

TENANT:                              BUILD-A-BEAR WORKSHOP, L.L.C.,
                                     a Missouri limited liability company

                                     By: /s/ Maxine Clark
                                         -------------------------
                                     Its: Manager

                                       7
<PAGE>


                                    SUBLEASE

      THIS SUBLEASE ("Sublease") is made and entered into this _______ day of
__________, 2000, by and between NewSpace, Inc., a Missouri corporation
("Landlord"), and Build-A-Bear Workshop, L.L.C., a Missouri limited liability
company ("Tenant").

      WITNESSETH, THAT:

      WHEREAS, Landlord is the tenant of the property known as 1954 Innerbelt
Business Center Drive, located in St. Louis County, Missouri, [ILLEGIBLE] more
particularly shown on Exhibit A attached hereto and incorporated herein by
reference (the "Building"); and

      WHEREAS, Landlord has agreed to sublease the portion of the Building
outlined in pink on Exhibit A attached hereto and incorporated herein by
reference (the "Premises") to Tenant.

      NOW, THEREFORE, in consideration of the premises, the mutual covenants,
promises and conditions set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows:

      1. Sublease. Landlord hereby subleases the Premises to Tenant and Tenant
hereby subleases the Premises from Landlord for the term, at the rental, and
upon all the conditions set forth herein. This agreement constitutes a sublease,
and Tenant acknowledges that Landlord's interest in the Building is as a Tenant
under a written lease with State of California Public Employees Retirement
System (the Prime Lessor"), dated July 26, 1986 and amended seven (7) times (the
"Prime Lease"), a copy of which along with all amendments is attached hereto,
marked Exhibit B and incorporated herein by reference. Except as provided
herein, this Sublease is expressly made subject to all the terms and conditions
of the Prime Lease, and, insofar as they relate to the Premises or the use and
occupancy thereof, Tenant agrees to observe and comply with all covenants and
obligations of Landlord under the Prime Lease.

      2. Term. The term of this sublease (the "Term") shall commance February
15, 2000, and expire on June 30, 2000.

      3. Option to Renew. Subject to the terms and conditions set forth herein,
Tenant shall have the option to renew this Sublease for an additional term of
five (5) years commancing on the first day following the expiration of the Term.
So long as Tenant is not in default of a material covenant under this Sublease,
Tenant may renew this Sublease as provided hereinabove upon giving Landlord
written notice of such renewal not less than nine (9) months prior to the
expiration of the Term. Any renewal of this Sublease shall be on the same terms
and conditions of this Sublease except that the base rent payable during such
renewal shall be determined pursuant to Exhibit D to the Amended and Restated
Lease attached as an exhibit to the 6th Amendment to the Prime Lease.

      4. Rental. Tenant shall pay to Landlord as base rent, commancing on June
14, 2000 (the "Rental Commancement Date"), without deduction, setoff, notice or
demand, at c/o Robert Fox, NewSpace, Inc., 1960 Innerbelt Business Center Drive,
St. Louis, Missouri 63114 or at such other place as Landlord shall designate
from time to time by notice to Tenant, Thirteen Thousand Four Hundred
Fifty-Seven Dollars ($13,457.00) per month (based on $10.765 per square foot per
year) for each month during the first twelve (12) months of this Sublease
(prorated for the first partial month); Thirteen Thousand Six Hundred Fourteen
($13,614.00) per month (based on $10.89) per square foot per year) for each
month from the thirteenth (13th) through the thirty-sixth (36th) months of the
term of this Sublease; Thirteen Thousand Nine Hundred Twenty Dollars
($13,920.00) per month (based on $11.135 per square foot per year) from the
thirty-seventh (37th) through the sixtieth (60th) months of the term of this
Sublease; and Fourteen Thousand Seventy-Five Dollars ($16,075.00) per month
(based on $21.26 per square foot per year) for each month from the Sixty-first
(61st) month of the term of the Sublease through the Termination date. For the
period commencing on the Rental Commencement Date and ending on the last day of
the month in which the Rental Commencement Date occurs, rental shall be
apportioned on the basis of the number of days in said month.

      5. Additional Rent. As and for additional rent (the "Additional Rent") for
the Premises, Tenant shall pay Landlord, commancing on the Rental Commancement
Date, CAM Expenses, increases, if any, in property Taxes of the Property Taxes
paid by the Landlord under the Prime Lease in 2000, the Base Year, and Insurance
Costs incurred by the Landlord under the Prime Lease over Insurance Costs
incurred in 2000 (collectively, "Operating Costs"). Tenant shall pay to Landlord
as additional rent a prorata portion of the amounts payable by Landlord as
Operating Costs under the Prime Lease. The prorata amount shall be determined by
multiplying the total amount of Operating Costs that Landlord is required to

                                       1
<PAGE>

pay under the Prime Lease by a fraction, the numerator of which is 15,000 and
the denominator of which is 40,749. Such additional rent shall be payable as and
when Operating Costs are payable by Landlord. If the Prime Lease provides for
the payment by Landlord of Operating Costs on the basis of an estimate thereof,
then as and when adjustments between estimated and actual Operating Costs are
made under the Prime Lease, the obligations of Landlord and Tenant hereunder
shall be adjusted in a like manner; and if any such adjustment shall occur after
the expiration or earlier termination of the Term, then the obligations of
Landlord and Tenant under this Subsection 5 shall survive such expiration or
termination. Landlord shall, upon request by Tenant, furnish Tenant with copies
of all statements submitted to Landlord of actual or estimated Operating Costs
during the Term.

      In addition to the foregoing, Tenant shall pay Landlord as additional rent
the sum of Three Hundred Dollars ($300.00) on the Rental Commencement Date and
on each anniversary of the Rental Commencement Date during the term of this
sublease in lieu of a security deposit. Additional Rent shall be due thirty (30)
days following Tenant's receipt thereof.

      6.    Quiet Enjoyment. So long as Tenant shall observe and perform the
covenants and agreements binding on it hereunder, Tenant shall, at all times
during the term, peacefully and quietly have and enjoy possession of the
Premises without and encumbrance and hindrance by, from or through Landlord, or
anyone else lawfully claiming an interest in the Premises, subject, however, to
the terms and conditions of this Sublease.

      7.    Use of the Premises. Tenant warrants and represents to Landlord that
the Premises shall be used and occupied only for office, warehouse and
distribution purposes. Tenant shall occupy the Premises, conduct its business
and control its employees, agents and invitees in such a manner as in lawful and
reputable and without creating any nuisance. Tenant shall neither permit any
waste on the Premises, nor allow anything to be stored in the Premises which
would, in the reasonable opinion of Landlord, be extra hazardous on account of
fire, or which would in any way increase or render void the firm insurance on
the Premises.

      8.    Mechanic's Liens. Tenant shall have no authority, expressed or
implied, to create or place any lien or encumbrance of any kind or nature
whatsoever on, or in any manner to bind the interest of Landlord or Prime
Lessor in the Premises or to charge the rentals payable hereunder for any claim
in favor of any person dealing with the Tenant, including those who may furnish
materials or perform labor for any of Tenant's construction or repairs, and each
such claim shall affect and each such lien shall attach to, if at all, only the
leasehold interest granted to the Tenant herein. Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises, and that it will save and hold the Landlord and
Prime Lessor harmless from any and all liability, loss, damage, cost and expense
arising out of asserted claims or liens against the leasehold estate or against
the right, title and interest of Landlord and the Prime Lessor in the Building.

      9.    Estoppel Certificates. Upon delivery of the Premises to Tenant, and
thereafter within ten(10) days following the written request of Landlord or the
Prime Lessor, from time to time Tenant shall execute, acknowledges, and deliver
to landlord or to Prime Lessor or Prime Lessor's mortgagee, proposed
mortgage or proposed purchaser of the Building, an estoppel certificate stating
whether this Sublease is in full force and effect and whether any changes may
have been made to the original Sublease; whether there are any defaults by
Landlord and, if so, the nature of such defaults; whether rent has been paid
more than thirty (30) days in advance; whether there are any security deposits;
and such other matters pertaining to the status of this Sublease as Landlord
or the Prime Lessor may reasonably request.

      10.   Indemnification By Tenant. Tenant hereby releases Landlord and Prime
Lessor from any liability for any loss or damage of any kind or for any injury
or death of persons or damage to property of Tenant or any other person from any
cause whatsoever by reason of the use, occupancy or enjoyment of the Premises by
Tenant or any person therein holding under Tenant. Tenant shall indemnify,
defend and save harmless Landlord and Prime Lessor, and each of their officers,
directors, agents and employees, from all claims, actions, demands, damages,
costs, expenses and liabilities whatsoever, including reasonable attorneys'
fees, on account of any real or claimed loss, damage or liability occurring in
or at the Premises, or arising out of the use, occupancy or enjoyment of the
Premises, or occasioned in whole or in part by the act or omission of Tenant or
its agents, contractors, employees, guests or invitees; provided, however,
notwithstanding the foregoing, Tenant shall not be responsible for any of the
foregoing to the extent directly attributable to the gross negligence or
intentional misconduct of Landlord or Prime Lessor.

                                        2
<PAGE>

      11.   Insurance/Release

      (a)   Insurance Coverance and Amounts. Tenant shall, at all times during
the term of this Lease and at Tenant's sole cost and expense, obtain and keep in
force the insurance coverages and amounts set forth in this section. Tenant
shall maintain commercial general liability insurance, including contractual
liability, broad form property damage liability, fire legal liability, premises
and completed operations, and medical payments, with limits not less than one
million dollars ($1,000,000) per occurrence and aggregate, insuring against
claims for bodily injury, personal injury and property damage arising from the
use, occupancy or maintenance of the Premises and the Buildings. The policy
shall contain an exception to any pollution exclusion which insures damage or
injury arising out of heat, smoke or fumes from a hostile fire. Any general
aggregate shall apply on a per location basis. Tenant shall maintain business
auto liability insurance with limits not less than one million dollars
($1,000,000) per accident covering owned, hired and non-owned vehicles used by
Tenant. Tenant shall maintain umbrella excess liability insurance on a following
form basis in excess of the required commercial general liability, business auto
and employers liability insurance with limits not less than two million dollars
($2,000,000) per occurrence and aggregate. Tenant shall carry workers'
compensation insurance for all of its employees in statutory limits in the state
in which the Property is located and employers liability insurance which efforts
not less than five hundred thousand dollars ($500,000) for each coverage. Tenant
shall maintain all risk property insurance for all personal property of Tenant
and improvements, fixtures and equipment constructed of installed by Tenant in
the Premises in an amount not less than the full replacement cost, which shall
include business income and extra expense coverage with limits not less than
fifty percent (50%) of gross revenues for a period of twelve (12) months. If
required by Landlord, Tenant shall maintain plate glass insurance coverage
against breakage of plate glass in the Premises. Any deductibles selected by
Tenant shall be the sole responsibility of Tenant.

      (b)   Insurance Requirements. All insurance and renewals thereof shall be
issued by companies with a rating of at least "A-" "VIII" or better in the
current edition of Best's Insurance Report and be licensed to do and doing
business in the state in which the Property is located. Each policy shall
expressly provide that the policy shall not be canceled or materially altered
without thirty (30) days prior written notice to Landlord and shall remain in
effect notwithstanding any such cancellation or alteration until such notice
shall have been given to Landlord and such thirty (30) days shall have expired.
All liability insurance (except employers liability) shall name Landlord and any
other parties designated by Landlord (including any investment manager, asset
manager or property manager) as an additional insured, shall be primary and
noncontributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on any act, omission, event or condition
that occurred or arose or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to Landlord. All property insurance shall name Landlord
as loss payee as respects Landlord's interest in any improvements and
betterments. Tenant shall deliver certificates of insurance, acceptable to
Landlord, to Landlord at least ten (10) days before the Commencement Date and at
least ten (10) days before expiration of each policy. If Tenant fails to insure
or fails to furnish any such insurance certificate, Landlord shall have the
right from time to time to effect such insurance for the benefit of Tenant or
Landlord or both of them, and Tenant shall pay Landlord on written demand, as
additional rent, all premiums paid by Landlord.

      (c)   Subrogation. Tenant waives, on behalf of all insurers, under all
policies of property insurance now or hereafter carried by Tenant insuring or
covering the Premises, or any portion or any contents thereof, or any operations
therein, all rights or subrogation which any such insurer might otherwise, if at
all, have to any claims of Tenant against Landlord. Landlord waives, on behalf
of all insurers under all policies of property insurance now or hereafter
carried by Landlord insuring or covering the Property, or any portion or any
contents thereof, or any operations therein, all rights of subrogation which
any insurer might otherwise, if at all, have to any claims of Landlord against
Tenant. Tenant shall procure from each of the insurers under all policies of
property insurance now or hereafter carried by Tenant insuring or covering the
Premises, or any portion or any contents thereof, or any operations therein, a
waiver of all rights of subrogation which the insurer might otherwise, if at
all, have to any claims of Tenant against Landlord as required by this section
11.

      12.   Holding Over. Unless otherwise agreed to in writing by Landlord and
Tenant, if Tenant retains possession of the Premises, or any part thereof, after
termination or expiration, of the Term, Tenant shall be deemed to be in default
hereunder. Landlord shall have any and all remedies provided for in this
Sublease and at law or in equity, and Tenant shall pay Landlord rent for the
time Tenant remain in possession at double the monthly rate in effect
immediately prior to such termination or expiration. The provisions of this

                                       3
<PAGE>

Section 14 do not exclude Landlord's right of re-entry or any other right
hereunder and such holding over shall be deemed to constitute a renewal or
extension of the Term.

      13.   Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be given on the date which is three
(3) days after being deposited in the United States Mail, registered or
certified mail, return receipt requested, postage prepaid, or if personally
delivered, upon actual receipt, addressed as follows:

      If to Landlord:           Newspace, Inc.
                                1960 Innerbelt Business Center Drive
                                St. Louis, MO 63114

      If to Tenant:             Build-A-Bear Workshop, L.L.C,
                                1954 Innerbelt Business Center Drive
                                St. Louis, MO 63114

subject to the right of either party to designate a different address or notice
person by notice similarly given in accordance with the provision of this
paragraph 15:

      14.   Repairs and Maintenance. Tenant shall at all times during the term
of this sublease and at Tenant's sole cost and expense, maintain and repair the
Premises and every part thereof (except only the parts for which expressly made
the responsibility of the Landlord under the Prime Lease) and all equipment,
fixtures and improvements therein (including walls, floors, heating and air
conditioning systems, dock boards, truck doors, dock bumpers, plumbing fixtures
and equipment, electrical components and mechanical systems) and keep all of the
foregoing clean and in good order and operating condition, ordinary wear and
tear excepted. Tenant shall not damage the Promises or disturb the integrity and
support provided by any wall. Tenant shall, at Tenant's expense, promptly repair
any damage to the Premises caused by Tenant or any agent, officer, employee,
contractor, licenses or invitee of Tenant. Tenant shall take good care of the
Premises and keep the Premises free from dirt, rubbish [ILLEGIBLE] at all times.
Tenant shall not overload the floors in the Premises or exceed the load-bearing
capacity of the floors in the Premises. Tenant shall, at Tenant's expense, enter
into a regularly scheduled preventive maintenance and service contract with a
maintenance contractor approved in writing by Landlord for servicing all hot
water, heating and air conditioning systems and equipment in the Premises. The
maintenance and service contract shall include all services suggested by the
equipment manufacturer and shall become effective (and Tenant shall deliver a
copy to Landlord) within thirty (30) days after the Commencement Date. Subleasee
shall, at the end of the term of this sublease, surrender to Landlord the
Promises and all alterations, additions, fixtures and improvements therein, or
thereto in the same condition as when received, ordinary wear and tear excepted.
Notwithstanding anything to the contrary contained in this section, Tenant's
obligation under this section shall not include making (i) any repair and
improvement necessitated by the negligence or willful misconduct of Landlord,
its agents, employees, servants or contractors, or (ii) any repair and
improvement caused by Landlord's failure to perform its obligations under the
Prime Lease or this sublease, as the case may be.

      15.   Utility Services. Tenant shall pay, directly to the appropriate
supplier before delinquency, for all water, gas, heat, light, power, telephone,
sewer, refuse disposal and other utilities and services supplied to the
Premises, together with all taxes, assessments, surcharges and similar expenses
relating to such utilities and service. Tenant shall, at its expense, install
separate moters for such services. If any such utilities or services are jointly
[ILLEGIBLE] with the Premises and the adjoining premises occupied by Landlord.
Landlord shall determine Tenant's share of the cost as such jointly [ILLEGIBLE]
utilities and services based on Landlord's estimate of usage, and Tenant shall
pay as additional rent Tenant's share of the cost of such jointly [ILLEGIBLE]
utilities and services to Landlord within twenty (20) days after receipt of
Landlord's written statement for such cost. Tenant shall furnish the Premises
with all telephone services, window washing, security service, janitor,
scavenger and disposal services, and other services required by Tenant for the
use of the Premises permitted by this Sublease. Tenant shall furnish all
electric light bulbs and tubes and restroom supplies used in the Premises.
Landlord shall not be in default under this Sublease or be liable for any damage
or loss directly or indirectly resulting from, nor shall the rent be abates or a
constructive or other [ILLEGIBLE] be deemed to have occurred by reason of, any
interruption of or failure to supply or delay in supplying any such utilities
and services or any limitation, curtailment, rationing, restriction on use of
water, electricity, gas or any resources or from of energy or other service
serving the Premises, whether such results from mandatory restrictions or
voluntary compliance with guidelines.

      16.    Eminent Domain. In the event title to the whole or a material part
of the Premises shall be lawfully [ILLEGIBLE] or taken in any manner for any
public or quasi-public use, this Sublease and estate hereby granted shall
forthwith cease and terminate as of the

                                        4
<PAGE>

date of vesting of title. Tenant hereby assigns to Prime Leasor Tenant's
interest in any award granted pursuant to this Section 17; provided, however,
nothing herein shall be deemed to give Prime Lessor any interest in or to
require Tenant to assign to Prime Lessor any award made to Tenant for the taking
of personal property or fixtures belonging to Tenant or for the interruption of
or damage to Tenant's business or for any funds awarded for Tenant's relocation.

      17.   Landlord's Remedise. All rights and remedies of Landlord herein
[ILLEGIBLE] shall be cumulative, and none shall exclude any other right or
remedy allowed by law. In addition to the other remedies in this sublease
provided. Landlord shall be entitled to the restraint by injunction of the
violation or attempted violation of any of the covenants, agreements or
conditions of this Sublease or the Prime Loans, and Landlord shall be entitled
to recover all direct and consequential damages arising cut of or caused by
Tenant's violation of any of the covenances, agreements or conditions of this
Sublease or the Prime Lease.

      (a)   If Tenant shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of Tenant or of all or a substantial part of its
assets, (ii) file a voluntary petition in bankruptcy, (iii) make a general
assignment for the benefit of creditors, (iv) file a petition or an answer
seeking reorganization or arrangement with creditors or to take advantage of any
insolvency law, or (v) file an answer admitting the material allegations of a
petition filed against Tenant in any bankruptcy, reorganization or insolvency
proceeding, or if an order, judgment or decree shall be entered by any court of
competant jurisdiction adjudicating Tenant a bankrupt or insolvent or approving
a petition seeking reorganization of Tenant or appointing a receiver, trustee or
liquidator of Tenant or of all or a substantial part of its assets, then, in any
of such events. Landlord may terminate this sublease by giving written notice to
Tenant and upon the giving of such notice the term of this Sublease and all
right, title and interest of Tenant hereunder shall expire as fully and
completely as if that day were the date herein specifically fixed for the
expiration of the term.

      (b)   If Tenant defaults in the payment of rent or Additional Rent and
such default continues for ten (10) days after written notice to Tenant, or if
Tenant defaults in the prompt and full performance of any other provision of
this sublease, and if such other default continues for thirty (30) days after
written notice, or if the leasehold interest of Tenant be levied upon under
execution, or be attached by process of law, then, and in any such event,
Landlord may, at its election, either terminate this Sublease and Tenant's right
to possession of the Premises, or, without terminating this Sublease, re-enter
and endeavor to [ILLEGIBLE] the Premises. Nothing herein shall relieve Tenant of
any obligation, including the payment of rent and Additional rent, as provided
in this Sublease.

      (c)   Upon any termination of this Sublease, Tenant shall surrender
possession and vacate the Premises immediately, and deliver possession thereof
to Landlord, and Tenant hereby grants to Landlord full and free License to enter
into and upon the Premises in such event and to repossess the Premises, and to
expel or remove Tenant and any others who may be occupying or within the
Premises, and to remove any and all property therefrom, using such force as may
be allowed by law, without being deemed in any manner guilty of [ILLEGIBLE]
enviction or forcible entry or detainer and without relinquishing Landlord's
right to rent and Additional Rent, or any other right given to Landlord
hereunder or by operation of law.

      (d)   If Landlord elects, without terminating the Sublease, to endeavor to
relet the Premises, Landlord may, at Landlord's option, enter into the Premises
and take and hole possession thereof, without such entry and possession
terminating the Sublease or releasing Tenant, in whole or in part, from Tenant's
obligation to pay rent and Additional Rent hereunder for the full Term as
hereinafter provided. Upon and after entry into possessions without termination
of the Sublease, Landlord shall endeavor in good faith (but without being
obligated to inour out of pocket costs as part of such endeavor) to relet the
Premises for the account of Tenant to any person, firm or corporation other than
Tenant for such rent, for such time and upon such terms as Landlord shall
determine to be reasonable. In any such case, Landlord may make repairs in or to
the Premises as are necessary to restore the Premises to as good a condition as
existed at the commencement date of this Sublease, and Tenant shall, upon
demand, pay the cost thereof, together with Landlord's expenses of the
reletting. If the consideration collected by Landlord upon any such reletting
for Tenant's account is not sufficient to pay monthly the full amount of the
rent and Additional Rent reserved in this Sublease, together with the cost of
repairs and Landlord's expenses, Tenant shall pay to Landlord the amount of each
monthly deficiency upon demand.

      (e)   If Landlord elects to terminate this Sublease pursuant to this
Section 19, it being understood that Landlord may elect to terminate the
Sublease after and notwithstanding its election to terminate Tenant's right to
possession provided in Section 19(h) above, Landlord shall forthwith upon such
termination be entitled to recover an amount equal to the

                                        5
<PAGE>

damages sustained by Landlord as a result of Tenant's default hereunder, and in
addition thereto, an amount equal to the rent provided in this Sublease for the
residue of the Term, leus the current rental value of the Promises for the
residue of the Term.

      (f)   Any and all property which may be removed from the promises by
Landlord pursuant to the authority of this Sublease or of law, to which Tenant
is or may be entitled, may be handled, removed or stored by Landlord at the
risk, cost and expense of Tenant, and Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof. Tenant shall pay to
Landlord, upon demand, any and all expenses incurred in such removal and all
storage charges against such property so long as the same shall be in Landlord's
possession or under Landlord's control. Any such property of Tenant not removed
from the Promises or retaken from storage by Tenant within thirty (30) days
after the end of the Term or of Tenant's right to possession of the Premises,
however terminated, shall be conclusively deemed to have been forever abandoned
by Tenant and either may be retained by Landlord as its property, or may be
disposed or in such manner as Landlord may see fit.

18.   Subordination of Sublease. This Sublease is and shall be subject and
subordinate to any and all mortgages, deeds of trust or land leases now existing
upon or that may be hereafter placed upon the Premises, and to all advances made
or to be made thereon, and all renewals, modifications, consolidations,
replacements or extensions thereof, and the lien of any such mortgages, deeds of
trust and land leases shall be superior to all rights hereby or hereunder vested
in Tenant, to the full extent of all sums occurred thereby. This provision shall
be self-operative, and no further instrument of Subordination shall be necessary
to effectuate such subordination; and the recording of any such mortgage, deed
of trust or land lease shall have preference and precedence and be superior and
prior in lien to this Sublease, irrespective of the date of recording. In
confirmation of such subordination, Tenant shall within ten (10) days after
request or Landlord, Prime Lessor, or the holder of any such mortgage, deed of
trust, or land lease, execute and deliver to Landlord, Prime Lessor or such
holder, as the case may be, any instrument acknowledging such subordination that
Landlord, Prime Lessor or such holder may reasonably request. Tenant agree to
any person or entity who may acquire title to the Building by way of transfer or
under this Sublease so long as Tenant is not in default in any of its
obligations hereunder. Tenant shall also, within twenty (20) days after
Landlord's or Prime Lessor's request, execute an attornment agreement evidencing
the obligations of Tenant herein to attorn to such mortgagee in the event of a
future succession of the rights of Landlord herein to any mortgagee, deed of
trust holder or land lessor of the Premises. In the event of any act or omission
of Landlord constituting a default by Landlord, Tenant shall not exercise any
remedy until Tenant has given Landlord, Prime Lessor and any mortgagee, deed of
trust holder or land lessor of the Building a prior thirty (30) day written
notice of such act or omission; provided, however, if such not or omission
cannot, with due diligence and in good faith, be remedied within such thirty
(30) day period, Landlord, Prime Lessor and any mortgagee, deed of trust holder
or land lessor shall be allowed such further period of time as may be reasonably
necessary provided that it commences remedying the same with due diligence and
in good faith within said thirty (30) day period.

      19.   Prevailing Party. In the event of litigation between Landlord and
Tenant in connection with this Sublease, in addition to any other relief therein
granted, the prevailing party shall be entitled to judgment for reasonable
attorneys' fees, costs of litigation, and [ILLEGIBLE] costs incurred therein.

      20.   Governing Law. This Sublease has been made and executed in the
County of St. Louie, State of Missouri, and shall be governed and construed in
accordance with the laws of the State of Missouri without regard to its conflict
of laws provisions.

      21.   Act of God or force Majeure. Landlord or Tenant shall not be
required to perform any covenant or obligation in this Sublease or be liable
in damages for its nonperformance, so long as the performance or
non-performance of the covenant or obligation [ILLEGIBLE] delayed, caused or
prevented by an act of God or force majeure or by the other party. An "act of
God" or "force majeure" is defined for purposes of this Sublease as strikes,
lockouts, [ILLEGIBLE], material or labor restrictions by any governmental
authority, unusual transportation delays, riots floods, washouts, explosions,
earthquakes, fire, storms, weather (including wat grounds or inclement weather
which prevents construction), acts of the public enemy, wara, insurrections and
any other cause not reasonably within the control of the party required to
perform and which by the exercise of due diligence the party required to perform
is unable to prevent or overcome. The foregoing provisions of this Section as
shall not apply, however, to Tenant's obligation to timely pay rent. Additional
Rent or any other [ILLEGIBLE] payable by Tenant under this Sublease.

                                       6
<PAGE>
      22. Severability. The invalidity of any provision of this Sublease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.

      23. Assignment and Sublease. Tenant shall not voluntarily or by operation
of law assign or encumber any interest in this Sublease, or sublet any part of
the Premises, without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed.

      IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of
the day and year first above written.

LANDLORD:                       NEWSPACE, INC.,
                                a Missouri corporation

                                By: ____________________________________
                                Its: CEO

TENANT:                         BUILD-A-BEAR WORKSHOP, L.L.C.,
                                a Missouri limited liability company

                                By: ____________________________________
                                Its: Manager

                                       7

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>31
<FILENAME>c86750exv10w29.txt
<DESCRIPTION>LEASE
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.29

                                 LEASE ABSTRACT

Mall:          Galleria

Store Name:    The Build-A-Bear Workshop

Store Address: store 1440

Landlord:      Hycel Partners I L.P.

Address:       164 Crestwood Plaza, Suite 200
               St. Louis, Missouri 63126-1794

Rent Paid To:  Same

Total square footage:   A 2,251

Annual Rent:         $74,328 yrs  1 to 2     ($33.02/sq. ft.)
                     $78,780 yrs  3 to 4     ($35.00/sq. ft.)
                     $83,292 yrs  5 to 6     ($37.00/sq. ft.)
                     $87,816 yrs  7 to 8     ($39.01/sq. ft.)
                     $92,268 yrs  9 to 10    ($40.99/sq. ft.)

Lease Commencement:  Section 1.03 10/1/97 if space is delivered by 7/1/97;
                           if not extended day for day

Rent Commencement: Section 1.03 Earlier of 10/1/97 or date store opens

Lease Expiration: Section 1.03 Ten years after Commencement Date

Early Termination: Section 2.02 Landlord's option

       Sales Amount:  Breakpoint

       Period: Any year after 3rd Lease Year

       Notice date: 30 days   Remedy: Terminate lease or increase minimum rent
                                      by 15%

Gross Sales Reports: Section 3.02 Yes

       Monthly by 15th   Annually 30 days after anniversary of Commencement Date

Percentage Rent: 6%

       Breakpoint:  Yrs 1 & 2 $929,100; yrs 3 & 4 $984,750;
                    yrs 5 & 6 $1,041,150; yrs 7 & 8 $1,097,700;
                    yrs 9 & 10 $1,153,350

       Payable: Section 2.02 Monthly after Breakpoint

CAM: Prorata (with 80% floor)

HVAC: Prorata

Tax: Section 2.04 Prorata (with 80% floor)

Advertising & Promotion: Section 17.01(b) $7,000/yr. ($3.12/sq. ft.)
       adjusted annually by advertising rates in St. Louis but not to exceed 5%
       increase in years 1 and 2, and then the greater of 5% or actual.

Radius Restriction: Section 6.03 5 miles

Security Deposit: Section 8.01 $7,000.00

Remodel: Section 5.06 First 3 months of 6th year

Plan Approval Fee: Section 5.03 $1,000.00 maximum

Completion Deposit: Section 5.03(d) $12,500.00

Modification of Signs: Section 10.03 $250 maximum for plan review

<PAGE>

                                      LEASE

                              SAINT LOUIS GALLERIA

                 TENANT:  SMART STUFF,  INC.

                 DATE:    May 5, 1997

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                     PAGE
<S>                                                                                                  <C>
ARTICLE A            BASIC LEASE PROVISIONS....................................................        1

ARTICLE I            GRANT AND TERM ...........................................................        3
      SECTION 1.01.  Leased Premises and Shopping Center.......................................        3
      SECTION 1.02.  Use of Additional Areas...................................................        3
      SECTION 1.03.  Commencement and Ending Date of Term......................................        3
      SECTION 1.04.  Failure of Tenant to Open.................................................        3
      SECTION 1.05.  Joint Opining ............................................................        3

ARTICLEII            RENT AND REAL ESTATE TAXES................................................        4
      SECTION 2.01.  Minimum Rent..............................................................        4
      SECTION 2.02.  Percentage Rent...........................................................        4
      SECTION 2.03.  Gross Sales Defined.......................................................        4
      SECTION 2.04.  Real Estate Taxes.........................................................        5
      SECTION 2.05.  Additional Rent..........................................................         6
      SECTION 2.06.  Late Charge...............................................................        6
      SECTION 2.07.  Governmental Limitation on Rents and Other Charges .......................        6
      SECTION 2.08.  Automatic Transfer........................................................        7

ARTICLE III          RECORDS AND BOOKS OF ACCOUNT..............................................        7
      SECTION 3.01.  Tenant's Records .........................................................        7
      SECTION 3.02.  Reports by Tenant ........................................................        8

ARTICLE IV           AUDIT.....................................................................        8
      SECTION 4.01.  Right to Examine Books ...................................................        8
      SECTION 4.02.  Audit ....................................................................        8

ARTICLE V            CONSTRUCTION, ALTERATION, RELOCATION AND REMODELING ......................        9
      SECTION 5.01.  Construction Provided by Owner............................................        9
      SECTION 5.02.  Parking Facilities........................................................        9
      SECTION 5.03.  Tenant's Work.............................................................        10
      SECTION 5.04.  Fire Prevention Systems...................................................        11
      SECTION 5.05.  Changes and Additions to Buildings........................................        11
      SECTION 5.06.  Remodeling of Leased Premises.............................................        12
      SECTI0N 5.07.  Construction Reimbursement Cost...........................................        12

ARTICLE VI           CONDUCT OF BUSINESS BY TENANT ............................................        12
      SECTION 6.01.  Use of Premises...........................................................        12
      SECTION 6.02.  Operation of Business.....................................................        13
      SECTION 6.03.  Competition ..............................................................        14
      SECTION 6.04.  Storage, Office Space, Display of Merchandise, Solicitation of Business ..        14
      SECTION 6.05.  Maintain Character of Shopping Center.....................................        14
      SECTION 6.06.  Waste ....................................................................        14
      SECTION 6.07.  Hazardous Substances......................................................        14

ARTICLE VII          OPERATION OF CONCESSIONS..................................................        15
      SECTION 7.01.  Consent of Owner..........................................................        15

ARTICLE VIII         SECURITY DEPOSIT..........................................................        15
      SECTION 8.01.  Amount of Deposit ........................................................        15
      SECTION 8.02.  Use and Return of Deposit ................................................        16
      SECTION 8.03.  Transfer of Deposit ......................................................        16
      SECTION 8.04.  Additional Security Deposit...............................................        16

ARTICLE IX           COMMON AREAS .............................................................        17
      SECTION 9.01.  Control of Common Areas by Owner..........................................        17
      SECTION 9.02.  License ..................................................................        17
      SECTION 9.03.  Tenant's Share of Expenses ...............................................        17

ARTICLE X            SIGNS, CANOPlES, FIXTURES, ALTERATIONS....................................        20
      SECTION 10.01. Installation and Alteration by Tenant.....................................        20
      SECTION 10.02. Tenant Discharge of Liens.................................................        20
      SECTION 10.03. Signs, Displays and Canopies .............................................        21
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                 <C>
ARTICLE XI           MAINTENANCE OF LEASED PREMISES..............................................   21
      SECTION 11.01. Maintenance by Tenant ......................................................   21
      SECTION 11.02. Maintenance by Owner .......................................................   22
      SECTION 11.03. Rules and Regulations ......................................................   22

ARTICLE XII          SURRENDER OF PREMISES.......................................................   22
      SECTION 12.01. Surrender of Premises and Ownership of Certain Property ....................   22
      SECTION 12.02. Ownership of Property on Premises...........................................   23

ARTICLE XIII         INSURANCE AND INDEMNITY.....................................................   23
      SECTION 13.01. Tenant's Insurance..........................................................   23
      SECTION 13.02. Increase in Insurance Premium...............................................   24
      SECTION 13.03. Identification of Owner ....................................................   25
      SECTION 13.04. Glass ......................................................................   25
      SECTION 13.05. Boiler Insurance.................. .........................................   25
      SECTION 13.06. Owner's Insurance...........................................................   25

ARTICLE XIV          UTILITIES...................................................................   26
      SECTION 14.01. Utility Charges ............................................................   26
      SECTION 14.02. Maintenance of Meters ......................................................   26
      SECTION 14.03. Discontinuance of Services..................................................   26
      SECTION 14.04. Energy Shortage ............................................................   27
      SECTION 14.05. No Overloading .............................................................   27

ARTICLE XV           ESTOPPEL CERTIFICATE, ATTORNMENT, SUBORDINATION.............................   27
      SECTION 15.01. Estoppel Certificate .......................................................   27
      SECTION 15.02. Attornment .................................................................   27
      SECTION 15.03. Subordination ..............................................................   28
      SECTION 15.04. Attorney-in-Fact ...........................................................   28

ARTICLE XVI          ASSIGNMENT AND SUBLETTING ..................................................   28
      SECTION 16.01. Consent Required    ........................................................   28
      SECTION 16.02. Owner's Right to Assign Lease...............................................   29
      SECTION 16.03. Change in Ownership........................................................    30
      SECTION 18.04. Continuing Liability of Tenant..............................................   30

ARTICLE XVII         PROMOTIONS FUND, ADVERTISING................................................   30
      SECTION 17.01. Promotions and Advertising Fund.............................................   30
      SECTION 17.02. Mall Credit Card Program ...................................................   31

ARTICLE XVIII        DESTRUCTION AND RESTORATION.................................................   31
      SECTION 18.01. Total or Partial Destruction of Leased Premises ............................   31
      SECTION 18.02. Partial Destruction of Shopping Center......... ............................   32
      SECTION 18.03. Waiver of Subrogation, Limitation of Liability..............................   32

ARTICLE XIX          EMINENT DOMAIN..............................................................   33
      SECTION 19.01. Total Condemnation of Leased Premises                                          33
      SECTION 19.02. Partial Condemnation of Leased Premises.....................................   33
      SECTION 19.03. Condemnation of Shopping Center.............................................   33
      SECTION 19.04. Owner's Damages ............................................................   33
      SECTION 19.05. Tenant's Damages............................................................   33

ARTICLE XX           DEFAULT BY TENANT...........................................................   34
      SECTION 20.01. Right to Terminate the Lease or Tenant's Possession of the Leased Premises..   34
      SECTION 20.02. Right to Relet..............................................................   34
      SECTION 20.03. Payment of Expenses.........................................................   35
      SECTION 20.04. Owner's Right to Cure Defaults  ............................................   35
      SECTION 20.05. Waiver of Rights of Redemption..............................................   35
      SECTION 20.06. Waiver and Subsequent Defaults..............................................   35
      SECTION 20.07. Injunctive Relief ..........................................................   36
      SECTION 20.08. Cumulative Remedies ........................................................   36
      SECTION 20.09. Tenant's Bankruptcy or Insolvency...........................................   36

ARTICLE XXI          DEFAULT BY OWNER............................................................   37
      SECTION 21.01. Notice to Owner.............................................................   37
      SECTION 21.02. Liability of Owner .........................................................   38
</TABLE>

<PAGE>

                                      LEASE

                                   WITNESSETH:

      In consideration of the payment of the rents and other charges provided
for herein and the covenants and conditions hereinafter set forth, Owner and
Tenant agree as follows:

<TABLE>
<S>                         <C>
ARTICLE A                   BASIC LEASE PROVISIONS

DATE:                       May 5, 1997

OWNER:                      HYCEL PARTNERS I, L.P., a Delaware limited partnership,
                            164 Crestwood Plaza, Suite 200
                            St.Louis, Missouri 63126-1794
                            EIN: 43-1530514


TENANT:                     SMART STUFF, INC., a Missouri corporation

ADDRESS OF TENANT:          1964 Innerbelt Business Center Drive
                            St. Louis, Missouri 63114

TENANT'S TRADE NAME:        THE BUILD-A-BEAR WORKSHOP

LEASED PREMISES:            Store 1440; Mall Level 1; containing approximately
                            2,251 square feet of Floor Area and hatched in black
                            on Exhibit 'A'.

