<SUBMISSION>
<ACCESSION-NUMBER>0000950124-03-002245
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20030730
<FILING-DATE>20030701
<EFFECTIVENESS-DATE>20030701
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CHILDTIME LEARNING CENTERS INC
<CIK>0001003648
<ASSIGNED-SIC>8351
<IRS-NUMBER>383261854
<STATE-OF-INCORPORATION>MI
<FISCAL-YEAR-END>0402
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-27656
<FILM-NUMBER>03768157
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>21333 HAGGERTY ROAD
<STREET2>SUITE 300
<CITY>NOVI
<STATE>MI
<ZIP>48375
<PHONE>248-697-9000
</BUSINESS-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>k77727def14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>Definitive Proxy Statement</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="70%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="13%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><FONT size="2">OMB APPROVAL</FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
OMB Number:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="2">3235-0059</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Expires:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>

<TD nowrap align="right" valign="top"><FONT size="2">August&nbsp;31, 2004</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="2" nowrap align="left" valign="top"><FONT size="2">Estimated average burden<br>hours per

response</FONT></TD>

        <TD align="right" valign="bottom"><FONT size="2">14.73</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><font size="2"><B>UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B>
</font>

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


<P align="center"><FONT size="2">Proxy Statement Pursuant to Section 14(a) of the Securities<BR>
Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;)
</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><FONT size="2">Filed by the Registrant &nbsp;&nbsp;<FONT face="wingdings">&#120;</FONT></FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Filed by a Party other than the Registrant &nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT></FONT></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">Check the appropriate box:</FONT></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><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Preliminary Proxy Statement</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
<B>Confidential, for Use of the Commission Only (as permitted by
Rule&nbsp;14a-6(e)(2))</B></FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp; Definitive Proxy Statement</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Definitive Additional Materials</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
Soliciting Material Pursuant to &#167;240.14a-12</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">CHILDTIME LEARNING CENTERS, INC.</FONT>
<HR size="1">
<P align="center"><FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT>
<p>
<HR size="1">
<P align="center"><FONT size="2">(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Filing Fee (Check the appropriate box):
</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><FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;&nbsp; No fee required.</FONT></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>

<TD><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and
0-11.</FONT></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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)&nbsp;Title of each class of securities to which transaction applies:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)&nbsp;Aggregate number of securities to which transaction applies:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)&nbsp;Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)&nbsp;Proposed maximum aggregate value of transaction:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5)&nbsp;Total fee paid:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Fee paid previously with preliminary materials.</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Check box if any part of the fee is offset as provided by Exchange Act
Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.</FONT></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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)&nbsp;Amount Previously Paid:</FONT></TD>
</TR>
</TABLE>
<HR size="1">


<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)&nbsp;Form, Schedule or Registration Statement No.:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)&nbsp;Filing Party:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<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><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)&nbsp;Date Filed:</FONT></TD>
</TR>
</TABLE>
<HR size="1">

<p>
<center>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="20%"></TD>
        <TD width="80%"></TD>
</TR>
<TR valign="top">
        <TD valign="bottom"><font size="2">SEC 1913 (02-02)</font></TD>
        <TD><font size="2"><b>Persons who potentially are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.</b></font></TD>
</TR>
</TABLE>
</center>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHILDTIME LEARNING CENTERS, INC.</FONT></B>

<P align="center">
<B><FONT size="2">NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS</FONT></B>

<P align="center">
<B><FONT size="2">To Be Held July&nbsp;30, 2003</FONT></B>

<P align="left">
<FONT size="2">To the Shareholders:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">PLEASE TAKE NOTICE that the Annual Meeting of
Shareholders of Childtime Learning Centers, Inc. (the
&#147;Company&#148;) will be held at the Childtime Learning
Centers, Inc. Corporate Office, 21333 Haggerty Road,
Suite&nbsp;300, Novi, MI 48375, on July&nbsp;30, 2003, at
10:30&nbsp;a.m., Eastern Daylight Time, to consider and act upon
the following matters:
</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;The election of two directors to serve
    until the 2006 Annual Meeting of Shareholders, and the election
    of a third director to serve until the 2004 Annual Meeting of
    Shareholders, and until their successors shall have been duly
    elected and qualified.
    </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;The approval of the proposed Childtime
    Learning Centers, Inc. 2003 Equity Compensation Plan, covering
    1,500,000 shares of common stock.
    </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;Such other business as may properly come
    before the meeting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only shareholders of record at the close of
business on June&nbsp;23, 2003 will be entitled to vote at the
meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your attention is called to the attached proxy
statement and the accompanying proxy. You are requested to sign
and return the proxy in the enclosed envelope, to which no
postage need be affixed if mailed in the United States. If you
attend the meeting, you may withdraw your proxy and vote your
own shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A copy of the Annual Report of the Company for
the fiscal year ended March&nbsp;28, 2003 accompanies this
Notice.
</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">By Order of the Board of Directors
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">IRA L. YOUNG
    </FONT></TD>
</TR>

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

</TABLE>

<P align="left">
<FONT size="2">Novi, Michigan
</FONT>

<DIV align="left">
<FONT size="2">July&nbsp;1, 2003
</FONT>
</DIV>

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

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">I. ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">II. COMPENSATION OF EXECUTIVE OFFICERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">III. APPROVAL OF THE CHILDTIME LEARNING CENTERS, INC. 2003 EQUITY COMPENSATION PLAN</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">New Plan Benefits Childtime Learning Centers, Inc. 1995 Employee Stock Option Plan</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">Equity Compensation Plan Information</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">IV. MATTERS RELATING TO THE AUDIT COMMITTEE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">V. OTHER MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">Appendix A</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">2003 Equity Compensation Plan</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHILDTIME LEARNING CENTERS, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">21333 Haggerty Road, Suite&nbsp;300</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Novi, MI 48375</FONT></B>
</DIV>

<DIV align="center">
<HR size="1" width="31%" align="center" noshade>
</DIV>

<P align="center">
<B><FONT size="2">PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS</FONT></B>

<P align="center">
<B><FONT size="2">To Be Held July&nbsp;30, 2003</FONT></B>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Annual Meeting of Shareholders (the
&#147;Meeting&#148;) of Childtime Learning Centers, Inc. (the
&#147;Company&#148;) will be held at the Childtime Learning
Centers,&nbsp;Inc. Corporate Office, 21333&nbsp;Haggerty Road,
Suite&nbsp;300, Novi, MI&nbsp;48375, on July&nbsp;30, 2003, at
10:30&nbsp;a.m., Eastern Daylight Time, for the purposes set
forth in the accompanying Notice of Annual Meeting of
Shareholders. The approximate mailing date for this proxy
statement and proxy is July&nbsp;1, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is important that your shares be represented
at the meeting. If it is impossible for you to attend the
meeting, please sign and date the enclosed proxy and return it
to the Company. The Board of Directors of the Company solicits
the proxy. Shares represented by valid proxies in the enclosed
form will be voted if received in time for the Annual Meeting.
Expenses in connection with the solicitation of proxies will be
borne by the Company and may include requests by mail and
personal contact by its directors, officers, and employees. The
Company will reimburse brokers or other nominees for their
expenses in forwarding proxy materials to principals. Any person
giving a proxy has the power to revoke it any time before it is
voted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All references in this Proxy Statement to
&#147;fiscal 2003&#148; are references to the Company&#146;s
fiscal year ended March&nbsp;28, 2003. Unless otherwise stated,
references to the &#147;Company&#148; mean Childtime Learning
Centers, Inc. and its wholly owned subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Voting Securities and Principal
Holders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only holders of record of shares of the
Company&#146;s common stock, no par value (the &#147;common
stock&#148;), at the close of business on June&nbsp;23, 2003
(the &#147;Record Date&#148;) are entitled to notice of, and to
vote at, the meeting or at any adjournment or adjournments
thereof, each share having one vote. On the Record Date, there
were issued and outstanding 19,516,210 shares of the common
stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the Record Date, the following persons were
known to the Company to be beneficial owners of more than 5% of
the Company&#146;s outstanding common stock.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><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="7%"><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 align="center" nowrap><B><FONT size="1">Person</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jacobson Partners Group (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">15,268,400</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">76.2%</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">c/o Benjamin Jacobson
    </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 align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">595 Madison Avenue, Suite&nbsp;3100
    </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 align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New York, NY 10022
    </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 align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Childcare Associates (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">2,427,373</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.4%</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">c/o Kellner, DiLeo &#38; Co.
    </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 align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">900 Third Avenue, 10th Floor
    </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 align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">New York, New York 10022
    </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>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="31%" align="left" noshade>
</DIV>

<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">Based on the Amendment to Schedule&nbsp;13D as
    filed by such holders with the Securities and Exchange
    Commission as of May&nbsp;16, 2003. Consists of all shares of
    common stock beneficially owned by members of the Jacobson
    Partners Group, including George&nbsp;A. Kellner,
    Benjamin&nbsp;R. Jacobson and James&nbsp;J. Morgan, as reported
    on the Schedule&nbsp;13D, as amended, filed by the Group.
    Includes (i)&nbsp;3,583,779 shares beneficially owned by
    Mr.&nbsp;Kellner, including the shares owned by Childcare
    Associates (see note&nbsp;2 below), (ii)&nbsp;346,818 shares
    beneficially owned by Mr.&nbsp;Morgan and (iii)&nbsp;11,628,136
    shares beneficially owned by Mr.&nbsp;Jacobson.
    Mr.&nbsp;Jacobson is the managing partner of Jacobson Partners
    and Mr.&nbsp;Morgan is a
    </FONT></TD>
</TR>

</TABLE>

<P align="center">

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

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

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

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">partner of Jacobson Partners. Mr.&nbsp;Kellner,
    Mr.&nbsp;Jacobson and Mr.&nbsp;Morgan are all investors in or
    co-investors of JP&nbsp;Acquisition Fund&nbsp;II, L.P. and
    JP&nbsp;Acquisition Fund&nbsp;III, L.P., entities controlled by
    affiliates of Jacobson Partners. Mr.&nbsp;Kellner also serves as
    a special advisor to Jacobson Partners. Reference is made to the
    table (and, in particular, notes&nbsp;4, 6, 7 and&nbsp;8 to such
    table) set forth under the caption &#147;Election of
    Directors&#148;.
    </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">Reference is made to the table (and, in
    particular, note&nbsp;7 to such table) set forth under the
    caption &#147;Election of Directors&#148;. Mr.&nbsp;Kellner is
    the managing partner of Childcare Associates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">


<!-- link1 "I. ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center">
<B><FONT size="2">I.&nbsp;ELECTION OF DIRECTORS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors proposes that
Benjamin&nbsp;R. Jacobson and Brett&nbsp;D. Shevack be elected
as directors of the Company to hold office until the Annual
Meeting of the Shareholders in 2006, and in each case, until his
successor is elected and qualified. The Board of Directors also
proposes that Kenneth Johnsson be elected as a director of the
Company to hold office until the Annual Meeting of Shareholders
in 2004, and until his successor is elected and qualified.
Mr.&nbsp;Johnsson is being nominated to provide franchisees of
the Company with representation on the Board of Directors, as
agreed to by the Company in connection with its acquisition of
Tutor Time Learning Systems. It is contemplated that the term of
the franchisee representative will be one year. Accordingly, to
create a one-year vacancy on the Board of Directors,
Mr.&nbsp;Jacobson, who had previously been elected to the Board
of Directors to serve until the 2004 Annual Meeting of
Shareholders, has tendered his resignation from the Board
effective as of the 2004 Annual Meeting and is being nominated
for election as a director to hold office until the 2006 Annual
Meeting of Shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The persons named in the accompanying proxy
intend to vote all valid proxies received by them for the
election of the foregoing nominees, unless such proxies are
marked to the contrary. The two nominees receiving the greatest
number of votes cast at the meeting or its adjournment will be
elected. Abstentions, withheld votes and broker non-votes will
not be deemed votes cast in determining which nominees receive
the greatest number of votes cast, but they will be counted for
purposes of determining whether a quorum is present. If any
nominee is unable or declines to serve, which is not
anticipated, it is intended that the proxies be voted in
accordance with the best judgment of the proxy holder. The
following information is furnished with respect to each nominee
for election as a director, with respect to each director whose
term of office as a director will continue after this meeting,
and with respect to each executive officer of the Company named
in the Summary Compensation Table below:
</FONT>

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

<TR>
    <TD width="33%"><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="22%"><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="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>
</TR>

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

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

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">of the Company&#146;s</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Positions and</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">of the Company</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offices with the</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">First Became</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Company and Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Owned as of</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Owned as of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">a Director(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Principal Occupations</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">the Record Date(2)</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">the Record Date</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD colspan="15" align="center" valign="top">
    <B><FONT size="2">Directors and Nominees for Election as
    Directors</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William D. Davis (2002)
    </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">53</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 Executive Officer of the
    Company
    </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">115,000</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(3)</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>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jason K. Feld (1996)
    </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">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice-President of Assessment Technologies, Inc.
    (Tucson, Arizona)
    </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">12,750</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(4)(5)</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>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Paula L. Gavin (2002)
    </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">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">President and Chief Executive Officer of YMCA of
    Greater New York (New York, New York)
    </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">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="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

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

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

<TR>
    <TD width="33%"><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="22%"><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="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="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></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">of the Company&#146;s</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Positions and</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">of the Company</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offices with the</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">First Became</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Company and Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Owned as of</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Owned as of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">a Director(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Principal Occupations</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">the Record Date(2)</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">the Record Date</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benjamin R. Jacobson (1996)
    </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">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chairman of the Board of the Company and Managing
    Partner of Jacobson Partners (New York, New York)
    </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">11,628,136</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(6)</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">59.4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Kenneth Johnsson (2002)
    </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">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Tutor Time Franchisee (Brewster, New York)
    </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">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="top" nowrap><FONT size="2">0</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">George A. Kellner (1995)
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice Chairman of the Board of the Company and
    Chief Executive Officer of Kellner, DiLeo &#38; Co. (New York,
    New York)
    </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">3,583,779</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(4)(7)</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 align="left" valign="top" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James J. Morgan (2001)
    </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">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Partner of Jacobson Partners (New York, New York)
    </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">346,818</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(8)</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>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brett D. Shevack (2002)
    </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">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice Chairman, Brand Initiatives, of BBDO New
    York (New York, New York)
    </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">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="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="15" align="center" valign="top">
    <B><FONT size="2">Other Named Executive Officers</FONT></B></TD>
</TR>

<TR>
    <TD colspan="7" align="left" valign="top">
    <FONT size="2">Frank M. Jerneycic
    </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">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="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left" valign="top">
    <FONT size="2">Scott W. Smith
    </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">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="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left" valign="top">
    <FONT size="2">Leonard C. Tylka
    </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">33,716</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(9)</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>
</TR>

<TR>
    <TD colspan="7" align="left" valign="top">
    <FONT size="2">Karen R. Danner
    </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">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="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="left" valign="top">
    <FONT size="2">All directors and executive officers as a group
    (12&nbsp;persons)
    </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">15,356,150</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(10)</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">77.4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="31%" align="left" noshade>
</DIV>