ADDRESS OF LEASED PREMISES: Commonly known as 1440 Saint Louis Galleria
                            St Louis, Missouri 63117

LEASE TERM:                 Ten (10) Lease Years

OUTSIDE DATE:               October 1,1997
</TABLE>

<TABLE>
<CAPTION>
    MINIMUM RENT:              ANNUAL        MONTHLY         PER S.F.
<S>                         <C>             <C>              <C>
Lease Year 1 thru 2         $ 74,328.00     $ 6,194.00       $  33.02
Lease Year 3 thru 4         $ 78,780.00     $ 6,565.00       $  35.00
Lease Year 5 thru 6         $ 83,292.00     $ 6,941.00       $  37.00
Lease Year 7 thru 8         $ 87,816.00     $ 7,318.00       $  39.01
Lease Year 9 thru 10        $ 92,268.00     $ 7,689.00       $  40.99
</TABLE>

<PAGE>

PERCENTAGE RATE :                   Six percent (6%)

PERCENTAGE BREAKPOINT:

During the first (1st) Lease Year through and including the second (2nd) Lease
Year, an amount per annum equal to $929,100.00

During the third (3rd) Lease Year through and including the fourth (4th) Lease
Year, an amount per annum equal to $984,750.00

During the fifth (5th) Lease Year through and including the sixth (6th) Lease
Year, an amount per annum equal to $1,041,150.00

During the seventh (7th) Lease Year through and including the eighth (8th) Lease
Year, an amount per annum equal to $1,097,700.00

During the ninth (9th) Lease Year through and including the tenth (10th) Lease
Year, an amount per annum equal to $1,153,350.00

PERMITTED USES:

The display, assembly and sale at retail of make it yourself plush bears and
other animals and accessories related to such bears and other animals such as
clothes, books, shampoo, jewelry and stickers and for no other purposes.

SECURITY DEPOSIT:                 Seven Thousand Dollars ($7,000.00)
                                                               See Section 8.01.

PROMOTION AND ADVERTISING CHARGE: Seven Thousand Dollars ($7,000.00)
                                                          See Section 17.01 (b).

REMODELING PERIOD:                The first three (3) months of the sixth (6th)
                                                   Lease Year. See Section 5.06.

                                                                               2

<PAGE>

ARTICLE I GRANT AND TERM

SECTION 1.01. Leased Premises and Shopping Center

      Owner hereby demises and leases to Tenant, and Tenant hereby rents from
Owner those certain premises described as the "Leased Premises" in Article A of
this Lease (the "Leased Premises"), together with the appurtenances specifically
herein granted. The term "Shopping Center" shall mean the Saint Louis Galleria,
City of Richmond Heights, St. Louis County, Missouri, together with the
buildings and other improvements from time to time located on the land
thereunder.

SECTION 1.02. USE OF ADDITIONAL AREAS

      The use and occupation by Tenant of the Leased Premises during the term of
this Lease shall include the nonexclusive use in common with others entitled
thereto of the "Common Areas", as that term is hereinafter defined; subject,
however, to the terms and conditions of this Lease and to reasonable rules and
regulations for the use thereof as prescribed from time to time by Owner.

SECTION 1.03. COMMENCEMENT AND ENDING DATE OF TERM SEE RIDER, PARAGRAPH 1

      (a)   The term of this Lease and Tenant's obligation to pay rent hereunder
shall commence upon the earlier of the following dates (the "Commencement
Date"); (ii) the date on which Tenant shall first open the Leased Premises for
business to the public; or (iii) the "Outside Date" set forth in Article A. The
Commencement Date shall not be postponed due to any delays by Tenant in mailing
or delivery of any of the plans described in Exhibit "B" or due to any changes
made to or required by such plans. If requested by Owner, Tenant shall execute
an agreement confirming the Commencement Date and expiration date of this Lease.

      (b)   If the term of this Lease shall not have commenced within one (1)
year of the date hereof, then Owner shall have the right to cancel this Lease by
giving Tenant thirty (30) days' notice. If this right is exercised, this Lease
shall become null and void, and neither party shall have any further liability
or obligation to the other hereunder, and Tenant shall execute an instrument in
recordable form containing a release and surrender of all right, title and
interest in and to the Leased Premises.

      (c)   The term of this Lease shall end on the last day of the last Lease
Year provided under the heading "Lease Term" in Article A, unless sooner
terminated pursuant to the terms of this Lease.

SECTION 1.04. FAILURE OF TENANT TO OPEN

      Subject to Article XVIII and Section 27.04, in the event that Tenant fails
to open the Leased Premises for business fully fixtured, stocked and staffed by
the commencement of the term of this Lease as provided in Section 1.03(a), then
Tenant shall, in recognition of the difficulty or impossibility of determining
Owner's damages, pay to Owner as liquidated damages and not as a penalty, in
addition to the Minimum Rent and other charges payable hereunder, a separate
charge, payable upon demand, equal to fifty percent (50%) of the Minimum Rent
(prorated on a per diem basis, and irrespective of whether payment of Minimum
Rent is then abated by other provisions of this Lease) during the period
beginning with the Commencement Dale and ending on the date Tenant opens the
Leased Premises for business with the public.

SECTION 1.05. JOINT OPENING

                                                                               3
<PAGE>

<TABLE>
<S>                                                                                <C>
ARTICLE XXII          ACCESS BY OWNER...........................................   38
       SECTION 22.01. Right of Entry............................................   38
       SECTION 22.02. Excavation................................................   38

ARTICLE XXIII         PROPERTY WITHIN THE LEASED PREMISES.......................   38
       SECTION 23.01. Payment of Taxes and Fees ................................   38
       SECTION 23.02. Loss and Damage...........................................   38
       SECTION 23.03. Notice by Tenant..........................................   38

ARTICLE XXIV          HOLDING OVER, SUCCESSORS................................     39
       SECTION 24.01. Holding Over..............................................   39
       SECTION 24.02. Successors................................................   39

ARTICLE XXV           QUIET ENJOYMENT.........................................     39
       SECTION 25.01. Owner's Covenant..........................................   39

ARTICLE XXVI          DEFINITION OF TERMS.......................................   40
       SECTION 26.01. Common Areas..............................................   40
       SECTION 26.02. Owner.....................................................   40
       SECTION 26.03. Floor Area................................................   40
       SECTION 26.04. Tenant....................................................   40
       SECTION 26.05. Tenant's Agents...........................................   40
       SECTION 26.06. Lease Year and Partial Lease Year.........................   40
       SECTION 26.07. Guarantor.................................................   41
       SECTION 26.08. Major Store and Major Store Premises......................   41
       SECTION 26.09. Tenant Design Guide.......................................   41

ARTICLE XXVII         MISCELLANEOUS ............................................   41
       SECTION 27.01. Accord and Satisfaction...................................   41
       SECTION 27.02. Entire Agreement .........................................   41
       SECTION 27.03. Relationship of the Parties...............................   42
       SECTION 27.04. Force Majeure.............................................   42
       SECTION 27.05. Notices...................................................   42
       SECTION 27.06. Captions and Section Numbers .............................   42
       SECTION 27.07. Use of Pronoun............................................   42
       SECTION 27.08. Brokerage.................................................   42
       SECTION 27.09. Partial Invalidity........................................   43
       SECTION 27.10. Applicable Law............................................   43
       SECTION 27.11. No Option.................................................   43
       SECTION 27.12. Reimbursement.............................................   43
       SECTION 27.13. Recording.................................................   43
       SECTION 27.14. Liquidated Damages........................................   43
       SECTION 27.15. Tenant's Financial Information............................   43
       SECTION 27.16. Authority.................................................   43
       SECTION 27.17. Consent ..................................................   44
       SECTION 27.18. Right to Change Shopping Center Name......................   44
       SECTION 27.19. Adding and Withdrawing Property...........................   44
       SECTION 27.20. Additional Major Store....................................   44
       SECTION 27.21. Gift Certificates.........................................   44
       SECTION 27.22. Survival of Tenant's Obligations..........................   44
       SECTION 27.23. Trial by Jury Waiver and Counterclaims....................   44
       SECTION 27.24. Rider.....................................................   45
       SECTION 27.25. Exhibits .................................................   45

RIDER...........................................................................    1
EXHIBIT "A"           SITE PLAN.................................................    1
EXHIBIT "B"           IMPROVEMENT OF LEASED PREMISES............................    1
ARTICLE B-1           CONSTRUCTION REQUIREMENTS.................................    1
       SECTION 1.     Structure of Building.....................................    1
       SECTION 2.     Interior Finish ..........................................    1
       SECTION 3.     Utilities.................................................    1
       SECTION 4.     Tenant's Work.............................................    2
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                <C>
ARTICLE B-II        PLANS........................................................    2
      SECTION 1.    Preliminary Plans............................................    2
      SECTION 2.    Working Plans................................................    2
      SECTION 3.    Changes in Working Plans.....................................    3
      SECTION 4.    Construction by Tenant.......................................    4
      SECTION 5.    Miscellaneous................................................    4
      EXHIBIT "C"   RULES AND REGULATIONS........................................    1
      EXHIBIT "C-1" FORM OF LETTER OF CREDIT.....................................    1
</TABLE>

<PAGE>

ARTICLE II     RENT AND REAL ESTATE TAXES

SECTION 2.01.  MINIMUM RENT

      Tenant agrees to pay to Owner at the address specified In Section 27.05 or
at such other place designated by Owner (including without limitation by way of
a lock box), without any prior notice or demand therefor and without any
deduction or setoff whatsoever, the "Minimum Rent" specified in Article A, in
equal monthly installments on or before the first day of each calendar month in
advance. Minimum Rent for a fractional calendar month (including the fractional
calendar month at the commencement of the term, if any) shall be prorated on a
per diem basis. If the term of this Lease includes any Partial Lease Year, as
defined in Section 26.06, then Tenant shall pay as Minimum Rant for any Partial
Lease Year, the then applicable Minimum Rent payable per annum prorated on a per
diem basis with respect to such Partial Lease Year.

SECTION 2.02.  PERCENTAGE RENT

      (a) In addition to the payment of Minimum Rent, Tenant agrees to pay to
Owner for each Lease Year as "Percentage Rent" hereunder, an amount equal to the
"Percentage Rate" set forth in Article A for the "Gross Sales", as that term is
hereinafter defined, for each such Lease Year in excess of the applicable
"Percentage Breakpoint" set forth in Article A for each such Lease Year. With
respect to each Lease Year, the Percentage Rent shall be due and payable
commencing with the calendar month during such Lease Year in which the aggregate
Gross Sales for such Lease Year shall first have exceeded the applicable
Percentage Breakpoint and thereafter shall be paid monthly on all additional
Gross Sales made during the remainder of such Lease Year. Such payments shall be
made to Owner not later than the fifteenth (15th) day following each month in
which any such excess Gross Sales are made and without any prior notice or
demand therefor and without any setoff or deduction whatsoever.

      (b) For the purpose of computing the Percentage Rent payable hereunder
with respect to any Partial Lease Year or Lease Year in which there has been an
abatement of Minimum Rent as provided in this Lease, the applicable Percentage
Breakpoint shall be adjusted to equal the product obtained by multiplying the
applicable Percentage Breakpoint by a fraction, the numerator of which is the
Minimum Rent paid by Tenant for such Partial Lease Year or Lease Year, and the
denominator of which is the Minimum Rent otherwise payable by Tenant had such
Partial Lease Year or Lease Year constituted three hundred sixty-five (365) days
or had the Minimum Rent been payable without abatement.

SECTION 2.03.   GROSS SALES DEFINED      SEE RIDER PARAGRAPH 2

      The term "Gross Sales" as used herein shall be defined to mean the
aggregate amount of the price charged for all goods sold, services rendered and
other operations in, on, at or from the Leased Premises by Tenant and all
others, whether such sales are evidenced by cash, check, credit charge account,
exchange or otherwise and regardless of the amount, if any, of profits realized
on any transaction. Gross Sales shall include, but not be limited to, the entire
amount of the price charged, whether wholly or partially in cash or credit, from
the sale, lease, licensing or delivery of goods, wares and merchandise, whether
such sales be made by means of merchandise or other vending

                                                                               4

<PAGE>

or video devices in the Leased Premises, rentals, lottery tickets, food, drinks,
sales to Tenant's employees, deposits not refunded to purchasers, service
charges for layaway sales, receipts from the sale of gift certificates and
merchandise vouchers at the time of sale, not at the time of redemption for
merchandise, and for service performed in, on or from the Leased Premises,
together with the amount of all orders taken or received, including mail,
catalog, telephone, telegraph, electronic mail, at home, or other orders
received at the Leased Premises, whether such orders be filled from the Leased
Premises or elsewhere and the amounts received from interest on charge accounts
and other finance charges, and, if any one or more departments or other
divisions of Tenant's business shall be sublet by Tenant or conducted by any
person, firm or corporation other than Tenant pursuant to this Lease, for all
receipts of gross sales of such departments or divisions in the same manner and
with the same effect as if the business or sales of such departments and
divisions of Tenant's business had been conducted by Tenant itself. Gross Sales
shall not include sales of merchandise for which cash has been refunded or
allowances made on merchandise claimed to be defective or unsatisfactory,
provided they shall have been included in Gross Sales and provided that if such
refunds or allowances are in the form of credits to customers, such credits
shall be included in Gross Sales when used; the sales price of merchandise
returned by customers for exchange, provided that the sales price of merchandise
delivered to the customer in exchange shall be included in Gross Sales; the
amount of any sales, use or gross receipts tax imposed by any federal, state,
municipal or other governmental authority directly on sales and collected from
customers, provided that the amount thereof is added to the selling price or
absorbed therein, that the amount is paid by Tenant to such governmental
authority and that a specific record is made at the time of each sale of the
amount of tax. Each charge or sale upon installment or credit shall be treated
as a sale for the full price in the month during which such charge or sale shall
be made, irrespective of the time when Tenant shall receive payment (whether
full or partial) therefor, and no reserve or deduction shall be allowed for
uncollected or uncollectible charge accounts, bad debts, or other items. Each
charge or sale shall be recorded for its full amount, and no deduction or offset
thereto shall be permitted for trade-ins, over-allowances for trade-ins,
coupons, handling charges for coupons or the equivalent.

SECTION 2.04.    REAL ESTATE TAXES

      (a) Tenant shall pay its proportionate share of the "Real Estate Taxes"
which may be levied or assessed against the land, buildings and other
improvements owned by Owner in the Shopping Center during the term of this
Lease. Said land, buildings and improvements shall hereinafter be referred to as
"Owner's Parcel". For purposes of this Section, the term "Real Estate Taxes"
shall include all real estate taxes, assessments, water and sewer rents (except
water meter charges and sewer rent based thereon) and other governmental
impositions and charges of every kind and nature whatsoever, extraordinary as
well as ordinary, general and special, foreseen and unforeseen, and each and
every Installment thereof (including any interest on amounts which may be paid
in installments) which shall or may, during the term of this Lease, be levied,
assessed, imposed or becomes due and payable with respect to Owner's Parcel, or
which Owner is contractually obligated to pay (including, without limitation,
payments in lieu of Real Estate Taxes to any governmental or quasi-governmental
entity) or which arise in connection with the use, occupancy or possession of or
grow due or payable out of or for Owner's Parcel or any part thereof, or which
may have been assessed by any taxing body on Owner's Parcel in any calendar year
or part thereof during the term of this Lease but which are abated pursuant to
ordinances of any taxing body, plus all costs incurred by Owner (including
reasonable attorney, consultant and appraiser fees) in contesting or negotiating
the Real Estate Taxes, any proposed Real Estate Taxes or any reassessment of
Real Estate Taxes with any governmental authority, plus an administrative fee
equal to two and one-half percent (2 1/2%) of the total of the foregoing costs
and Real Estate Taxes.

      (b) Nothing herein contained shall be construed to include as a tax which
shall be the basis of Real Estate Taxes, any inheritance, estate, succession,
transfer, gift, franchise, corporation, income or profit tax or capital levy
that is or may be imposed upon Owner, provided, however, that if, at any time
after the date hereof the methods of taxation shall be altered so that in lieu
of or as a substitute for or in addition to the whole or any part of the Real
Estate Taxes now levied, assessed or imposed on the Owner's Parcel, there shall
be levied, assessed or imposed a tax on the rents received from the Owner's
Parcel, or a tax or license fee imposed upon Owner which is otherwise measured
by or based in whole or in part upon Owner's Parcel or any portion thereof, then
the same shall be included in the computation of Real Estate Taxes hereunder
and computed as if the amount of such tax or fee so payable were that due if
Owner's Parcel were the only property of Owner subject thereto.

     (c) Tenant's proportionate share of the Real Estate Taxes shall be the sum
obtained by multiplying the total amount of the Real Estate Taxes assessed each
calender year on the Owner's Parcel (less any contribution thereto by the Major
Stores) by a fraction, the numerator of which shall be the Floor Area of the
Leased Premises and the denominator of which shall be the leased and occupied
Floor Area of the Owner's Parcel (less the Floor Area of the Major Store
Premises) for such calendar year; provided, however, in no event shall such
denominator be less than the amount equal to eighty percent (80%) of the average
of the total Floor Area of the owner's Parcel available for lease on the first
day of each calendar month in such calendar year (less the Floor Area of the
Major Store Premises). The Floor Area of the Owner's Parcel in effect for the
whole of any calender year shall be the average of the leased and occupied Floor
Area in affect on the first day of each calendar month in such calendar year.
Tenant hereby waives any right it may have by statute or otherwise to protest
the Real Estate Taxes Imposed on the Owner's Parcel, the building or buildings
of which the Leased Premises form a part or the Leased Premises; it being agreed
that Owner shall have the exclusive right (but not obligation) to contest or
compromise any Real Estate Taxes.
<PAGE>

      (d) Tenant shall pay to Owner, as Additional Rent, Tenant's proportionate
share of Real Estate Taxes in estimated (which estimate may be based on the
prior calendar year's actual Real Estate Taxes) equal monthly installments in
advance on the first day of each calender month during the term of this Lease.
If Owner determines that Owner has underestimated Tenant's proportionate share
of Real Estate Taxes, Owner may revise its estimate and adjust Tenant's monthly
payments upon written notice to Tenant and such adjusted estimate shall become
effective as of the next monthly payment. Within a reasonable time after receipt
of the actual tax bill for such calendar year, Owner shall furnish to Tenant a
statement showing Tenant's proportionate share of Real Estate Taxes for such
calendar year and the payments made by Tenant for such calendar year. If
Tenant's aggregate monthly payments are greater than Tenant's proportionate
share of Real Estate Taxes with respect to such calendar year, then Tenant shall
receive a credit for the excess against future payments of Tenant's
proportionate share of Real Estate Taxes becoming due to Owner (or if such
excess occurs at the end Of the term or is otherwise incapable of being credited
against future payments end provided that Tenant is current in the payment of
Minimum Rent, Percentage Rent, Additional Rent and all other sums payable under
any of the terms and provisions of this Lease, such excess shall be refunded to
Tenant within twenty (20) days after said determination). If Tenant's aggregate
monthly payments are less than Tenant's proportionate share of Real Estate Taxes
for such calendar year, then Tenant shall pay to Owner the difference within ten
(10) days after receipt of Owner's statement. If the term of this Lease shall
begin or end other than on the first or last day of a calendar year, Tenant's
proportionate share of the Real Estate Taxes shall be prorated for such calendar
year based on a three hundred sixty-five (365) day year. In the event of any
dispute in the amount of any payment actually due under this Section. Tenant
shall pay the amount according to Owner's bill or statement hereunder. However,
such payment shall be without prejudice to Tenant's position, and if the dispute
shall be determined in Tenant's favour, by agreement or otherwise, Owner shall
issue a credit to Tenant against future payments of Tenant's proportionate share
of the Real Estate Taxes for the amount of Tenant's overpayment resulting from
such compliance by Tenant. Any tax bill or statement sent by Owner shall be
deemed binding and conclusive if Tenant fails to object thereto within thirty
(30) days after receipt thereof.

      (e) Tenant shall be solely responsible for and shall pay before
delinquency all taxes, assessments, license fees and public charges levied,
assessed or imposed upon its business operation, as well as upon all trade
fixtures, merchandise and other personal property in or upon the Leased Premises
whether or not owned by Tenant. Should the taxing authorities include in Real
Estate Taxes machinery, equipment, fixtures, inventory or other personal
property or assets of Tenant, then Tenant shall also pay the entire taxes for
such items.

SECTION 2.05.    ADDITIONAL RENT

      Wherever it is provided In this Lease that Tenant is required to make any
payment to Owner, such payment shall be deemed to be 'Additional Rent, whether
or not the same be designated "Additional Rent". However, such Additional Rent
shall not be deemed to be Minimum Rent and shall not be deducted from Percentage
Rent or be considered in the computation of Percentage Rent If such amounts or
charges are not paid at the time provided in this Lease, they shall nevertheless
be collectible as Additional Rent with the next installment of rent thereafter
falling due hereunder.

SECTION 2.06.    LATE CHARGE

      Regardless of whether Tenant is in default, if Tenant shall fall to pay
when the same is due and payable, any Minimum Rent, Percentage Rent, Additional
Rent or any other amounts or charges accruing under this Lease, such unpaid
amounts shall bear interest at the lesser of (i) the highest lawful rate of
interest that may be charged Tenant under the laws of the state of Missouri or
(ii) the rate of one and one-half percent (1 1/2%) per month (or any fraction
thereof) from the date Tenant's payments first due to the date of payment;
provided, however, that the payment of such interest shall not excuse or cure
any default upon which such interest may have accrued. Nothing contained herein
shall be deemed to suspend or delay the payment of any amount of money or charge
at the time the same become due and payable hereunder, or limit any other remedy
of Owner.

SECTION 2.07.    GOVERNMENTAL LIMITATION ON RENTS AND OTHER CHARGES

      If any law, decision, order, rule or regulation (collectively called
"Limiting Law") of any governmental authority shall have the effect of limiting
for any period of time the amount of rant or other amounts payable by Tenant to
any amount less than the amount required by this Lease, then:

      (a) Throughout the period of limitation, Tenant shall remain liable for
the maximum amount of Minimum Rent, Percentage Rent and Additional Rent which
are legally payable; and

                                                                               5
<PAGE>

      (b) When the period of limitation ends, or if the Limiting Law is
repealed, or following any order or ruling that substantially restrains or
prohibits enforcement of the Limiting Law, Tenant shall pay to Owner, on demand
(to the extent that payment of such amounts is not prohibited by law), all
amounts that would have been due from Tenant to Owner during the period of
limitation but which were not paid because of the Limiting Law; and thereafter
Tenant shall pay to Owner Minimum Rent, Percentage Rent and Additional Rent due
pursuant to this Lease, all calculated as though there had been no intervening
period of limitation.

SECTION 2.08.    AUTOMATIC TRANSFER

      Owner may, at its sole option, upon not less than thirty (30) days prior
written notice to Tenant, require Tenant to promptly execute and deliver to
Owner any documents, instruments, authorizations or certificates required by
Owner to permit Owner to receive payment of Minimum Rent, Additional Rent or any
other sums or charges payable under any of the terms and provisions of this
Lease by an automated debiting system, whereby any or all of such payments by
Tenant (as designated from time to time by Owner) shall be debited monthly or
from time to time, as determined by Owner, from Tenant's account in a bank or
financial institution designated by Tenant and credited to Owner's bank account
as Owner shall designate from time to time. Tenant shall promptly pay all
service fees and other charges connected therewith, including, without
limitation, any charges resulting from insufficient funds in Tenant's bank
account or any charges imposed on Owner. In the event Tenant elects to designate
a different bank or financial institution from which any Minimum Rent,
Additional Rent or other sums or charges payable under this Lease are
automatically debited, then Tenant shall notify Owner in writing of such change
and shall deliver to Owner the required documents, instruments, authorizations
and certificates specified in this Section no later than thirty (30) days prior
to the date such change is to become effective, Tenant agrees that it shall
remain responsible to Owner for all payments of Minimum Rent, Additional Rent
and any other sums or charges payable pursuant to the terms and provisions of
this Lease, even if Tenant's bank account is incorrectly debited in any given
month. Such Minimum Rent, Additional Rent and any other sums or charges shall be
immediately payable to Owner upon written demand, Tenant's failure to property
designate a bank or financial Institution or to promptly provide appropriate
information in accordance with the provisions of this Section 2.08 shall
constitute a default of the Lease.

ARTICLE III     RECORDS AND BOOKS OF ACCOUNT


SECTION 3.01.   TENANT'S RECORDS

      (a) For the purpose of ascertaining the amount payable as Percentage Rent,
Tenant agrees to prepare (and cause any assignee, licensee, concessionaire or
subtenant to prepare) and keep on the Leased Premises or at its principal office
for a period of not less than three (3) years following the end of each Lease
Year a complete, adequate and accurate set of books and records in accordance
with generally accepted accounting principles of Tenant's Gross Sales (and all
exclusions therefrom) which shall be sufficient to enable Owner to verify
Tenant's Gross Sales for each such Lease Year. These books and records shall
show Gross Sales, claimed exclusions from Gross Sales, inventories and receipts
of merchandise at the Leased Premises and dally receipts from all sales and
other transactions on or from the Leased Premises by Tenant and any other
persons conducting any business upon or from said premises. All Gross Sales
shall be recorded at the time of sale and in the presence of the customer, and
shall be recorded in a point of sale terminal, computer, cash register or
registers having a cumulative total, which shall be sealed in a manner approved
by Owner and having such other features as shall be approved by Owner. Tenant
further agrees to keep on the Leased Premises or at its principal office for at
least three (3) years following the end of each Lease Year the sales and
occupation tax returns with respect to said Lease Years and all pertinent
original sales records. Pertinent original sales records shall include: (i)
dally dated cash register tapes, including tapes from temporary registers; (ii)
serially numbered sales slips; (iii) the originals of all mail orders at and to
the Leased Premises; (iv) the original records of all telephone or facsimile
orders at and to the Leased Premises; (v) settlement report sheets of
transactions with subtenants, concessionaires and licensees; (vi) original
records showing that merchandise returned by customers was purchased at the
Leased Premises by such customers; (vii) memorandum receipts or other records of
merchandise taken out on approval; (viii) computer disk, tape or other
electronic storage device; (ix) such other sales records, if any, which would
normally be examined by an independent accountant pursuant to accepted auditing
standards in performing an audit of Tenant's sales; and (x) the records
specified in (i) to (ix) above of subtenants, assignees, concessionaires or
licensees. The aforementioned books and records shall be open to inspection and
audit by Owner and/or Owner's authorized representatives during regular business
hours at any time during the term of this Lease and for a period of at least one
(1) year after the termination of this Lease.

                                                                               7

<PAGE>

      (b) If In the opinion of Owner's Independent certified accountant Tenant's
books and records are inadequate to determine Gross Sales (or any Lease Year,
Tenant shall promptly pay to Owner the examination fee, Owner's in-house
processing costs, and all other costs associated with any audit and
Investigation in accordance with Article IV, and if Tenant falls to provide
adequate books and records for any Lease Year within twenty (20) days after
notice of such inadequacy, Tenant shall pay Owner, as liquidated damages and not
as a penalty (in recognition of the difficulty or impossibility of determining
Owner's damages), as Additional Rent for such Lease Year, an amount equal to
twenty-five percent (25%) of the amount of the Minimum Rent payable by Tenant
for such Lease Year,

      (c) In the event that Owner should commence an audit of Tenants books and
records with respect to Gross Sales in accordance with Article IV, then in such
case all of such audited books and records shall be kept until such audit is
completed, but not to exceed an additional one (1) year, except in the event of
litigation concerning any deficiency in Percentage Rent in which case such books
and records shall be kept until such litigation Is finally determined by a
final, unappealable order of court.

SECTION 3.02.    REPORTS BY TENANT

      (a) Tenant shall submit to Owner monthly on or before the fifteenth (15th)
day of each month during the term hereof (including the fifteenth (15th) day of
the month following the end of the term of this Lease) at the place then fixed
for the payment of rent or such place as designated from time to time by Owner,
together with the remittance of Percentage Rent (if any is then due), a written
statement signed by Tenant, certified by it to be true and correct and showing
in reasonably accurate detail the amount of Gross Sales for the preceding month
or fractional month, if any. Tenant shall submit to Owner on or before the
thirtieth (30th) day following the end of each Lease Year at the place then
fixed for at the place then fixed for the payment of rent a written statement
signed by Tenant, duly certified to be true and correct by Tenant and by
independent certified public accountants of recognized standing, in a form
satisfactory to Owner in scope and substance, and showing in reasonable accurate
detail satisfactory in scope to Owner the amount of Gross Sales during the
preceding Lease Year or Partial Lease Year and an itemization of all claimed
exclusions therefrom. The statements referred to herein shall be In such form
and style end contain such details and breakdown as the Owner may reasonably
determine. Tenant shall require all concessionaires, licensees and subtenants to
furnish similar statements to Owner as part of Tenant's own monthly reports.

      (b) If Tenant shall fall to prepare and deliver any statement of Gross
Sales required herein, Owner, in addition to other rights or remedies it may
have, shall collect from Tenant Fifty Dollars ($50,00) for each day that any
Gross Sales statement is late and may elect to make an audit of all books and
records of Tenant, including Tenant's bank accounts, pursuant to Section 4.02,
and prepare any statement which Tenant has failed to prepare and deliver. Such
audit shall be made and such statement prepared by an accountant selected by
Owner. Any statement so prepared shall be conclusive on Tenant, and Tenant shall
pay on demand all expenses connected with such audit and the preparation of any
such statement and all sums as may be shown by such audit to be due as
Percentage Rent.

ARTICLE IV      AUDIT

SECTION 4.01.   RIGHT TO EXAMINE BOOKS

      The acceptance by Owner of payments of Percentage Rent shall be without
prejudice to Owner's right is examine the books and records of Tenant and all
concessionaires, licensees and subtenants of Tenant as may be permitted
hereunder, in order to determine the Gross Sales and Inventories of merchandise
at the Leased Premises and to verify the amount of annual Gross Sales in and
from the Leased Premises.

SECTION 4.02.   AUDIT

      At its option, Owner may cause at any reasonable time, upon forty-eight
(48) hours' prior notice to Tenant. a complete audit to be made of all business
affairs at the Leased Premises and all books and records referred to in Section
3.01 relating to the Gross Sales for the period covered by any statement issued
by Tenant as above set forth. If any such audit shall disclose a liability for
Percentage Rent to the extent of two percent (2%) or more in excess of the
Percentage Rent theretofore computed and paid by Tenant for such period, and/or
disclose that the amount of Gross Sales on any statement was understated by two
percent (2%) or more of the Gross Sales, then Tenant shall promptly pay to
Owner, the examination fee, Owner's in-house processing fee, and all other costs
associated with said audit and investigation, the deficiency (which shall be
payable in any event) and the appropriate late charge computed according to
Section 2.06. In addition, if any such audit shall disclose ability for
Percentage Rent to the extent of

                                                                               8

<PAGE>
four percent (4%) or more or disclose an understatement of the amount of Gross
Sales by four percent (4%) or more, or if Tenant shall fail to permit inspection
in accordance with the terms of this section, then owner, at its option, may
terminate this Lease upon thirty (30) days notice to Tenant of Owner's election
to do so, Any information obtained by Owner as a result of such audit shall be
held in strict confidence by Owner except as may be necessary for the
enforcement of Owner's rights under this Lease (including, without limitation,
disclosure to the holder or prospective holder of any encumbrance affecting the
Shopping Center or to any bona fide prospective purchaser thereof) or in
connection with any tax proceedings or other legal requirements.

ARTICLE V        CONSTRUCTION, ALTERATION, RELOCATION AND REMODELING

SECTION 5.01.   CONSTRUCTION PROVIDED BY OWNER        SEE RIDER PARAGRAPH. 3

      (a) The construction provided by Owner in, of and for the Leased Premises
has been or shall be, within a reasonable time hereafter, completed in
conformity with Owner's obligations under Article B-l of Exhibit 'B', annexed
hereto and made a part hereof; subject, however to delays beyond its reasonable
control as described in Section 27.04. Upon completion, Owner will make the
Leased Premises available to Tenant for its construction and completion as
hereinafter provided. Tenant agrees that Owner may make any changes in the
construction provided by Owner which may become reasonably necessary or
advisable without the approval of Tenant,

      (c) Owner has made no representations, covenants or warranties with
respect to the condition of the Leased Premises and no promises to decorate,
alter, repair or improve the Leased Premises before or after the execution
hereof except as expressly set forth in this Lease. Tenant further agrees that
no representations or promises have been made to Tenant that any other tenants
will lease space within the Shopping Center or that Tenant has any exclusive
right to sea merchandise, goods or services of any type and character.

      (d) Tenant has inspected the Leased Premises and deems it to be suitable
for the type of business to be conducted during the Lease term. Owner has made
no warranty of fitness concerning the suitability of the Leased Premises for
Tenant's business. Within the four-week period after delivery of possession,
Tenant shall give Owner notice of any contended defects in the construction
provided by Owner and of any contended variances from the requirements of this
Lease. Any defect or variance not so set forth shall be deemed waived by Tenant
if Tenant shall fail to give such notice, it shall waive all rights with respect
to any defects or variances, and upon the expiration of the four-week period,
the Leased Premises shall be conclusively deemed to have been accepted by
Tenant, if Tenant shall notify Owner of any contended defects during the
four-week period, the Leased Premises shall be conclusively deemed accepted by
Tenant subject to the defects or variances set forth in the notice. At any time
after the expiration of the four-week period, upon request of Owner, Tenant
shall execute a certificate certifying that the Leased Premises were accepted in
accordance with the foregoing.

SECTION 5.02.   PARKING FACILITIES

      Subject to Articles XVII and XIX, the Shopping Center shall contain
parking areas having such number of parking spaces for passenger type
automobiles as Owner deems appropriate. Owner reserves the right at any time to
implement a pay parking system or to revert to free parking on all or any part
of the parking lots or facilities, Owner may designate certain portions of the
parking areas as reserved for the use of certain tenants or customers of certain
tenants.

                                                                               9

<PAGE>

SECTION 5.03.   TENANT'S WORK

      (a) Tenant shall prepare and submit to Owner for written approval its
Preliminary Plans as provided in Exhibit "B". Following Owner's approval of
Tenant's Preliminary Plans, which approval shall not be unreasonably withheld or
delayed, Tenant shall prepare and submit to Owner for written approval complete
Working Plans for the Leased Premises as provided in Exhibit "B", prepared by
Licensed Missouri Registered Architects and engineers and describing all work
which is to be performed by Tenant under this Lease. Such Plans shall be
prepared in conformity with the applicable provisions of Exhibit "B" and shall
show in sufficient detail the locations of all utilities and partitions, the
storefront, all materials and finishes to be used and any other matters which
may affect the construction work in the Leased Premises and/or the building of
which it forms a part in the event Tenant's said Plans, in the reasonable
judgment of Owner or Owner's architect, are incomplete, inadequate or
inconsistent with the terms of this Lease, and/or do not conform to the high
standards of quality design, motif, decor or quality established or adopted by
Owner, and/or would tend to create an imbalance with or be incompatible with
Owner's design of the adjoining premises, and/or would subject Owner to
additional costs or expenses in the performance of any of its construction,
and/or would provide for or require any installation of work which is or might
be unlawful or create an unsound or dangerous condition or adversely affect the
structural soundness of the Leased Premises or the building of which the same
forms a part, and/or would interfere with or abridge the use and enjoyment of
any adjoining space in the building in which the Leased Premises are located,
Owner may, without any obligation for increased costs or any delay, deny
approval of Tenant's proposal Plans. Tenant agrees that within twenty (20) days
after written notification of Owner's decision to deny such approval it will
submit revised and/or corrected Plans to Owner remedying the objections
previously noted. Further, Tenant agrees to pay to Owner within ten (10) days
after receipt of an invoice therefor, the reasonable costs incurred by Owner for
the review of Tenant's Plans, not to exceed Other Thousand Dollars ($1,000.00).

      (b) Promptly after Owner notifies Tenant that the Leased Premises are
ready for commencement of Tenant's Work, Tenant shall commence and thereafter
complete at to sole cost and expense, with due diligence and in accordance with
good construction practices and applicable legal and insurance requirements, all
work required of it under Exhibit "B" and in accordance with its approved
Working Plans. If Tenant shall neglect, fail or refuse to commence its work as
aforesaid or thereafter neglects, fails or refuses to diligently proceed with
and complete its work, then Owner, in addition to other rights or remedies it
may have and, after thirty (30) days' notice to Tenant, may (i) complete
Tenant's Work at Tenant's expense and thereupon commence the term of this Lease,
(ii) commence the term of this Lease and all of Tenant's payment obligations
hereunder, notwithstanding the incompletion of Tenant's Work, or (iii) declare
this Lease cancelled and of no further force and offset.

      (c) Tenant may but only with the written consent of Owner, enter the
Leased Premises for preliminary work prior to the completion by Owner of its
construction, provided that Tenant's Work shall be done in such manner so as not
to interfere with any construction being performed or to be performed by Owner
and provided also that Tenant's Work does not interfere with any of Owner's
labor agreements. Tenants entry on and occupancy of the Leased Premises prior to
the commencement of this Lease shall be governed by and subject to all the
provisions, covenants and conditions of this Lease other than those requiring
the payment of Minimum Rent and other charges, except utility charges.

      (d) All entry on the Leased Premises by Tenant and all work done by Tenant
shall be at Tenant's sole risk. Tenant shall furnish to Owner all certificates
and approval with respect to work done by Tenant or on Tenant's behalf that may
be required from an authority for the issuance of a certificate of occupancy,
and Owner shall have no responsibility or liability whatsoever for any loss or
damage to any fixtures or equipment installed or left in the Leased Premises.
Before entering on the Leased Premises for the performance of Tenant's Work,
Tenants shall furnish Owner for the mutual benefit of both Tenant and Owner and
its designees a bond naming both Owner and Tenant as beneficiaries and obligees
in an amount satisfactory to Owner written by a surety company licenses and
authored to issue such bonds in the State of Missouri, guaranteeing the payment
and performance of Tenant's Work, free of mechanics', or other liens or in lieu
of such bond, Tenant shall deposit with Owner the sum of Twelve Thousand Five
Hundred Dollars ($12,500,00), which may be in the form of cash or an irrevocable
letter of credit from a national bank in the Metropolitan St. Louis area,
payable in St. Louis, Missouri, running in favor of Owner which shall be
irrevocable for a period ending not earlier than six (6) months after Tenant has
completed Tenant's Work, including the completion of any punchlist items,
construction performance guarantee, the same to be held by Owner without
liability for interest until Tenant has completed Tenant's Work in conformance
with the Working Plans, including the completion of any punchlist items, has
received its final occupancy permit, has provided full and final mechanic's
and/or materialmen's lien waivers from all contractors, subcontractors and
materialmen used in performing Tenant's Work, and has opened for business in the
leased Premises. Should Tenant fail to so complete Tenant's Work, obtain such
occupancy permit, provide such then waivers, or open for business, Owner may, in
addition to any other remedies available to Owner at law or in equity or under
this lease, retain said deposit.

      (e) If it shall be necessary or Owner shall deem it consistent to perform
any item of Tenant's Work in the Leased Premises in order to permit to continue
and complete any of its construction, then Tenant shall cause such work to be
commenced on the date fixed by Owner in a written notice to Tenant given at
least ten (10) days prior thereto, and Tenant shall thereafter cause such work
to be completed with

                                                                              10

<PAGE>

due diligence. If Tenant shall fail to comply with the foregoing, Owner may, at
its election, proceed with its construction and, upon the completion thereof or
so much thereof as can be completed in the absence of such work by Tenant, Owner
shall be deemed to have fulfilled all of Its construction obligations hereunder.

      (f) Tenant and Tenant's Agents agree to use bast efforts during the
performance of any construction work to cause no interference to the Shopping
Center or any person, firm or corporation doing business in the Shopping Center.
During construction of Tenant's Work, Owner shall have the right to reasonably
control the usage of the Common Areas by Tenant, Tenant's Agents and contractors
for parking, storage, and otherwise. Tenant agrees to employ only union labor
and to cause its Independent contractors to employ only union labor (who shall
be members of labor unions affiliated and not in conflict with labor unions
whose members are employed in connection with construction at the Shopping
Center) for all construction work performed by Tenant in the Leased Premises.

      (g) Time is of the essence with respect to Tenant's performance of each of
the provisions concerning construction and the opening of the Leased Premises
tor business.

      (h) Notwithstanding anything to the contrary contained in this Lease,
Tenant shall not have the right to open the Leased Premises for business with
the public until (i) Tenant shall have submitted to Owner an affidavit
certifying the names of all contractors, subcontractors and materialmen used in
performing Tenant's Work In the Leased Premises, and (ii) Tenant shall have
delivered to Owner a permanent certificate of occupancy or its equivalent for
the Leased Premises. Nothing contained in this paragraph (h) shall be deemed to
delay the Commencement Date or Tenant a obligation to commence paying rent as
required by Section 1.03 of this Lease. Within ninety (90) After Tenant opens
the Leased Premises for business with the public, Tenant shall deliver to Owner
duly executed full mechanic's and/or materialmen's lien waivers from all
contractors, subcontractors and materialman used in performing Tenant's Work

SECTION 5.04.       FIRE PREVENTION SYSTEMS

      (a) If the National Board of Fire Underwriters or any local Board of Fire
Underwriters or Insurance Exchange (or other bodies hereafter exercising similar
functions) shall require or recommend the installation of fire extinguishers, a
"sprinkler system", fire detection and prevention equipment (including, but not
limited to, smoke detectors and heat sensors), or any changes, modifications,
alterations, or the installation of additional sprinkler heads or other
equipment for any existing sprinkler, fire extinguishing system, and/or fire
detection system for any reason, whether or not attributable to Tenants use of
the Leased Premises or alterations performed by Tenant; or

      (b) If any law, regulation, or order or if any bureau, department, or
official of the Federal, State, and/or Municipal Governments shall require or
recommend the Installation of fire extinguishers, a 'sprinkler system," fire
detection and prevention equipment (including, but not limited to, smoke
detectors and heat sensors), or any changes, modifications, alterations, or the
installation of additional sprinkler heads or other equipment for any existing
sprinkler system, fire extinguishing system, and/or fire detection system for
any reason, whether or not attributable to Tenant's use of the Leased Premises
or alterations performed by Tenant; or

      (c) If any such installation, changes, modifications, alterations,
sprinkler heads, or other equipment become necessary to prevent the imposition
of a penalty, an additional charge, or an increase in the fire insurance rate as
fixed by said Board or Exchange, from time to time, or by any fire insurance
company as a result of the use of the Leased Premises whether or not the same is
a permitted use under Section 6.01;

then Tenant shall, at Tenant's sole cost and expense, promptly make such
Installations within the Leased Premises and make such changes, modifications,
alterations, or the installation of additional sprinkler heads or other required
or recommended equipment. If Tenant fails to perform its obligation under this
Section, Owner may, at Owner's option after giving Tenant fifteen (15) days
prior written notice, enter upon the Leased Premises and put, provide same or
place same in good order, condition and repair; and the cost thereof plus a
fifteen percent (15%) administrative charge shall become due and payable as
Additional Rent by Tenant to Owner upon demand, but nothing contained in this
sentence shall be deemed to impose any duty upon Owner or affect in any manner
the obligations placed upon Tenant by this Section.

SECTION 5.05.    CHANGES AND ADDITIONAL TO BUILDINGS   SEE RIDER. PARAGRAPH. 4.5

      Owner hereby reserves the right at any time to make alterations, additions
or diminutions to, and to build additional stories on, any building in the
Shopping Center, including the building in which the Leased Premises are
contained, and to build adjoining the same. Owner also reserves the right to
construct other buildings or improvements in the Shopping Center from time to
time and to make alterations, additions or diminutions thereto, to build
additional stories on any such building or buildings, to build adjoining same
and to construct multi-deck, elevated or subsurface parking facilities. Owner
shall have the right to erect in connection with any of the foregoing temporary
scaffolds and

                                                                              11


<PAGE>

other aids to construction on the exterior of the Leased Premises, provided that
access to the Leased Premises shall not be denied. Owner may make any use it
desires of the side or rear walls of the Leased Premises, provided that such use
shall not encroach on the interior of the Leased Premises. Owner also reserves
the right to install, maintain use, repair and replace pipes, ducts, mains,
columns, conduits, wires and appurtenant fixtures leading through the Leased
Premises in locations which will not materially interfere with Tenant's use
thereof. The purpose of the site plan attached hereto as Exhibit "A" is to show
the approximate location of the Leased Premises. Owner reserves the right at any
time to relocate the premises of any tenant (excluding Tenant), buildings,
automobile parking areas, and other Common Areas shown on said site plan.

SECTION 5.06.     REMODELING OF LEASED PREMISES

      (a) Provided that Tenant has not completed a substantial remodeling of the
Leased Premises by the end of the fifth (5th) Lease Year, then during the
"Remodeling Period", set forth in Article A, Tenant shall, at its sole cost and
expense remodel the Leased Premises (meaning painting wall, surfaces, replacing
carpeting and floor covering, replacing wall covering, repairing and
refurbishing display fixtures, to like new condition, cleaning and relamping
light fixtures, replacing or repainting ceiling tiles and such other items that
have experienced more than ordinary wear and tear so that the Leased Premises
has a new and "fresh" look in keeping with the first class quality of the
Shopping Center) in accordance with plans and specifications approved by Owner
(the 'Remodeling Work'). Tenant shall not commence the Remodeling Work until the
plans and specifications for the Remodeling Work have been approved by Owner.
For purposes of performing the Remodeling Work, Tenant may, with Owner's prior
approval, close the Leased Premises during the Remodeling Period as is necessary
to perform the Remodeling Work; provided, however, there shall be no abatement
of the Minimum rent and the other charges payable under the Lease during such
period Tenant shall close the Leased Premises to perform such Remodeling Work.
Tenant shall reimburse Owner (or the reasonable costs incurred by Owner for the
review of Tenant's plans and specifications for the Remodeling Work within ten
(10) days after receipt of an invoice therefor.

      (b) If Tenant shall fall to complete the remodeling Work prior the
expiration of the Remodeling Period then, without limiting Owner's other
remedies and in consideration of the failure to realize increased Gross Sales
which the parties anticipate would be generated by reason of the Remodeling
Work, at Owner's option, (i) the Minimum Rent (as the same may have been
increased pursuant to the other provisions of this Lease) otherwise payable by
Tenant during the balance of the term, shall be deemed automatically increased
by twenty-five percent (25%) commencing with the first month after the
expiration of the Remodeling Period, and continuing thereafter throughout the
remainder of the term, or (ii) Owner shall have the right to terminate into
Lease; by giving notice thereof to Tenant within ninety (90) days after the
expiration of the Remodeling Period. If Owner so elects to terminate this Lease,
then this Lease shall terminate sixty (60) days alter such notice to Tenant.

SECTION 5.07.      CONSTRUCTION REIMBURSEMENT COAT

      The cost of operating, maintaining, repairing and replacing the central
ventilating and all conditioning service shall be allocated according to the
provisions of Section 9.03.

ARTICLE VI         CONDUCT OF BUSINESS BY TENANT

SECTION 6.01.      USE OF PREMISES

      (a) Tenant shall use the Leased Premises solely for the "Permitted Uses"
set forth In Article A and for no other purposes whatsoever. Tenant shall
conduct business in the Leased Premises solely under the "Trade Name" set forth
in Article A and under no other name whatsoever. Tenant shall use the name
"Saint Louis Galleria" in its local business address and advertising. Tenant
shall not sell lottery tickets, raffle tickets or any kind of gaming tickets
from the Leased Premises.

      (b) In the event that Tenant, at any lime during the term of this Lease,
shall use or permit others to use the Leased Premises for any purpose other than
the Permitted Uses without obtaining the prior written consent of Owner, and
Tenant shall not cease using the Leased Premises for such non-permitted use
within ten (10) days after written notice from Owner. In addition to Owner's
other rights and remedies hereunder or at law or in equity, it is hereby
mutually agreed that the Minimum Rent during the period Tenant shall use the
Leased Premises for such non-permitted use shall be automatically increased to
one hundred twenty-five percent (125%) of the Minimum Rent otherwise payable for
such period.

                                                                              12
<PAGE>
     (c)  Tenant will not use, permit or suffer the use of the Leased Premises
for any business or purpose which is in violation of any law or the rules or
regulations of any public authority. Tenant shall, at its sole cost and expense,
promptly comply with all present and future laws, regulations or rules of any
county, state, federal and other governmental authority and any bureau or
department thereof, and of the National Board of Fire Underwriters, or any other
body exercising similar function, which may be applicable to the Leased
Premises, including the making of any required structural changes thereto and
including the making of any changes, alterations, or additions in the fire
detection and prevention system or equipment. If Tenant shall install any
electrical equipment that overloads the lines in the Leased Premises, Tenant
shall make whatever changes are necessary to comply with the requirements of the
insurance underwriters and governmental authorities having jurisdiction
thereover. Tenant shall not conduct catalogue sales in or from the Leased
Premises, except of merchandise which Tenant is permitted to sell "over the
counter" in or at the Leased Premises pursuant to the provisions of this
Section.

     (d)  The plumbing facilities of the Leased Premises shall not be used for
any purpose other than that for which they were constructed, nor shall any
substances be disposed of in such facilities which may clog, erode, or damage
the plumbing, pipes, lines or conduits of the Shopping Center, whether through
the utilization of "garbage disposal" units or otherwise. If Tenant is
permitted to use and uses the Leased Premises for the sale, preparation, or
service of food, Tenant shall install and maintain all grease traps that may be
necessary or desirable to prevent the accumulation of grease or other wastes in
the plumbing facilities servicing the Leased Premises, shall install all fire
extinguishing devices required by local codes and/or Owner's insurance carrier
and keep such devices in good working order and repair, shall install all
necessary exhaust systems, filters and ducts, and shall install a garbage
disposal system. Tenant shall clean all grease traps at least monthly and, if
provided by Owner, Tenant shall participate in and pay to Owner within ten (10)
days after receipt of an invoice therefor, the cost of providing cleaning or
treatment services to the plumbing facilities to prevent the accumulation of
grease and other wastes in the plumbing facilities servicing the Leased
Premises. If Tenant fails to perform its obligations under this Section, Owner
may, at Owner's option after giving Tenant fifteen (15) days notice, enter upon
the Leased Premises and put the same in good order, condition and repair; and
the cost thereof plus a fifteen percent (15%) administrative charge shall
become due and payable as Additional Rent by Tenant to Owner upon demand, but
nothing contained in this sentence shall be deemed to impose any duty upon
Owner or affect in any manner the obligations placed upon Tenant by this
Section. Tenant shall not place a load on any floor exceeding the floor load
per square foot which such floor was designed to carry. Tenant shall not
install, operate or maintain any heavy item of equipment in the Leased
Premises, except in such manner as to achieve a proper distribution of weight.
Tenant shall not use the roof of the Leased Premises for any purposes. Tenant
shall not use any exterior walls of the Leased Premises other than the
storefront as provided herein. Tenant shall be responsible for the expense of
any breakage, stoppage or damage resulting from a violation of these provisions
where it is caused by Tenant, Tenant's Agents, customers or invitees.

SECTION 6.02.  Operation of Business

     (a)  Tenant shall continuously and uninterruptedly use, occupy and operate
all of the Leased Premises during the entire term of this Lease for the
Permitted Uses with due diligence and efficiency and in a high grade and
reputable manner so as to produce the optimum amount of Gross Sales which may
be produced by such manner of operation, unless prevented from doing so by
causes listed in Section 27.04. Subject to inability by reason of strikes or
labor disputes, Tenant shall provide adequate personnel and shall carry at all
times in the Leased Premises a full and complete stock of seasonable
merchandise of such size, character and quality as shall be reasonably designed
to produce the maximum amount of Gross Sales. Tenant shall keep the Leased
Premises open for business to the public continuously during all business hours
and days designated by owner from time to time as the hours for the Shopping
Center, which designated hours shall at a minimum require Tenant to be open for
business Monday through Saturday 10:00 A.M. to 9:30 P.M. and Sunday 11:00 A.M.
to 6:00 P.M., and for such additional hours as may be designated by Owner from
time to time. Tenant shall install and maintain at all times displays of
merchandise in the display windows (if any) of the Leased Premises. Tenant
shall keep the display windows and the signs on the Leased Premises well
lighted during the hours commencing one-half (1/2) hour before through one-half
(1/2) hour after the hours for the Shopping Center. Tenant shall not, during
the hours and days that the Leased Premises are required to be open for
business under this Lease, lock, barricade or otherwise prevent access into the
Leased Premises through any door opening onto the mall or sidewalk adjacent to
the Leased Premises.

     (b)  If Tenant fails to (i) keep the Leased Premises open during the hours
and days that the Leased Premises are required to be open for business to the
public under this Lease, (ii) operate all of the Leased Premises in the manner
required under this Lease, or (iii) adequately stock or staff the Leased
Premises, then Tenant shall, in recognition of the difficulty or impossibility
of determining Owner's damages, pay to Owner, upon demand, as liquidated
damages and not as a penalty and in addition to the Minimum Rent and other
charges payable under this Lease, a separate charge equal to one-thirtieth
(1/30th) of the monthly Minimum Rent for each and every day that the Leased
Premises are not open or are not fully operated or in which such hours are not
maintained in accordance with the provisions of this Section.




                                                                              13
<PAGE>
SECTION 6.03.       COMPETITION

      In consideration of the fact that Owner has agreed to accept a percentage
of Tenant's Gross Sales as a portion of the rent during the term of the Lease,
neither Tenant nor any of Tenant's affiliates, subsidiaries or parent
corporations (collectively "Tenant's Affiliates") shall directly or indirectly
engage in any similar or competing business within a radius or five (5) miles
from the outside boundary of the Shopping Center, in the event that Tenant or
Tenant's Affiliates, during the term of this Lease, directly or indirectly,
owns, operates, acquires, engages in, or is in any manner interested in, any
such business in violation of this provision, it is hereby mutually agreed that
if said improper competition occurs within the first five (5) years of the
term of this Lease, then for the remainder of the term, the annual Minimum Rent
(for the unexpired term) shall be the greater sum of the following; (i) the
highest annual Minimum Rent and Percentage Rent paid by Tenant during any Lease
Year that Tenant has been a tenant in the Leased Premises, or (ii) the sum of
one hundred fifty percent (150%) of the then applicable annual Minimum Rent and
that if said improper competition occurs after the first five (5) years of the
term of this Lease (if any), then for the remainder of the term, the annual
Minimum Rent (for the unexpired term) shall be the greater sum of the following:
(i) the highest annual Minimum Rent and Percentage Rent paid by Tenant during
any Lease Year that Tenant has been a tenant in the Leased Premises, or (ii) the
sum of one hundred twenty-five percent (125%) of the then applicable annual
Minimum Rent. The provisions of this Section shall not apply to any business
operated by Tenant or Tenant's Affiliates under another trade name for an
unrelated use or existing businesses of Tenant operated for the same use as the
Leased Premises on the date of this Lease.

SECTION 6.04. STORAGE, OFFICE SPACE, DISPLAY OF MERCHANDISE, SOLICITATION OF
              BUSINESS

      (a) Tenant shall warehouse, store and/or stock in the Leased Premises only
such goods, wares and merchandise as Tenant intends to offer for sale at retail
at, in, from or upon the Leased Premises. This shall not preclude occasional
emergency transfers of merchandise to the other stores of Tenant not located in
the Shopping Center.

      (b) Tenant shall use for office, clerical or other non-selling purposes
only such space in the Leased Premises as is from time to time reasonably
required for Tenant's business in the Leased Premises.

      (c) Neither Tenant nor Tenant's Agents shall display any merchandise
outside the Leased Premises in the Common Areas or in any way obstruct the malls
or sidewalks adjacent thereto or conduct any sale or similar undertaking in
these areas.

SECTION 6.05.       MAINTAIN CHARACTER OF SHOPPING CENTER

      Tenant shall not permit the Leased Premises, or any part thereof, to be
used as sleeping quarters or for any immoral purposes or in any manner which
causes odors, excessive noises or otherwise constitutes a nuisance or which may
injure the building or the reputation, character or appearance of the Shopping
Center or which may disturb, inconvenience, annoy or cause complaints by other
tenants of the Shopping Center. No auction, fire, going out of business,
liquidation, distress or bankruptcy sales or any other similar practices may be
conducted in the Leased Premises without the previous written consent of Owner.

 SECTION 6.06.       WASTE

      Tenant shall not commit or suffer to be committed any waste upon the
Leased Premises or use the Leased Premises for any extra-hazardous purpose or in
any manner that will violate, suspend, void, or serve to increase the premium
rate of or make inoperative any policy or policies of insurance of any kind
whatsoever at any time carried on any property, buildings or improvements in the
Shopping Center, or any part thereof, including the Leased Premises.

 SECTION 6.07.       HAZARDOUS SUBSTANCES              SEE RIDER PARAGRAPH 6

      Tenant and Tenants Agents shall not (i) use, store, generate, treat, sell
or dispose in, on, from or about the Leased Premises, any "Hazardous Substances"
(hereinafter defined), or (ii) permit the use, storage, generation, treatment,
selling or disposal in, on, from or about the Leased Premises or the Shopping
Center of any Hazardous Substances, except Hazardous Substances in such amounts
and of such types that are commonly and customarily used in the cleaning and
maintenance of retail stores and in a manner that complies with all laws, rules,
regulations, ordinances, codes and any other governmental restriction or
requirement of all federal, state and local government authorities having
jurisdiction thereof regulating such Hazardous Substances ("Governmental
Regulations"), permits issued for any such Hazardous Substances (which permits
Tenant shall obtain prior to bringing any Hazardous

                                                                              14

<PAGE>
 Substances in, on or about the Leased Premises or the Shopping Center) and all
producers' and manufacturers' instructions and recommendations to the extent
they are stricter than Governmental Regulations. "Hazardous Substances" or
"Hazardous Substance" as used in this lease shall mean any substances or
substance now or hereafter designated as, or containing components designated
as, hazardous, dangerous, toxic or harmful and/or subject to any Governmental
Regulations, Including, without limitation, asbestos in any form, urea
formaldehyde foam insulation, transformers or other equipment which contains
dielectric fluid or other fluids containing levels of polychlorinated biphenyls
in excess of fifty (50) parts per million and petroleum products in any form.
Tenant shall: (i) promptly, timely, and completely comply with all Governmental
Regulations now or hereafter pertaining to the use, discharge, handling,
transportation, disposal, treatment, generation, storage, sale or presence on
the Leased Premises of Hazardous Substances; and (ii) allow Owner or Owner's
agents or representatives to enter onto the Leased Premises at all times to
check Tenant's compliance with all applicable Governmental Regulations regarding
Hazardous Substances. Any and all costs incurred by Owner and associated with
Owner's inspection of the Leased Premises and Owner's monitoring of Tenant's
compliance with this Section, including Owner's attorneys' fees and costs, shall
be deemed Additional Rent and shall be due and payable to Owner immediately upon
demand by Owner, Tenant shall indemnify, defend and save Owner, its partners,
managers, agents and employees harmless from and against any and all damages,
penalties, costs and other liabilities (including Owner's attorneys' fees and
costs and the cost of any remedial or abatement activities), arising during the
term of this Lease or anytime thereafter, directly or indirectly, from the use,
discharge, handling, transportation, disposal, treatment, generation, storage,
existence or sale of Hazardous Substances, during the term of this Lease in on
from or about the Leased Premises except to the extent such use, discharge,
handling, transportation, disposal, treatment, generation, storage, existence or
sale of Hazardous Substances resulted solely from the actions of Owner. Tenant's
obligations under this Section shall survive the expiration or termination of
this Lease.

ARTICLE VII         OPERATION OF CONCESSIONS

SECTION 7.01.       CONSENT OF OWNER

      Tenant shall not permit any business to be operated in or from the Leased
Premises by any concessionaire, licensee or franchisee without the prior written
consent of Owner, which Owner may in Its sole and absolute discretion elect to
give or withhold despite any statutory provision to the contrary.

ARTICLE VIII         SECURITY DEPOSIT

SECTION 8.01.       AMOUNT OF DEPOSIT

      (a) Tenant, contemporaneously with the execution of this Lease (except as
hereinafter otherwise provided), shall deposit with Owner the "Security Deposit"
set forth in Article A (the "Deposit"), which may be In the form of
either (i) Cash Deposit (the "Cash Deposit"), or (ii) an automatically renewable
irrevocable Letter of Credit (the "LC Deposit").

      (b) If Tenant elects the Cash Deposit, the Cash Deposit shall be held by
Owner, without liability for interest, as security for the faithful performance
by Tenant of all of the terms, covenants and conditions of this Lease by Tenant
to be performed. Owner shall not be required to hold the Cash Deposit as a
separate fund, but may commingle it with other funds.

      (c) If Tenant elects the LC Deposit, Tenant shall deposit with Owner an
Irrevocable Letter of Credit from a national bank in the metropolitan St Louis,
Missouri area payable in St. Louis, Missouri, running in favor of Owner. The
Letter of Credit shall be irrevocable for the term of this Lease and shall
provide that it is automatically renewable for a period ending not earlier than
sixty (60) days after the expiration of the term of this Lease without any
action whatsoever on the part of Owner, provided that the issuing bank that have
the right not to renew the Letter of Credit by giving written notice to Owner
not less than sixty (60) days prior to the expiration of the then current term
thereof (it being understood, however, that the privilege of the issuing bank
not to renew the letter of Credit shall not, in any event, diminish the
obligation of Tenant to maintain the Letter of Credit with Owner through the
date which is sixty (60) days after the expiration of the term of this Lease).
The form and terms of the Letter of Credit (and the bank issuing the Letter of
Credit) shall be in the form attached to this Lease at Exhibit "C-1". Tenant,
contemporaneously with the

                                                                              15
<PAGE>
execution of this Lease shall deliver to Owner a copy of the form of Letter of
Credit to be issued by Tenant's bank for approval by Owner, and Tenant shall
deliver the actual Letter of Credit to Owner within five (5) days after the
execution of this Lease. Tenant further covenants that it will not assign or
encumber the Letter of Credit or any part thereof and that neither Owner nor its
successor or assigns will be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. Without limiting the generality
of the foregoing, if the Letter of Credit expires earlier than sixty (60) days
after the expiration of the term of this Lease or the issuing bank notifies
Owner that it will not renew the Letter of Credit, Owner will accept a renewal
thereof or substitute Letter of Credit (such renewal or substitute Letter of
Credit to be effective not later than sixty (60) days prior to the expiration of
the existing Letter of Credit), irrevocable and automatically renewable as above
provided to sixty (60) days after the end of the term of this Lease upon the
same terms as the expiring Letter of Credit or such other terms as may be
acceptable to Owner. However, (i) if the Letter of Credit is not timely renewed
or a substitute Letter of Credit is not timely received, or (ii) If Tenant fails
to maintain the Letter of Credit the amount and terms set forth in this Article
VIII, Tenant, at least sixty (60) days prior to the expiration of the Letter of
Credit, or immediately upon its failure to comply with each and every term of
this Article VIII, shall deposit with Owner cash security in the amount required
by and to be held subject and In accordance with, all the terms and conditions
set forth in this Article VIII, failing which the Owner may present such Letter
of Credit to the bank, in accordance with the terms of this Article VIII and the
entire sum secured thereby shall be paid to Owner, to be held by Owner as
provided in this Article VIII.

 SECTION 8.02.       USE AND RETURN OF DEPOSIT

      In the event of the failure of Tenant to keep and perform any of the
terms, covenants and conditions of this Lease to be kept and performed by
Tenant, Owner at its option may appropriate and apply the entire Deposit, or so
much thereof as may be necessary, to compensate Owner for loss or damage
sustained or suffered by Owner due to such breach on the part of Tenant. Should
the entire Deposit, or any portion thereof, be appropriated and applied by Owner
for the payment of overdue rent or other sums due end payable to Owner by Tenant
hereunder, then Tenant shall, upon the written demand of Owner, forthwith remit
to Owner in cash a sufficient amount to restore the Deposit to the original sum
deposited. Tenant's failure to do so within five (5) days after receipt of such
demand shall constitute a breach of this Lease. The use application or
retention of the Deposit by Owner shall not prevent Owner from exercising any
other right or remedy provided for under this Lease or at law or in equity and
shall not limit any recovery to which Owner may otherwise be entitled. Should
Tenant comply with all of the terms, covenants and conditions of this Lease and
promptly pay all of the rental and other charges herein provided or as it falls
due and all other sums payable by Tenant to Owner here under, the Deposit shall
be returned in full to Tenant within sixty (60) days of the end of the term of
this Lease.

SECTION 8.03.       TRANSFER OF DEPOSIT

      Owner may assign its Interest in the Deposit or deliver the Deposit to any
mortgagee of the Shopping Center. Further, Owner may deliver the Deposit to the
purchaser or other transferee of Owner's interest in the Leased Premises, and
thereupon Owner shall be discharged from any further liability with respect to
the Deposit. Tenant agrees to look solely to the purchaser or transferee for the
return of the Deposit. Tenant may not mortgage, assign or encumber the Deposit,
and Tenant agrees that neither Owner nor any of its successors shall be bound by
any such mortgage, assignment or encumbrance. In the event of the foreclosure of
any first mortgage encumbering the Shopping Center or any part thereof or a
conveyance in lieu of foreclosure, the party who succeeds to title by reason
thereof shall have no obligation for return of the Deposit

SECTION 8.04.       ADDITIONAL SECURITY DEPOSIT

      If Tenant commits a default (either monetary or non-monetary) more than
two (2) times in any three hundred sixty-five (365) day period, irrespective of
whether or not such default is cured, then (i) If Tenant was not initially
required to provide a Deposit with the execution of this Lease, Tenant shall,
within ten (10) days after written demand by Owner, deliver to Owner a Deposit
in the amount of three (3) times the then applicable monthly Minimum Rent to be
held in accordance with the provisions of this Article VIII or (ii) If Tenant
initially provided a Deposit to Owner with the execution of this Lease, Tenant
shall, within ten (10) days after written demand by Owner, deliver to Owner the
amount necessary to increase the Deposit to four (4) times the then applicable
monthly Minimum Rent.