<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%.
    </FONT></TD>
</TR>

</TABLE>
<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">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">All addresses are care of Childtime Learning
    Centers,&nbsp;Inc., 21333&nbsp;Haggerty Road, Suite&nbsp;300,
    Novi, Michigan&nbsp;48375.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Unless otherwise noted, the Company believes that
    all persons named in the table have sole voting and investment
    power with respect to all shares of common stock beneficially
    owned by them.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consists of shares of common stock issuable
    pursuant to stock options that are exercisable within
    60&nbsp;days after the Record Date.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 12,500 shares of common stock issuable
    pursuant to stock options, granted under the Company&#146;s
    Director Stock Option Plan, that are exercisable within
    60&nbsp;days after the Record Date.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 250 shares of common stock with respect
    to which Mr.&nbsp;Feld shares voting and investment powers with
    his spouse.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 10,000 shares of common stock issuable
    pursuant to stock options, granted under the Company&#146;s
    Director Stock Option Plan, that are exercisable within
    60&nbsp;days after the Record Date. Also includes 292,663 shares
    (including 4,317 shares issuable pursuant to options, granted
    upon consummation of the Company&#146;s rights offering, that
    are exercisable within 60&nbsp;days of the Record Date (the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">3
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><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></TD>
    <TD align="left">
    <FONT size="2">&#147;Standby Commitment Options&#148;) (see
    &#147;Compensation Committee Interlocks and Insider
    Participation&#148; below)) owned directly by Mr.&nbsp;Jacobson.
    Pursuant a Securityholders&#146; Agreement dated as of
    September&nbsp;23, 2002, among certain shareholders of the
    Company (the &#147;Securityholders&#146; Agreement&#148;),
    Jacobson Partners has certain significant rights to restrict or
    compel the disposition of such 292,663 shares, and thus
    Mr.&nbsp;Jacobson has sole voting power but may be deemed to
    have shared dispositive power with respect to such shares. Also
    includes 2,327,712 shares (including 86,012 shares issuable
    pursuant to Standby Commitment Options) directly owned by
    JP&nbsp;Acquisition Fund&nbsp;II, L.P., 6,887,851 shares
    (including 262,610 shares issuable pursuant to Standby
    Commitment Options) directly owned by JP&nbsp;Acquisition
    Fund&nbsp;III, L.P., and 622,656 shares held by the Jacobson
    Partners Profit Sharing Plan, as to which shares
    Mr.&nbsp;Jacobson may be deemed to have shared voting power and
    shared dispositive power. Also includes 1,487,254 shares
    (including 47,061 shares issuable pursuant to Standby Commitment
    Options) directly owned by other members of the Jacobson
    Partners Group as to which, pursuant to the
    Securitiesholders&#146; Agreement, Mr.&nbsp;Jacobson has certain
    proxy voting rights and Jacobson Partners has certain
    significant rights to restrict or compel the disposition of such
    shares. Consequently, Mr.&nbsp;Jacobson may be deemed to have
    shared voting power and shared dispositive power with respect to
    such shares. Mr.&nbsp;Jacobson is (a)&nbsp;the managing partner
    of Jacobson Partners, which is the sole member of JPAF&nbsp;III
    LLC, which is the general partner of JP&nbsp;Acquisition
    Fund&nbsp;III, L.P., (b)&nbsp;the controlling shareholder of
    JPAF, Inc., which is the general partner of JPAF Limited
    Partnership, which is the general partner of JP Acquisition
    Fund&nbsp;II, L.P., and (c)&nbsp;a co-trustee of the Jacobson
    Partners Profit Sharing Plan.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 2,427,373 shares of common stock owned
    by Childcare Associates and 437,627 shares of common stock owned
    by KD Partners&nbsp;II. Mr.&nbsp;Kellner is the managing partner
    of Childcare Associates and the managing partner of KD Special
    Situations Partners, the investment general partner of KD
    Partners&nbsp;II. Also includes 63,450 shares of common stock
    owned by Mr.&nbsp;Kellner&#146;s spouse, with respect to which
    shares Mr.&nbsp;Kellner may be deemed to have shared voting
    power and shared dispositive power. Mr.&nbsp;Kellner is a member
    of the Jacobson Partners Group, but he disclaims beneficial
    ownership of all shares beneficially owned by other members of
    the Group. Also includes 93,515 shares of common stock
    (including 6,401 shares issuable pursuant to Standby Commitment
    Options (see &#147;Compensation Committee Interlocks and Insider
    Participation&#148; below)) owned directly by Mr.&nbsp;Kellner
    as to which, pursuant to the Securityholders&#146; Agreement,
    Jacobson Partners has certain significant rights to restrict or
    compel their disposition and Mr.&nbsp;Jacobson has certain proxy
    voting rights. Consequently, Mr.&nbsp;Kellner may be deemed to
    have shared voting power and shared dispositive power with
    respect to such 93,515 shares.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 110,000 shares of common stock issuable
    pursuant to options, granted in connection with
    Mr.&nbsp;Morgan&#146;s consulting arrangement with the Company,
    that are exercisable within 60&nbsp;days after the Record Date.
    Mr.&nbsp;Morgan is a partner of Jacobson Partners and thus a
    minority investor in funds included in the Jacobson Partners
    Group, but he disclaims beneficial ownership of all shares
    beneficially owned by other members of the Group. Also includes
    236,818 shares of common stock (including 5,298 shares issuable
    pursuant to Standby Commitment Options (see &#147;Compensation
    Committee Interlocks and Insider Participation&#148; below))
    owned directly by Mr.&nbsp;Morgan as to which, pursuant to the
    Securityholders&#146; Agreement, Jacobson Partners has certain
    significant rights to restrict or compel their disposition and
    Mr.&nbsp;Jacobson has certain proxy voting rights. Consequently,
    Mr.&nbsp;Morgan may be deemed to have shared voting power and
    shared dispositive power with respect to such 236,818 shares.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 26,666 shares issuable pursuant to
    options, granted in connection with Mr.&nbsp;Tylka&#146;s
    consulting arrangement with the Company, which are exercisable
    within 60&nbsp;days of the Record Date. Although Mr.&nbsp;Tylka
    is a minority investor in Childcare Associates, he disclaims
    beneficial ownership of the shares of common stock owned by such
    shareholder.
    </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 shares issuable pursuant to stock
    options that are exercisable within 60&nbsp;days of the Record
    Date, as described in the foregoing notes. Does not include
    shares, or shares issuable pursuant to stock options, held by
    former executive officers or directors of the Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">4
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Other Information Relating to Directors and
Nominees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief account of the business
experience during the past five years of each member or nominee
of the Board of Directors of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">William D. Davis </FONT></I><FONT size="2">has
served as the President and Chief Executive Officer of the
Company since July&nbsp;22, 2002, and as a Director since
August&nbsp;2002. Mr.&nbsp;Davis was formerly President and
Chief Executive Officer of Tutor Time Learning Systems, Inc.,
from March&nbsp;2002 until the Company&#146;s acquisition of
Tutor Time in July&nbsp;2002. Tutor Time filed Chapter&nbsp;11
bankruptcy in May&nbsp;2002. Prior to joining Tutor Time,
Mr.&nbsp;Davis served as Chief Executive Officer of Waterbury
Holdings, a holding company located in Burlington, Vermont, from
March&nbsp;1995 through January&nbsp;1998. During his
association with Waterbury Holdings, Mr.&nbsp;Davis held the
position of Partner and Chief Executive Officer of
Waterbury&#146;s affiliates, including McKenzie LLC, All
Season&#146;s Kitchen LLC, Franklin County Cheese Corporation,
Waterbury Fresh Foods LLC, Rondele LLC, and Frank Hahn
Incorporated. In December&nbsp;1998, Mr.&nbsp;Davis, along with
other investors, purchased Rondele Foods LLC from Waterbury
Holdings, and he became Chairman of the newly-formed company,
Rondele Specialty Foods, based in Wausau, Wisconsin.
Mr.&nbsp;Davis also served as the President and Chief Executive
Officer of ChefExpress.Net Inc., an Internet-based virtual
warehouse providing ingredients and specialty food, from
January&nbsp;2000 through June&nbsp;2001. Mr.&nbsp;Davis is also
a board member of Green Mountain Coffee Roasters Inc., where he
serves as Chairman of the Audit Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Dr.&nbsp;Jason K. Feld
</FONT></I><FONT size="2">has been a Vice President of
Assessment Technology Incorporated since 1986. Assessment
Technology Incorporated is a private Tucson, Arizona based
corporation that creates, distributes and supports the use of
technology to promote learning and documents the effectiveness
of educational programs on children. In addition to his past
service as a faculty member at the University of Arizona,
Dr.&nbsp;Feld has served on boards and committees for
educational organizations. His work has been published in books,
technical reports and research articles.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Paula L. Gavin </FONT></I><FONT size="2">is
the President and Chief Executive Officer of the YMCA of Greater
New York. While serving in that capacity, she has been
responsible for the management and development of 20 branches
and 200 YMCA program locations in New York City since 1990.
Prior to that, Ms.&nbsp;Gavin was Vice President of Network
Operations at AT&#38;T, where her responsibilities included
business planning, finance, personnel and training for
AT&#38;T&#146;s operations unit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Benjamin R. Jacobson
</FONT></I><FONT size="2">has served as a director of the
Company since February&nbsp;1996 and as the Company&#146;s
Chairman of the Board since December&nbsp;2002. Since 1989, he
has been the managing general partner of Jacobson Partners, a
New York City based private equity firm. Mr.&nbsp;Jacobson also
serves as a board member for several privately held companies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Kenneth Johnsson </FONT></I><FONT size="2">is
a Tutor Time franchisee currently responsible for the operation
of two Tutor Time centers in Connecticut and New York. Prior to
opening his first franchise in 1995, Mr.&nbsp;Johnsson held
various sales and management positions with Strauss Paper
Company located in Port Chester, New&nbsp;York.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">George A. Kellner
</FONT></I><FONT size="2">has been a director of the Company
since 1996 and of its predecessor since July&nbsp;1990. He has
also served as the Company&#146;s Chairman of the Board until
August&nbsp;2001, at which time he became the Company&#146;s
Vice Chairman of the Board. Mr.&nbsp;Kellner is Chief Executive
Officer of Kellner, DiLeo&nbsp;&#38; Co., a private New York
City based firm specializing in merger and convertible
arbitrage, distressed and high-yield investing and special
situations. Kellner, DiLeo&nbsp;&#38; Co. is a member firm of
the New York and American Stock Exchanges. Mr.&nbsp;Kellner is a
Trustee of Milton Academy and Bard College, Vice Chairman of
Phoenix House, a member of the Board of Overseers at the NYU
Stern School of Business, a member of the Advisory Council of
the Department of Economics at Princeton University and a member
of the Dormitory Authority of the State of New&nbsp;York.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">James J. Morgan </FONT></I><FONT size="2">has
served as the Interim President and Chief Executive Officer of
the Company from January&nbsp;2001 until August&nbsp;2001 and
from March&nbsp;2002 until July&nbsp;22, 2002. Mr.&nbsp;Morgan
has also served as the Company&#146;s Chairman of the Board from
August&nbsp;2001 until December&nbsp;2002. Since
January&nbsp;2002, Mr.&nbsp;Morgan has been a partner of
Jacobson Partners, having previously acted as an investor in
Jacobson Partners performing consulting assignments for that
entity. Benjamin Jacobson, the Chairman of the Board of the
</FONT>