                                                                              16

<PAGE>
ARTICLE IX          COMMON AREAS

SECTION 9.01.       CONTROL OF COMMON AREAS BY OWNER  SEE RIDER, PARAGRAPHS 4, 5

      All Common Areas shall at all limes be subject to the exclusive control
and management of Owner and to such rules and regulations as Owner may from time
to time establish, modify and enforce. Owner shall have the right to make
changes, additions, deletions, alterations or improvements in and to the size,
shape or both of said Common Areas and in the number, type, style and location
of any or all aspects of the facilities, fixtures, equipment, signs or other
property therein or thereon; to construct, maintain and operate lighting
facilities on all said areas; to construct and lease kiosks on any part of said
areas; to permit entertainment events, advertising displays, artistic displays,
educational displays and other displays in said areas; to police the same; from
time to time to change the area, level, location and arrangement or parking
areas and other facilities herein referred to; to restrict parking by tenants,
their officers, agents and employees to designated parking areas; to loss all or
any portion of the Common Areas or facilities to such extent as may, in the
opinion of Owner's counsel, be legally sufficient to prevent a dedication
thereof or the accrual of any rights to any person or the public therein; to
close temporarily all or any portion of the parking areas or facilities; to
discourage non-customer parking; and to do and perform such other acts in and to
said areas and improvements as, in the use of good business judgment, Owner
shall determine to be advisable with a view to the improvement of the
convenience and use thereof by Owner, tenants, their officers, agents, employees
and customers. Tenant, Tenant's Agents, customers and other invitees shall not
use the Common Areas for the solicitation of business, the distribution of
advertisements, filers or handbills of any nature; for sound trucks or other
amplifying devices; or for solicitation for membership in or contributions to
any organization or association of any kind without the prior written approval
of Owner, which Owner may in its sole and absolute discretion elect to give or
withhold. The right of Tenant's Agents to use such Common Areas shall be limited
to the periods during which such Agents shall be engaged in the pursuit of
Tenant's business. Owner will operate and maintain the Common Areas In such
manner as Owner, in its sole discretion, shall determine from time to time.
Without limiting the scope of such discretion, Owner shall have the full right
and authority to employ all personnel and to make all rules and regulations
pertaining to and necessary for the proper operation and maintenance of the
Common Areas. Nothing contained herein shall be deemed to create any liability
upon Owner for any damage to or loss of motor vehicles of Tenant's customers or
Agents or for loss of property, from within such motor vehicles, unless caused
by the negligence of Owner.

SECTION 9.02.       LICENSE

      All Common Areas not within the leased Premises, which Tenant may be
permitted to use and occupy, are to be used and occupied under a revocable
license, and if the amount of such areas be diminished, Owner shall not be
subject to any liability, nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall the diminution of such areas be
deemed a constructive or actual eviction.

 SECTION 9.03.      TENANT'S SHARE OF EXPENSES        SEE RIDER, PARAGRAPH 7

      (a) During each calendar year during the term hereof, Tenant shall pay to
Owner, in addition to the rentals specified In Article II, as Additional Rent,
and at the times and In the manner hereinafter set forth, its prorata share of
the "Net CAM Costs" for such calendar year. For purposes of this Lease, "Net CAM
Costs" shall be defined as the costs included In Paragraph (l)-(3) below for
each such calendar year less the contribution received by Owner, if any, from
any Major Store in the Shopping Center as a reimbursement to Owner for "Net CAM
Costs" for each such calendar year.

      Net CAM Costs shall include:

            (1) Operating Costs: All sums incurred by Owner in connection with
            operating, maintaining, equipping, inspecting, protecting,
            repairing, replacing, insuring, cleaning, improving, altering and
            lighting the Common Area, including but not limited to the
            following: the maintenance, repair, replacement, rental,
            depreciation, cost recovery and/or reserve for replacement of the
            following: all property, furniture, fixtures, plantings,
            landscaping, security devices, equipment and systems and other
            equipment located on or used in the operation of the Common Area;
            any heating, ventilating, air conditioning, emergency water,
            sprinkler, escalators, elevators, telephone, cable television,
            electrical, gas, domestic water, storm drainage and sewer systems;
            all identification, directional and other signs and markers; all
            other items serving the Common Areas; all personal property taxes
            and other charges relating to the Common Area; all salaries, fees,
            wages, payroll and social security taxes, workers' compensation and
            unemployment insurance and other benefits of all personnel,
            including without limitation supervisory personnel and all
            independent contractors engaged in the

                                                                              17
<PAGE>
            operation, management, maintenance and/or security of the Common
            Areas; on-site management, accounting and attorneys' fees; all
            necessary tools, materials, and supplies; supplying and cleaning
            employees' uniforms and/or work clothes; the cost of, installation
            and maintenance of Christmas and other seasonal decorations;
            periodic depreciation calculated in accordance with generally
            accepted accounting principles of the cost or expense of any repair,
            maintenance, renovation or replacement of any part of the Common
            Area, including fixtures, furnishings and equipment therein, the
            cost of which is not paid out of insurance proceeds, plus interest
            thereon at the then applicable interest rate therefor (as determined
            by Owner); all costs relating to separate employee parking areas,
            including, but not limited to the cost of any shuttle services Owner
            may provide and the cost of transportation services; resurfacing,
            restriping, repair and maintenance of the parking decks and other
            parking areas; repair end maintenance of the roof of the Shopping
            Center, and the cost for pest extermination and removal of ice,
            snow, trash, rubbish, debris, garbage and other refuse.

            (2)   Utility Costs: The cost of providing all utility services to
            the Common Area, including, without limitation, the charges,
            surcharges and other costs or taxes levied or imposed for
            electricity to operate the lighting, exhaust, signage, heating,
            ventilating, elevator, escalator and air conditioning systems; and
            the charges for water, sprinkler, telephone, cable television, gas,
            sewer and refuse services to the Common Area.

            (3)   Administrative Costs: Owner's administrative, office and
            overhead costs In an amount equal to fifteen percent (15%) of the
            total of all of the Operating Costs and Utility Costs.

      (b)   Tenant's prorata share of the Net CAM Costs shall be determined by
multiplying the total amount of Net CAM Costs for each calendar year during the
term by a fraction the numerator of which shall be the Floor Area of the Leased
Premises and the denominator of which shall be the leased and occupied Floor
Area of the Shopping Center (less the Floor Area of the Major Store Premises and
any promises which do not front on the enclosed mall) for such calendar year in
which such costs ware incurred; provided, however, in no event shall such
denominator be less than the amount equal to eighty percent (80%) of the average
of the total Floor Area of shopping center available for lease on the first day
of each calendar month in such calendar year (less the Floor Area of the Major
Store Premises and any premises which do not front on the enclosed mall). The
Floor Area of the Shopping Center in effect for the whole of any calendar year
shall be the average of the leased and occupied Floor Area in effect on first
day of each calendar month in such calendar year.

      (c)   In addition to the payment of its share of Net CAM Costs, Tenant
shall also pay to Owner during each calendar year during the term hereof, as
Additional Rent and at the times and in the manner hereinafter set forth, its
prorata share of the "Tenant VAC Costs." For purposes of the Lease, Tenant VAC
Costs shall mean all costs of operating, maintaining, altering, improving,
repairing and replacing the central ventilating and air conditioning equipment
serving the Leased Promises and other areas in the Shopping Center concurrently
using said service. Tenant's prorata share of the Tenant VAC Costs shall be
determined by multiplying the total monthly amount of said costs by a fraction,
the numerator of which shall be the Floor Area of the Leased Premises and the
denominator of which shall be the Floor Area of all premises in the Shopping
Center fronting on the enclosed mall which concurrently use said service as of
the last day of the calendar month in which such costs were incurred. Said
monthly payments shall be due to Owner within ten (10) days after Owner has
billed Tenant for the same and shall be paid without any deduction or setoff
whatsoever. The costs included in Tenant VAC costs are not duplicative of the
costs included in Net Cam Costs.

      (d)   Payment of Tenant's prorata share of the Net CAM Costs and the
Tenant VAC Costs shall be made as follows:

            (1)   Tenant shall pay to Owner upon the Commencement Date of the
            term and on the first day of each calendar month during the term
            thereafter such amounts estimated by Owner to be Tenant's monthly
            prorata share of the Net CAM Cost. Owner may adjust said estimated
            monthly amounts upon written notice to Tenant on the basis of
            Owner's experience and reasonably anticipated costs and said
            adjusted estimates shall become effective as of the next monthly
            payment.

            (2)   Within ninety (90) days following the end of each calendar
            year, Owner shall furnish to Tenant a statement covering such year
            just expired, certified as correct by an independent public
            accountant or by an authorized representative of Owner, showing the
            Net CAM Costs for such year and the payments made by Tenant with
            respect to such year. If Tenant's aggregate monthly payments are
            greater than Tenant's prorata share of the Net Cam Costs with
            respect to such year, then Tenant shall receive a credit for the
            excess against future payments of Tenant's share of Net CAM Costs
            becoming due to Owner (or such excess occurs at the end of the term
            or is otherwise incapable of being credited against future payments
            and provided that Tenant is current in the payment of Minimum Rent,
            Percentage Rent, Additional Rent and all other sums payable under
            any of the terms and provisions of this Lease, such excess shall be
            refunded to Tenant within twenty (20) days after said
            determination). If said payments are less than man Tenant's prorata
            share, then Tenant shall pay to Owner the difference within twenty
            (20) days after said determination.

                                                                              18
<PAGE>

            (3)   Within ninety (90) days following the end of each calendar
            year, Owner may furnish to Tenant a statement covering such year
            just expired, certified as correct by an independent public
            accountant or by an authorized representative of Owner, showing the
            Tenant VAC Costs for such year end the payments made by Tenant with
            respect to such year. If Tenant's aggregate monthly payments are
            greater than Tenant's prorate share of the Tenant VAC Costs with
            respect to such year, then Tenant shall receive a credit for the
            excess against future payments of Tenant's share of the Tenant VAC
            Costs becoming due to Owner (or if such excess occurs at the end of
            the term or is otherwise incapable of being credited against future
            payments and provided that Tenant is current in the payment of
            Minimum Rent, Percentage Rent, Additional Rent and all other sums
            payable under any of the terms and provisions of this Lease, such
            excess shall be refunded to Tenant within twenty (20) days after
            said determination). If said payments are less than Tenant's prorata
            share, then Tenant shall pay to Owner the difference within twenty
            (20) days after said determination. If no adjustment is required,
            Owner will not furnish a statement

      (e)   Provided that Tenant is not in default under any terms or provisions
of this Lease, Owner shall make its records relating to the Net CAM Costs and to
the calculation of Tenant's prorata share thereof for the immediately preceding
calendar year available for Tenant's Inspection at Owner's principal place of
business or at another place designated by Owner during normal business hours
and within thirty (30) business days after receiving a written request from
Tenant to Inspect the same. Tenant shall deliver to Owner a copy of the results
of such inspection within fifteen (15) days of its receipt by Tenant. Tenant
agrees that it will not engage a contingent fee auditor of perform Tenant's
inspection and that Tenant's auditor will be an independent certified public
accountant or a qualified full-time employee of Tenant. Tenant, its auditor, and
the officers, employees and agents of each, shall treat such records and the
results of such inspection, including any compromise, settlement or adjustment
between Owner and Tenant, in strict confidence and shall not divulge the
information contained in such records or the results of such inspection to any
other person, entity, tenant or Major Store at any time. Prior to exercising its
right to inspect Owner's records, Tenant shall cause its auditor to execute a
confidentiality and indemnification agreement acknowledging that the records and
results of the inspection of such records including any compromise, settlement
or adjustment between Owner and Tenant, shall be held in strict confidence and
shall not be disclosed in any manner whatsoever without the prior written
consent of Owner, which consent may be withheld in Owner's sole discretion,
unless disclosure is required pursuant to any litigation between Owner and
Tenant in which the subject matter of the litigation involves the records or the
inspection of such records, or if required by law. Tenant understands end
acknowledges that the foregoing provisions concerning confidentiality are of
material importance to Owner and that any violation of these provisions shall
result in immediate and irreparable harm to Owner. If Tenant, its officers,
employees and agents and/or the auditor violate the provisions of this
subparagraph (e), Owner, in addition to any rights and remedies at law or In
equity, shall have the right to terminate Tenant's right to audit in the future
pursuant to this subparagraph (e). Tenant shall indemnity and hold Owner
harmless from and against all claims, suits, proceedings, actions, damages,
liabilities, losses, costs and expenses, inducing reasonable attorney's fees,
arising out of or related to any breach of the provisions of this subparagraph
(e) by Tenant and/or its auditor. Tenant's obligations under this subparagraph
(e) shall survive the expiration or earlier termination of this Lease.

      (f)   If the term of this Lease shall begin or end other than on the first
or last day of the calendar year or a calendar month, all charges which apply to
a full calendar year or a calendar month shall during those fractional years
and/or months be billed and adjusted on the basis of such fraction. Tenant's
obligation to pay its prorata share of the Net CAM Costs and the Tenant VAC
Costs for the period under the Lease (and any interest or late charge which
might apply) shall survive the termination of the Lease, and Tenant recognizes
that for the final Lease Year the final reconciliation of this charge may occur
after the termination date,

      (g)   In the event of any dispute in the amount of any payment actually
due under this Section. Tenant shall pay the amount according to Owner's bill or
statement hereunder. However, such payment shall be without prejudice to
Tenant's position, and if the dispute shall be determined in the Tenant's favor,
by agreement or otherwise, Owner shall credit Tenant the amount of Tenant's
overpayment resulting from such compliance by Tenant. A bill or statement
setting forth the amount of any payment due Owner under this Section shall be
deemed binding and conclusive if Tenant fails to object thereto within thirty
(30) days after receipt thereof.

      (h)   Notwithstanding anything to the contrary contained in this Lease,
(i) any security service that may be provided by Owner is intended solely for
the operation and benefit of the Common Areas and not for the benefit or
protection of the Leased Premises or any other premises occupied by Tenant and
(ii) Owner shall not be liable in any manner whatsoever to Tenant or to any
third party by reason of Owner's act or failure to act in providing or
maintaining any security In the Shopping Center,

                                                                              19
<PAGE>

ARTICLE X SIGNS, CANOPIES, FIXTURES, ALTERATIONS

SECTION 10.01. Installation and Alterations by Tenant

      (a)   All fixtures installed by Tenant shall be completely new or like new
and installed by Union Labor, Tenant shall not make or cause to be made any
alterations, additions or improvements of any kind or nature to the Leased
Premises or install or cause to be installed any trade fixtures, signage, floor
coverings, interior or exterior lighting or plumbing fixtures or make any
changes to the storefront without first obtaining Owner's written approval and
consent, which Owner may in its sole and absolute discretion elect to give or
withhold. Tenant shall make no adjustment, alteration or repair to any part of
the sprinkler or fire alarm system in or serving the Leased Premises without the
prior approval of Owner and Owner's property insurance carrier or
representative. Tenant shall present to Owner plans and specifications for such
work at the time approval is sought in a form satisfactory to Owner.

      (b)   Insofar as is possible, any work done pursuant to this Section shall
be performed so as not to interfere with the operations of other tenants in the
Shopping Center or with the operations of Owner. Activities that in Owner's
judgment do interfere with other tenants or Owner shall be conducted at times
other than during normal store hours and in the manner reasonably specified by
Owner. All alterations, Improvements and additions to the Leased Premises shall
be made in a good and workmanlike manner and in accordance with all applicable
laws and insurance requirements. Immediately when made or installed,
alterations, improvements and additions shall be deemed to have attached to the
freehold and to have become the property of Owner and shall remain for the
benefit of Owner at the end of the term, or other expiration of this Lease, in
as good order and condition as they were when installed, reasonable wear and
tear excepted; provided, however, if prior to the termination of this Lease, or
within twenty (20) days thereafter, Owner so directs. Tenant shall promptly
remove the additions, improvements, fixtures and installations which were placed
in the Leased Premises by Tenant or Tenant's Agents and which are designated in
said notice and shall repair any damage occasioned by such removal and repairs
at Tenant's expense. In the event of making such alterations, improvements
and/or additions as herein provided. Tenant shall indemnify and save Owner
harmless from all expense, liens, claims or damages to either persons or
property arising out of or resulting from undertaking or making of said
alterations, additions and improvements.

      (c)   Tenant shall not decorate, paint or in any other manner alter, and
shall not Install or affix any device, fixture or attachment upon or to the
exterior of the Leased Promises or of any building or any part thereof in the
Shopping Center, including the roof or canopy thereof, without the prior written
consent thereto of Owner, which Owner may in its sole and absolute discretion
elect to give or withhold. If Tenant shall do any of the foregoing acts in
contravention of this provision, Owner shall have the right to remove any such
decoration, paint, alteration, device, fixture or attachment and restore the
Leased Premises to the condition thereof prior to such act, and the cost of such
removal and restoration shall be paid by Tenant as Additional Rent payable in
the month next following such removal and restoration.

      (d)   All store fixtures or trade fixtures, wall coverings, carpets and
drapes shall remain the property of Tenant.

      (e)   Tenant shall not make any alterations, repairs or installations, or
perform any other work to the Leased Premises unless, prior to the commencement
of such work, Tenant shall obtain (and during the performance of the work keep
in force) public liability and workers' compensation insurance to cover every
contractor to be employed. The policies shall be non-cancelable without thirty
(30) days' notice to Owner and shall be carried with companies reasonably
satisfactory to Owner. Prior to the commencement of the work, Tenant shall
deliver duplicate originals or certificates of such Insurance policies to Owner.

SECTION 10.02. Tenant Discharge of Lions

      Tenant shall not permit to be created nor to remain undischarged any lien,
encumbrance or charge arising out of any work of any contractor, mechanic,
laborer or materialmen which might be or become a lien, encumbrance or charge
upon the Leased Premises or the income therefrom, and Tenant shall not suffer
any other matter or thing whereby the estate, right and interest of Owner in the
Leased Premises or in the Shopping Center might be impaired. If any lien or
notice of lien on account of an alleged debt of Tenant or Tenant's Agents or any
notice of contract by a party engaged by Tenant or Tenant's Agents to work in
the Leased Premises shall be filed against the Leased Premises or the Shopping
Center, Tenant shall, within twenty-four (24) hours of receipt thereof, give
notice to Owner of such lien and shall within ten (10) days after notice of the
filing thereof, cause the same to be discharged of record by payment, deposit,
bond, order of a court of competent jurisdiction or otherwise. If Tenant shall
that to cause such lien or notice of lien to be discharged with the period
provided, then Owner, in addition to any other rights or remedies

                                                                              20
<PAGE>

may, after giving Tenant notice of its intention, but shall not to obligated to,
discharge the same by either paying the amounts claimed to be due or by
procuring the discharge of such lien by deposit or by bonding proceedings
without inquiring into the validity thereof; and in any such event, Owner shall
be entitled, if Owner so elects, to defend any prosecution of any action for
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the lienor with interest, costs and allowances. Any amount paid by
Owner and all costs and expenses, including attorneys' fees, incurred by Owner
in connection therewith, together with interest thereon at the rate specified
in Section 2.06 from the respective dates of Owner's making of the payment or
incurring of the cost and expense shall be paid by Tenant to Owner on demand, as
Additional Rent.

SECTION 10.03. Signs, Displays and Canopies

      (a)   Tenant shall not erect, install, maintain or permit any signs,
insignias, decals or other advertising or display devices, illuminated or
otherwise, on the exterior of the Leased Premises or of any building or part
thereof in the Shopping Center, or on, in or about the windows or doors of any
such building or elsewhere within a distance of seven (7) feet from the
storefront which shall be visible to public view outside the Leased Premises
without the prior approval thereof in writing by Owner, which Owner may in its
sole and absolute discretion elect to give or withhold. Tenant shall not erect,
install, maintain or permit any easel signs, pedestal signs or banners on the
interior or exterior of the Leased Premises, Tenant shall promptly, on notice
from Owner, remove the sign or advertising or display device erected or
maintained in violation of this provision. If Tenant fails to remove same
promptly upon receipt of notice from Owner to such effect, Owner may enter upon
the Leased Premises and cause such sign or advertising or display device to be
removed, and the cost of such removal and restoration shall be paid by Tenant as
Additional Rent for the month next following such removal. Tenant shall, at its
own expense, maintain and keep in good repair all signs, advertising and display
devices in or about the Leased Premises and shall save Owner harmless from any
loss, cost or damage as a result of the erection, maintenance, existence or
removal of the same. All signs shall be in accordance with Owner's sign
specifications referred to as "Graphic & Signage Criteria" in the Tenant Design
Guide. Upon vacating the Leased Premises, Tenant shall remove all signs and
repair all damage caused by such removal. If Tenant requests Owner's consent
during the term of this Lease to modify, change or install a new storefront
sign, then Tenant shall pay Owner (whether or not Owner consents thereto) the
reasonable costs incurred by Owner for the review of the plans and
specifications for such new or modified storefront sign within ten (10) days
after receipt of an invoice therefor, not to exceed Two Hundred Fifty Dollars
($250.00).

      (b)   If Owner shall deem It necessary to remove any sign in order to
paint or to make repairs, alterations, or improvements to the Leased Premises or
to the building of which the Leased Premises are a part, Owner shall have the
right to do so at its sole cost provided that Owner shall reinstall such sign at
its sole cost and indemnify and hold Tenant harmless from all costs, expenses
and liability in connection with the removal and reinstallation of such sign.

ARTICLE XI MAINTENANCE OF LEASED PREMISES

SECTION 11.01. Maintenance by Tenant

      (a)   Subject to the provisions of Articles XVIII and XIX hereof, during
the term of this Lease, Tenant shall keep the Leased Premises (including the
entire storefront thereof) in a careful, safe, clean and proper manner and shall
maintain in good order and condition, make replacements and repairs to the
Leased Premises and every part thereof, including, without limiting the
generality of the foregoing, all plumbing, sewerage (including the flow to the
main sewer line), all air conditioning and heating facilities (other than the
ventilating and air conditioning supply main originally installed by Owner)
exclusively serving the Leased Premises, the sprinkler system within the Leased
Premises, fixtures, leasehold improvements, interior wells, floors, ceilings,
sides, storefronts, security gates, windows, doors, door closures and other door
appliances and appurtenances, glass, showcases, skylights, all electrical
facilities, utilities, meters and equipment, including lighting fixtures,
lamping, fans, and electric motors, all telephone equipment and facilities
(including all conduit, wires and cables to the telephone terminal location
outside the Leased Premises), all other appliances and equipment of every kind
and nature, all landscaping upon or attached to the Leased Premises, and all
vestibules, entrances and returns located within the Leased Premises. In
addition, Tenant shall maintain and keep clean any loading platform, truck dock
and/or maneuvering space thereof which is used by Tenant (notwithstanding the
fact that the same may be deemed to be a portion of the Common Areas). Tenant
shall employ a firm satisfactory to Owner engaged in the business of maintaining
air conditioning systems to maintain the air conditioning system serving the
Leased Premises, to inspect said system at least once every year, and to report
in writing to Owner and Tenant the results of each such inspection and the
repairs and/or replacements recommended by such firm. Tenant shall promptly make
the repairs and/or replacements so recommended. Tenant shall comply at its sole
cost and expense with the applicable rules and regulations governing refuse
removal in, on and from the Leased Premises.

                                                                              21
<PAGE>

Tenant shall participate in any recycling program designated by Owner or
required by law and comply with the applicable rules and regulations governing
such program.

      (b)   Should Tenant, with Owner's approval, install, use, keep or maintain
all conditioning or other equipment on the roof of the building of which the
Leased Premises form a part, Tenant agrees to assume primary responsibility for
the maintenance and repair of that portion of the root where such installation
is made, and such installation and the operation, maintenance and repair thereof
shall be made in such manner that the rights of Owner under any roofing bond or
roof guaranty then in force shall not be affected or voided thereby.  Tenant
agrees to be solely responsible for all damages to Owner and/or other tenants in
the Shopping Center resulting from the installation, operation, maintenance
and/or repair of such air conditioning equipment.

      (c)   If Tenant fails to perform its obligations under this Section, Owner
may, at Owner's option, after giving Tenant fifteen (15) days prior written
notice, enter upon the Leased Premises and put the same In good order, condition
and repair; and the cost thereof plus a fifteen percent (15%) administrative
charge shall become due and payable as Additional Rent by Tenant to Owner upon
demand, but nothing contained in this sentence shall be deemed to impose any
duty upon Owner or affect in any manner the obligations placed upon Tenant by
this Section.

SECTION 11.02.  Maintenance by Owner

      Subject to the provisions of Articles XVIII and XIX hereof and Section
11.01 and during the term of this Lease, Owner shall keep in good order and
repair the central ventilating and air conditioning system, the ventilating and
air condoning supply main to the Leased Premises originally installed by Owner,
the foundations, exterior walls (excluding the Interior of all walls and the
exterior and interior of all storefronts, windows, doors, glass and showcases),
downspouts, gutters and roof (excluding skylights and interior ceilings) of the
Leased Premises, except for any damage thereto caused by any act, negligence or
omission of Tenant, Tenant's Agents and/or Invitees and except for reasonable
wear and tear. It is an express condition precedent to all obligations of Owner
to repair and maintain that Tenant shall have notified Owner in writing of the
need for such repairs or maintenance. Other than as herein provided, Owner shall
not be responsible to maintain or make any improvements, repairs and/or
replacements of any kind in or upon the Leased Premises.

SECTION 11.03. Rules and Regulations

      The rules end regulations appended to this Lease as Exhibit "C" are hereby
made a part of this Lease, and Tenant and Tenant's Agents agree to comply with
and observe the same. The failure to keep and observe said rules and regulations
shall constitute a breach, of the terms of this Lease as if the same were
contained herein as covenants. Owner reserves the right from time to time to
amend or supplement said rules and regulations and to adopt and promulgate
additional rules and regulations applicable to the Leased Premises and the
Shopping Center. Notice of such additional rules and regulations, and amendments
and supplements, if any, shall be given to Tenant, and Tenant agrees thereupon
to comply with and observe all such rules and regulations and amendments thereto
and supplements thereof, provided the same shall apply uniformly to all tenants
similarly situated In the Shopping Center.

ARTICLE XII SURRENDER OF PREMISES

SECTION 12.01. SURRENDER OF PREMISES END OWNERSHIP OF CERTAIN PROPERTY

      (a)   Upon the termination of this Lease, Tenant shall surrender to Owner,
without notice, the Leased Premises and all keys thereto Including, without
limitation, all buildings,improvements, apparatus and fixtures, except moveable
trade fixtures and furniture installed by Tenant, at Tenant's sole expense
without contribution (whether directly or indirectly) from Owner then upon the
Leased Premises, in as good condition and repair as the same shall be at the
commencement of the term of this Lease, reasonable wear and tear excepted.

      (b)   Tenant shall remove all property of Tenant including Tenant's
storefront signage, and all alterations, equipment, machinery, additions and
improvements made or installed from time to time by either party hereto, in,
upon or about the Leased Premises as to which Owner shall have made the election
herein before provided in Section 10.01(b), repair all damage to the Leased
Premises caused by such removal and restore the Leased Premises to the condition
they were prior to the installation of articles so removed. Should Tenant fail
to effect such removal or make the necessary repairs or restoration, Owner may
do so, and Tenant hereby agrees to reimburse Owner for all reasonable costs

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and expenses incurred therewith. All property not so removed shell be the
property of Owner, and upon the termination of this Lease, shall be surrendered
to Owner by Tenant without any Injury, damage or disturbance thereto or payment
therefor. Owner's said property shall include but not be limited to all
components of the heating, air conditioning (if any), plumbing and electrical
systems, lighting fixtures (including track light systems). all escalators,
elevators, dumbwaiters, conveyors and all partitions (whether removable or
otherwise).

SECTION 12.02. Ownership of Property on Premises

      Moveable trade fixtures, furniture, signs and other personal property
installed or placed in the Leased Premises at the cost of Tenant or Tenant's
Agents without contribution (whether directly or indirectly) from Owner shall be
the property of Tenant or such Agent, and Tenant shall remove the same prior to
the termination of this Lease. Tenant shall at its own cost and expense
completely repair any and all damage to the Leased Premises resulting from or
caused by such removal. If Tenant fails to remove any of such property, Owner
may at its option retain all or any of such property, In which case title
thereto shall thereupon vest In Owner, or Owner may remove from the Leased
Premises and dispose of in any manner all or any of such property, in which case
Tenant shall, upon demand, pay to Owner the actual expense of such removal and
disposition and the repair of any and all damage to the Leased Premises
resulting from or caused by such removal. The provisions of this Section shall
survive termination of this Lease.

ARTICLE XIII INSURANCE AND INDEMNITY

SECTION 13.01. Tenant's Insurance

      (a)   Tenant shall procure and from the date of this Lease or the date
Tenant takes physical possession of the Leased Premises, whichever of said dates
shall first occur, through the term of this Lease maintain in full force and
effect, at its sole cost and expense, with respect to the Leased Premises and
the business of Tenant and any approved subtenant, licensee or concessionaire,
the following insurance in standard form generally in use in the State of
Missouri and satisfactory to Owner with responsible insurance companies
satisfactory to Owner, having a general policy holder's rating of not less then
"A" and a financial rating of Class XV, or its equivalent, as rated in the most
current available "Best's Key Rating Guide" and authorized to do business in
said State:

            (1)   Commercial general liability insurance including property
            damage, with minimum limits shown below for any accident or
            occurrence resulting in bodily injury to or the death of one person,
            consequential damages arising therefrom and damage to property, with
            minimum limits shown below for any accident or occurrence resulting
            in body injury to or the death of more than one person,
            consequential damages arising therefrom, and property damage.

            Commercial General Liability (occurrence form) with the following
            minimum limits:

(i)   General Aggregate                             $ 1,000,000.00
(ii)  Products/Completed Operations Aggregate         1,000,000.00
(iii) Personal & Advertising Injury                   1,000,000.00
(iv)  Each Occurrence                                 1,000,000.00
(v)   Fire legal Liability                               50,000.00
and

            an Umbrella Liability policy with the following minimum limits:

(I)      Each Occurrence           $2,000,000.00
(II)     Aggregate                 $2,000,000.00

            (2)   Fire Insurance (with extended coverage and vandalism and
            malicious mischief coverage), water damage and sprinkler leakage
            insurance insuring all of Tenant's personal property, trade
            fixtures, decorations, merchandise, inventory, furniture, signs,
            floor covering, wall covering, glass, improvement, betterments and
            equipment in the Leased Premises;

            (3)   Contractual liability insurance covering the insuring
            provisions of this Lease and the performance by Tenant of the
            Indemnity agreement In Section 13.03;

                                                                              23
<PAGE>

            (4)   Workers' Compensation Insurance to comply with the applicable
            laws of the State of Missouri; and

            (5)   Liquor Liability or "Dram Shop" Liability Insurance in an
            amount equal to the maximum liability for which Tenant may be held
            under the laws of the State in which the Leased Premises are located
            if Tenant is permitted pursuant to Section 8.01 of the Lease to sell
            beer, wine or other alcoholic liquors or beverages in the Leased
            Premises. If Tenant shall be unable to procure such insurance, then
            the sale of alcoholic beverages shall be suspended in the Leased
            Premises until such date as such insurance is maintained by Tenant
            as herein provided. In addition, Tenant's indemnification
            obligations under Section 13.03 shall extend to damage resulting
            from risks insurable by "dram-shop" or liquor liability insurance.

Said insurance shall name Owner and, at Owner's request, the holder of any
Mortgage, as an additional insured for the full amount of the insurance herein
required with respect to the operations and activities of Tenant and Tenant's
Agents on or in connection with the Shopping Center and shall contain provisions
that Owner, although named as an additional insured, shall nevertheless be
entitled to recovery under said policies for any loss occasioned to it, its
servants, agents and employees by reason of the negligence of Tenant or Tenant's
Agents. All of said insurance policies shall be primary policies not
contributing with and not in excess of coverage which Owner may carry. With
respect to each and every policy of such Insurance and each renewal thereof,
Tenant, at the beginning of the term of this Lease and thereafter not less than
thirty (30) days prior to the expiration of any such policy, shall furnish Owner
with a certificate of insurance executed by the insurer involved which shall
contain, in addition to the matters customarily set forth in such a certificate
under standard insurance industry practices, an undertaking by the insurer to
give Owner thirty (30) days' prior written notice of any cancellation or change
in scope or amount of coverage of such policy and to pay Owner first for its
loss in the event of payment for a covered loss.

      (b)   The minimum limits on any insurance maintained by Tenant shall not
limit Tenant's liability under Section 13.03 hereof. Any Insurance required
to be carried under this Lease may be carried under a blanket policy covering
the Leased Premises and other locations of Tenant, provided that Owner shall be
named as an additional insured thereunder, as its interests may appear. If
Tenant elects to include the Leased Premises in blanket coverage, Tenant may
deliver to Owner a duplicate original of the blanket insurance policy or a
certificate evidencing such insurance instead of the original of the policy.
Tenant agrees to permit Owner at all reasonable times to inspect the policies of
insurance of Tenant covering risks upon the Leased Premises for which policies
or copies thereof are not delivered to Owner.

      (c)   If Tenant shall not comply with its covenants contained in this
Section, Owner may after giving Tenant fifteen (15) days prior written notice,
obtain such insurance and, in such event, Tenant agrees to pay the premium for
such insurance. Further, if Tenant shall fail to deliver any certificate of
insurance when due, Owner, in addition to other rights or remedies it may have,
shall collect from Tenant Fifty Dollars ($50.00) for each day that said
certificate is late.

SECTION 13.02. INCREASE IN INSURANCE PREMIUM

      (a)   Tenant agrees that it will not use, suffer or permit the Leased
Premises, or any part thereof, to be used or occupied for any purpose contrary
to the requirements of any insurance underwriters or rating bureaus, Tenant
further agrees that it will not keep, use, sell or offer for sale in or upon the
Leased Premises any article which may be prohibited by the standard form of fire
insurance policy or in any manner increase the cost of insurance to Owner above
and beyond the normal cost of such insurance for the use permitted above and for
the type and location of the building of which the Leased Premises are a part or
which may result in the imposition of a penalty or additional charge by Owner's
Insurance company or the National Board of Fire Underwriters. Tenant agrees to
pay any increase in premiums for fire and extended coverage insurance that may
be charged during the term of this Lease on the amount of such insurance which
may be carried by Owner on said premises or the building of which they are a
part, resulting from Tenant's use of the Leased Premises, or from the type of
merchandise sold by Tenant or Tenant's Agents in the Leased Premises, whether or
not Owner has consented to such use or merchandise. In determining whether
increased premiums are the result of Tenant's use of the Leased Premises, a
schedule, issued by the organization making the insurance rate on the Leased
Premises, showing the various components of such rate, shall be conclusive
evidence of the several items and charges which make up the insurance on the
Leased Premises.

      (b)   In the event Tenants occupancy causes any increase of premium for
the fire, boiler and/or casualty rates on the Leased Premises and/or the
Shopping Center property or any part thereof, above the rate (or the least
hazardous type of occupancy legally permitted in the Leased Premises, Tenant
shall pay the additional premium on the fire, boiler and/or casualty insurance
policies by reason thereof. Tenant also shall pay In such event any additional
premium on the rent insurance policy that may be carried by Owner for the
protection against rent loss through fire. Bills for such additional premiums
shall be rendered by Owner to Tenant at such times as Owner may elect and shall

                                                                              24
<PAGE>

be due from and payable by Tenant when rendered, and the amount thereof shall
be deemed to be, and be paid as, Additional Rant

SECTION 13.03. Indemnification of Owner

      (a) Subject to Section 18.03, Tenant will indemnify, defend and save
harmless Owner from and against all "Claims", as that term is defined in
subsection (c) hereof. In connection with loss of life, bodily injury and/or
damage to property arising from or out of any occurrence (i) in, upon or at the
Leased Premises, or the occupancy or use by Tenant of the Leased Premises or any
part thereof, or occasioned wholly or in part any act or omission of Tenant,
its agents, employees, servants, subtenants, licensees or concessionaires,
including, without limitation, the following: any death or injury (whether
physical or non-physical) to persons or any damage to property that may result
by reason of the present or future lack of repair of the Leased Premises or any
part thereof or caused by or resulting from any acts of God or the elements, or
the wiring, equipment, furnishings, utilities, fixtures, apparatus, signs,
advertising, display devices, awning or other covering therein or thereof, or
plumbing, gas, water, steam, snow, ice or other pipes, or any sewerage, leakage,
or the use, misuse or disuse of the Leased Premises, any part thereof, or any
equipment, furnishings or fixtures therein, or any person or persons lawfully or
unlawfully upon the Leased Premises or any part thereof, including Tenant,
Tenant's Agents, customers and invitees, or any act, omission or neglect of any
such person, or in any manner whatsoever growing out of the past, present or
future condition or use of the Leased Premises or any part thereof, or (ii) the
Common Areas or any part thereof due directly or indirectly to the act,
negligence or omission of Tenant, Tenant's Agents, customers or invitees,

      (b) Tenant shall at its cost defend any Claims against Owner with respect
to the foregoing or in which Owner may be impleaded. Tenant shall pay, satisfy
and/or discharge any judgments, orders and decrees which may be rendered against
Owner in connection with the foregoing.

      (c) As used herein, "Claims" shall mean all claims, suits, proceedings,
actions, demands, causes of action, responsibility, liability, judgments,
executions, damages, loss and expense (including attorney's fees).

SECTION 13.04. Glass

      All glass, both exterior and interior, is installed and maintained at the
sole risk of Tenant. In the event of any damage, Tenant shall, at its expense,
promptly replace all glass in or on the Leased Premises with glass of the same
kind, size and quality, or such other glass as may be required under any law or
regulation. In the event that Tenant shall fail to replace any broken or
damaged glass, Owner shall have the right to replace the same, and the cost
thereof plus a fifteen percent (15%) administrative charge shall be paid by
Tenant as Additional Rent payable in the month next following such replacement.

SECTION 13.05. Boiler Insurance

      Tenant shall carry at its own expense Broad Form Boiler and Machinery
Insurance on all air conditioning equipment, boilers and other pressure vessels
and systems, whether fired or unfired, installed by Tenant and used on the
Leased Premises.

SECTION 13.06. Owner's Insurance

      (a) Owner shall at all times during the term hereof maintain in effect a
policy or policies of insurance covering the buildings on Owner's Parcel,
including Tenant's permanent leasehold Improvements, but not Tenant's moveable
trade fixtures, merchandise, Inventory, or other items used in Tenant's trade or
business, in  amount at least equal to eighty percent (80%) of full
replacement cost (exclusive of the cost of excavations, foundations and
footings), providing protection against any peril generally included within the
classification "All Risk" (or at Owner's option, other special Broad Form
coverages), together with Insurance against vandalism and malicious mischief
and, at Owner's option, sprinkler leakage. Owner's obligation to carry the
Insurance provided for herein may be brought within the coverage of a blanket
policy or policies of Insurance.

      (b) Tenant shall pay to Owner within ten (10) days after presentation of a
bill therefore, as Additional Rent hereunder, Tenant's proportionate share of
all premiums end deductible charges for procuring and maintaining (i) the
Insurance referred to the Section 13,00(a) and (ii) rent, casualty, earthquake,
flood, multi-risk and public liability Insurance (including umbrella coverage)
and any other Insurance maintained by Owner on the Shopping Center, (Including
the Common Areas end Owners property at the Shopping Center), plus an
administrative fee equal to fifteen percent (15%) of the total of such foregoing
costs (the "Insurance Costs"), Tenant's proportionate share of the

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<PAGE>

Insurance Costs shall be calculated by multiplying the Insurance Costs for the
applicable billing period (less any contribution thereto by the Major Stores} by
a fraction, the numerator or which shall be the Floor Area in the Leased
Premises and the denominator of which shall be the Floor Area in the Shopping
Center (less the Floor Area of the Major Store Premises) which Is leased and
occupied on the date the bill is rendered, provided, however, in no event shall
such denominator be less than the amount equal to eighty percent (80%) of the
total Floor Area available for lease in the Shopping Center (less the Floor Area
of the Major Store Premises) as of the date the bill is rendered. If the term of
this lease shall begin or end other than on the first or last day of an
insurance billing period, Tenant's proportionate share of Insurance Costs shall
be prorated on a per diem basis for such billing period. In the event of any
dispute in the amount of any payment actually due under this Section, Tenant
shall pay the amount according to Owner's bill or statement hereunder. However,
such payment shall be without prejudice to Tenant's position, and if the dispute
shall be determined in Tenant's favor, by agreement or otherwise, Owner shall
pay to Tenant the amount of overpayment resulting from such compliance by
Tenant. Any bill or statement setting forth the amount of any payment due Owner
under this Section shall be deemed binding and conclusive If Tenant falls to
object thereto within thirty (30) days after receipt thereof.

ARTICLE XIV    UTILITIES

SECTION 14.01. Utility Charges

      (a) Tenant shall, at Tenant's sole cost and expense, contract in its own
name and pay for all electric current, telephone, fresh, water, gas. sewer and
other utility services used or consumed by Tenant In the Leased Premises (other
than ventilating and air conditioning service as described in paragraph (b)
below) or in any sign of Tenant's In the Shopping Center, together with all
taxes or other charges levied on or associated with such utilities in case any
such utility charges are not paid by Tenant when due. Owner after giving Tenant
fifteen (15) days prior written notice, may pay the same to the utility company
or department furnishing the same, and any amounts so paid by Owner are hereby
agreed and declared to be Additional Rent payable hereunder which shall be due
and payable with the next Installment of rent thereafter falling due under this
Lease. Owner may require Tenant to Install, at Tenant's expense, submeters for
certain utility services provided to the Leased Premises. Notwithstanding the
foregoing, if Owner shall supply any utility services to the Leased Premises or
If a submeter is installed for any of said utilize, Tenant shall pay to Owner as
billed (but no more than monthly) for the utility service so supplied or
submetered at the same rates which Tenant would pay to the utility company
supplying such utility service if such utility service were supplied by such
utility company to Tenant by direct meter; provided, however, in no event shall
such reimbursement by Tenant be less than Owner's actual cost of providing such
services. Any such charges for service supplied by Owner shall be due and
payable within ten (10) days alter billing therefor by Owner.

      (b) Owner shall construct, at its initial cost, central ventilating and
air conditioning equipment providing service to the Leased Premises, the Common
Areas and other tenants in the Shopping Center, Specifically, Owner shall supply
to the Leased Premises ventilating and air conditioning service of up to 1.5 CFM
per square foot by installing main supply and return ducts to the Leased
Premises in a location selected by Owner. Tenant shall, at its cost, install a
fan powered variable air volume mixing box with electric resistance healing
coil, temperature controls and all distribution ductwork, fans, diffusers,
vents, smoke dampers) and return grills in the Leased Premises and will submit
plans and specifications therefor to Owner for approval as provided in Section
5.03 above. Should Tenant require additional air conditioning or ventilation,
Tenant shall at its cost be responsible for the additional equipment, supply,
ducts and returns.

      (c) Owner shall not be liable in damages or otherwise for the quality,
quantity or interruption of any utility or other services to the Leased Premises
(whether or not furnished by Owner) from the date of possession of the Leased
Premises by Tenant or the dale of commencement of this Lease, whichever shall
first occur. The construction, erection and location of all utilities, including
poles, wires, conduits, and pipes, serving the Leased Premises from any point in
or adjacent to the Shopping Center shall be subject at all times to the approval
of Owner.

SECTION 14.02. MAINTENANCE OF METERS

      Tenant shall keep all meters and submeters serving the Leased Premises in
good order and repair, whether or not they are located in the Leased Premises.

SECTION 14.03. DISCONTINUANCE OF SERVICES SEE RIDER PARAGRAPH

      Owner may, with ten (10) days' notice to Tenant, or without notice in the
case of an emergency, cut off and discontinue trash and rubbish removal (where
provided), gas, water, electricity, ventilating, air conditioning service and

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<PAGE>

any or all other utilities or services whenever such discontinuance is necessary
in order to make additions, improvements, repairs, replacements or alterations
to the Shopping Center or the building therein or during any period in which
bills for the same remain unpaid by Tenant. No such action by Owner shall be
construed as an eviction or disturbance of possession or as an election by Owner
to terminate this Lease, nor shall Owner be in any way responsible or liable for
such action.

SECTION 14.04. ENERGY SHORTAGE

      Tenant shall at its sole cost and expense be responsible for conversion of
any of the utilities used in the Leased Premises to an alternative energy source
to comply with governmental laws, rules, orders and regulations which may be or
are in effect. Should it become necessary or desirable because of recommended
actions or directives of public authorities to reduce energy consumption within
the Shopping Center, Tenant will reduce its energy consumption in accordance
with reasonable, uniform and non-discriminatory standards established by Owner.

SECTION 14.05. NO OVERLOADING

      Tenant shall in no event use any of the utility facilities in any way
which shall overload or overburden the utility systems. Tenant desires to
install any equipment which shall exceed the capacity of any electrical,
telephone, water, gas, sewer or other utility facilities or which shall require
additional utilities, facilities, Tenant shall not have the right to do so
without Owner's prior written approval of Tenant's plans and specifications
therefor. If such installation is approved by Owner, and if Owner provides such
additional facilities to accommodate Tenant's installation, Tenant agrees to pay
Owner, on demand, the costs of providing, maintaining and repairing such
additional utility facility or utility facilities of a greater capacity.

ARTICLE XV ESTOPPEL CERTIFICATE, ATTORNMENT, SUBORDINATION

SECTION 15.01. ESTOPPEL CERTIFICATE                  SEE RIDER PARAGRAPH 9

      Within days after request therefor by Owner (which thirty (30) period is
not subject to any notice and cure periods otherwise provided under this Lease),
or in the event that upon any sale, assignment, financing or hypothecation of
the Leased Premises and/or the land thereunder by Owner, an estoppel certificate
shall be required from Tenant, Tenant agrees to deliver in recordable form a
certificate to any proposed mortgagee or purchaser, or to Owner, certifying (if
such be the case) that Owner has completed construction of the Leased Premises,
that this Lease is in full force and effect, and that there are no defenses or
offsets thereto (or stating those claimed by Tenant) and the dates, if any, to
which any rent or charges have been paid in advance. Tenant shall also, upon
request by Owner, deliver to Owners:

      (i) Such financial information concerning Tenant and/or any Guarantor
      hereof and their business operations as may be requested by any mortgagee,
      purchaser, prospective mortgagee or prospective purchaser of the fee of
      the Leased Premises (any financial information and any statement delivered
      pursuant thereto may be relied upon by any mortgagee, purchaser,
      prospective mortgagee or prospective purchaser of the fee of the Leased
      Premises; provided, however, that any such financial Information and any
      such statement shall be utilized only for bona fide business reasons
      related to such mortgage and/or purchase); and

      (II) An executed and acknowledged instrument amending this Lease in such
      respects as may be required by any mortgagee or prospective mortgagee
      under any said first mortgage, provided that any such amendment shall not
      materially alter or impair any of the rights and remedies of Tenant under
      this Lease.

SECTION 15.02. ATTORNMENT

      Tenant shall, in the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under any mortgage made by
Owner covering the Leased Promisee, or upon the sale or other transfer of
Owner's interest in this Lease or the Shopping Center attornment to the
transferee upon any such foreclosure, sale or transfer end recognize such
transferee as the Owner under this Lease. Tenant further agrees upon request to
execute and deliver a recordable instrument setting forth the provisions of this
Section.

                                                                              27
<PAGE>

SECTION 15.03. SUBORDINATION             SEE RIDER, PARAGRAPH 10

      This Lease and the estate of Tenant hereunder shall be subject and
subordinate to any deed of trust or mortgage lien or charge (jointly, herein
referred to as "Mortgage") and to any ground lease, reciprocal Operating and
Easement Agreement, reciprocal easement agreement or other operating agreement
(jointly, herein referred to as "Agreement") between Owner and any store
operating at the Shopping Center which is now or at any time hereafter may be
placed upon or affect the Leased Premises and the Shopping Center, and any
replacement, renewal, refinancing or extension of any such Mortgage and any
modification, amendment or supplement to such Agreement. Any such Mortgage
Shall, for the full amount of principal at any time advanced thereon or secured
thereby, with interest, be prior and paramount to this Lease and to the rights
of Tenant hereunder and all persons claiming through or under Tenant, or
otherwise, in the Leased Premises. Tenant, on Tenant's behalf, and on behalf of
all persons claiming through and under Tenant, covenants and agrees that Tenant
will, from time to time at the request of Owner or the holder of any Mortgage,
execute and deliver any necessary or proper instruments or certificates
acknowledging the priority of the lien or charge of such Mortgage and/or
Agreement to this Lease and the subordination of this Lease thereto.
Notwithstanding anything to the contrary in this paragraph, in the event the
holder of any such Mortgage elects to have this Lease superior to its Mortgage,
then upon Tenant being notified to that effect by such encumbrance holder, this
Lease shall be deemed prior to the lien of said Mortgage (but not in respect to
the priority of entitlement to insurance proceeds or any award in condemnation),
whether this Lease is dated prior or subsequent to the date of such Mortgage,
and Tenant shall execute, acknowledge and deliver an instrument in the form used
by such encumbrance holder effecting such priority.

SECTION 15.04. ATTORNEY-IN-FACT

      Tenant, upon request of any party in interest, shall execute promptly such
instruments or certificates to carry out the intent of Sections 15.02 and 15.03
above as shall be requested by Owner. If fifteen (15) days after the date of a
second (2nd) written request by Owner to execute such instruments Tenant shall
not have executed the same, Owner may, at its option, cancel this Lease without
incurring any liability on account thereof, and the term hereby granted is
expressly limited accordingly.

ARTICLE XVI ASSIGNMENT AND SUBLETTING

SECTION 16.01. CONSENT REQUIRED          SEE RIDER, PARAGRAPH 11

      (a) Tenant shall not voluntarily, involuntarily or by operation of law
assign, transfer, mortgage, or otherwise hypothecate or encumber this Lease, in
whole or in part, or any interest therein, nor sublet all or any part of the
Leased Premises or permit any other persons (including licensees and
concessionaires) to occupy same without the prior written consent of Owner in
each Instance, any references elsewhere herein to assignees, subtenants or other
persons notwithstanding. In the event that Tenant so requests Owner's consent,
Owner may in its sole and absolute discretion arbitrarily give or withhold
consent. Any attempted transfer, assignment, subletting, mortgage, hypothecation
or encumbrance without Owner's written consent shall be void, shall confer no
rights upon any third person, and shall, at the option of Owner, terminate this
Lease. The consent of Owner, if given in one instance, shall not constitute a
waiver of the necessity for such consent to any subsequent assignment,
subletting, occupancy, transfer, mortgage or encumbrance. As a condition to any
assignment of this Lease by Tenant which is permitted hereunder, the assignee
thereof shall be required to execute and deliver to Owner an agreement in
recordable form, whereby such assignee assumes and agrees with Owner to
discharge all obligations of tenant under this Lease. Notwithstanding any
assignment or subletting, Tenant shall remain fully liable under this Lease and
shall not be relieved from performing any of its obligations hereunder.

      (b) Subject to the other terms of this Article, if this Lease be assigned,
or if the Leased Premises or any part thereof be sublet or occupied by anybody
other than Tenant, Owner, at Owner's election may collect rent from the
assignee, subtenant or occupant, and apply the net amount collected to the rent
herein reserved.

      (c) If Owner consents to any transfer or assignment of this Lease or
subletting of the Leased Premises, such consent shall not be effective unless
and until Tenant gives notice of the assignment or subletting and a copy of the
assignment or sublease to Owner, and the transferee, assignee or sublessee
delivers to Owner a written agreement in form and substance satisfactory to
Owner pursuant to which such transferee, assignee or sublessee assumes all of
the obligations and liabilities of Tenant under this Lease.

                                                                              28
<PAGE>
      (d) Tenant agrees to pay Owner upon demand all reasonable attorney's fees
incurred by Owner in connection with the processing or documentation of any
assignment, transfer, subletting or encumbrance pursuant to the Section.

                                                    SEE RIDER, PARAGRAPH 12

      (e) If Tenant shall request Owner's consent to any assignment of this
Lease or to any subletting of all or any part of the Leased Premises, Tenant
shall submit to Owner with such request the name of the proposed assignee or
subtenant, such information concerning its business, financial responsibility
and standing as Owner may reasonably require, and the consideration (and terms
and conditions thereof) to be paid for and the effective date of the proposed
assignment or subletting. Upon receipt of such request and all such Information,
Owner shall have the right (without limiting Owner's right of consent in respect
of such assignment or subletting), by giving notice to Tenant within fifteen
(15) days thereafter, (i) to terminate this Lease if the request is for an
assignment or a subletting of all the Leased Premises, or (ii) if such request
is to sublet a portion of the Leased Premises only, to terminate this Lease with
respect to such portion. If Owner exercises its right to terminate this Lease,
the effective date of termination shall be set forth in Owner's notice to
Tenant, but such date shall not be earlier than the effective date of the
proposed assignment or subletting nor later than ninety (90) days thereafter. If
Owner so elects to terminate this Lease, Tenant shall continue to pay the
Minimum Rent, annual Percentage Rent and other charges hereunder to Owner until
the effective date of termination, on which date Tenant will surrender
possession of the Leased Premises or the portion thereof subject to such right
of termination to Owner in accordance with the terms of this Lease. If Owner
shall terminate this Lease as to a portion of the Leased Premises only, then
following such termination the Minimum Rent (but not the annual Percentage Rent)
and other charges hereunder determined on the basis of the Floor Area in the
Leased Premises shall be reduced in the same proportion as the Floor Area in
such portion of the Leased Premises bears to the Floor Area in the Leased
Premises immediately prior to such termination.

      (f) If Tenant shall request Owner's consent to an assignment of this Lease
and Owner shall consent thereto, the assignee ("Assignee") shall pay directly to
Owner, as Additional Rent hereunder, at such times as the Assignee shall have
agreed to pay Tenant, an amount equal to any consideration the Assignee shall
have agreed to pay Tenant on account of such assignment. If Assignee shall fail
to pay Owner any such consideration when due, such failure shall constitute a
default under this Lease.

      (g) If Tenant shall request Owner's consent to a subletting of the Leased
Premises or any part thereof and Owner shall consent thereto, Tenant shall pay
Owner, as Additional Rent, in addition to the Minimum Rent and other charges
payable hereunder, an amount equal to any consideration paid by the subtenant to
Tenant in excess of (i) the Minimum Rent, annual Percentage Rent and other
charges payable hereunder if all of the Leased Premises are so sublet or (II) If
less than all of the Leased Premises are so sublet, the Minimum Rent, annual
Percentage Rent and other charges payable hereunder allocable to the portion of
the Leased Premises so sublet based on the Floor Area in the Leased Premises so
sublet to the total Floor Area in the Leased Premises. The foregoing amount
shall be determined monthly and paid by Tenant to Owner on the first day of each
calendar month in advance during the term of such sublease. If Tenant shall
fail to pay Owner any such consideration, such failure shall be a default
under this Lease.

      (h) Notwithstanding anything to the contrary contained in this Lease, in
the event of an assignment of this Lease, or the subletting of all or any
portion of the Leased Premises (whether with or without the consent of Owner,
but nothing in this paragraph shall be deemed to give Tenant the right to assign
this Lease or sublet all or any portion of the Leased Premises without Owner's
consent), the Minimum Rent payable hereunder shall, effective as of the
effective date of each such assignment or subletting, automatically be Increased
to the greater of (i) an amount equal to the highest annual combined Minimum
Rent and annual Percentage Rent payable by Tenant during any Lease Year prior to
such effective date or (ii) one hundred twenty percent (120%) of the Minimum
Rent which would have otherwise been payable during the remainder of the term of
this Lease.

SECTION 16.02. OWNER'S RIGHT TO ASSIGN LEASE

      Owner's rights to assign this Lease are and shall remain unqualified. Upon
any sale or transfer of Owner's interest in this Lease or the Shopping Center,
Owner shall thereupon be entirely freed of all obligations of the Owner
hereunder and shall not be subject to any liability resulting from any act,
omission or event occurring after such conveyance.

                                                                              29
<PAGE>

SECTION 16.03. CHANGE IN OWNERSHIP           SEE RIDER, PARAGRAPH 13

      If Tenant or any Guarantor is a corporation, partnership or other business
entity and if at any time during the term of this Lease (i) any part or all of
such corporation's shares shall be transferred by sale, assignment, request,
inheritance, dissolution, merger, consolidation or other reorganization,
operation of law or other disposition, so as to result in a change in the
effective voting control of such corporation which was in effect as of the date
of this Lease by persons or entitles owning a majority of such corporation's
shares on the data of this Lease, or (ii) twenty-five percent (25%) of the
interest in such partnership or other business entity is transferred, assigned,
sold or otherwise disposed of, or (iii) any transfer of Interest in such
partnership or other business entity results in a change in effective control,
the Tenant shall promptly notify Owner in writing of such change and any such
transfer shall, unless made with Owner's prior consent (which consent may be
withheld in Owner's sole, absolute and arbitrary discretion) be deemed an
unauthorized assignment of this Lease and a default by Tenant under this Lease.

SECTION 16.04. CONTINUING LIABILITY OF TENANT

      Notwithstanding any assignment or sublease pursuant to this Article,
Tenant and any Guarantor hereof shall remain fully liable on this Lease and
shall not be released from performing any of the terms, covenants and conditions
of this Lease.

ARTICLE XVII PROMOTIONS FUND, ADVERTISING

SECTION 17.01. PROMOTIONS AND ADVERTISING FUND

      (a) In order to foster the Interests of the Shopping Center and to assist
the business of Tenant by public relations, sales promotions, center-wide
advertising, special events, displays, shows, signs, promotional literature and
other activities promoting the Shopping Center, Owner shall during the term of
this Lease conduct or provide promotional and advertising activities. In order
to perform these activities, Owner shall establish a Promotions and Advertising
Fund and from that Fund spend and/or allocate monies to carry out the above
purposes and pay for all administrative expenses related thereto, including the
salary of a marketing director and support staff. Owner shall have the exclusive
right to hire and/or retain persons required to perform these services, plan
events and create and conduct advertising campaigns. Any personnel so hired and
any persons so retained shall be under the exclusive control and supervision of
Owner. Owner shall also have the exclusive right to change the name of the Fund
from time to time. Owner shall have no obligation to pay for any costs or
expenses in excess of the sums contributed to said Fund nor to expend all of the
sums contributed to the Fund during any given year.

      (b) In each calendar year during the term of this Lease, Tenant shall pay
to Owner, as Additional Rent, an amount per annum (the "Promotion and
Advertising Charge") equal to the Promotion and Advertising Charge set forth in
Article A of the Lease; subject, however, to adjustment on January 1 of each
calendar year during the term of this Lease as hereinafter provided. On January
1, 1999, and on January 1 of calendar year 2000, the Promotion and Advertising
Charge for the immediately preceding calendar year shall be increased by the
"Average Advertising Rate" (hereinafter defined) for the applicable "Comparison
Period" (hereinafter defined); provided, however, in no event shall the annual
increase in the Promotion and Advertising Charge exceed an amount equal to five
percent (5%) of the Promotion and Advertising Charge which was payable for the
immediately preceding calendar year. On January 1, 2001 and on January 1 of each
calendar year during the reminder of the term of this Lease, the Promotion and
Advertising Charge for the immediately preceding calendar year shall be
increased by the greater of the following percentages: (i) five percent (5%) or
(ii) the "Average Advertising Rate" for the applicable "Comparison Period"). A
percentage decrease in the Average Advertising Rate will not cause any reduction
or readjustment. The Promotion and Advertising Charge shall be paid in advance
in semi-annual installments on January 1 and July 1 of each calendar year during
the term of this Lease, and on the Commencement Date for the calendar year in
which this Lease shall commence. The Promotion and Advertising Charge shall be
prorated for any partial calendar year during the term of this Lease. The
failure of any other tenant to contribute to the Fund shall not release Tenant
from its obligations under this Section.

      (c) The term "Average Advertising Rate" shall mean the average of the
percentage increase in each of the following advertising mediums during an
applicable Comparison Period; (i) the prime advertising rate for the
commercial radio station with the largest market share in the greater St. Louis,
Missouri metropolitan area (the "Metropolitan Area"), (ii) the prime advertising
rate for the commercial television station with the largest market share in the
Metropolitan Area, (iii) the daily advertising rate for a full page
advertisement for the daily newspaper in the Metropolitan Area with the largest
daily circulation, (iv) the monthly advertising rate for an outdoor billboard in
the Metropolitan Area, and (v) the first class postal rate for mailing a letter
with the United States Postal Service.

      (d) The term "Comparison Period" shall mean the period of twelve
consecutive calendar months commencing on July 1 of a prior calendar year and
ending on June 30 of the calendar year immediately preceding the January 1 on
which an adjustment to the Promotion and Advertising Charge will be made.

                                                                              30
<PAGE>

      (e) The "largest market share for a particular advertising medium and
particular Comparison Period shall be determined by the Arbitron rankings or any
comparable media rankings service selected by Owner.

      (f) It at anytime during the term of this Lease a tax (the Advertising
Tax) is imposed on advertising services, the purchase of advertising in any
media and/or any other advertising functions, then, in addition to the increase
in (b) above, the Promotion and Advertising Charge for the calendar year in
which such Advertising Tax is applicable, and each calendar year thereafter
during the term in which an Advertising Tax is imposed, shall be increased by
the percentage equal to the effective rate of the applicable Advertising Tax.
For example, if the Advertising Tax for an applicable calendar year is two
percent (2%), then the Promotion and Advertising Charge for such calendar year
shall be increased by two percent (2%). Such increase in the Promotion and
Advertising Charge shall be effective with the first calendar month in which
such Advertising Tax is imposed. For the calendar year in which an Advertising
Tax is first imposed, the increase in the Promotion and Advertising Charge under
this paragraph shall be prorated.

      (g) Owner may elect to form a committee comprised of representatives of
Owner, any Major Store and various other tenants in the Shopping Center to
discuss the promotions activities sponsored by the Shopping Center and paid for
out of this Fund.

SECTION 17.02. MALL CREDIT CARD PROGRAM

ARTICLE XVIII DESTRUCTION AND RESTORATION

SECTION 18.01. Total or Partial Destruction of Leased Premises

      (a) If the Leased Premises shall be damaged to the extent of fifty percent
(50%) or more of the cost of replacement thereof or to the extent of less than
fifty percent (50%) of the cost of replacement thereof during the last five (5)
years of this Lease, and the damage or other casualty to covered by Owner's
policy of fire and extended coverage insurance, then Owner shall have the option
to rebuild or terminate this Lease. Said option shall be exercised by notice to
Tenant and given not more than one (1) year from the date of such damage. If
Owner elects to rebuild, Owner shall, at its expense, upon receipt of the
Insurance proceeds, proceed with so much of the restoration of the Leased
Premises as was Owner's original construction provided or in Section 5.01 and
Exhibit "B"; and Tenant shall, at its expense, proceed with all repairs and
restorations not included in Owner's original construction in conformance with
Section 5.03 and Exhibit "B" and shall restore and replace its trade fixtures,
decorations, signs, floor covering, wall covering, carpeting, glass, furniture,
equipment, personal property, merchandise, inventory and contents at least to
the condition immediately prior to the damage or destruction. The proceeds of
all insurance carried by Tenant on such property shall be held in trust by
Tenant for the purposes of such repair, restoration or replacement. The parties
shall promptly commence and diligently proceed with their restoration
obligations hereunder. Owner shall not be obligated to expend any sums for
repairs, replacements or rebuilding which are greater than the proceeds of any
insurance policy carried by Owner.

      (b) If the Leased Premises shall be damaged by any uninsured casualty or
any casualty not reimbursed by Owner's insurance carrier excluding any
deductible amount, Owner shall have the option to rebuild or terminate this
Lease, to be exercised by notice to Tenant given not more than one (1) year from
the date of such damage. If Owner elects to rebuild, Owner shall, at its
expense, proceed with so much of the restoration of the Leased Premises as was
Owner's original construction provided for in Section 5.01 and Exhibit "B"; and
Tenant shall, at its expense, proceed with all repairs and restorations not
included in Owner's original construction in conformance with Section 5.03 and
Exhibit "B" and shall restore and replace its trade fixture, decorations, signs,
floor covering, wall covering, carpeting, glass, furniture, equipment, personal
property, merchandise, inventory and contents at least to the condition
immediately prior to the damage or destruction. The proceeds of all insurance
carried by Tenant in such property shall be held in trust by Tenant for the
purposes of such repair, restoration or replacement. The parties shall promptly
commence and diligently proceed with their restoration obligations hereunder.

      (c) If the Leased Premises shall be damaged to the extent of less than
fifty percent (50%) of the cost of replacement, by fire or other casualty
covered by Owner's policy of fire and extended coverage insurance during

                                                                              31

<PAGE>

the term of this Lease, except for the last five (5) years of this Lease, then
the parties shall restore the Leased Premises in accordance with the parties'
respective obligations contained in Section 18.01(a).

      (d) In the event of total destruction of the Leased Promises pursuant to
an insured casualty not caused by the fault or neglect of Tenant or Tenant's
Agents, Tenant's Minimum Rent shall completely abate from the date of such
destruction, and the Percentage Breakpoint shall be prorated to the date of such
destruction. If Owner elects to rebuild as aforesaid, Tenant's Minimum Rent
shall completely abate from the date of such destruction until forty-five (45)
days after the date when Owner notifies Tenant that the Leased Premises are
ready for commencement of Tenant's Work, or upon the day when Tenant opens for
business, whichever date shall first occur. The Percentage Breakpoint shall be
proportionately reduced based on the period of time Tenant is unable to be open
for business due to such destruction. But in the event of a partial destruction
or damage not caused by the fault or neglect of Tenant or Tenant's Agents,
whereby Tenant shall be deprived of the occupancy and use of only a portion of
the Leased Premises, then the Minimum Rent and the Percentage Breakpoint shall
be equitably apportioned according to the area of the Leased Premises which is
unusable by Tenant, until such time as the Leased Premises are repaired or
restored as provided herein. If the total or partial destruction is caused by
the fault or neglect of Tenant or Tenant's Agents, rent shall not abate.

      (e) Except for the abatement of the Minimum Rent hereinabove set forth,
Tenant shall not be entitled to and hereby waives all claims against Owner for
any compensation or damage for loss of use of the whole or any part of the
Leased Premises and/or for any inconvenience or annoyance occasioned by any such
damage, destruction, repair or restoration. The provisions of any statute or
other law which may be in effect at the time of the occurrence of any such
damage or destruction, under which a lease is automatically terminated or a
Tenant is given the right to terminate a lease upon the occurrence of any such
damage or destruction, are hereby expressly waived by Tenant.

      (f) Upon termination of the Lease under any of the provisions of this
Article, the parties shall be released thereby without further obligations to
the other party coincident with the surrender of possession of the Leased
Premises to Owner, except for items which have theretofore accrued and are then
unpaid, and the then remaining balance of the security deposit, if any, which
may have been made by Tenant pursuant to the provisions of Article VIII hereof
shall be returned to Tenant.

SECTION 18.02. PARTIAL DESTRUCTION OF SHOPPING CENTER

      In the event a "major portion" of the Shopping Center shall be damaged or
destroyed by fire or other casualty (notwithstanding that the Leased Premises
may be unaffected), Owner may cancel this Lease by giving Tenant notice of its
election, and this Lease shall terminate and shall become null and void sixty
(60) days after said notice. Rent shall be adjusted as of the date of such
termination. A "major portion" of the Shopping Center shall be deemed damaged or
destroyed if the cost of the restoration thereof would exceed fifteen percent
(15%) of the amount it would have cost to replace the Shopping Center in its
entirety at the time such damage or destruction occurred.

SECTION 18.03. WAIVER OF SUBROGATION, LIMITATION OF LIABILITY

Anything in this Lease to the contrary notwithstanding, it is agreed that each
party (the "Releasing Party") hereby waives any right of subrogation and
releases the other (the "Released Party") from any lability which the Released
Party would, but for this Section 18.03, have had to the Releasing Party during
the term of this Lease, resulting from the occurrence of any accident or
occurrence of casualty (i) which is or would be covered by a fire and extended
coverage policy (with a vandalism and malicious mischief endorsement attached)
or by a sprinkler leakage, boiler and machinery or water damage policy in the
State of Missouri (irrespective of whether such coverage is being carried by the
Releasing Party), or (ii) covered by any other casualty property damage
insurance being carried by the Releasing Party at the time of such occurrence,
which accident, occurrence or casualty may have resulted in whole or in part
from any act or neglect of the Released Party, its officers, agents or
employees; provided, however, the release hereinabove set forth shall became
inoperative and null and void if the Releasing Party wishes to place the
appropriate insurance with an insurance company which takes the position that
the existence of such release vitiates or would adversely affect any policy so
insuring the Releasing Party in a substantial manner and notice thereof is given
to the Released Party.

                                                                              32

<PAGE>

ARTICLE XIX EMINENT DOMAIN

SECTION 19.01. TOTAL CONDEMNATION OF LEASED PREMISES

      If the whole of the Leased Premises shall be permanently taken, acquired
or condemned by eminent domain, or transferred by agreement in lieu of
condemnation by eminent domain, for any public or quasi-public use or purpose,
then the term of this Lease shall cease and terminate as of the date of title
vesting in such proceeding. All rentals shall be paid by Tenant up to that date,
and Tenant shall have no claim against Owner or the condemning authority for the
value of any unexpired term of this Lease.

SECTION 19.02. PARTIAL CONDEMNATION OF LEASED PREMISES

      If any part of the Leased Premises shall be permanently taken, acquired or
condemned by eminent domain, or transferred by agreement in lieu of condemnation
as aforesaid, and in the event that such partial taking or condemnation shall
render the Leased Premises unsuitable for the business of Tenant, then the term
of the Lease shall cease and terminate as of the date of title vesting in such
proceeding. Tenant shall have no claim against Owner or the condemning authority
for the value of any unexpired term of this Lease, and rent shall be adjusted to
the date of such termination. In the event of a partial taking or condemnation
which is not extensive enough to render the Leased Premises unsuitable for the
business of Tenant, Owner shall promptly restore the Leased Premises to a
condition, comparable to its condition at the time of such condemnation less the
portion lost in the taking, and this Lease shall continue in full force and
effect with a proportionate adjustment of the Minimum Rent and the Percentage
Breakpoint for the said portion lost by such taking or condemnation.

SECTION 19.03. CONDEMNATION OF SHOPPING CANTER

      In the event a major portion of the Shopping Center shall be taken,
condemned or transferred as aforesaid and as a result thereof Owner, in its sole
discretion, elects to discontinue the operation of the Shopping Center, Owner
may cancel this Lease by giving Tenant notice of its election, and this Lease
shall terminate and shall become null and void sixty (60) days after said
notice. A major portion of the Shopping Center shall be deemed to mean ten
percent (10%) or more of the leasable space within the Shopping Center.

SECTION 19.04. OWNER'S DAMAGES

      In the event of any condemnation or taking as aforesaid, whether whole or
partial and whether or not this Lease shall be terminated, Tenant shall not be
entitled to any part of the compensation award, either leasehold or reversion.
Owner is to receive the full amount of such award, and Tenant hereby expressly
waives any right or claim to any part thereof and any claim for deduction
therefrom for any present or future estate of Tenant. Tenant hereby assigns to
Owner all its right, title and interest to any such award and shall execute all
documents required to evidence this result.