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

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Company, is the managing general partner of
Jacobson Partners. Mr.&nbsp;Morgan retired in 1997 as President
and Chief Executive Officer of Philip Morris Incorporated.
Mr.&nbsp;Morgan also serves as a board member for several
privately held companies.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Brett D. Shevack </FONT></I><FONT size="2">is
the Vice Chairman, Brand Initiatives, of BBDO New York, an
advertising agency headquartered in New York, New York. Prior to
joining BBDO, Mr.&nbsp;Shevack was the President of the Wolf
Group, an integrated advertising agency which acquired Partners
&#38; Shevack, an agency founded by Mr. Shevack, in 1998.
</FONT>

<P align="left">
<B><FONT size="2">Meetings of the Board of Directors and Board
Committees and Compensation of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No director attended fewer than 75% of the eight
Board of Director meetings held in fiscal 2003 or the one
Compensation Committee meeting held during fiscal 2003.
Messrs.&nbsp;Feld and Shevack, however, each attended fewer than
75% of the two Audit Committee meetings held in fiscal 2003
during the time they served on the Audit Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors of the Company currently
has an Audit Committee and a Compensation Committee. The Board
of Directors does not have a separate nominating committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The duties of the Compensation Committee include
recommending to the entire Board of Directors of the Company the
compensation arrangements for senior management and directors of
the Company and administration of the 1995 Stock Incentive Plan
For Key Employees. During fiscal 2003, the Compensation
Committee held one meeting. The current members of the
Compensation Committee are Paula&nbsp;L. Gavin, George&nbsp;A.
Kellner and James&nbsp;J. Morgan. Mr.&nbsp;Morgan is the
Chairman of the Compensation Committee. Upon adoption of the
proposed Childtime Learning Centers, Inc. 2003 Equity
Compensation Plan, the Compensation Committee will be
reconstituted to consist only of independent directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The duties of the Audit Committee include
reviewing the services provided by the Company&#146;s
independent auditors, consulting with such auditors on audits
and proposed audits, and reviewing the need for internal
auditing procedures and the adequacy of internal controls.
During fiscal 2003, the Audit Committee held four meetings. The
current members of the Audit Committee are Jason&nbsp;K. Feld,
Paula&nbsp;L. Gavin and Brett&nbsp;D. Shevack. Ms.&nbsp;Gavin is
Chairperson of the Audit Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the fiscal year ended March&nbsp;28, 2003,
the standard arrangement for compensation of directors was as
follows: officers of the Company who were directors (including
the non-executive Chairman of the Board) did not receive any
additional compensation for services as a director. Directors
who were not employees of the Company received directors&#146;
fees of $4,000&nbsp;per year, paid in quarterly installments,
$1,500&nbsp;for each Board meeting attended and $250&nbsp;for
each Committee meeting attended. Prior to October, 2002, the
standard arrangement for compensation of directors provided for
annual directors&#146; fees of $6,000 and per meeting fees
of&nbsp;$500. Directors who are not employees of the Company are
also participants in the Company&#146;s Director Stock Option
Plan. Pursuant to such plan, options to purchase
2,500&nbsp;shares are granted to each non-employee director,
subject to availability, at each annual meeting at which they
are elected or remain in office. Options for up to
75,000&nbsp;shares are available for grant under the Director
Stock Option Plan, each of which becomes fully vested and
exercisable on the first anniversary of the date of grant. The
exercise price of options granted under the Plan will equal the
market price of the common stock at the time of grant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;16, 2002, as an inducement to
their acceptance of their appointment to the Company&#146;s
Board of Directors, each of Paula&nbsp;L. Gavin, Kenneth
Johnsson and Brett&nbsp;D. Shevack were granted options to
purchase 2,500&nbsp;shares of the Company&#146;s common stock at
$1.50&nbsp;per share (the price per share, as reported on The
Nasdaq SmallCap Market, at the close of business on such date).
The options vest on the first anniversary of the grant date and
expire in October&nbsp;2007.
</FONT>

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

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

<P align="left">


<!-- link1 "II. COMPENSATION OF EXECUTIVE OFFICERS" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center">
<B><FONT size="2">II.&nbsp;COMPENSATION OF EXECUTIVE
OFFICERS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information for
the fiscal years ended March&nbsp;28, 2003, March&nbsp;29, 2002
and March&nbsp;30, 2001 concerning the compensation of the
Company&#146;s Chief Executive Officer, the other executive
officers of the Company having total annual compensation during
fiscal 2003 in excess of $100,000, one other individual who
served as the Company&#146;s Chief Executive Officer during
fiscal 2003 and two individuals who served as executive officers
of the Company during fiscal 2003.
</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="2">&nbsp;</FONT></TD>
    <TD width="41%"><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="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="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="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="2"></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 colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="6" align="center" nowrap><B><FONT size="1">Annual</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Long-Term</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="6" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="6" align="center" nowrap><HR size="1" noshade></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Fiscal</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">(Shares)</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William D. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157,500</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">235,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</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">President and Chief Executive Officer
    </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="22"><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">Frank M. Jerneycic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101,637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73,000</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">50,000</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>
</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">Chief Financial Officer and Treasurer
    </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="22"><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">Scott W. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</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">5,000</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>
</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">Vice President of Human Resources
    </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="22"><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">James J. Morgan(2)(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">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,986</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">&#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">Former Interim President and
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,000</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">110,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></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">Chief Executive Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,045</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">&#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">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="bottom" nowrap><FONT size="2">108,337</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
</TR>

<TR>
    <TD colspan="22"><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">Leonard Tylka(2)(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134,172</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">Former Interim Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">154,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">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">18,004</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(7)</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">Financial Officer and Treasurer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">10,000</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>
</TR>

<TR>
    <TD colspan="22"><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">Karen R. Danner(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">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">170,000</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>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125,441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</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">Former Vice President of
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,899</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">15,000</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>
</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">Corporate Operations
    </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>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="31%" align="left" noshade>
</DIV>

<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">Represents relocation expenses reimbursed by the
    Company.
    </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">Appointment as interim officer, and related
    compensation, was pursuant to a consulting arrangement with the
    Company (see &#147;Consulting Agreements&#148; below).
    </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">Effective July&nbsp;22, 2002, Mr.&nbsp;Morgan
    ceased serving as the Company&#146;s Interim President and Chief
    Executive Officer.
    </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">Includes option for 60,000 shares granted during
    fiscal 2001, with respect to which the expiration date was
    extended during fiscal 2002.
    </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">Includes compensation expense related to stock
    options granted below market price.
    </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">Effective August&nbsp;30, 2002, Mr.&nbsp;Tylka
    ceased serving as the Company&#146;s Interim Chief Financial
    Officer and Treasurer.
    </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">Includes compensation expense related to stock
    options granted to Mr.&nbsp;Tylka on September&nbsp;1, 2001.
    </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">Effective March&nbsp;26, 2003, Ms.&nbsp;Danner
    ceased serving as the Company&#146;s Vice President of Corporate
    Operations.
    </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">Represents $30,441 of relocation expenses
    reimbursed by the Company and $95,000 paid in severance.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Mr.&nbsp;Jerneycic is also entitled to receive
severance, equal to three months of his base salary, in the
event his employment is terminated by the Company without cause.
</FONT>

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

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

<P align="left">
<B><FONT size="2">Option Grants in Fiscal 2003</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides details regarding
stock options granted to the executive officers named in the
above Summary Compensation Table in the last fiscal year.
</FONT>

<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="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="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="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="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="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="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>
</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="11"></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="10" align="center" nowrap><B><FONT size="1">Potential Realizable</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="10" align="center" nowrap><B><FONT size="1">Value At Assumed</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="14" align="center" nowrap><B><FONT size="1">Individual Grants</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="10" align="center" nowrap><B><FONT size="1">Annual Rates of</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="14" align="center" nowrap><HR size="1" noshade></TD><TD></TD>
    <TD></TD>
    <TD colspan="10" align="center" nowrap><B><FONT size="1">Stock&nbsp;Price</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">% of Total</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="10" align="center" nowrap><B><FONT size="1">Appreciation for</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Options Granted</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="10" align="center" nowrap><B><FONT size="1">Term(5)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">to Employees in</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Price Per</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="10" align="center" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Granted</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Fiscal Year</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Share</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">0%</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">5%</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">10%</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William D. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8/15/09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,941</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="right" valign="bottom" nowrap><FONT size="2">85,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(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">28.8</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">3.50</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">8/15/09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,733</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 M. Jerneycic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.9</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">3.50</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">8/26/09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,287</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">Scott W. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.7</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">3.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5/1/09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">NA</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,616</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">James J. Morgan
    </FONT></DIV>
    </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">&#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">Leonard Tylka
    </FONT></DIV>
    </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">&#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">Karen R. Danner
    </FONT></DIV>
    </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">&#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 align="left">
<HR size="1" width="31%" align="left" noshade>
</DIV>

<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">This option vests in five equal annual
    installments of 30,000 shares beginning on August&nbsp;15, 2003,
    and vests in full if Mr.&nbsp;Davis is terminated within six
    months following a change in control of the Company.
    </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">This option vested in full as of
    February&nbsp;15, 2003. As originally granted, each year during
    the term of this option, Mr.&nbsp;Davis was required to exercise
    the option with regard to an amount of shares equal to
    (a)&nbsp;50% of any annual cash bonus paid to him by the Company
    that year, divided by (b)&nbsp;$3.50, up to a maximum of 40,160
    shares per calendar year. The option was amended to eliminate
    this mandatory exercise feature.
    </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">This option vests in five equal annual
    installments of 10,000 shares beginning on August&nbsp;28, 2003,
    and vests in full upon a change in control of the Company.
    </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">This option vests in full on May&nbsp;1, 2005 or,
    if earlier, upon a change in control of the Company.
    </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">In accordance with SEC rules, these columns show
    gains that might exist for the options over the life of the
    option. This valuation is hypothetical; if the stock price does
    not increase above the exercise price, compensation paid to the
    option holders will be zero. These gains are based on assumed
    rates of annual compounded stock price appreciation of 5% and
    10% from the date the options were granted over the full option
    term. Of course, actual gains, if any, on stock option exercises
    are dependent on the future performance of the Company&#146;s
    common stock. There can be no assurance that the amounts
    reflected in the table will be achieved. A 5% or 10% annually
    compounded increase in the Company&#146;s stock price from the
    date of grant to the end of the applicable term for the options
    granted to Mr.&nbsp;Davis would result in stock prices of $3.19
    and $4.03, respectively, for the options granted to
    Mr.&nbsp;Jerneycic would result in stock prices of $3.13 and
    $3.95, respectively, and for the options granted to
    Mr.&nbsp;Smith would result in stock prices of $4.02 and $5.07,
    respectively.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Aggregate Option Exercises in the Last Fiscal
Year and Fiscal Year-End Option Values</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
concerning stock options exercised during the fiscal year ended
March&nbsp;28, 2003, by the executive officers named in the
above Summary Compensation Table, as well as the
</FONT>

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

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

<DIV align="left">
<FONT size="2">value of unexercised options held by such persons
on March&nbsp;28, 2003, as measured in terms of the closing
price of the common stock on that date as quoted on The Nasdaq
SmallCap Market ($1.00&nbsp;per share).
</FONT>
</DIV>

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

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Value of Unexercised</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Acquired</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Number of Unexercised</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">In-the-Money Options</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Upon</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Options at Fiscal Year-End</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">At Fiscal Year End</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Realized</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Exercisable/Unexercisable</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Exercisable/Unexercisable</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William D. Davis
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">85,000/150,000</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;/&#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">Frank M. Jerneycic
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">0/50,000</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;/&#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">Scott W. Smith
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">0/5,000</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;/&#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">James J. Morgan
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">110,000/0</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">&#151;/&#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">Leonard Tylka
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">26,600/3,400</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">&#151;/&#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">Karen R. Danner
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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">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">&#151;/&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Incentive Bonus Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2003, each of the executive
officers of the Company, other than James J. Morgan and Leonard
C. Tylka, participated in the Company&#146;s incentive bonus
plan which would entitle the executive officers to receive a
bonus upon the Company achieving a targeted level of operating
earnings during fiscal 2003. These bonus arrangements were
structured by the Company&#146;s Compensation Committee during
fiscal 2003. Although the Company failed to achieve of the
objectives of the incentive formula with respect to the
executive officers, discretionary bonuses were paid to the
executive officers, as specified above in the &#147;Summary
Compensation Table&#148;, and to other key management employees
based on improvements in operating earnings during the second
half of fiscal 2003.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January&nbsp;2001, the Company entered into
consulting agreements with each of James J. Morgan and Leonard
C. Tylka. The agreement with Mr.&nbsp;Morgan had a six-month
term starting January&nbsp;16, 2001, which was extended by the
Company and Mr.&nbsp;Morgan. During the term, Mr.&nbsp;Morgan
functioned as a consultant until January&nbsp;29, 2001, at which
time he was appointed Interim Chief Executive Officer and
President of the Company. As compensation for his services,
Mr.&nbsp;Morgan was to receive a $15,000&nbsp;per month
consulting fee, reimbursement of reasonable business expenses,
and options to purchase 60,000 shares of the Company&#146;s
common stock, at an exercise price of $7.00&nbsp;per share. The
options had a two-year term and vested at the rate of 10,000
shares per month, with the first 10,000 shares vesting on
January&nbsp;29, 2001. Pursuant to the consulting agreement,
Mr.&nbsp;Morgan was appointed to the Board of Directors
effective January&nbsp;29, 2001, which appointment would
continue after termination of his role as Interim Chief
Executive Officer. In July&nbsp;2001, the Company entered into a
new consulting agreement with Mr.&nbsp;Morgan. Pursuant to the
new arrangement, Mr.&nbsp;Morgan was appointed the
Company&#146;s Chairman of the Board and ceased serving as
Interim Chief Executive Officer and President, effective
August&nbsp;2001. As compensation for his services,
Mr.&nbsp;Morgan received a $7,500&nbsp;per month consulting fee,
reimbursement of reasonable business expenses, and options to
purchase 50,000 shares of the Company&#146;s common stock, at an
exercise price of $11.00&nbsp;per share. The options vest one
year from the date of grant and expire September&nbsp;2006. The
options automatically vest upon a change of control of the
Company. In addition, the expiration date for the previously
granted option to acquire 60,000 shares of the Company&#146;s
common stock was extended to September 2006. In March&nbsp;2002,
Mr.&nbsp;Morgan was reappointed as the Company&#146;s Interim
Chief Executive Officer and President, positions he filled until
July&nbsp;22, 2002. Mr.&nbsp;Morgan&#146;s consulting
arrangement ended in November&nbsp;2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the consulting agreement with
Mr.&nbsp;Tylka, Mr.&nbsp;Tylka was appointed as the
Company&#146;s Interim Chief Financial Officer effective as of
January&nbsp;29, 2001. For his services, Mr.&nbsp;Tylka was to
receive an annual consulting fee in the amount of $150,000,
payable monthly in arrears, and reimbursement of reasonable
business expenses. Mr.&nbsp;Tylka&#146;s engagement as
consultant was to continue until terminated by the
Company&#146;s Chairman of the Board upon sixty days&#146; prior
written notice. This consulting agreement replaced the
consulting agreement with Mr.&nbsp;Tylka, entered into in
May&nbsp;1997, which provided Mr.&nbsp;Tylka with annual
consulting fees of $25,000. In February&nbsp;2002, the Company
entered into a new consulting agreement with
</FONT>

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

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

<DIV align="left">
<FONT size="2">Mr.&nbsp;Tylka, extending his appointment as the
Company&#146;s Interim Chief Financial Officer until
June&nbsp;30, 2002. Since June&nbsp;30, 2002,
Mr.&nbsp;Tylka&#146;s consulting arrangement had been extended
on a month-to month basis until November&nbsp;2002. For his
services, Mr.&nbsp;Tylka received an annual consulting fee in
the amount of $175,000, payable monthly in arrears, and
reimbursement of reasonable business expenses. Mr.&nbsp;Tylka
received a $10,000 severance payment from the Company upon the
termination of his consulting arrangement. In connection with
his consulting arrangement, in March 2001, Mr.&nbsp;Tylka was
granted options to purchase 10,000 shares of the Company&#146;s
common stock at a price of $7.97&nbsp;per share. These options
vest evenly over 3&nbsp;years and expire in March&nbsp;2007. In
September&nbsp;2001, Mr.&nbsp;Tylka was granted additional
options to purchase 20,000 shares at $11.00 per share. These
additional shares vest in September&nbsp;2002 and expire in
September&nbsp;2006. Mr.&nbsp;Tylka&#146;s options automatically
vest upon a change of control of the Company.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Certain Relationships and Related Parted
Transactions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For related party transactions and a summary of
certain other relationships involving the Company and its
directors and executive officers, please see &#147;Consulting
Agreements&#148; above and &#147;Compensation Committee
Interlocks and Insider Participation&#148; below.
</FONT>