SECTION 19.05. TENANT'S DAMAGE

      Although all damages in the event of any condemnation are to belong to
Owner, whether such damages are awarded as compensation for diminution in value
of the leasehold or to the fee of the Leased premises, Tenant shall have the
right to claim, prove and recover from the condemning authority, but not from
Owner, such compensation as may be separately awarded or recoverable by Tenant
in Tenant's own right on account of any cost or loss to which Tenant might be
put in removing Tenant's merchandise, furniture, fixtures and personal property,
but only if or to the extent such award shall be in addition to the award for
the land, the building and the other improvements containing the Leased
Premises.

                                                                              33
<PAGE>

ARTICLE XX         DEFAULT BY TENANT

SECTION 20.01.     RIGHT TO TERMINATE THE LEASE OR TENANT'S POSSESSION OF THE
                   LEASED PREMISES

      (a) If Tenant shall fail to pay any Minimum Rent, Percentage Rent,
Additional Rent, or other sums payable hereunder within ten (10) days after the
day payment is required by the terms of this Lease, or if Tenant shall fail to
perform any of the other terms, conditions or covenants of this Lease to be
observed or performed by Tenant for more than ten (10) days after receipt of
notice of such default by Tenant, or if Tenant shall vacate or abandon (it being
agreed that not operating for business in the Leased Premises for seven (7)
consecutive days shall be deemed an abandonment) the Leased Premises, or if
Tenant or Tenant's Agents shall falsify any report required to be furnished to
Owner pursuant to the terms of this Lease, or if Tenant or any Guarantor of this
Lease shall become bankrupt or insolvent, file or acquiesce in any debtor
proceedings, or take or have taken against it in any court pursuant to any
statute either of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
of all or a portion of Tenant's or any such Guarantor's property, or if Tenant
or any Guarantor of this Lease makes an assignment for the benefit of creditors
or petitions for or enters into such an arrangement, or if Tenant shall suffer
this Lease to be taken under any writ of execution, then Owner, in addition to
the other rights or remedies it may have under this Lease and at law or in
equity, shall have the Immediate right to (i) terminate this Lease (in which
case the term of this Lease shall automatically terminate on the giving of such
notice) or (ii) terminate Tenant's right to possession of the Leased Premises
without termination of this Lease. Notwithstanding any termination of Tenant's
right to possession of the Leased Premises without termination of this Lease,
Owner may at any time after such termination of possession elect to terminate
this Lease for such previous breach by giving notice thereof to Tenant.

      (c) Notwithstanding anything to the contrary contained in this Lease and
notwithstanding any other rights or remedies Owner may have, Tenant shall be
deemed to be in "Chronic Default" if Tenant commits a monetary default during
any three hundred sixty-five (365) day period in which any three (3) other
events of monetary default have already occurred (even though said defaults may
have been timely cured). If Tenant is in Chronic Default, owner may immediately
exercise any or all remedies available to Owner under this Lease or at law or in
equity, all without giving Tenant an opportunity to cure the last default which
causes Tenant's Chronic Default.

      (d) Upon (i) any termination of this Lease, whether by lapse of time or by
the exercise of any option by Owner to terminate the same or in any other manner
whatsoever, or (ii) any termination of Tenant's right to possession without
termination of this Lease, Tenant shall immediately surrender possession of the
Leased Premises to Owner and immediately vacate the same, and remove all effects
therefrom, except such as may not be removed under other provisions of this
Lease. If Tenant fails to surrender possession and vacate as aforesaid, Owner
may forthwith re-enter the Leased Premises, and repossesses itself thereof as in
its former estate and expel and remove Tenant end any other persons and property
therefrom, using such force as may be necessary, without being deemed guilty of
trespass, eviction, conversion or forcible entry and without thereby waiving
Owner's rights to rent or any other rights given Owner under this Lease or at
law or in equity. If Tenant shall not remove all effects for the Leased Premises
as hereinabove provided, Owner may, at its option, remove any or all of said
effects in any manner it shall choose and store the same without liability for
loss thereof, and Tenant shall pay Owner, on demand, any and all expenses
incurred in such removal and also storage of said effects for any length of time
during which the same shall be in Owner's possession or in storage. No re-entry
or taking possession of the Leased Premises by Owner, shall be constructed as an
election on its part to terminate this Lease unless a notice of such intention
is given to Tenant (all other demands and notices of forfeiture or other similar
notices being hereby expressly waived by Tenant). Notwithstanding any reletting
without termination, Owner may at any time thereafter elect to terminate this
Lease for such previous breach in the manner provided in this Section.

SECTION 20.02.     RIGHT TO RELET

      If Owner re-enters the Leased Premises as provided In this Article or if
Owner takes possession of the Leased Premises pursuant to legal proceedings or
any notice provided for by law, then Owner may at its option, make such
alterations and repairs as Owner shall determine may be necessary in order to
relet all or any portion of the Leased

                                                                              34

<PAGE>
Premises and to relet the Leased Premises or any part thereof for such term or
terms (which may be for a term extending beyond the term of this Lease), at such
rental or rentals and upon such other terms and conditions of Owner in its sole
discretion may deem advisable. Upon each such reletting, all rentals received by
Owner shall be applied first to the payment of any indebtedness other than rent
due hereunder from Tenant to Owner; second to the payment of any costs and
expenses of such reletting, including any brokerage fees or attorneys' fees and
any costs of such alterations and repairs; and third to the payment of rent and
other charges due and unpaid hereunder. The residue, if any, shall be held by
Owner and applied in payment of future rent as the same may become due and
payable hereunder. If the rentals received from such reletting during any month
are less than that to be paid during that month by Tenant hereunder, Tenant
shall pay any such deficiency to Owner. Such deficiency shall be calculated and
paid monthly. No re-entry or taking possession of the Leased Premises by Owner
shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention is given to Tenant or unless the termination
thereof is decreed by a court of competent Jurisdiction. Notwithstanding any
such reletting without termination, Owner may at any time thereafter elect to
terminate this Lease for such previous breach. Should Owner at any time
terminate this Lease for any breach, then in Addition to any other remedies
Owner may have, Owner may recover from Tenant all damages Owner may incur by
reason of such breach, including the cost of recovering possession of the Leased
Premises, reasonable attorneys' fees, and the worth at the time of such
termination of the excess, if any, of the amount of rent and charges equivalent
to rent reserved in this Lease for the remainder of the stated term over the
then reasonable rental value of the Leased Premises for the remainder of the
stated term, all of which amounts shall be immediately due and payable from
Tenant to Owner. In determining the annual Minimum Rent and other charges which
would be payable by Tenant hereunder subsequent to termination, the annual
Minimum Rent payable per annum for the remainder of the stated term shall be
increased by an amount equal to the average Percentage Rents payable by Tenant
from the commencement of the term to the time of termination, or during the
preceding three (3) full calendar years, whichever period is shorter.

SECTION 20.03.     Payment of Expenses

      In addition to any other remedies Owner may have at law or in equity
and/or under this Lease, Tenant shall pay upon demand all of Owner's costs,
charges and expenses, including fees of counsel, agents and others retained by
Owner, incurred in connection with the recovery of sums due under this Lease,
because of the breach of any covenant under this Lease, or for any other relief
against Tenant. In the event Tenant shall bring any action against Owner for
relief hereunto and Tenant shall fall to obtain a final, unappealable judgment
against Owner, or if Tenant causes any appearance by Owner as a witness or
otherwise in any proceeding, or if Owner should become a party to any litigation
instituted by or against Tenant with respect to any third party, Tenant shall
pay Owner's reasonable attorneys' fees and expenses and all court costs.
Tenant's obligations under this Section shall survive the expiration of the term
of this Lease.

SECTION 20.04.     OWNER'S RIGHT TO CURT DEFAULTS

      If Tenant fails to perform any agreement or obligation on its part to be
performed under this Lease, Owner shall have the right (i) if no emergency
exists, to perform the same after giving fifteen (15) days' notice to Tenant,
and (ii) in any emergency situation to perform the same immediately without
notice or delay. For the purpose of rectifying Tenant's defaults as aforesaid,
Owner shall have the right to enter the Leased Premises. Tenant shall on demand
reimburse Owner for the costs and expenses incurred by Owner in rectifying
Tenant's defaults as aforesaid, including reasonable attorney's fees and an
administrative fee equal to fifteen percent (15%) of all such costs. Except for
gross negligence by Owner, Owner shall not be liable or in any way responsible
for any loss, inconvenience, annoyance or damage resulting to Tenant or anyone
holding under Tenant for any action taken by Owner pursuant to this Section. Any
act or thing done by Owner pursuant to this Section shall not constitute a
waiver of any such default by Tenant or a waiver of any covenant, term or
condition herein contained or the performance thereof.

SECTION 20.05.     WAIVER OF RIGHT OF REDEMPTION

      Tenant hereby expressly waives any and all rights of redemption granted by
or under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause or in the event of Owner obtaining possession of the
Leased Premises by reason of the violation by Tenant of any of the covenants or
condition) of this Lease or otherwise.

SECTION 20.06.     WAIVER AND SUBSEQUENT DEFAULTS

      No waiver of any covenant or condition or of the breach of any covenant or
condition of this Lease shall be taken to constitute a waiver of any subsequent
breach of such covenant or condition or to justify or authorize the

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nonobservance on any other occasion of the same or of any other covenant or
condition hereof, nor shall the acceptance of rent by Owner at any time when
Tenant has breached or is in default under any covenant or condition hereof,
with or without knowledge of any breach or default by Tenant, be construed as a
waiver of such breach or default or of Owner's right to terminate this Lease on
account of such default, nor shall any waiver or indulgence granted by Owner to
Tenant be taken as an estoppel against Owner, regardless of Owner's knowledge of
any such preceding breach. It is expressly understood that if at any time Tenant
shall be in default in any of its covenants or conditions hereunder, an
acceptance by Owner of rental during the continuance of such default or the
failure on the part of Owner promptly to avail itself of such other right or
remedies as Owner may have, shall not be construed as a waiver of such default,
but Owner may at anytime thereafter, if such default continues, terminate this
Lease on account of such default in the manner hereinbefore provided. No
covenant, term or condition of this Lease shall be deemed to have been waived by
Owner, unless such waiver is in writing by Owner.

SECTION 20.07.     INJUNCTIVE RELIEF

      In the event of any breach or threatened breach by Tenant of any of the
terms and provisions of this Lease, Owner shall have the right to injunctive
relief as if no other remedies were provided herein for such breach,

SECTION 20.09.     CUMULATIVE REMEDIES

      The rights and remedies given to Owner by this Lease shall be deemed to be
cumulative, and no one of such rights or remedies shall be exclusive at law or
in equity of the rights and remedies which Owner might otherwise have by virtue
of a default under this Lease. The exercise of one such right or remedy by Owner
shall not impair Owner's standing to exercise any other right or remedy.

SECTION 20.09.     TENANT'S BANKRUPTCY OR INSOLVENCY

      Should Tenant file, or have filed against it, a petition under the
Bankruptcy Code (11 U.S.C. Section 101 et. seq. as from time to time amended),
then this Lease shall be in default, and Owner shall be entitled to all rights
and remedies hereunder and otherwise.

      (a) In the event that Tenant shall become a debtor under Chapter 7 of the
Bankruptcy Code and Tenant shall elect to assume this Lease for its own use or
for the purpose of assigning the same or otherwise, such election or assignment
may be made only if all of the provisions of this Section 20809 are satisfied.
If Tenant shall fall to elect to assume this Lease within sixty (60) days after
the filing of a petition or such additional time as provided by the Bankruptcy
Court within such sixty (so) day period, then this Lease shall be deemed to have
been rejected. Immediately thereupon, Owner shall be entitled to possession of
the Leased Premises without further obligation to Tenant and this Lease shall
terminate, but Owner's right to be compensated for damages (including, without
limitation, liquidated damage pursuant to the terms of this Lease) in any such
proceeding shall survive.

      (b) In the event that a petition for reorganization or adjustment of debts
is filed concerning Tenant under Chapter 11 of the Bankruptcy Code, or a
proceeding is filed under Chapter 7 of the Bankruptcy Code and is transferred to
Chapter 11, Tenant must assume or reject this Lease within the earlier of: (i)
confirmation of the plan; or (ii) sixty (60) days from the date of the filing of
the petition under Chapter 11 or such transfer thereto, or Tenant shall be
deemed to have rejected this Lease. In the event that Tenant has failed to
perform all of Tenant's obligations under this Lease within the time periods
(excluding grace periods) required for such performance, no election by Tenant
to assume this Lease, whether under Chapter 7 or Chapter 11, shall be effective
unless each of the following conditions has been satisfied:

      (1) Tenant has cured or has provided Owner with "Assurance" (as that term
      is hereinafter defined) that it will cure: (i) all monetary defaults under
      this Lease within ten (10) days from the date of such assumption, and (ii)
      all non-monetary defaults under this Lease within thirty (30) days from
      the date of such assumption;

      (2) Tenant has compensated, or has provided Owner with Assurance that
      within ten (10) days from the date of such assumption it will compensate
      Owner for any pecuniary loss incurred by Owner arising from the default of
      Tenant, indicated in any statement of pecuniary loss sent by Owner to
      Tenant;

      (3) Tenant has provided Owner with Assurance of the future performance of
      each of the obligations under this Lease of Tenant and has (i) deposited
      with Owner, as security for the timely payment of rent hereunder, any
      amount equal to three (3) monthly installments of rent, and (ii) paid in
      advance to Owner on

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<PAGE>

      the date rent is due and payable one-twelfth (1/12) of Tenant's annual
      obligations for Additional Rent pursuant to this Lease. The Obligations
      imposed upon Tenant, shall continue with respect to Tenant or any assignee
      of Tenant's Interests in this Lease after the completion of bankruptcy
      proceedings; and

      (4) Such assumption will not breach or cause a default under any provision
      of any other lease, mortgage, financing agreement, reciprocal operating or
      easement agreement or other agreement by which Owner is bound relating to
      the Shopping Center or any larger development of which the Shopping Center
      is a part.

For purposes of this Section, Owner and Tenant acknowledge that "Assurance"
shall mean no less than that: (i) Tenant has and will continue to have
sufficient unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Owner shall sufficient funds will be available
to fulfill the obligations of Tenant under this Lease, and (ii) the Bankruptcy
Court shall have entered an order aggregating sufficient cash payable to Owner,
and/or Tenant shall have been granted a valid and perfected first lien and
security interest and/or mortgage in property of Tenant, acceptable as to value
and kind to Owner and Owner's mortgagees, to secure to Owner and Owner's
mortgagees the obligation of Tenant to cure the defaults under this Lease,
monetary and non-monetary, within the time period set forth above.

      (c) Tenant shall have further complied with all provisions of Section 365
of the Bankruptcy Code.

      (d) If Tenant has assumed this Lease pursuant to the terms and provisions
of this Section for the purpose of assigning (or elects to assign) this Lease,
this Lease may be so assigned only if the proposed assignee has provided
adequate assurance of future performance of all of the terms, covenants and
conditions of this Lease to be performed by Tenant. Owner shall be entitled to
receive all cash proceeds of any such assignment. As used herein, "adequate
assurance of future performance" shall mean that no less than each of the
following conditions has been satisfied:

      (1) The proposed assignee has furnished Owner with (i) a current financial
      statement audited by a certified public accountant indicating a net worth
      and working capital in amounts which Owner and Owner's mortgagees
      reasonably determine to be sufficient to assure the future performance by
      such assignee of Tenant's obligations under this Lease, and (ii) a
      guarantee or guarantees in form and substance satisfactory to Owner and
      Owner's mortgagees from one or more persons with aggregate net worth equal
      to or in excess of Tenant's net worth as of the date of this Lease. Tenant
      hereby acknowledges Owner's reliance upon the provisions of this
      subsection;

      (2) Said assignment shall be subject to Owner's receipt from said assignee
      of Assurance, as defined above, along with a prior finding by the
      Bankruptcy Court of compliance with all provisions of Section 365 of the
      Bankruptcy Code;

      (3) Any such assignment shall be specifically subject to all the
      provisions hereof; and

      (4) A substantial reduction of any Percentage Rent due hereunder for
      purposes of Section 365 of the Bankruptcy Code shall be deemed to be a
      reduction of five percent (5%) or more in said Percentage Rent.

      (e) For purposes of this Section 20.09 only, the term "Tenant" shall also
mean and apply to Tenant's trustee in any bankruptcy proceeding and/or Tenant as
debtor-in-possession, as the case may be appropriate.

      (f) This Lease shall be deemed a Lease of "Non-residential Real Property"
within a "shopping center" for the purpose of Section 365 of the Federal
Bankruptcy Code.

ARTICLE XXI        DEFAULT BY OWNER

SECTION 21.01.     NOTICE TO OWNER

      In no event shall Owner be charged with default in the performance of any
of its obligations hereunder, unless and until Owner shall have failed to
perform such obligations within thirty (30) days (or within such additional time
as is reasonably required to correct any such default) after notice to Owner by
Tenant properly specifying wherein Owner has to perform any such obligations.

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SECTION 21.02.     LIABILITY OF OWNER

      Notwithstanding anything to the contrary provided in this Lease, it is
specifically understood and agreed by the parties that neither Owner nor any of
its partners, employees, officers, directors, representatives, managers, agents,
trusts, trustees or beneficiaries shall have any personal liability whatsoever
with regard to any provision of this Lease or any obligation or liability
arising from or in connection with this Lease in the event of a breach or
default by Owner of any of its obligations. Tenant shall look solely to the
equity of Owner in the Shopping Center at the time of the breach or default for
the satisfaction of each and every remedy of Tenant. Such exculpation shall be
absolute and without any exceptions whatsoever.

ARTICLE XXII       ACCESS BY OWNER

SECTION 22.01.     RIGHT OF ENTRY                        SEE RIDER, PARAGRAPH 14

      Owner or its agents shall have the right to enter the Leased Premises at
all reasonable during normal business hours (except in the case of an emergency)
times to examine the same, to show them to prospective purchasers, mortgagees or
lessees, to enforce or carry out any provisions of this Lease, and to make such
repairs, alterations, improvements or additions to the Leased Premises or to the
Shopping Center as Owner may deem necessary or desirable in connection with the
expansion, modification, alteration, reduction, additions to, remodeling,
rearrangement or renovation of any portion of the Shopping Center or which
Tenant has covenanted herein to do and has failed so to do. Owner shall be
allowed to take all material into and upon said premises that may be required
therefor without the same constituting an eviction of Tenant in whole or in
part. The rent shall in no wise abate while said repairs, alterations,
improvements or additions are being made by reason of loss or interruption of
business of Tenant or otherwise. During the six (6) months prior to the
expiration of the term of this Lease or any renewal term, Owner may exhibit the
Leased Promises to prospective tenants or purchasers. If Tenant shall not be
personally present to open and permit an entry into the Leased Premises, at any
time, when for any reason an entry therein shall be necessary or permissible,
Owner or Owner's agents may forcibly enter the same without rendering Owner or
such agents liable therefor and without in any manner affecting the obligations
and covenants of this Lease. Nothing contained herein, however, shall be deemed
or construed to impose upon Owner any obligation, responsibility or liability
whatsoever for the care, maintenance or repair of the building or any part
thereof, except as otherwise herein specifically provided.

SECTION 22.02.     EXCAVATION                            SEE RIDER, PARAGRAPH 14

      If an excavation shall be made upon land adjacent to the Leased Premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation license to enter upon the Leased Premises
for the purpose of doing such work as Owner shall deem necessary to preserve the
wall or the building of which the Leased Premises form a part from injury or
damage and to support the same by proper foundations, without any claim for
damages or indemnification against Owner or diminution or abatement of rent.

ARTICLE XXIII      PROPERTY WITHIN THE LEASED PREMISES

SECTION 23.01.     PAYMENT OF TAXES AND FEES

      Tenant shall be solely responsible for and shall pay before delinquency
all municipal, county, state or federal taxes assessed during the term of this
Lease upon Tenant's business or against any leasehold Interest or personal
property of any kind, owned by or placed in, upon or about the Leased Premises
by Owner, Tenant, Tenant's Agents or others holding under, through or with the
consent of Tenant. Tenant shall pay when and as due all license fees, permit
fees and charges of a similar nature for the conduct of business in the Leased
Premises.

SECTION 23.02.     LOSS AND DAMAGE

      Owner shall not be liable for any damage to any property of Tenant or of
others located on the Leased Premises, nor for the loss of or damage to any
property of Tenant or of others by theft or otherwise. Except to the extent
caused by Owner's negligence (but subject to Section 18.03 hereof). Owner shall
not be liable for any injury or damage to persons or property resulting from
fire, explosion, falling plaster, steam, gas,

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<PAGE>

electricity, water, rain, snow or leaks from any part of the Leased Premises or
from the pipes, wires, odors, appliances or plumbing works or from the roof,
street or sub-surface or from any other place or by dampness or by any other
cause of whatsoever nature. Owner shall not be liable for any such damage caused
by other tenants, persons in the Leased Premises, occupants of adjacent
property, of the Shopping Center or the public, or caused by operations in
construction of any private, public or quasi-public work. Owner shall not be
liable for any latent defect in the Leased Premises or in the building of which
they form a part. All property kept or stored on the Leased Premises shall be so
kept or stored at the risk or Tenant only, and Tenant shall hold Owner harmless
from any claims arising out of damage to the same, including subrogation claims
by Tenant's insurance carrier, unless such damage shall be cause by the willful
act or gross neglect of Owner.

SECTION 23.03      NOTICE BY TENANT

      Tenant shall give immediate notice to Owner in case of fire or accidents
in the Leased Premises or in any fixtures or equipment therein.

ARTICLE XXIV       HOLDING OVER, SUCCESSORS

SECTION 24.01.     HOLDING OVER

      Any holding over after the expiration of the term hereof in all or any
part of the Leased Premises, without the consent of Owner, shall be construed to
be a tenancy from month to month on the terms and conditions herein specified,
so far as applicable, excepting that Tenant shall pay for each day that Tenant
holds over rent at double the highest annual rate of Minimum Rent, Percentage
Rent and Additional Rent hereinbefore paid under this Lease for a Lease Year,
Tenant hereby waives notice to vacate the Leased Premises and agree that Owner
shall be entitled to the benefit of all provisions of law respecting the summary
recovery of possession from a Tenant holding over to the same extent as if
statutory notice had been given.

SECTION 24.02.     SUCCESSORS

      Except as otherwise expressly provided, all rights and liabilities herein
given to, or imposed upon, the respective parties hereto shall extend to and
bind the several respective heirs, executors, administrators, successors and
permitted assigns of the parties. If there shall be more than one tenant
hereunder, they shall all be bound jointly and severally by the terms, covenants
and agreements herein. No rights, however, shall inure to the benefit of any
assignee of Tenant unless the assignment to such assignee severally has been
approved by Owner in writing as provided in Section 16.01 hereof.

ARTICLE XXV        QUIET ENJOYMENT

SECTION 25.01.     OWNER'S COVENANT

      Upon timely payment by Tenant of the Minimum Rent, Percentage Rent,
Additional Rent and other charges herein provided and upon the observance and
performance of all the covenants, terms and conditions on Tenant's part to be
observed and performed, Tenant shall peaceably and quietly hold and enjoy the
Leased Premises for the term hereby demised without hindrance or interruption by
Owner or any other person or persons lawfully or equitably claiming by, through
or under Owner, subject, nevertheless, to the terms and conditions of this
Lease.

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<PAGE>

ARTICLE XXVI       DEFINITION OF TERMS

SECTION 26.01.     COMMON AREAS

      The terms "Common Area" and "Common Areas" as used herein shall mean all
areas, facilities and improvements located, in, on or near the Shopping Center
as are provided from time to time by Owner for the general use in common, of
Owner and the tenants, their officers, agents, employees and customers,
including but not limited to employee parking areas, customer service centers,
customer parking areas, parking decks, truckways, malls, roofs, skylights,
windows, vestibules, mall amenities, mall HVAC units, satellite dishes,
concourses, courts, corridors, approaches, exits, entrances, curbs, roadways,
drives, access roads, ramps, sidewalks, signs, loading facilities, package
pick-up stations, landscaped areas, escalators, elevators, public restrooms,
comfort stations, auditoriums, stairways, water, sanitary and storm sewer, gas,
electric, telephone, cable television and other utility lines, systems conduits
and facilities to the perimeter wall of any building and those serving more than
one premises within a building, and any of the foregoing which serve the Common
Area.

SECTION 26.02.     OWNER

      The term "Owner" as used herein, so far as covenants or obligations on the
part of Owner are concerned, shall be limited to mean and include only the Owner
or Owners at the time in question of the Leased Premises. In the event of any
sale or transfer of the Shopping Center or any transfer of title to the Leased
Premises or the underlying ground or Lease, the Owner herein named (and in case
of any subsequent transfers or conveyances, the then grantor) shall be
automatically and entirely freed and relieved from the performance of all
covenants and obligations under this Lease and all liability concerning all such
covenants and obligations from and after the date of such conveyance or
transfer, provided that any amount then due and payable to Tenant by Owner or
the then grantor, under any provisions of this Lease, shall be paid to Tenant.
It is intended hereby that the covenants and obligations contained in this Lease
on the part of Owner shall, subject as aforesaid, be binding on Owner, its
heirs, successors and assigns only during and in respect to their successive
periods of ownership.

SECTION 26.03.     FLOOR AREA

      The term "Floor Area" as used herein shall mean the actual number of
square feet of leased and occupied floor space of all levels, including
basements and mezzanines, of promisee in the Shopping Center used for retail or
restaurant purposes, without deduction or exclusion for any space occupied or
used by columns, ducts, chases, stairs or other interior construction or
equipment within the exterior faces of exterior walls, except party walls (walls
shared by separate tenants), in which case the center of the wall in question
shall be used instead of the exterior face thereof.

SECTION 26.04.     TENANT

      The term "Tenant" as used herein shall be deemed and taken to mean each
and every person or party mentioned as a tenant herein; and if there shall be
more than one Tenant, any notice required or permitted by the terms of this
Lease may be given by or to any one thereof and shall have the same force and
effect as if given by or to all.

SECTION 29.05.     TENANT'S AGENTS

      The term "Tenant's Agents" as used herein shall be deemed and taken to
mean Tenant's employees, representatives, licensees, concessionaires, agents,
tenants, subtenants, assignees, contractors, heirs, successors, legatees,
devisees and guarantors.

SECTION 26.06.     LEASE YEAR AND PARTIAL LEASE YEAR

      The term "Lease Year" as used hereto shall mean a period of twelve (12)
consecutive full calendar months. The first Lease Year shall begin on the date
of commencement of the term hereof if said date shall occur on the first day of
a calendar month. If not, then the first Lease Year shall commence upon the
first day of the calendar month

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<PAGE>
next following the date of commencement of the term hereof. Each succeeding
Lease Year shall commence upon the anniversary date of the first Lease Year. Any
fractional month prior to the first Lease Year and any period following the last
Lease Year shall be referred to herein as a "Partial Lease Year". Unless
otherwise applicable, the term Partial Lease Year shall be included in the term
Lease Year.

SECTION 26.07.     GUARANTOR

      This term "Guarantor" as used herein shall mean any partnership, person,
corporation or other entity which has undertaken, by separate instrument,
endorsement on this Lease or in any other manner to warrant, agree or guarantee
that the obligations of Tenant, or any portion thereof, shall be performed by
Tenant.

SECTION 26.08.     MAJOR STORE AND MAJOR STORE PREMISES

      The term "Major Store Premises" shall mean a store containing at least
25,000 square feet of contiguous Floor Area and operated under a single trade
name. The term "Major Store" shall mean the occupant from time to time of a
Major Store Premises.

SECTION 26.09.     TENANT DESIGN GUIDE

      The term "Tenant Design Guide" shall mean the Tenant Design Guide provided
by Owner from time to time.

ARTICLE XXVII      MISCELLANEOUS

SECTION 27.01.     ACCORD AND SATISFACTION

      The acceptance by Owner of payments of Percentage Rent or reports thereof
shall be without prejudice and shall in no way constitute a waiver of Owner's
right to claim a deficiency in the payment of such rent or to audit Tenant's
books and records. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction. Owner at its sole and absolute discretion may apply
any payment received from Tenant in any manner Owner elects. Owner may accept
such check or payment without prejudice to Owner's right to recover the balance
of such rent or pursue any other remedy provided in this Lease.

SECTION 27.02.     ENTIRE AGREEMENT

      This Lease, all Exhibits, and the Rider, if any, attached hereto and
forming a part hereof together with any rules and regulations adopted and
promulgated by Owner, set forth all the covenants, promises, agreements,
assurances, representations, warranties, statements, conditions and
understandings (the "Representations") between Owner and Tenant concerning the
Leased Premises and the Shopping Center. There are no Representations, either
oral or written, between them other than as are herein set forth. This Lease
supersedes end revokes all previous negotiations, arrangements, offers,
proposals, brochures, representations and Information conveyed, whether oral or
written, between the parties hereto or their representatives, and Tenant
acknowledges that it has not been induced to enter into this Lease by any
Representations not set forth herein and has not relied on any such
Representations and likewise, no such Representations shall be used to interpret
or construed this Lease, and Owner shall have no liability for any consequences
arising as a result of any such Representations. Specifically, but without
limitation, Tenant acknowledges that Tenant has relied solely on its own
investigation and business judgment in its determination to enter into this
Lease, that any statements which may have been made by any representative of
Owner concerning the success of Tenant's business or the Shopping Center or the
extent of Tenant's sales or profits are based upon that representative's
expectations and are not to be considered as promises, covenants or guarantees
of success, that the success of Tenant's business and the Shopping Center are
based upon many factors, including certain factors not within the control of
Owner and certain factors which are within the control of Tenant and that Tenant
is not in any way entitled to the benefits of any agreements between Owner and
other tenants or occupants which agreements may differ from the terms of this
Lease. Except as herein otherwise provided, no subsequent alteration, amendment,
change or addition to this Lease shall be binding upon Owner or Tenant unless
reduced to writing and signed by them.

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<PAGE>

SECTION 27.03.     RELATIONSHIP OF THE PARTIES

      Owner does not, in any way or for any purpose, become a partner of Tenant
in the conduct of its business, or otherwise, or joint venturer or a member of a
joint enterprise with Tenant whatsoever, or become a principal or agent of
Tenant. The provisions of this Lease relating to the Percentage Rent payable
hereunder are included solely for the purpose of providing a method whereby the
rent is to be measured and ascertained. It is expressly understood and agreed
that neither the computation of rent nor any other provisions contained in this
Lease nor any act or acts of the parties hereto shall be deemed to create any
relationship between Owner and Tenant other than the relationship of landlord
and tenant.

SECTION 27.04.     FORCE MAJEURE

      In the event that either party hereto shall be delayed, hindered in, or
prevented from the performance of any act required hereunder by reason of
strikes, lock-outs, labor troubles, inability to procure materials, failure of
power, restrictive governmental laws or regulations, riots, insurrection, war or
other reason of a like nature, not the fault of the party delayed in performing
work or doing acts required under the terms of this Lease, then performance of
such act shall be excused for the period of the delay, and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay. The provisions of this Section shall not, however, operate
to excuse Tenant from prompt payment of Minimum Rent, Percentage Rent,
Additional Rent or any other payments required by the terms of this Lease.

SECTION 27.05.     NOTICES

      Any notice, demand, request, payment (including Minimum Rent, Percentage
Rent and Additional Rent payments), communication or other instrument which may
be or is required to be given under this Lease shall be delivered in person or
sent by United States certified mail, return receipt requested, postage prepaid,
by facsimile, or by any overnight or express mall service which provides
receipts to indicate delivery, and shall be addressed (a) if to Owner, at 164
Crestwood Plaza - Suite 200, St. Louis, Missouri 63126-1794, or at such other
address as Owner may designate by written notice, and (b) if to Tenant, at the
"Address of Tenant" set forth in Article A or at such other address as Tenant
shall designate by written notice (and Owner may deliver the notice to the
Leased Premises in addition to the "Address of Tenant"); provided, however,
Owner may, after notice to Tenant, require all Minimum Rent, Percentage Rent and
Additional Rent to be paid to Owner by way of a lockbox. Any notice, demand,
request, or communication required of Owner under this Lease may be given by
Owner's attorneys as well as Owner. All notices sent by mail or by overnight or
express mall service shall be effective upon being deposited in the United
States mail or with such service as herein provided.

SECTION 27.06.     CAPTIONS AND SECTION NUMBERS

      The captions, titles, section numbers, article numbers, and table of
contents appearing in this Lease are inserted only as a matter of convenience
and in no way define, limit, construe, or describe the scope or intent of such
sections or articles for this Lease or in any way affect this Lease.

SECTION 27.07.     USE OF PRONOUN

      The use in this Lease of the neuter singular pronoun to refer to Owner or
Tenant shall be deemed a proper reference even though Owner or Tenant may be an
individual, a partnership, a corporation, or a group of two or more individuals
or business entities. The necessary grammatical changes required to make the
provisions of this Lease apply in the plural sense where there is more than one
Owner or Tenant and to either corporations, associations, partnerships, or
individuals, males or females, shall in all instances be assumed as though in
each case fully expressed. Unless the context otherwise requires, the word
person shall include corporation, firm or association.

SECTION 27.08.     BROKERAGE                            SEE RIDER, PARAGRAPH 15

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<PAGE>

SECTION 27.09.             PARTIAL INVALIDITY

      Each term and each provision of this Lease to be performed by Tenant shall
be construed to be both an independent covenant and a condition. If any term,
covenant or condition of this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this Lease
shall be valid and be enforced to the fullest extent permitted by law.

SECTION 27.10.             APPLICABLE LAW

      The validity, performance and enforcement of this Lease shall be construed
under the laws of the State of Missouri. Should either party institute legal
suit or action for enforcement of any obligation contained herein, it is agreed
that the venue of such suit or action shall be, at the option of Owner, in St.
Louis County, Missouri, and Tenant expressly consents to Owner's designating the
venue of such suit or action.

SECTION 27.11.             NO OPTION

      The submission of this Lease for examination does not constitute a
reservation of or option for the Leased Premises, and this Lease becomes
effective as a Lease only upon execution and delivery thereof by Owner and
Tenant.

SECTION 27.12.             REIMBURSEMENT

      All terms, covenants and conditions herein contained to be performed by
Tenant shall be performed all its sole cost and expense, and if Owner shall pay
any sum of money or do any act which requires the payment of money by reason of
the failure, neglect or refusal of Tenant to perform such term, covenant or
condition, the sum of money so paid by Owner shall be payable by Tenant to Owner
with the next succeeding installment of rent. All sums payable by Tenant to
Owner under this Lease shall be paid without any prior demand therefor and
without any deduction or setoff whatsoever.

SECTION 27.13.             RECORDING

      Tenant shall not record this Lease without the written consent of Owner.

SECTION 27.14.             LIQUIDATED DAMAGES

      Tenant hereby agrees that the provisions of this Lease stipulating an
amount of damages or rental adjustments in lieu of damages which take effect
upon breach by Tenant of this Lease are agreed upon liquidated damages to
compensate Owner as the exact amount of damages cannot be ascertained with
certainty.

SECTION 27.15.             TENANT'S FINANCIAL INFORMATION

      Tenant represents and warrants to Owner that all of Tenant's financial
information submitted by Tenant to Owner prior to the mutual execution of this
Lease to true and correct. Tenant acknowledges that Owner has relied on such
information as an inducement for Owner's execution of this Lease.