<P align="left">
<B><FONT size="2">Compensation Committee Interlocks and Insider
Participation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee currently consists of
Ms.&nbsp;Gavin and Messrs. Kellner and Morgan. All the members
of the Compensation Committee are currently non-employee
directors of the Company. Mr.&nbsp;Morgan, however, was the
Interim President and Chief Executive Officer of the Company
from January&nbsp;2001 until August&nbsp;2001 and from
March&nbsp;2002 until July&nbsp;2002. Mr.&nbsp;Milton Dresner
was a member of the Compensation Committee until his resignation
from the Board of Directors in October&nbsp;2002.
Mr.&nbsp;Dresner was a non-employee director of the Company.
Upon adoption of the proposed Childtime Learning Centers, Inc.
2003 Equity Compensation Plan, the Compensation Committee will
be reconstituted to consist only of independent directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Morgan, a former executive officer of
the Company, serves on the compensation committee of
Bertucci&#146;s Corporation, the chief executive officer of
which is Benjamin&nbsp;R. Jacobson.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July&nbsp;2000, the Company retained Jacobson
Partners to provide management and financial consulting
services. Jacobson Partners is a private equity firm of which
Benjamin&nbsp;R. Jacobson, the Chairman of the Board of the
Company, is the managing general partner, James J. Morgan, a
director and former Chairman of the Board and Interim Chief
Executive Officer of the Company, is a partner, and
George&nbsp;A. Kellner, the Company&#146;s Vice Chairman of the
Board, is a special advisor. As consideration for the provision
of such services to the Company and its Board of Directors,
Jacobson Partners is entitled to receive an annual fee of
$250,000, plus reimbursement of reasonable out-of-pocket
expenses. The agreement will continue in effect until terminated
by either party upon six months&#146; prior written notice. As
additional consideration for its services, the Company granted
to Jacobson Partners, and its designees, two options to acquire,
in the aggregate, up to 557,275&nbsp;shares of the
Company&#146;s common stock. Options for 294,117&nbsp;shares
were exercised at a cost of $2,500,000. The options to acquire
the remaining 263,158&nbsp;shares expired July&nbsp;2002. The
294,117&nbsp;shares acquired by Jacobson Partners and its
designees upon exercise of the options are subject to
registration rights until July&nbsp;2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of its agreement with the Company,
Jacobson Partners agreed that, until July&nbsp;2002, neither it
nor its designees would acquire additional shares of the
Company&#146;s common stock (whether in the open market or in
private transactions) (i)&nbsp;having an aggregate purchase
price in excess of $2,500,000 or (ii)&nbsp;at the same time the
Company would be engaged in a share repurchase agreement. During
that two-year period, pursuant to a separate agreement with
Childcare Associates and KD Partners&nbsp;II (Company
shareholders controlled by Mr.&nbsp;Kellner), Jacobson Partners
and its designees had the right to acquire Company shares owned
by such entities to the extent investors in such entities wish
to have their pro rata interest in the Company&#146;s common
stock sold; provided that any shares so purchased by Jacobson
Partners and its designees would be subject to an irrevocable
voting proxy in favor of Mr.&nbsp;Kellner. All shares of the
common stock acquired by Jacobson
</FONT>

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

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<DIV align="left">
<FONT size="2">Partners and its designees during the first two
years of the agreement, including shares purchased in the open
market or in private transactions, are subject to registration
rights until July&nbsp;6, 2007.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;26, 2002, in connection with the
Company&#146;s acquisition of substantially all of the assets of
Tutor Time Learning Systems, Inc., the Company entered into an
investment advisory agreement with Jacobson Partners. Upon
consummation of the acquisition, Jacobson Partners earned a fee
consisting of a cash payment of $333,334 and the issuance of
175,438&nbsp;shares of the Company&#146;s common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July&nbsp;2002, to provide a majority of the
funding to finance the Company&#146;s acquisition of
substantially all of the assets of Tutor Time Learning Systems,
Inc., and to provide related working capital, the JP Acquisition
Fund Group, a group of lenders organized by Jacobson Partners,
loaned an aggregate of $14,000,000 to the Company. The loans,
evidenced by the Prior Subordinated Notes, were subject to a
subordination agreement in favor of the Company&#146;s secured
creditor, bore interest at 15% (of which only 7% is payable in
cash unless certain conditions are met, with the rest payable in
kind with the issuance of additional subordinated debt) and had
an original maturity of December&nbsp;31, 2004. The terms of
this subordinated loan arrangement were approved by a Special
Committee of the Board of Directors. Although Jacobson Partners
received no consideration for arranging this financing, lenders
included JP&nbsp;Acquisition Fund&nbsp;II, L.P. and
JP&nbsp;Acquisition Fund&nbsp;III, L.P., entities controlled and
managed by affiliates of Jacobson Partners (for an aggregate of
$10,497,154), Mr.&nbsp;Jacobson (for $115,703), Mr.&nbsp;Kellner
(for $174,429) and Mr.&nbsp;Morgan (for $225,000). During fiscal
2003, the Prior Subordinated Notes held by these related lenders
accrued interest in the following amounts: JP&nbsp;Acquisition
Fund&nbsp;II, L.P. and JP&nbsp;Acquisition Fund&nbsp;III,
L.P.&nbsp;&#151; $1,170,264; Mr.&nbsp;Jacobson&nbsp;&#151;
$12,899; Mr.&nbsp;Kellner&nbsp;&#151; $19,446; and
Mr.&nbsp;Morgan&nbsp;&#151; $25,084.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also in July&nbsp;2002, certain members of the
JP&nbsp;Acquisition Fund Group (the &#147;Optionees&#148;)
agreed to arrange for the Company to obtain a standby purchase
commitment in connection with the Company&#146;s Rights
Offering. As consideration for such commitment, a Special
Committee of the Board of Directors approved the grant to the
Optionees of options (the &#147;Standby Commitment
Options&#148;) to purchase, in the aggregate, up to 400,000
shares of common stock, until July&nbsp;19, 2006, at an exercise
price of $5.00 per share (approximately 171% of the five-day
average of the daily closing prices of the common stock on The
Nasdaq National Market System as of July&nbsp;19, 2002, the date
of the agreement). All shares acquired by the Optionees would be
subject to registration rights, pursuant to which, until
July&nbsp;6, 2007, the Optionees would have the right to cause
the Company to register, at the Company&#146;s expense, their
shares of common stock, whenever the Company is otherwise
registering shares (except in certain circumstances). The option
grant to the Optionees was approved by the Company&#146;s
shareholders and became effective and fully vested upon
consummation of the Rights Offering. Optionees receiving Standby
Commitment Options included Mr.&nbsp;Jacobson (options for
4,790&nbsp;shares, including 473&nbsp;shares reflecting his
proportionate interest in options beneficially owned by Jacobson
Partners, Mr.&nbsp;Kellner (options for 6,401&nbsp;shares) and
Mr.&nbsp;Morgan (options for 5,303&nbsp;shares, including
5&nbsp;shares reflecting his proportionate interest in options
beneficially owned by Jacobson Partners).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February&nbsp;2003, prior to the commencement
of the Rights Offering, the JP&nbsp;Acquisition Fund Group
entered into a Standby Securities Purchase Agreement pursuant to
which the Group agreed to purchase the securities to be offered
by the Company as part of the Rights Offering not subscribed for
by the Company&#146;s shareholders, at the same price to be made
available under the Rights Offering to the Company&#146;s
shareholders. Upon consummation of the Rights Offering and the
purchases contemplated under the Standby Securities Purchase
Agreement, the JP&nbsp;Acquisition Fund Group acquired an
aggregate of 76,023&nbsp;Units, consisting of
10,719,243&nbsp;shares of common stock and
$2,660,805&nbsp;principal amount of New Subordinated Notes. The
Units were acquired at the Rights Offering price of
$158.52&nbsp;per Unit. Of such amounts, Mr.&nbsp;Jacobson
acquired 887,525 shares and $220,308 of New Subordinated Notes
(including 11,069 shares and $2,748 of New Subordinated Notes
reflecting his proportionate interest in securities beneficially
owned by Jacobson Partners), Mr.&nbsp;Kellner and his spouse
acquired 665,802&nbsp;shares and $165,270 of New Subordinated
Notes, and Mr.&nbsp;Morgan acquired 226,569&nbsp;shares and
$56,241 of New Subordinated Notes (including 123&nbsp;shares and
$31 of New Subordinated Notes reflecting his proportionate
interest in securities beneficially owned by Jacobson Partners).
</FONT>

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

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<P align="left">
<B><FONT size="2">Compensation Committee Report on Executive
Compensation</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">General</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee&#146;s overall
compensation policy applicable to the Company&#146;s executive
officers is to provide a compensation program that will attract
and retain qualified executives for the Company and provide them
with incentives to achieve the Company&#146;s goals and increase
shareholder value. The Compensation Committee implements this
policy through establishing salaries, incentive bonuses and by
granting stock options. The Compensation Committee&#146;s
current policy is not to provide significant pension or other
retirement benefits for the Company&#146;s executives.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Salaries</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee&#146;s policy is to
provide salaries that are generally competitive with those of
comparable officers in comparably sized companies in the child
care and other service industries. In setting individual salary
levels for the executive officers (including the Chief Executive
Officer) of the Company, members of the Compensation Committee
determined such competitive salaries based on their own
subjective judgments. With respect to establishing salaries for
executive officers other than the Chief Executive Officer, the
Compensation Committee also relied on the recommendations of the
Company&#146;s Chief Executive Officer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The former interim Chief Executive Officer&#146;s
salary for fiscal 2003 was established by the Compensation
Committee in accordance with such individual&#146;s consulting
agreement with the Company.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Bonuses</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee&#146;s policy is that
a significant portion of the executive officer&#146;s total
compensation should be tied to incentive bonus plans. As a
result, the compensation of the Company&#146;s executive
officers is directly related to the overall financial and
operating performance of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee structured the fiscal
2003 bonus plan based upon an incentive formula tied to a
targeted level of operating earnings. Although the targeted
level of operating earnings with respect to executive officers
was not met during fiscal 2003, the Compensation Committee
approved discretionary bonuses for executive officers, as well
as for other management employees, based on improvements in
operating earnings during the second half of fiscal 2003. The
bonus amount approved with respect to each executive officer,
including the Chief Executive Officer, was determined based on
the subjective judgment of the members of the Compensation
Committee (which, for executive officers other than the Chief
Executive Officer, was based in part on the recommendation of
the Chief Executive Officer) as to the relative contribution of
each executive officer, as well as the relative salary level and
time of service with the Company of each executive officer.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Stock
Options</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee&#146;s policy is to
award stock options to the Company&#146;s executive officers and
other key employees in amounts reflecting the participant&#146;s
position and ability to influence the Company&#146;s overall
performance. Options are intended to provide participants with
an increased incentive to make contributions to the long-term
growth of the Company, to join the interests of participants
with the interests of shareholders of the Company, and to
attract and retain qualified employees. The Compensation
Committee&#146;s policy has been to grant options with a term of
up to seven years (generally with a five-year pro rata vesting)
and to fix the exercise price of the options at the fair market
values of the underlying shares on the date of grant. Such
options will, therefore, only have value if the price of the
underlying shares increases. The Compensation Committee&#146;s
general practice is to consider the granting of stock options
after the end of each fiscal year and, in certain cases, upon
hiring of the executive officer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee granted options to
executive officers during fiscal 2003, based upon the
recommendation of the Chief Executive Officer. In making his
recommendations, the Chief Executive Officer subjectively
considered certain factors, including his perception of
individual performance, the individuals&#146; contribution to
the overall performance of the Company and the anticipated value
of the executive&#146;s
</FONT>

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

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<DIV align="left">
<FONT size="2">contribution to the Company&#146;s future
performance, as well as the need to retain executives. The
determination was not based on specific objectives and no
specific weight was given to any of the factors considered.
Mr.&nbsp;Davis received his options based on the subjective
judgment of the Compensation Committee. Factors considered by
the Compensation Committee in determining the terms of his
options included the anticipated value of the Chief Executive
Officer&#146;s contribution to the Company&#146;s future
performance and the incentive to be provided to induce him to
join the Company as its Chief Executive Officer.
</FONT>
</DIV>
<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">By the Compensation Committee
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">James J. Morgan, Chairman
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Paula L. Gavin
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">George A. Kellner
    </FONT></TD>
</TR>

</TABLE>

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

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following line graph compares the yearly
cumulative total shareholder return (i.e., the change in share
price plus the cumulative amount of dividends, assuming dividend
reinvestment, divided by the initial share price, expressed as a
percentage) on the Company&#146;s common stock from
April&nbsp;3, 1998 through March&nbsp;28, 2003 with the
cumulative total return of (i)&nbsp;the NASDAQ Stock Market-US
Index, and (ii) a peer index group consisting of Standard
Industrial Classification (&#147;SIC&#148;) Code 8351, which
includes Child Care Services.
</FONT>

<P align="center">
<B>COMPARISON OF CUMULATIVE TOTAL RETURN</B>

<DIV align="center">
<B>AMONG CHILDTIME LEARNING CENTERS, INC.,</B>
</DIV>

<DIV align="center">
<B>THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP</B>
</DIV>

<P align="center">
<IMG src="k77727k7772701.gif" alt="(PERFORMANCE GRAPH)">

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

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

<TR>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="14" align="center" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

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

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">MEASUREMENT PERIOD</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">LEARNING</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">PEER</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">MARKET</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">(FISCAL YEAR COVERED)</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">CENTERS, INC.</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">GROUP</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">(U.S.)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="14" align="center" nowrap><HR size="1" noshade></TD><TD></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">4/99
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="15" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3/00
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="15" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3/01
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55.87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="15" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3/02
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="15" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">3/03
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="15" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="31%" align="left" noshade>
</DIV>

<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">$100 invested on 4/3/98 in stock or index
    including reinvestment of dividends. Fiscal year ending
    March&nbsp;31.
    </FONT></TD>
</TR>

</TABLE>

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

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">


<!-- link1 "III. APPROVAL OF THE CHILDTIME LEARNING CENTERS, INC. 2003 EQUITY COMPENSATION PLAN" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="center">
<B><FONT size="2">III.&nbsp;APPROVAL OF THE CHILDTIME LEARNING
CENTERS, INC.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">2003 EQUITY COMPENSATION PLAN</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s Board of Directors proposes
that our shareholders approve the Childtime Learning Centers,
Inc. 2003 Equity Compensation Plan (the &#147;Plan&#148;). The
Plan permits the granting of the following &#147;Awards&#148;:
(1)&nbsp;stock options, including both nonqualified options and
incentive options, (2)&nbsp;stock appreciation rights
(&#147;SARs&#148;), (3)&nbsp;restricted stock and restricted
stock units (&#147;RSUs&#148;), (4)&nbsp;performance shares, and
(5)&nbsp;other awards which are denominated or payable in,
valued by reference to, or otherwise based on common stock,
including rights to make an outright purchase of unrestricted or
restricted stock (other stock-based awards), to key employees,
outside directors, consultants and advisors of the Company and
its subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors believes that it is in the
best interest of the Company and its shareholders to be able to
offer Awards to key employees, outside directors, consultants
and advisors in accordance with the terms of the Plan, in order
provide incentives to such key employees, outside directors,
consultants and advisors to make significant and extraordinary
contributions to our long-term performance and growth, to join
the interests of key employees, outside directors, consultants
and advisors with the interests of our shareholders, and to
facilitate attracting and retaining key employees, outside
directors, consultants and advisors with exceptional ability.
Under the Company&#146;s current stock incentive plans, only
29,014 shares remain available for grant (as options or
restricted stock) to officers and key employees and 40,000
shares remain available for option grant to outside directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The full text of the Plan is set forth on
Appendix&nbsp;A to this Proxy Statement. The major features of
the Plan are summarized below, but each shareholder should
review the Plan itself for a full understanding of its contents.
</FONT>

<P align="left">
<B><FONT size="2">Administration; Plan Participants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee of the Board of
Directors, which will be reconstituted to consist exclusively of
two or more independent directors, will administer the Plan. The
Plan authorizes the Compensation Committee to interpret the
Plan, to promulgate, amend and rescind rules and regulations
relating to the Plan and to make all other determinations
necessary or advisable for its administration. Unless otherwise
determined by the Board of Directors, the Compensation
Committee&#146;s determinations and interpretations under the
Plan will be binding on participants. Under the Plan, the
Company has agreed to indemnify the Compensation Committee
members for reasonable expenses incurred in connection with the
defense of any action, suit or proceeding involving any action
or failure to act with respect to the Plan (other than matters
where the Compensation Committee member is determined to have
acted in bad faith).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Participants are chosen by the Compensation
Committee from among those individuals who are or who become key
employees (including officers and directors who are also key
employees) of the Company, outside directors, consultants and
advisors who, in the judgement of the Compensation Committee,
are or will become responsible for the Company&#146;s direction
and financial success. The Compensation Committee determines
those eligible participants or classes of participants to be
granted Awards, the type of Award and the terms and conditions
of the Awards.
</FONT>

<P align="left">
<B><FONT size="2">Amendment or Termination of the Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Plan may be terminated or amended at any time
by the Board of Directors. Unless sooner terminated, the Plan
will terminate ten&nbsp;years after its adoption by the Board of
Directors, and no Awards may be awarded thereafter. The
termination of the Plan will not affect the validity of any
Award outstanding on the date of termination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of conforming to any changes in
applicable law or governmental regulations, or for any other
lawful purpose, the Board of Directors has the right, with or
without approval of the Company&#146;s shareholders, to amend or
revise the terms of the Plan at any time; however, no such
amendment or revision can (i)&nbsp;with respect to the Plan,
increase the maximum number of shares in the aggregate which are
subject to the Plan or with respect to which Awards may be made
to individual participants (other than anti-dilution
adjustments),
</FONT>