SECTION 27.16.             AUTHORITY

      Tenant, if a corporation, warrants and represents to Owner that Tenant is
a duly incorporated or duly qualified (if foreign) corporation and is authorized
to do business in the State of Missouri; and that Tenant's execution of this
Lease is pursuant to a resolution of the Tenant's Board of Directors.

                                                                              43

<PAGE>

SECTION 27.17.             CONSENT

SECTION 27.18.     RIGHTS TO CHANGE SHOPPING CENTER NAME

      Owner reserves the right to change the name of the current address of the
Shopping Center or both during the term of this Lease. Should Owner elect to
make such changes, Tenant shall thereupon use the new name and/or address in its
local business address and advertising as provided in Section 6.01(a) and Owner
shall incur no liability to Tenant as a result of such changes. Furthermore,
such changes shall not entail a decrease in rental value, constitute an eviction
or diminution of services or excuse Tenant from the full performance of all its
Lease obligations.

SECTION 27.19.     ADDING AND WITHDRAWING PROPERTY

      From time to time Owner may add property to the Shopping Center or
withdraw property from the Shopping Center. Any property so added shall
thereafter be subject to the terms of this Lease and shall be included in the
term Shopping Center as used in this Lease and any property so withdrawn by
Owner shall thereafter not be subject to the terms of this Lease and shall be
executed from the term Shopping Center as used in this Lease.

SECTION 27.20.     ADDITIONAL MAJOR STORE



SECTION 27.21.     GIFT CERTIFICATES

      Tenant shall honor all gift certificates issued by the Shopping Center and
other gift certificate programs sponsored by the Shopping Center, provided
Tenant either is reimbursed by Owner upon demand for the face amount of such
gift certificates or may deposit such gift certificate directly into its bank
account with the same effect as depositing a check from a customer.

SECTION 27.22.     SURVIVAL OF TENANT'S OBLIGATIONS

      All obligations of Tenant, which by their nature involve performance, in
any particular, after the end of the term, shall survive the expiration or other
termination of this Lease.


SECTION 27.23.     TRIAL BY JURY WAIVER AND COUNTERCLAIMS

      THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY MATTER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF OWNER AND
TENANT, OR TENANT'S USE AND OCCUPANCY OF THE LEASED PREMISES. IF OWNER COMMENCES
ANY PROCEEDING AGAINST TENANT FOR NON-PAYMENT OF ANNUAL MINIMUM RENT OR ANY
ADDITIONAL RENT PAYABLE HEREUNDER, THEN TENANT WILL NOT INTERPOSE ANY
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION IN SUCH PROCEEDING; PROVIDED, HOWEVER,
THE TERMS OF THIS SENTENCE SHALL NOT PRECLUDE TENANT FROM ASSERTING ANY SUCH
COUNTERCLAIMS IN A SEPARATE ACTION BROUGHT BY TENANT.

<PAGE>

SECTION 27.24.             RIDER

      A rider consisting of       4         page(s), with Sections numbered
consecutively 1 through 15 is attached hereto and made a part hereof.

SECTION 27.25.             EXHIBITS

      Exhibits "A", "B", "C" and "C-1" are attached hereto and made a part
hereof prior to execution.

IN WITNESS WHEREOF, Owner and Tenant have signed and sealed this Lease as of the
day and year first above written.

                OWNER       HYCEL PARTNERS I, L.P.
                            BY: Galleria Partners, L.P.
                                Its General Partner
                                BY: Mark H. Zorensky Grantor Trust
                                    Its General Partner

                                BY: /s/ Mark H. Zorensky
                                    --------------------
                                    Mark H. Zorensky
                                    Trustee

                TENANT      SMART STUFF, INC.
                            By: /s/ MAXINE CLARK
                               -----------------
                            NAME: MAXINE CLARK
                            TITLE: Pres./Ceo



ATTEST:        (SEAL)

 /s/  MAXINE CLARK
 ---------------------------
 Secretary

                                                                              45
<PAGE>

STATE OF MISSOURI          )
                           )SS
                           )
COUNTY OF ST. LOUIS        )


      On this 7th day of May, 1997, before me appeared Mark H. Zorensky, as
Trustee of his Grantor Trust, one of the general partners of Galleria Partners,
L.P., which is the general partner of HYCEL PARTNERS I, LP., to me known to be
the person described in and who executed the forgoing instrument and
acknowledged that he executed the same as his free act and deed in his capacity
set forth above.

      IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal In the County and State aforesaid, the day and year first above written.

                            /S/ SHIRLEY K. CARIGNAN
                            ------------------------------------
                            Notary Public

SHIRLEY K. CARIGNAN, NOTARY PUBLIC
STATE OF MISSOURI, ST. LOUIS COUNTY
MY COMMISSION EXPIRES JULY 14, 1999.


STATE OF       )
               )SS
COUNTY OF      )

      On the 5th day of May, 1997, before me the undersigned a Notary Public in
and for said Country and State, personally appeared Maxine Clark known to me to
be the ______________ President, and CEO, known to me to be the _______________
of SMART STUFF, INC., and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of Directors, and
said individuals acknowledged said instrument to be the free act and deed of
said corporation.

      IN TESTIMONY WHEREOF , I have hereunto set my hand and affixed my official
seal in said County and State as of the day and year last above written.

                            /s/ CAROLYN SUE HERRMANN
                            ------------------------
                            Notary Public

My Commission Expires:
                            CAROLYN SUE HERRMANN
                            Notary Public - Notary Seal
                            STATE OF MISSOURI
                            St. Louis Country
                            My Commission Expires: Nov. 20, 1998

<PAGE>

RIDER

RIDER attached to and made a part of Lease dated May 5, 1997 by and between
Hycel Partners I, LP, a Delaware limited partnership, as Owner, and SMART STUFF,
INC., as Tenant.

            In the event of a conflict between the terms and provisions of the
Lease and the terms and provisions of this Rider, the terms and provisions of
this Rider shall be controlling.

      1.    SECTION 1.03. TERM - OWNER'S WORK DELAY.

            Notwithstanding anything to the contrary contained in Section 1.03
of the Lease, Owner shall endeavor to deliver possession of the Leased Premises
to Tenant on or before July 1, 1997, but Owner shall have no liability to
Tenant for failing to do so, and if Owner does not do so then, as Tenant's sole
and exclusive remedy therefore, the Outside Date set forth in Article A of the
Lease shall be extended for a period equivalent to the number of days between
July 1, 1997 and the date Owner shall so make the Leased Premises available to
Tenant (but excluding both such dates in making such computation).

      2.    SECTION 2.03. GROSS SALES - EXCLUSIONS.

            Notwithstanding anything to the contrary contained in Section 2.03
of the Lease, Gross Sales shall not include, or if included, there shall be
deducted (but only to the extent they have been included):

      (1)   Sales to Tenant's employees at a discount, provided such sales in
      the aggregate do not exceed one percent (1%) of Gross Sales per Lease Year
      (calculated on a non-cumulative basis).

      (2)   Bad debts actually written off by Tenant for federal income tax
      purposes, provided such bad debts do not exceed one percent (1%) of Gross
      Sales in any Lease Year (computed on a non-cumulative basis), it being
      agreed that such amounts shall be included in Gross Sales in the Lease
      Year in which collected.

      (3)   Insurance proceeds received in the settlement of claims for loss or
      damage to merchandise.

      (4)   Gift certificates until redeemed (it being agreed that redeemed gift
      certificates shall be included in Gross Sales even if such gift
      certificates were initially purchased elsewhere).

      (5)   Refunds, whether cash or credit, made to customers on sales of
      merchandise from the Leased Premises, but only to the extent of such
      refund.

      (6)   The sales price of trade fixtures, machinery and equipment which
      Tenant has the right to remove from the Leased Premises after use thereof
      in the conduct of Tenant's business in the Leased Premises.

      3.    SECTION 5.01. OWNER'S WORK - "AS-IS".

            Notwithstanding anything to the contrary contained in Section 5.01
or in any other provision of the Lease, it is agreed that Owner has completed
Owner's Work set forth in Exhibit B. Tenant has inspected and approved the same,
and Tenant shall accept the Leased Premises in an "as-is" condition.

                                       1

<PAGE>

      4.    SECTION 5.50. CHANGES AND ADDITIONS - VISIBILITY AND ACCESS.
            SECTION 9.01. CONTROL OF COMMON AREAS BY OWNER-VISIBILITY AND
            ACCESS.

            Owner will use diligent efforts not to materially, adversely impair
the visibility of the Leased Premises from the enclosed mall or to prohibit
access into or egress from the Leased Premises to the enclosed mall.

      5.    SECTION 5.05. CHANGES AND ADDITIONS - KIOSKS.
            SECTION 9.01. CONTROL OF COMMON AREAS BY OWNER - KIOSKS.

            Notwithstanding anything to the contrary contained in the Lease,
Owner shall not construct any permanent kiosks or carts (except as set forth on
Exhibit A or existing as of the Commencement Date of this Lease) in the enclosed
mall within ten (10) feet in front of the Leased Premises.

      6.    SECTION 6.07. HAZARDOUS SUBSTANCES - SUPPLEMENT.

            If it is determined as a result of any investigation or testing that
Hazardous Substances are present within the Leased Premises, such presence
pre-existed the date on which possession of the Leased Premises was given
tenant, and Governmental Regulations require the remediation, removal or
abatement thereof, Owner will, at its sole cost, remediate, remove and abate
such Hazardous Substances in accordance with all applicable Governmental
Regulations, except in each case to the extent such Hazardous Substances are
present, or are required to be removed, as a result of the act of Tenant, its
subtenants or assignees or their respective agents, employees or contractors, in
which case Tenant, at its sole expense, shall remediate, remove and abate such
Hazardous Substances in accordance with all applicable Governmental Regulations.

      7.    SECTION 9.03. TENANT'S SHARE OF EXPENSES - SUPPLEMENT.

            (A) Notwithstanding anything to the contrary contained in Section
9.03 of the Lease, the following items shall be excluded from Net CAM Costs:

      (1)   Any items for which Owner is reimbursed by insurance or otherwise
      compensated, including direct reimbursement by any other tenant in the
      Shopping Center.

      (2)   To the extent covered by construction warranties and/or insurance
      maintained by Owner, the cost of correcting construction defects in the
      initial design or construction of the Shopping Center.

      (3)   Any legal, brokerage or other fees or expenses incurred in
      connection with the negotiation, execution or enforcement of any lease for
      space in the Shopping Center.

      (4)   The cost of providing improvements within the leased premises of any
      tenants in the Shopping Center.

            (B) Owner agrees that charges payable by Tenant under the provisions
of this Section 9.03, shall not be a duplication of charges payable by Tenant
elsewhere under this Lease.

      8.    SECTION 14.03. OWNER'S LIABILITY FOR INTERRUPTION - ABATEMENT.

            Notwithstanding anything to the contrary contained in section 14.03
of the Lease, if (i) the interruption of any such services or utilities is due
to the negligent act or omission of Owner, its agents or employees, (ii) such
interruption is for a period in excess of forty-eight (48) hours after notice
thereof

                                       2

<PAGE>

from Tenant and (iii) such interruption forces Tenant to close the Leased
Premises for business, then, as Tenant's sole and exclusive remedy on account
thereof, the Minimum Rent (but not the Percentage Rent or other charges payable
hereunder) shall be abated commencing forty-eight (48) hours after such notice
from Tenant and continuing until the earlier of (i) the date Tenant reopens the
Leased Premises for business, or (ii) such interrupted services or utilities are
again being furnished to the Leased Premises.

      9.    SECTION 15.01. ESTOPPEL CERTIFICATE - SUPPLEMENT.

            Upon not leas than thirty (30) days prior written request by Tenant
and not more than three (3) times during the term of this Lease, Owner will
deliver to Tenant a statement certifying that (i) this Lease is unmodified and
in full force and effect (or if there has been any modifications thereof that
the Lease is in full force and effect as modified and stating the nature of the
modification or modifications); (ii) that, to the extent of Owner's knowledge,
Tenant is not in default under this Lease (or if such default exists, the
specific nature and extent thereof); and (iii) the date to which Minimum Rent
has been paid in-advance, if any.

      10.   SECTION 15.03. PRIORITY OF LEASE - NON-DISTURBANCE.

            Upon written request by Tenant, Owner will use reasonable efforts to
cause the holder of the existing mortgage on the Shopping Center to execute a
non-disturbance agreement, in form and substance reasonably satisfactory to such
holder recognizing Tenant's rights Under the Lease; provided, however, owner
shall have no liability to Tenant for the failure of such holder to provide such
a non-disturbance agreement. Tenant shall pay the amount charged by such holder,
if any, for such non-disturbance agreement.

      11.   SECTION 16.01. PERMITTED ASSIGNMENT - SUPPLEMENT.

            Notwithstanding anything to the contrary contained in Section 16.01
of the Lease, Tenant shall have the right, without owner's consent, to assign
this Lease or sublet the entire (but not part of the) Leased Premises, to its
parent corporation or to a wholly owned subsidiary or to a corporation which is
wholly owned by the same corporation which wholly owns Tenant; provided,
however, that (i) Tenant shall also remain primarily liable for all obligations
under this Lease, (ii) the assignee or subtenant shall, at least thirty (30)
days prior to the effective date of the assignment or subletting, deliver to
Owner, instruments evidencing such assignment or subletting and its agreement to
assume and be bound by all of the terms, conditions and covenants of the Lease
to be performed by Tenant, (iii) Tenant shall not be in default beyond the
applicable cure period under any of the terms or provisions of this Lease and
(iv) Tenant's right to make such assignment or subletting is expressly
conditioned on, and shall remain in effect only as long as, the assignee or
subtenant maintains its relationship as parent corporation or wholly owned
subsidiary of Tenant or wholly owned subsidiary of Tenant's parent corporation.

      12.   SECTION 16.01(E). ASSIGNMENT - NEGATION OF TERMINATION.

            Notwithstanding anything to the contrary contained in paragraph (e)
of Section 16.01 of the Lease, in the event Owner elects to exercise its right
to terminate the Lease in accordance with the terms of paragraph (e) of Section
16.01 of the Lease, Tenant shall have the right to negate such termination by
giving Owner notice, within fifteen (15) days following the date Tenant receives
notice from Owner of such termination, of Tenant's intent to continue operation
of its business in the Leased premises in accordance with the terms and
provisions of the Lease and not to assign the Lease or sublet all or any portion
of the Leased Premises. If Tenant so elects to negate Owner's notice of
termination, then the Lease shall continue in full force and effect for the term
of the Lease.

                                       3

<PAGE>

      13.   SECTION 16.03. CHANGE IN OWNERSHIP - SUPPLEMENT.

            The owners of the voting stock of Tenant named herein as of the
date of the Lease may, without the prior consent of Owner, transfer the voting
stock of Tenant named herein to (i) any person (s) who is an owner of the
voting stock of Tenant named herein as of the date of the Lease, (ii) the
"immediate family" of any person(s) who is an owner of the voting stock of
Tenant named herein as of the data of the Lease (the term "IMMEDIATE FAMILY"
meaning a spouse, lineal descendants and legal cousins), or(iii) any trust for
the benefit of any person(s) who is an owner of the voting stock of Tenant
named herein as of the date of the Lease and such owners' immediate family.
Nothing contained in Section 16.03 of the Lease shall prohibit any transfer or
sale of any non-voting or voting equity interest of Tenant named herein so long
as such transfer or sale does not result in a change in the effective ownership
and/or management control of Tenant named herein.

      14.   SECTION 22.01. RIGHT OF ENTRY - SUPPLEMENT.
            SECTION 22.02. EXCAVATION - SUPPLEMENT.

            Notwithstanding anything to the contrary, contained in Sections
22.01 or 22.02 of the Lease, if Owner's entry pursuant to Section 22.01 or 22.02
of the Lease (other than an entry pursuant to section 20.04) is so extensive and
disruptive that Tenant is forced to close the Leased Premises for business for
more than forty-eight (48) hours, then, as Tenant's sole and exclusive remedy on
account thereof, the Minimum Rent (but not the Percentage Rent or other charges
payable hereunder) shall be abated commencing forty-eight (48) hours after
Tenant closes the Leased Premises for business and continuing until the earlier
of (i) the date Tenant is able to reopen the Leased Premises for business or
(ii) the date Owner substantially completes such work.

      15.   SECTION 27.08. BROKERAGE - SUPPLEMENT.

            Each party represents and warrants to the other party that it has
had no dealings with any broker or agent in connection with the Lease, and each
party agrees to indemnify and hold the other party harmless from and against any
and all claims, liabilities or expense (including reasonable attorneys' fees)
imposed upon, asserted or incurred by each party as a consequence of any breach
of this representation.

                            Initialed by: MHZ
                                          ------------------------------
                                                    Owner

                                          ___________________________
                                                   Tenant

                                       4

<PAGE>

EXHIBIT "A"                 SITE PLAN

Attached to and forming part of Lease dated May 5 1997, by and between HYCEL
PARTNERS I, L.P., as Owner, and SMART STUFF, Inc. as Tenant.

Space 1440 SAINT LOUIS GAULERIA
Approximate Floor Area: 2,251 square feet.

      NOTES:

      (1)   This Site Plan is preliminary and may be modified at any time
      without Tenant's consent, at the option of Owner, but the size, dimensions
      and location of the Leased Premises may not be modified.

      (2)   Owner may locate additional curb cuts anywhere in the parking areas
      and in the interior access roads to afford access thereto from adjoining
      properties.

      (3)   No representation to made by Owner with respect to any information
      shown on this plan.

<PAGE>

                                   EXHIBIT A
                                  SHEET 2 OF 3

                                     [PLAN]

<PAGE>

                                   EXHIBIT A
                                  SHEET 3 Of 3

                                     [PLAN]
<PAGE>

EXHIBIT "B" IMPROVEMENT OF LEASED PREMISES

ARTICLE B-1 CONSTRUCTION REQUIREMENTS

Section 1. Structure of Building

      (a)   Owner has constructed or will construct the structural frame,
exterior walls (other than the storefront), a concrete slab floor, and the roof
(over insulation) of the building of which the Leased Premises are a part.
Owner's work excludes any exterior wall or storefront construction, except for
vertical neutral strips approximately thirty-six inches in width, centered upon
the demising walls of the Leased Premises.

      (b)   Columns located at or within the demising proportions of the Leased
Premises shall be fireproofed by Tenant, if required by code, and the finished
floor, any necessary filler and the ceiling are to be provided by Tenant, all
at its cost.

Section 2. Interior Finish

      (a)   Owner will provide metal studs for Tenant's Interior demising walls
defining the Leased Premises, which walls shall be constructed by Tenant of 5/8"
fire-rated dry wall or as required by code.

      (b)   Suspended Ceiling System shall be installed by Tenant at its cost
end shall consist of non-combustible rated assembly covering the entire area
exposed in the Leased Premises. Space above the suspended ceiling will be of
sufficient height to permit installation of all ducts, electric, plumbing and
sprinkler lines to be concealed.

      (c)   Tenant shall provide door and door frame construction meeting the
requirements of the applicable building codes for access to any adjacent service
corridor from the Leased Premises. Any curtain walls, interior division walls,
or any walls where a change occurs in ceiling heights, shall be provided by
Tenant and shall consist of studs with plaster or dry wall.

Section 3. Utilities

      (a)   Electrical Work

      Owner shall install electrical conduit and wiring to a meter location
outside the Leased Premises. Tenant, at its expense, shall provide an electrical
breaker, electrical conduit and wiring from such meter location to the Leased
Premises in a location approved by Owner, shall procure the installation of its
electric meter and shall cause the electrical service to be connected to such
meter. The electrical service shall be 120/208 volts, three-phase, four wire for
Tenant's combined power and lighting requirement. The size of the aforesaid
conduit installed by Tenant shall be a minimum of two (2) inches in diameter.
Tenant shall also install a disconnect switch for the electrical service in the
Leased Premises and shall provide a junction box or panel within the Leased
Premises at a location selected by Owner.

      (b)   Telephone Service

      Owner shall provide a telephone terminal location outside the Leased
Premises. Tenant shall provide conduit through which it may cause telephone
wires to be run to the Leased Promises in a location approved by Owner. The
procuring of telephone service to the Leased Premises shall be at Tenant's cost
and expense, except as otherwise provided hereinabove.

      (c)   Gas Service

      Owner will provide gas service to a meter location outside the Leased
Premises. If Owner approves the use of gas service by Tenant, Tenant shall
provide gas piping from such meter location to the Leased Premises at a location
approved by Owner, shall procure the installation of Tenant's gas meter, and
shall cause the gas service as aforesaid to be connected to such meter.

                                                                               1
<PAGE>

      (d)   Plumbing end Sprinkler

      Owner will provide roof drains and downspouts. If the governing building
codes and/or Tenant's use of the Leased Premises shall require potable cold
water service to the Leased Premises, Owner shall furnish and install water
service to the Leased Premises in a location selected by Owner. Tenant shall
procure the Installation of Tenant's water submeter (if required by Owner), and
shall cause the water service provided by Owner as aforesaid to be connected to
such meter.

      Owner will provide a sprinkler main to or adjacent to the Leased Premises.
Tenant shall at its cost tap into that main and Install sprinkler service in the
Leased Premises.

      Owner will provide a four Inch (4") sanitary sewer line beneath the floor
slab of the Leased Premises to which Tenant may connect its plumbing facilities.

      (a)   Payment of Utilities

      The provisions of this Section have reference only to providing facilities
for the utilities referred to herein and do not refer in any respect to the
payment for any utilities as such. Owner does not warrant the availability of
any utility services to the Leased Premises.

SECTION 4. Tenant's Work

      All work required to complete end place the Leased Premises in finished
condition for opening for business (except that work to be specifically done by
Owner pursuant to this Article B-I) shall be furnished by Tenant and at Tenant's
expense, in accordance with plans and specifications approved by Owner and with
the provisions of Article B-II.

ARTICLE B-II PLANS

SECTION 1. Preliminary Plans

      Within forty-five (45) days after the date of execution of this Lease,
Tenant, at its sole cost and expense, shall cause to be prepared and delivered
to Owner for Owner's approval one (1) set of Mylar transparencies and three (3)
sets of prints of preliminary drawings and specifications ("Preliminary Plans")
for the construction and improvement of the Leased Premises as required of
Tenant under this Lease (said construction and improvement are herein referred
to as "Tenant's Work"). Tenant covenants and agrees that such Preliminary Plans
shall be prepared in strict accordance with (1) the design criteria,
construction requirements and specifications set forth In the Tenant Design
Guide, and (ii) the provisions of subparagraph (a) of Sections 2 of Article B-II
hereinafter (the design criteria, construction requirements and specifications
referred to in subdivision (i) and the provisions of subparagraph (a) of Section
2 referred to in subdivision (ii) being hereinafter collectively referred to as
"Tenant's Construction Requirements"). Owner covenants and agrees that Owner
shall not unreasonably withhold approval of the Preliminary Plans if the same
shall have been prepared in strict accordance with Tenant's Construction
Requirements. Owner shall notify Tenant of the matters, if any, in which the
Preliminary Plans fail to conform to Tenant's Construction Requirements. Tenant
shall, within twenty (20) days upon receipt of any such notice from Owner, cause
the Preliminary Plans to be revised in such manner as is requisite to obtaining
Owner's approval and shall resubmit one (1) set of mylar transparencies and
three (3) sets of prints of revised Preliminary Plans for Owner's approval. When
Owner shall determine that the Preliminary Plans, as the case may be, conform to
Tenant's Construction Requirements, Owner shall cause one (1) set thereof to be
initialed on behalf of Owner, thereby evidencing the approval thereof by Owner,
and shall return such set so initialed to Tenant

SECTION 2. Working Plans

      (a)   The term "Working Plans" as used hereafter In Article B-II of this
Exhibit "B" means the complete development and delineation by licensed Missouri
Registered Architects end engineers of drawings, specifications, bid
instructions, bid forms, general conditions, and other documents and details as
requited to secure competitive lump sum bids from qualified contractors for the
construction of Tenant's Work, and shall completely describe the architectural,
structural, mechanical and electrical components of Tenant's Work. The Working
Plans submitted by Tenant for Owner's approval shall:

                                                                               2
<PAGE>

            1.    Include detailed drawings and specifications of all
            mechanical, HVAC, sprinkler, plumbing and electrical installations
            which shall be installed by Tenant.

            2.    Show in complete detail all parts which will affect the
            appearance of the building and its structural, mechanical and
            electrical components, including any special heavy equipment and its
            location and any openings in floors and walls.

            3.    Comply with all applicable laws, codes and regulations.

            4.    Comply with the applicable standards of the National Board of
            Fire Underwriters, the National Electrical Code, the American Gas
            Association, and the American Society of Heating and Air
            Conditioning Engineers.

            5.    Include suitable instructions and provisions so as to comply
            with all of the requirements of this Exhibit "B".

            6.    Use materials that are in harmony with the high quality of
            design established in the Common Area.

      (b)   Within thirty (30) days after approval of the Preliminary Plans,
Tenant, at Tenant's sole cost and expense, shall cause to be prepared and
delivered to Owner one (1) set of mylar transparencies and three (3) sets of
prints of Working Plans prepared in conformity with the approved. Preliminary
Plans and in strict accordance with Tenant's Construction Requirements. Owner
shall within ten (10) business days after receipt of the Working Plans  notify
Tenant of the matters, if any, in which said Working Plans fall to conform with
the approved Preliminary Plans and Tenant's Construction Requirements. Tenant
shall, within twenty (20) days upon receipt of any such notice from Owner, cause
said Working Plans to be revised in such manner as is requisite to obtaining
Owner's approval and shall resubmit one (1) set of mylar transparencies and
three (3) sets of prints of revised Working Plans for Owner's approval. When
Owner shall determine that the Working Plans or revised Working Plans, as the
case may be, conform to the approved Preliminary Plans and Tenant's Construction
Requirements, Owner shall cause one (1) counterpart thereof to be initialed on
behalf of Owner, thereby evidencing the approval thereof by Owner, and shall
return such counterpart so initiated to Tenant.

SECTION 3. CHANGES IN WORKING PLANS

      From and after Owner's approval of the Working Plans, no change in the
approved Working Plans shall be made except as set forth hereinafter in this
Section 3:

      (a)   With respect to any changes in the approved Working Plans initiated
by Tenant, the following provisions shall apply:

            (1)   No such change in the approved Working Plans shall be made
            unless Owner expressly consents thereto in writing (which consent
            shall not be unreasonably withheld);

            (2)   All architectural services with respect to any such change
            shall be rendered by the architect who prepared the Working Plans
            (herein called "Tenant's Architect") at the sole cost of Tenant; and

            (3)   All construction work with respect to each such change shall
            be performed by Tenant at the sole cost of Tenant.

      (b)   With respect to any changes in the approved Working Plans initiated
by Owner, the following provisions shall apply:

            (1)   No such change in the approved Working Plans shall be made
            unless Tenant expressly consents thereto in writing (which consent
            shall not be unreasonably withheld);

            (2)   All architectural services with respect to any such change
            shall be rendered by Tenant's Architect at the sole cost of Owner;
            and

            (3)   All construction work with respect to each such change shall
            be performed by Tenant at the sole cost of Owner.

                                                                               3
<PAGE>

SECTION 4. Construction By Tenant

      Tenant shall cause the commencement of construction of Tenant's Work
within thirty (30) days after the last to occur of the following, to wit:

      (a)   Owner's approval of the Working Plans as provided in Section 2 of
this Article B-II; or

      (b)   Owner's notice to Tenant that the building will, within thirty (30)
days after said notice, be completed to the extent reasonably required for the
commencement of Tenant's Work (in case of any disagreement between Owner and
Tenant as to the date on which the building shall have been completed in
substantial conformity with Exhibit "B", the architects in charge of the
construction shall fix such date by a certificate in writing, under oath, which
shall be binding upon the parties hereto); and Tenant shall cause the completion
of Tenant's Work within sixty (60) days thereafter In accordance with the
following requirements:

            (1)   Tenants' Work shall be constructed strictly in accordance with
            the approved Working Plans;

            (2)   Tenant shall comply and shall cause the contractor and each
            subcontractor concerned with the construction of Tenant's Work to
            comply with Tenant's Construction Requirements and specifications as
            set forth in this Exhibit "B";

            (3)   Tenant shall supply at its cost all heat, air conditioning,
            electricity, water, telephone and other utility service required by
            it during construction; and

            (4)   During the construction and completion of Tenant's Work,
            Tenant and Tenant's Agents shall keep the Leased Premises and the
            Common Areas reasonably clean and free of debris.

SECTION 5. Miscellaneous

      The approval by Owner of the Preliminary Plans and/or Working Plans shall
not constitute the assumption of any liability on the part of Owner for their
compliance with applicable building codes and the requirements of this Lease or
for their accuracy, and Tenant shall be solely responsible for such Plans and
specifications. Owner will provide one (1) copy of the Tenant Design Guide to
tenant at no charge. If Tenant requires additional copies of the Tenant Design
Guide, Tenant shall pay to Owner, as Additional Rent, within ten (10) days after
receipt of an invoice therefor, the sum of Fifty Dollars ($50.00) for each
additional copy of the Tenant Design Guide.

<PAGE>

EXHIBIT"C" RULES AND REGULATIONS

Tenant agrees as follows:

      (1)  All loading and unloading of goods shall be done only at such times,
in the areas, and through the entrances designated for such purposes by Owner.
Tenant shall cause any truck-making deliveries to or for it to be expeditiously
loaded or unloaded and the merchandise and freight promptly removed from the
loading docks and other loading areas. Tenant shall attempt to cause no delivery
trucks or other vehicles servicing the Leased Premises to park or stand at or on
any curb, roadway, and ramp or drive in the Shopping Center. Owner reserves the
right to further regulate the activities of Tenant in regard to deliveries and
servicing of the Leased Premises, and Tenant agrees to abide by such further
non-discriminatory regulations of Owner.

      (2)   The delivery or shipping of merchandise, supplies and fixtures to
and from the Leased Premises shall be subject to such rules and regulations as
in the judgment of Owner are necessary for the proper operation of the Leased
Premises or Shopping Center.

      (3)   All garbage and refuse shall be kept in the kind of container
specified by Owner and shall be placed either within the Leased Premises
prepared for collection or if any common compactor or dumpster provided by Owner
in the manner and at reasonable times and places specified by Owner. Tenant
shall not permit any rubbish or refuse of any nature emanating from the Leased
Premises to accumulate in or on the Common Areas, including but not limited to
rear delivery areas, loading platforms, service corridors, truck docks and/or
maneuvering space therefor. If Owner shall provide or designate a service for
picking up refuse and garbage, Tenant shall use same at Tenant's cost and may
either be backcharged by Owner as Additional Rent for same or have such costs
included under Section 9.03(a). Otherwise, Tenant shall designate a responsible
refuse service to collect all garbage and refuse in, on and from the Leased
Premises. Tenant shall pay all costs associated with the removal of any of
Tenant's refuse or rubbish.

      (4)   No radio or television or other similar device shall be installed
without first obtaining in each instance Owner's consent in writing. No antenna
or satellite dish shall be erected on the roof or exterior walls of the Leased
Premises, or on the grounds, without in each instance, the written consent of
Owner. Any antenna or satellite dish so installed without such written
consent shall be subject to removal without notice at any time.

      (5)   No loud speakers, televisions, phonographs, radios, musical
instruments or other devices shall be used in a manner so as to be heard or seen
outside of the Leased Premises without the prior written consent of Owner,

      (6)   Heating, ventilating and air conditioning shall be thermostatically
controlled in the Leased Premises, and Tenant agrees to operate same so that the
temperature within the Leased Premises will be reasonably identical to that
within the enclosed mall and connecting corridors and will comply with all laws
and governmental rules, orders and regulations. Tenant shall keep the Leased
Premises at a temperature sufficiently high to prevent freezing of water in
pipes and fixtures.

      (7)   Any outside areas which constitute a part of the Leased Premises
shall be kept clean and free from snow, Ice, dirt and rubbish by Tenant to the
satisfaction of Owner, and Tenant shall not place or permit any obstructions or
merchandise in such areas and in the outside areas adjoining the Leased
Premises.

      (8)   Tenant and Tenant's Agents shall park their cars only in those
portions of the parking area designated for that purpose by Owner. Tenant shall
furnish Owner with state automobile license numbers assigned to Tenant's car or
cars, and cars of Tenant's employees, within five (5) days after taking
possession of the Leased Premises and shall thereafter notify Owner of any
changes within five (5) days after such changes occur. In the event that Tenant
or Tenant's Agent fail to park their cars in designated parking areas as
aforesaid, then Owner at its option shall charge Tenant Twenty-Five Dollars
($25.00) per day per car parked in any area other than those designated as and
for liquidated damages. Tenant hereby authorizes Owner to remove from the
Shopping Center any of Tenant's cars or cars belonging to Tenant's employees
and/or to attach violation stickers or notices to such cars, and Tenant hereby
waives and releases Owner and hereby indemnifies Owner against all claims,
liabilities, costs and expanses which may result therefrom.

      (9)   Tenant shall use at Tenant's cost such peat extermination contractor
as Owner may direct and at such intervals as Owner may require. If Tenant fails
to use such contractor, Owner may at its option have such work performed, and
the cost thereof shall become due and payable as Additional Rent by Tenant
hereunder upon demand.

<PAGE>

      (10)  All mechanical equipment and machinery shall be kept free of noises
and vibrations which may be transmitted to any part of the walls or buildings in
which the leased premises are located or beyond the confines of the Leased
Premises.

      (11)  No orders or vapors shall be permitted to emanate from the Leased
Premises.

      (12)  No live animals shall be kept on or about the Leased Premises.

<PAGE>

EXHIBIT "C-1" FORM OF LETTER OF CREDIT

                                (BANK LETTERHEAD)
(INSERT DATE)

IRREVOCABLE LETTER OF CREDIT NO. (INSERT NUMBER)

Hycel Partners I, L.P.
d/b/a Saint Louis Galleria
164 Crestwood Plaza
Suite 200
St Louis, MO 63126

Dear Sir;

At the request and for the account of (INSERT NAME OF TENANT) located at (INSERT
ADDRESS OF TENANT) (hereafter called "Applicant"), we hereby establish our
Irrevocable letter of Credit No. (INSERT NUMBER) in your favor and authorize you
to draw on us up to the aggregate amount of US$ (INSERT AMOUNT OF LETTER OF
CREDIT) available by your drafts at sight drawn on us and accompanied by the
following:

A written statement by you that:

      (I)   "Applicant is in default under that certain Lease doled (INSERT DATE
      OF LEASE) between you, as Owner, and Applicant, as Tenant (the 'Lease');"
      or

      (II)  "Applicant has failed to deliver timely a renewal Letter of Credit
      as provided in the Lease."

This Irrevocable Letter of Credit will be duly honored by us at sight upon
delivery of the statement set forth above without inquiry as to the accuracy of
such statement and regardless of whether Applicant disputes the contents of such
statement.

We hereby engage with you that all drafts drawn under and in compliance with the
terms of this Irrevocable Letter of Credit will be duly honored by us if
presented at (INSERT ADDRESS OF ISSUING BANK) no later than (INSERT EXPIRATION
DATE OF LETTER OF CREDIT), it being a condition of this Irrevocable Letter of
Credit that it shall be automatically extended for periods of at least one year
from the present and each future expiration date unless, at least sixty (60)
days prior to the relevant expiration date, we notify you, by certified mail,
return receipt requested, that we elect not to extend this Irrevocable Letter of
Credit for any additional period.

This Irrevocable Letter of Credit is transferable at no charge to any
transferree of Owner upon notice to the undersigned from you and such
transferree.

This Irrevocable Letter of Credit is subject to the Uniform Customs and
Practices for Documentary Credits (1993-Rev) International Chamber of Commerce
Pupation #500.

Sincerely yours,

(INSERT AUTHORIZED SIGNATURE)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>32
<FILENAME>c86750exv10w30.txt
<DESCRIPTION>AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.30

                                                        HYCEL PROPERTIES CO.
                                                        101 South Hanley Road
                                                        Suite 1300
                                                        St. Louis, MO 63105-3494
                                                        Telephone 314 721-4800
                                                        Facsimile 314 721-3663


October 16, 2002

[HYCEL PROPERTIES LOGO]

Ms. Maxine Clark
President and CEB
Build-A-Bear Workshop, Inc.
1954 Innerbelt Business Center Dr.
St. Louis, MO 63114

Dear Maxine:

This letter, when countersigned by you, will confirm that Build-A-Bear Workshop,
Inc., a Delaware Corporation (the "Company"), has engaged Hycel Properties Co.,
a Missouri corporation ("Hycel"), as an independent contractor to serve as the
Company's exclusive real estate consultant.

1.    Hycel's Real Estate Services

      Hycel's services pursuant to this Agreement shall be to act as real estate
consultants for the purpose of locating store spaces for the Company in markets
identified by the Company as markets in which it wishes to conduct business.
Hycel will perform the terms of this Agreement, will exercise reasonable skill
and care for the Company and will promote the interests of the Company with the
utmost good faith, loyalty and fidelity. No offer of subagency will be made
without the Company's prior written approval. Hycel may also recommend markets.
Hycel will use reasonable efforts to find retail locations in those markets and
to this end will provide the following services:

      (a)   Identify and locate suitable locations for occupancy, such as malls,
            specialty centers and other specific locations to meet the Company's
            needs; and

      (b)   Obtain proposals for desired locations and negotiate all business
            terms with the property owner's representative, subject to the
            Company's approval.

<PAGE>

Ms. Maxine Clark
Build-A-Bear Workshop, Inc.
October 16, 2002
Page 2

2.    Company to Furnish Information

      The Company agrees to furnish to Hycel such information with respect to
the Company as Hycel may reasonably request in connection with the services to
be rendered by Hycel hereunder. The Company represents that all information
furnished to Hycel will be accurate and complete in all material respects to the
best of the Company's knowledge and belief, after reasonable investigation.

3.    Exclusivity

      During the term of this agreement, Hycel shall be the exclusive United
States agent for the Company in performing the types of services that Hycel is
to perform as set forth in paragraph 1 above.

      During the term of this Agreement, Hycel shall not represent as agent,
finder, or broker any other person whose business, in whole or in part, is the
sale of, at retail, stuffed animals or whose major business is the sale of toys,
by doing any of the activities for such other company that Hycel is doing for
Company as set forth in paragraph 1 above.

4.    Fees and Reimbursements of Expenses

      (a)   As compensation for Hycel's services under paragraph 1, the Company
shall pay or cause to be paid to Hycel fees as follows:

            (i)   Commencing on November 1, 2002, through and including December
                  31, 2005, a monthly fee due on the first of each month in the
                  amount of Four Thousand Dollars ($4,000.00).

            (ii)  For each lease executed by the Company, for a property in the
                  United States, a fee of Seven Thousand Five Hundred Dollars
                  ($7,500,00), payable within ten (10) days after execution.

            (iii) For each lease executed by the Company, for a property in
                  Canada, a fee of One Thousand Dollars ($1,000.00), payable
                  within Ten (10) days after execution.

<PAGE>

Ms. Maxine Clark
Build-A-Bear Workshop, Inc.
October 16, 2002
Page 3

      (b)   In addition, the Company shall pay all out-of-pocket expenses of
Hycel however, travel and other travel related expenses shall be reimbursed at
their cost plus ten percent (10%), whether or not a proposal to lease a certain
location is accepted. Any out-of-town travel and any other single out-of-pocket
expense item in excess of $750.00 shall be pre-approved by the Company. On a
monthly basis, the expenses under this paragraph 4(b) will be reimbursed by the
Company.

5.    Term

      The term of this Agreement shall commence on November 1, 2002 and shall
terminate on December 31, 2005. If a lease is subsequently accepted by the
Company that was negotiated by Hycel prior to the termination of this Agreement,
the fees and expenses referred to above will be due and payable upon the
execution of the lease. Any of the Company's obligations that have accrued prior
to the termination of this Agreement shall survive the termination of this
Agreement.

6.    Assignment

      This Agreement shall not be assigned by either the Company or Hycel
without the prior written consent of the other party, such consent not to be
unreasonably withheld; provided, however, if requested by Hycel, the Company
will consent to the assignment of this Agreement to another entity so long as
Hycel or Mark H. Zorensky owns at least fifty percent (50%) interest in such
entity.

7.    Proprietary Information

      The parties acknowledge that, during the course of Hycel's dealings on
behalf of Company as well as for the third parties, Hycel has developed or
become acquainted with, and in the future may develop or become acquainted with,
data, concepts, studies, demographics, and other information pertaining to
retail properties, tenants, rentals, sales, markets, businesses, and associated
industries (the "Property"). Hycel will use the Property in fulfilling its
obligations under this Agreement. Company agrees that the Property shall,
however, remain the exclusive property of Hycel, and Hycel shall have all
economic benefits resulting therefrom, including all rights to use the Property
in providing real estate consulting or other services for its own account, to
affiliates, or to third parties. Company further agrees to maintain in strict
confidence any of the Property disclosed to Company, and agrees to restrict
access to the Property to the employees and agents of Company on a
"need-to-know" basis, to require its employees and agents to maintain strict
confidentiality with respect to the Property, and to refrain from disclosing,
divulging or communicating the Property, directly or indirectly, to others
(unless compelled by court order or governmental authority).

<PAGE>

Ms. Maxine Clark
Build-A-Bear Workshop, Inc.
October 16, 2002
Page 4

8.    Claims

      Hycel and the Company will indemnify, defend and save harmless the other
from and against all "Claims" as that term is defined. Both parties agree to
defend at their cost any Claims against them with respect to the foregoing or in
which they may be impleaded. Each party shall pay, satisfy and/or discharge any
judgements, orders and decrees that may be rendered against themselves in
connection with the foregoing. As used herein, "Claims" shall mean all claims,
suits, proceedings, actions, demands, causes of action, responsibility,
liability, judgments, executions, damages, loss and expense (including
attorney's fees).

If this letter correctly sets forth the Company's understanding, please sign and
return one (1) copy of this letter. Upon receipt by Hycel this letter shall be
deemed a binding agreement in accordance with the laws of the State of Missouri.
The parties agree to submit to the jurisdiction of the courts in the State of
Missouri.

Sincerely,

HYCEL PROPERTIES CO.

/s/ Mark H. Zorensky

Mark H. Zorensky
President

MHZ/jap

ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN BUILD-A-BEAR WORKSHOP,
INC.

BY: /s/ Maxine Clark
    -----------------------
    Name: Maxine Clark
    Title: CEB

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>33
<FILENAME>c86750exv10w31.txt
<DESCRIPTION>CONSTRUCTION MANAGEMENT AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.31

                                                        HYCEL PROPERTIES CO.
                                                        HYCEL RETAIL CROUP
                                                        7817 Forsyth Blvd.
                                                        St. Louis, MO 63105-3307
                                                        Telephone 314 721-4800
                                                        Facsimile 314 721-3663

                       CONSTRUCTION MANAGEMENT AGREEMENT

THIS AGREEMENT is made and entered into this 16th day of November 2003, by and
between Hycel Properties Co., a Missouri corporation ("Hycel"), and Build-A-Bear
Workshop, Inc., a Missouri Corporation (the "Company").

                                    RECITALS

WHEREAS, Hycel and the Company have entered into an agreement for Hycel to
provide real estate consulting services to the Company; and

WHEREAS, Hycel has offered to provide construction management services to the
Company for the construction of the Company's Build-A-Bear Workshop stores; and

WHEREAS, the Company desires to have Hycel provide construction management
services to the Company,

NOW THEREFORE, in consideration of the mutual covenants hereinafter exchanged,
it is agreed as follows:

      1.    Construction Management Services

            Hycel will provide the following services in connection with the
            construction of the Company's new stores:

            (a)   Design/Plan Review

                  Hycel will work closely with the Company's architect and
                  engineers to assist in the development of a detailed set of
                  architectural and engineering drawings and specifications.
                  Upon receipt of the architectural and engineering drawings
                  from the Company's architect, as-builts from the previous
                  tenant build-out, landlord's tenant design criteria and the
                  lease sections relating to construction, Hycel's personnel
                  will review the drawings before submittal to the landlord and
                  for building permit.

            (b)   Bidding & Permits

                  Hycel will prepare bid forms and invitation to bid letters to
                  accompany the architectural and engineering drawings to be
                  distributed to selected general contractors the Company has
                  approved to handle the general construction of the space as
                  well as for all millwork, theming, signage, graphics and other
                  special equipment. Applications for building permits will be
                  made as well as the

<PAGE>

                  submittal for landlord approval. Bids will be evaluated and a
                  recommendation will be provided to the Company. A contract
                  will be prepared for the general contractor with the Company's
                  approval.

            (c)   Construction Supervision

                  Hycel's personnel will monitor the day-to-day activities of
                  the general contractor and coordinate scheduling and material
                  and equipment deliveries. Discrepancies, field conditions and
                  requests for additional information will be handled and
                  resolved. Periodic visits to the project will be made from
                  pre-construction through the construction phase of the project
                  to monitor progress and quality.

            (d)   Punchlist/Close-Out

                  A final visit to the project will be made upon substantial
                  completion of construction. A punchlist will be prepared
                  noting all items not completed or requiring rework to make the
                  store ready for occupancy and operation.

            (e)   Pay Request Review

                  All requests for payment, including change orders, will be
                  reviewed and evaluated. Lien waivers will be obtained,
                  reviewed and compared to the pay requests. All required
                  documentation from the general contractor and equipment,
                  fixture and other suppliers, including the completion of
                  punchlist items, will be obtained. Hycel will advise the
                  Company that the contractor may be paid.

      2.    Fees and Reimbursement of Expenses

            (a)   As compensation for Hycel's services under this Agreement, the
                  Company shall pay, or cause to be paid, to Hycel a fee (the
                  "Construction Management Fee") of:

                        Two Hundred Fifty-Two Thousand Dollars ($252,000). This
                        fee is for up to 15 stores and a store in Manhattan, New
                        York, which shall count as three (3) stores for a total
                        of eighteen (18) new stores. The parties agree that the
                        exact location of any store cannot be determined. Should
                        the company desire to utilize Hycel for additional
                        stores (more than 18 stores, or 15 stores and a store in
                        Manhattan, New York which shall count as 3 stores), the
                        Construction Management Fee will be Fourteen Thousand
                        Dollars ($14,000) per store and shall be paid 50% at the
                        start of construction and 50% upon the store opening
                        business.

<PAGE>

                        The Construction Management Fee outlined above shall be
                        paid as follows: Twelve (12) monthly payments of Twenty
                        One-Thousand and 00/100 Dollars ($21,000.00) on the
                        first of each month commencing January 2004 through
                        December 2004. Any additional stores shall be paid as
                        outlined above.

            (b)   The fee paid under paragraph 2(a) above does not include
                  changes to existing stores or trouble shooting. If the Company
                  requests additional store design or construction services not
                  covered in the scope of this Agreement, such services will be
                  billed to the Company monthly at the rate One Hundred
                  Twenty-Five Dollars ($ 125.00) per hour if such services are
                  performed by a senior construction staff member, at the rate
                  of Seventy-Nine Dollars ($79.00) per hour for a construction
                  crew staff member and at the rate of Fifty-Six Dollars
                  ($56.00) per hour if such services are performed by support
                  staff to the construction staff member.

            (c)   The fee paid under paragraph 2(a) and 2(b) above does not
                  cover expenses. In addition, the Company shall pay all
                  out-of-pocket expenses of Hycel, however, travel and other
                  travel related expenses shall be reimbursed at their cost plus
                  overhead at ten percent (10%). Any single out-of-pocket
                  expense item in excess of $750.00 shall be pre-approved by the
                  Company. On a monthly basis, the Company will reimburse the
                  expenses within ten (10) days after receipt of an invoice.

      3.    Term

            The term of this agreement shall commence on January 1, 2004 and
            shall terminate on December 31, 2004. If Hycel's personnel have
            provided construction management or other services prior to the
            termination of this Agreement, the fees and expenses referred to
            above will be due and payable upon the completion of construction,
            as the case may be. Any of the Company's obligations that have
            accrued prior to the termination of this Agreement shall survive the
            termination of this Agreement.

      4.    Assignment

            This Agreement shall not be assigned by either the Company or Hycel
            without the prior written consent of the other party, such consent
            not to be unreasonably withheld; provided, however, if requested by
            Hycel, the Company will consent to the assignment of this Agreement
            to another entity so long as Hycel or Mark H. Zorensky owns at least
            fifty percent (50%) interest in such entity.

<PAGE>

      5.    Disclaimer

            The Company understands that Hycel does not purport to offer
            architectural and engineering services or installation and
            construction services (collectively "Construction Services"). The
            Company shall contract for Construction Services and the Company
            shall, at its cost, defend any claims against Hycel with respect to
            said Construction Services. The Company shall pay, satisfy and/or
            discharge any judgments, orders and decrees, which may be rendered
            against Hycel in connection with the foregoing.

      6.    Claims

            Hycel and the Company will indemnify, defend and save harmless the
            other from and against all "Claims", as that term is defined, based
            upon the indemnifying party's negligence or intentional misconduct.
            As used herein, "Claims" shall mean all claims, suits, proceedings,
            actions, demands, causes of action, responsibility, liability,
            judgments, executions, damages, loss and expense (including
            attorney's fees.)

      7.    Notices

            All notices called for hereunder shall be deemed delivered one day
            after having been posted in the United States mail, postage prepaid,
            at the address shown on the signature page of this Agreement, which
            address may be changed by either party by giving notice as called
            for herein-

IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first written above.

HYCEL PROPERTIES CO.                          BUILD-A-BEAR WORKSHOP, INC.

By: /s/ Mark H. Zorensky                      By: /s/ Brian Vent
    ------------------------                      ------------------------
        Mark H. Zorensky                          Name: BRIAN VENT
        President                                 Title: C.O.B.

7817 Forsyth Blvd.                            1954 Innerbelt Business Center Dr.
St. Louis, MO 63105                           St. Louis, MO 63114
<PAGE>

                        CONSTRUCTION MANAGEMENT AGREEMENT

THIS AGREEMENT is made and entered into this 9th day of October 2001, by and
between Hycel Properties Co., a Missouri corporation ("Hycel"), and Build-A-Bear
Workshop, Inc., a Missouri Corporation (the "Company").

                                    RECITALS

WHEREAS, Hycel and the Company have entered into an agreement for Hycel to
provide real estate consulting services to the Company; and

WHEREAS, Hycel has offered to provide construction management services to the
Company for the construction of the Company's Build-A-Bear Workshop stores; and

WHEREAS, the Company desires to have Hycel provide construction management
services to the Company,

NOW THEREFORE, in consideration of the mutual covenants hereinafter exchanged,
it is agreed as follows:

      1.    Construction Management Services

            Hycel will provide the following services in connection with the
            construction of the Company's new stores:

            (a)   Design/Plan Review

                  Hycel will work closely with the Company's architect and
                  engineers to assist in the development of a detailed set of
                  architectural and engineering drawings and specifications.
                  Upon receipt of the architectural and engineering drawings
                  from the Company's architect, as-builts from the previous
                  tenant build-out, landlord's tenant design criteria and the
                  lease sections relating to construction, Hycel's personnel
                  will review the drawings before submittal to the landlord and
                  for building permit.

            (b)   Bidding & Permits

                  Hycel will prepare bid forms and invitation to bid letters to
                  accompany the architectural and engineering drawings to be
                  distributed to selected general contractors the Company has
                  approved to handle the general construction of the space as
                  well as for all millwork, theming, signage, graphics and other
                  special equipment. Applications for building permits will be
                  made as well as the submittal for landlord approval. Bids will
                  be evaluated and a

                  See agreement dated Nov 10, 2003
<PAGE>

                  recommendation will be provided to the Company. A contract
                  will be prepared for the general contractor with the Company's
                  approval.

            (c)   Construction Supervision

                  Hycel's personnel will monitor the day-to-day activities of
                  the general contractor and coordinate scheduling and material
                  and equipment deliveries. Discrepancies, field conditions and
                  requests for additional information will be handled and
                  resolved. Periodic visits to the project will be made from
                  pre-construction through the construction phase of the project
                  to monitor progress and quality.

            (d)   Punchlist/Close-Out

                  A final visit to the project will be made upon substantial
                  completion of construction. A punchlist will be prepared
                  noting all items not completed or requiring rework to make the
                  store ready for occupancy and operation.

            (e)   Pay Request Review

                  All requests for payment, including change orders, will be
                  reviewed and evaluated. Lien waivers will be obtained,
                  reviewed and compared to the pay requests. All required
                  documentation from the general contractor and equipment,
                  fixture and other suppliers, including the completion of
                  punchlist items, will be obtained. Hycel will advise the
                  Company that the contractor may be paid.

      2.    Fees and Reimbursement of Expenses

            (a)   As compensation for Hycel's services under this Agreement, the
                  Company shall pay, or cause to be paid, to Hycel a fee (the
                  "Construction Management Fee") of:

                        Three Hundred Eighty-Two Thousand Two Hundred Dollars
                        ($382,200.00). This fee constitutes payment for up to
                        thirty (30) new stores. The parties agree that the exact
                        location of any store cannot be determined. Should the
                        Company desire to utilize Hycel for additional stores
                        (more than 30 stores), the Construction Management Fee
                        will be Twelve Thousand One Hundred Thirty Three Dollars
                        ($12,133.00) per store and shall be paid 50% at the
                        start of construction and 50% upon the store opening for
                        business.

                        The Construction Management Fee outlined above shall be
                        paid as follows: Twelve (12) monthly payments of Thirty
                        One-Thousand Eight Hundred Fifty Dollars and 00/100
                        ($31,850.00) on the first of

<PAGE>

                        each month commencing January 2002 through December
                        2002. Any additional stores shall be paid as outlined
                        above.

            (b)   The fee paid under paragraph 2(a) above does not include
                  changes to existing stores or trouble shooting. If the Company
                  requests additional store design or construction services not
                  covered in the scope of this Agreement, such services will be
                  billed to the Company monthly at the rate One Hundred Four
                  Dollars ($104.00) per hour if such services are performed by a
                  senior construction staff member, at the rate of Seventy-One
                  Dollars ($71.00) per hour for a construction crew staff member
                  and at the rate of Fifty Dollars ($50.00) per hour if such
                  services are performed by support staff to the construction
                  staff member.

            (c)   The fee paid under paragraph 2(a) and 2(b) above does not
                  cover expenses. In addition, the Company shall pay all
                  out-of-pocket expenses of Hycel (including travel and other
                  travel related expenses) at their cost plus overhead at ten
                  percent (10%). Any single out-of-pocket expense item in excess
                  of $500.00 shall be pre-approved by the Company. On a monthly
                  basis, the Company will reimburse the expenses within ten (10)
                  days after receipt of an invoice.

      3.    Term

            The term of this agreement shall commence on January 1, 2002 and
            shall terminate on December 31, 2001. If Hycel's personnel have
            provided construction management or other services prior to the
            termination of this Agreement, the fees and expenses referred to
            above will be due and payable upon the completion of construction,
            as the case may be. Any of the Company's obligations that have
            accrued prior to the termination of this Agreement shall survive the
            termination of this Agreement.

      4.    Assignment

            This Agreement shall not be assigned by either the Company or Hycel
            without the prior written consent of the other party, such consent
            not to be unreasonably withheld; provided, however, if requested by
            Hycel, the Company will consent to the assignment of this Agreement
            to another entity so long as Hycel or Mark H. Zorensky owns at least
            fifty percent (50%) interest in such entity.

      5.    Disclaimer

            The Company understands that Hycel does not purport to offer
            architectural and engineering services or installation and
            construction services (collectively "Construction Services"). The
            Company shall contract for Construction Services and the Company
            shall, at its cost, defend any claims against Hycel with respect to

<PAGE>

            said Construction Services. The Company shall pay, satisfy and/or
            discharge any judgments, orders and decrees, which may be rendered
            against Hycel in connection with the foregoing.

      6.    Notices

            All notices called for hereunder shall be deemed delivered one day
            after having been posted in the United States mail, postage prepaid,
            at the address shown on the signature page of this Agreement, which
            address may be changed by either party by giving notice as called
            for herein.

IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first written above.

HYCEL PROPERTIES CO.                       BUILD-A-BEAR WORKSHOP, INC.

By: /s/ Mark H. Zorensky                   By:[ILLEGIBLE]
    -----------------------                   --------------
    Mark H. Zorensky                          Name:
    President                                 Title:

101 South Hanley Road, Suite 1300             1954 Innerbelt Business Center Dr.
St. Louis, MO 63105                           St. Louis, MO 63114

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>34
<FILENAME>c86750exv10w32.txt
<DESCRIPTION>AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.32

                                    AGREEMENT

In consideration of one dollar and other monies already paid and the mutual
covenants and promises contained in this Agreement, and for other valuable
consideration, the sufficiency of which is hereby acknowledged, Adrienne Weiss
Company with an address at 875 North Michigan Avenue, Suite 3700, Chicago, IL
60611(hereinafter "CONTRACTOR") hereby contracts with Build-A-Bear Workshop,
Inc. a Delaware corporation, with principal offices at 1954 Innerbelt Business
Center Drive, St. Louis, Missouri 63114 (hereinafter "OWNER"), as follows:

      1. CONTRACTOR has been commissioned or contracted to design and create or
      has already designed and created certain audio, visual, musical,
      literary, graphic, dramatic, architectural, textual, software or other
      works, designs or processes or systems as described as follows: graphic
      projects that support brand identification, promotion development new
      products, entertainment products and expansion of the Build-A-Bear
      Workshop brand (a sample or description of which is attached hereto as
      Exhibit A). All such works, including without limitation all manners of
      dimensions, presentations, embodiments or forms thereof in any medium, and
      any revisions, alterations, variations or derivative works thereof, and
      any ideas, inventions, processes, designs, whether patentable,
      copyrightable or susceptible to other forms of intellectual property
      protection associated therewith or resulting therefrom, are hereinafter
      collectively referred to as the "Works".

2.    CONTRACTOR hereby assigns, transfers and conveys to OWNER the entire
      worldwide right, title and interest including worldwide copyright in and
      to the Works, including all reproduction rights present and future and any
      and all manners of dimensions, presentations, embodiments and/or forms
      thereof, and all derivative Works thereof which CONTRACTOR may now or
      hereinafter author in whole or part. CONTRACTOR warrants that the Works
      are the original works of the CONTRACTOR or its predecessor in interest,
      that CONTRACTOR owns the entire valid, subsisting and exclusive right,
      title and interest in the Works including without limitation exclusive
      claim to copyright therein; and that such Works have not been licensed,
      assigned, mortgaged or otherwise encumbered. Any other work, idea,
      invention design process or other intellectual property which CONTRACTOR
      may hereinafter create as part of any further contract or commission from
      OWNER or created at the request of OWNER or for which payment is made by
      OWNER to CONTRACTOR or which is associated with or results from any such
      commission, contract, request or payment by OWNER shall be deemed Works
      subject to the terms of this Agreement [and a sample of same shall be
      included as an exhibit hereto].

3.    CONTRACTOR hereby indemnifies, defends, and holds OWNER harmless for any
      breach of this agreement or any of the warranties and representations made
      herein or any claim against OWNER or its assigns, or others in privity
      with it, for copyright infringements, unfair competition, unfair trade
      practice, unjust enrichment, fraud or

<PAGE>

Build-A-Bear Workshop, Inc.
Agreement
Page 2

      infringement or violation of any intellectual property right relating to
      or by reason of uses of Works.

4.    Without limitation to any provision of this agreement, CONTRACTOR
      expressly acknowledges and agrees that it will not provide such Works or
      any derivative or substantially similar Works to any other party
      notwithstanding that such Works may be of a different color, size, texture
      or fabric.

5.    CONTRACTOR covenants that it will execute any and all documents required
      by OWNER for the purpose of implementing CONTRACTOR'S obligations under
      Paragraph two (2) above for confirming OWNER'S ownership.

6.    If CONTRACTOR is an individual (as opposed to a corporation):
      CONTRACTOR'S birth date is:______________________________________
      CONTRACTOR is a citizen of        United States

7.    This Agreement shall be governed by the internal laws of the State of
      Missouri, and federal intellectual property laws, without regard for
      choice of law. The parties agree that any dispute arising out of this
      Agreement shall be litigated solely in the federal and state courts
      located in the City or County of St. Louis, Missouri, and CONTRACTOR
      hereby submits to the exclusive jurisdiction of such courts.

8.    If any provision of this Agreement is deemed invalid or unenforceable by
      any court of competent jurisdiction, such provision shall be deemed
      amended to conform to applicable law so as to be valid, legal and
      enforceable in such jurisdiction. If such provision cannot be amended
      without materially altering the intention of the parties, it shall be
      stricken and the remainder of this Agreement shall continue in full force
      and effect.

9.    CONTRACTOR agrees to maintain any designs, drawings, business plans,
      prototypes, materials, documents, methods of business, inventions, trade
      secrets and other proprietary information associated with the Works or
      OWNER'S business, whether in tangible form, or communicated orally or in
      writing, or observed by CONTRACTOR ("Confidential Information") in
      confidence, and agrees that any employees of CONTRACTOR who have access to
      such Confidential Information shall likewise be bound to maintain such
      information in confidence, until such time as OWNER discloses such
      information to the public, or such information becomes available to the
      public through no fault of CONTRACTOR. Should CONTRACTOR or employees of
      CONTRACTOR have any doubt as to what constitutes Confidential Information,
      CONTRACTOR and its employees

<PAGE>

Build-A-Bear Workshop, Inc.
Agreement
Page 3

      agree to request clarification in writing form OWNER, who will advise
      CONTRACTOR and its employees accordingly in writing.

10.   This Agreement is the entire agreement between the parties and shall not
      be modified amended or altered in any manner except by written agreement
      of the parties.

11.   This Agreement shall inure to the benefit of, and be binding upon, the
      parties, their heirs, successors and assigns.

                                            BUILD-A-BEAR WORKSHOP, INC.

                                            By: /s/ Maxine Clark
                                                -------------------------------
                                            Printed Name: Maxine Clark
                                            Title: President
                                            Date: 7/19/01

                                           ADRIENNE WEISS CORPORATION

                                           By: /s/ Adrienne Weiss
                                               --------------------------------
                                           Printed Name: Adrienne Weiss
                                           Date: July 16, 2001
<PAGE>

                                    AGREEMENT

         In consideration of one dollar and other monies already paid and the
mutual covenants and promises contained in this Agreement, and for other
valuable consideration, the sufficiency of which is hereby acknowledged,
Adrienne Weiss Corporation with an address at _________________________________
(hereinafter "CONTRACTOR") hereby contracts with Build-A-Bear Workshop, Inc. a
Delaware corporation, with principal offices at 1954 Innerbelt Business Center
Drive, St. Louis, Missouri 63114 as successor in interest to Build-A-Bear
Workshop, L.L.C., and Smart Stuff, Inc. (hereinafter "OWNER"), as follows:

1.    CONTRACTOR has been commissioned or contracted to design and create or has
      already designed and created certain audio, visual, musical, literary,
      graphic, dramatic, architectural, textual, software or other works,
      designs or processes or systems as described as follows: Teddy Bear
      Hanger, and the "CHOOSE ME" jingles, with and without designs, (a sample
      or description of which is attached hereto as Exhibit A). All such works,
      including without limitation all manners of dimensions, presentations,
      embodiments or forms thereof in any medium, and any revisions,
      alterations, variations or derivative works thereof, and any ideas,
      inventions, processes, designs, whether patentable, copyrightable or
      susceptible to other forms of intellectual property protection associated
      therewith or resulting therefrom, are hereinafter collectively referred to
      as the "Works".

2.    CONTRACTOR hereby assigns, transfers and conveys to OWNER the entire
      worldwide right, title and interest including worldwide copyright in and
      to the Works, including all reproduction rights present and future and any
      and all manners of dimensions, presentations, embodiments and/or forms
      thereof, and all derivative Works thereof which CONTRACTOR may now or
      hereinafter author in whole or part. CONTRACTOR warrants that the WORKS
      are the original works of the CONTRACTOR or its predecessor in interest;
      that CONTRACTOR owns the entire valid, subsisting and exclusive right,
      title and interest in the Works including without limitation exclusive
      claim to copyright therein; and that such Works have not been licensed,
      assigned, mortgaged or otherwise encumbered. Any other work, idea,
      invention design process or other intellectual property which CONTRACTOR
      may hereinafter create as part of any further contract or commission from
      OWNER or created at the request of OWNER or for which payment is made by
      OWNER to CONTRACTOR or which is associated with or results from any such
      commission, contract, request or payment by OWNER shall be deemed Works
      subject to the terms of this Agreement [and a sample of same may be
      included as an exhibit hereto].

3.    CONTRACTOR hereby indemnifies, defends, and holds OWNER harmless for any
      breach of this agreement or any of the warranties and representations made
      herein or any claim against OWNER or its assigns, or others in privity
      with it, for copyright infringements, unfair competition, unfair trade
      practice, unjust enrichment, fraud or infringement or violation of any
      intellectual property right relating to or by reason of uses of works.

<PAGE>

Build-A-Bear Workshop, Inc.
Agreement
Page 2

4.    Without limitation to any provision of this agreement, CONTRACTOR
      expressly acknowledges and agrees that it will not provide such Works or
      any derivative or substantially similar Works to any other party
      notwithstanding that such Works may be of a different color, size, texture
      or fabric.

5.    CONTRACTOR covenants that it will execute any and all documents required
      by OWNER for the purpose of implementing CONTRACTOR'S obligations under
      Paragraph two (2) above for confirming OWNER'S ownership.

6.    If CONTRACTOR is an individual (as opposed to a corporation):
      CONTRACTOR'S birth date is: _____________________________________________
      CONTRACTOR is a citizen of  United States

7.    This Agreement shall be governed by the internal laws of the State of
      Missouri, and federal intellectual property laws, without regard for
      choice of law. The parties agree that any dispute arising out of this
      Agreement shall be litigated solely in the federal and state courts
      located in the City or County of St. Louis, Missouri, and CONTRACTOR
      hereby submits to the exclusive jurisdiction of such courts.

8.    If any provision of this Agreement is deemed invalid or unenforceable by
      any court of competent jurisdiction, such provision shall be deemed
      amended to conform to applicable law so as to be valid, legal and
      enforceable in such jurisdiction. If such provision cannot be amended
      without materially altering the intention of the parties, it shall be
      stricken and the remainder of this Agreement shall continue in full force
      and effect.

9.    CONTRACTOR agrees to maintain any designs, drawings, business plans,
      prototypes, materials, documents, methods of business, inventions, trade
      secrets and other proprietary information associated with the Works or
      OWNER'S business, whether in tangible form, or communicated orally or in
      writing, or observed by CONTRACTOR ("Confidential Information") in
      confidence, and agrees that any employees of CONTRACTOR who have access to
      such Confidential Information shall likewise be bound to maintain such
      information in confidence, until such time as OWNER discloses such
      information to the public, or such information becomes available to the
      public through no fault of CONTRACTOR. Should CONTRACTOR or employees of
      CONTRACTOR have any doubt as to what constitutes Confidential Information,
      CONTRACTOR and its employees agree to request clarification in writing
      from OWNER, who will advise CONTRACTOR and its employees accordingly in
      writing.

10.   This Agreement is the entire agreement between the parties and shall not
      be modified amended or altered in any manner except by written agreement
      of the parties.

<PAGE>

Build-A-Bear Workshop, Inc.
Agreement
Page 3

11.   This Agreement shall inure to the benefit of, and be binding upon, the
      parties, their heirs, successors and assigns. The parties acknowledge that
      OWNER is successor in interest to Build-A-Bear Workshop, L.L.C., and Smart
      Stuff, Inc., and this Agreement shall be equally effective in conveying
      all rights in the works to OWNER just as though those rights were first
      assigned to OWNER'S predecesser companies and then conveyed to OWNER.

12.   This Agreement is effective, nunc pro tunc, as of creation of the
      works.

BUILD-A-BEAR WORKSHOP, INC.                ADRIENNE WEISS CORPORATION

By: /s/ Maxine Clark                       By: /s/ Adrienne Weiss
    -----------------------------              --------------------------------
Printed Name: Maxine Clark                 Printed Name: Adrienne Weiss
Title: President                           Title: CEO

<PAGE>

                                    EXHIBIT A

1.    All "CHOOSE ME" jingles, with and without designs, including in
      particular:

      A.    Choose Me Stuff Me Stitch Me Fluff Me Take Me Home

      B.    Choose Me Stuff Me Stitch Me Fluff Me Dress Me Hear Me Name Me Take
            Me Home

      C.    Choose Me Hear Me Stuff Me Stitch Me Fluff Me Name Me Dress Me Take
            Me Home

      D.    All other variations, derivative works, and presentations, with and
            without designs, including but not limited to the attached designs.

2.    Teddy Bear Hanger (copy attached)

<PAGE>

[GRAPHIC]

CHOOSE ME

STUFF ME

STITCH ME

FLUFF ME

DRESS ME

TAKE ME HOME

<PAGE>

[GRAPHIC]

<PAGE>

BUILD - A - BEAR HANGER.

(FRONT)

<PAGE>

BUILD - A - BEAR HANGER.

(BACK)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>35
<FILENAME>c86750exv21w1.txt
<DESCRIPTION>LIST OF SUBSIDIARIES OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                    EXHIBIT 21.1

                   SUBSIDIARIES OF BUILD-A-BEAR WORKSHOP, INC.

<Table>
<Caption>
Subsidiary:                               Jurisdiction of Incorporation/Organization:
------------------------------------      -------------------------------------------
<S>                                       <C>
Build-A-Bear Entertainment, LLC           Missouri

Build-A-Bear Workshop Franchise           Delaware
Holdings, Inc.

Build-A-Bear Workshop Canada Ltd.         New Brunswick

Build-A-Bear Retail Management, Inc.      Delaware
</Table>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>36
<FILENAME>c86750exv23w1.txt
<DESCRIPTION>CONSENT OF KPMG LLP
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.1



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

As discussed in Note 2(q) to the consolidated financial statements, the Company
adopted Emerging Issues Task Force Issue No. 03-6, Participating Securities and
the Two-Class Method under FASB Statement No. 128, Earnings Per Share.


/s/ KPMG LLP
St. Louis, Missouri
August 11, 2004

</TEXT>
</DOCUMENT>
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