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

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<DIV align="left">
<FONT size="2">materially change the class of persons eligible
to be participants under the Plan or establish additional and
different business criteria on which performance share goals are
based without approval or ratification of the Company&#146;s
shareholders; or (ii)&nbsp;with respect to an Award previously
granted under the Plan, except as otherwise specifically
provided in the Plan, alter or impair any such Award without the
consent of the holder thereof.
</FONT>
</DIV>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to adjustment as described below, Awards
may be granted for a maximum of 1,500,000&nbsp;shares of common
stock during the term of the Plan. Under the Plan, if any shares
subject to any Award are forfeited, or if any such Award
terminates without the delivery of shares or other
consideration, the shares previously used or reserved for such
Awards will be available for future Awards. In any event, the
maximum number of shares with respect to which Awards may be
granted to any individual during the term of the Plan may not
exceed 1,500,000&nbsp;shares. In addition, the aggregate fair
market value (determined at the time an incentive option is
granted) of shares with respect to which incentive options are
exercisable for the first time by any individual during any
calendar year cannot exceed $100,000. The amount of cash and the
value of any property paid to any individual during any calendar
year in settlement of a performance share cannot exceed
$1&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee, in its discretion,
may adjust the number of shares which may be made the subject of
new Awards or are then subject to outstanding Awards, the option
price with respect to each outstanding stock option, the grant
value with respect to outstanding SARs, and the aggregate number
of shares available at any time under the Plan to reflect such
events as a stock split, stock dividend, or other extraordinary
corporate event. The Awards that may be granted under the Plan
cannot presently be determined. In addition, nothing in the Plan
prevents the Company or any of its affiliates from adopting or
continuing in effect other or additional compensation
arrangements.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Awards granted under the Plan will be evidenced
by a written agreement between the Company and each participant,
which will be in accordance with the Plan and may contain
restrictions and limitations that do not violate the terms of
the Plan. Subject to the terms of the Plan, the Compensation
Committee may grant a participant one or more of the following
Awards and any combination thereof:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Options and SARs.
</FONT></I><FONT size="2">The Compensation Committee in its
discretion may grant either incentive options meeting the
definition of incentive stock option under Section&nbsp;422 of
the Internal Revenue Code of 1986, as amended (&#147;Code&#148;)
or nonqualified options not meeting such definition, or any
combination of incentive and nonqualified options. The option
price for incentive options may not be less than 100% (110% for
a participant owning 10% or more of our voting stock) of the
fair market value of the common stock on the grant date. The
option price for nonqualified options may not be less than 50%
of the fair market value of the common stock on the grant date.
Incentive options may only be granted to an employee of the
Company or any of the subsidiaries in which the Company owns
directly or indirectly 50% or more of the combined voting power
of all classes of its stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SARs may be granted in conjunction with or
independent of any stock option granted under the Plan. A SAR
granted in conjunction with a stock option may either be an
alternative right or an additional right. The exercise of a SAR
granted as alternative right will terminate the stock option to
the extent of the number of shares with respect to which the SAR
is exercised and vice versa. For SARs granted as an additional
right, both the SAR and the stock option may be exercised. Upon
exercise of a SAR, a participant is generally entitled to
receive an amount equal to the difference between the fair
market value of the shares with respect to which the participant
exercises the SAR at the time of grant and the fair market value
of the shares with respect to which the participant exercises
the SAR at the time of exercise. This amount may be payable in
cash or shares of common stock or any combination thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Incentive options and related SARs are generally
nontransferable by a participant other than by will or the laws
of descent and distribution and stock options and SARs will be
exercisable, during the lifetime of the
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<DIV align="left">
<FONT size="2">participant, only by the participant. However,
the Compensation Committee in its discretion may permit the
transfer of a nonqualified option or any related or
independently granted SAR.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the time of exercise, the option price for the
exercise of options must be paid in full in cash or, with the
consent of the Compensation Committee, in common stock. In the
discretion of the Compensation Committee, payment may also be
made by (a)&nbsp;the Company retaining from the shares to be
delivered upon exercise of the option that number of shares
having the fair market value on the date of exercise equal to
the option price, (b)&nbsp;by delivery of irrevocable
instructions to a stock broker to promptly deliver to the
Company full payment of the option price of the shares so
purchased from the proceeds of the stock broker&#146;s sale of,
or loan against, such shares (a &#147;Regulation&nbsp;T Stock
Option Exercise&#148;), or (c)&nbsp;if the Company has a stock
repurchase program in effect, by requesting that the Company
repurchase and retain the repurchase price for the number of
shares having a fair market value equal to the option price. The
Compensation Committee may also permit payment of all or part of
the exercise price of a stock option by means of a promissory
note of the participant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Restricted Stock Awards or RSUs.
</FONT></I><FONT size="2">The Compensation Committee may grant
restricted stock or RSUs to a participant. Restricted stock and
RSUs are nontransferable and will have an established
restriction period that may differ for each participant and with
respect to all or any portion of the same Award. Participants
are entitled to all dividend and voting rights with respect to
restricted stock. A participant will have no stock ownership
interest as a result of being granted RSUs, but may, in the
discretion of the Compensation Committee, receive dividend
equivalents on such units. Upon termination of a
participant&#146;s employment for any reason, all shares or
units which are still subject to restrictions will be forfeited;
however if the termination results from death, permanent
disability, retirement at a retirement age permitted under the
Company&#146;s retirement plan or policies, or is without cause
or is under an agreement with the Company, the Compensation
Committee may, in its discretion, release some or all of the
shares or units from the restrictions. At the expiration of the
restriction period, (i)&nbsp;with respect to restricted stock,
the Company will deliver stock certificates to the participant
or the legal representative of the participant&#146;s estate or,
if the shares were previously issued with a legend, the Company
will reissue certificates without the legend, and (ii)&nbsp;with
respect to RSUs, the Company will pay a participant an amount
equal to the fair market value of that number of shares to which
such RSU relates. In the discretion of the Compensation
Committee, the amount paid with respect to an RSU may be paid in
cash, common stock, other property or any combination thereof
and may be paid in a lump sum or in installments, currently or
on a deferred basis with provision for the payment or crediting
of a dividend equivalent or a reasonable rate of interest on
installment or deferred payment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Performance Shares.
</FONT></I><FONT size="2">The Compensation Committee may grant
to a participant the right to obtain performance shares. Unless
otherwise determined by the Compensation Committee, rights to
obtain performance shares are nontransferable. A
participant&#146;s right to obtain performance shares will be
subject to the attainment of one or more pre-established
performance goals over a performance period prescribed by the
Compensation Committee. The performance goal will be established
in writing no later than the earlier of 90&nbsp;days after the
start of a performance period or expiration of the first 25% of
the performance period and while the outcome of the performance
goal is substantially uncertain. The performance goals must be
based on the following business criteria: free cash flow, cash
flow return on investment, stock price, market share, sales,
revenues, earnings per share, return on equity, total
shareholder return, costs, net income, working capital turnover,
inventory or receivable turnover and/or margins of our company,
or any of our subsidiaries, divisions or units. The Compensation
Committee, in its discretion, will establish the specific
targets and other details of the performance goal. A performance
goal must, however, be objective so that a third party with
knowledge of the relevant facts could determine whether the goal
has been attained. The performance goal must prescribe an
objective formula or standard under which a third party could
compute the number of performance shares issuable to a
participant. Unless otherwise determined by the Compensation
Committee in the case of a participant who dies or becomes
permanently disabled, the performance shares will be issued to a
participant only after the expiration of the performance period
and the Compensation Committee has certified in writing that the
performance goal and any other material terms of the Award have
been satisfied. No participant will have the rights of a
shareholder with respect to performance shares until their
actual issuance. In the discretion of the Compensation
Committee, (i)&nbsp;a participant may defer the receipt of a
performance share
</FONT>

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

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<DIV align="left">
<FONT size="2">until a later time, and (ii)&nbsp;all or any
portion of a performance share Award may be settled by payment
of cash or other property in an amount not to exceed
$1&nbsp;million.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Stock Based Awards.
</FONT></I><FONT size="2">The Compensation Committee may grant
participants other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based
on or related to, shares of common stock as are deemed by the
Compensation Committee, in its discretion, to be consistent with
the purpose of the Plan, provided that such grants must comply
with applicable law. Without limitation, the Compensation
Committee may permit a participant to make a current, outright
purchase of common stock, which shares may or may not be subject
to any restrictions or conditions, for a price equal to, less
than or greater than the then fair market value of the common
stock, with the price payable by the participant in such form
and manner and at such time as determined by the Compensation
Committee in its discretion.
</FONT>

<P align="left">
<B><FONT size="2">Federal Income Tax Consequences</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rules governing the tax treatment of stock
options, SARs, restricted stock awards, RSUs and other
stock-based awards, including treatment of stock acquired upon
the exercise of a stock option or SAR, and the receipt or
release from restriction of performance shares or other shares,
are quite technical. Therefore, the description of the tax
consequences set forth below is necessarily general in nature
and does not purport to be complete. Moreover, the statutory
provisions are subject to change, as are their interpretations,
and their application may vary in individual circumstances.
Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income
tax laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Options.
</FONT></I><FONT size="2">Incentive options granted pursuant to
the Plan are intended to qualify as &#147;incentive stock
options&#148; within the meaning of Section&nbsp;422 of the
Code. If the participant makes no disposition of the shares
acquired pursuant to exercise of an incentive option within
one&nbsp;year after the transfer of shares to such participant
and within two&nbsp;years from the grant of the option, the
participant will realize no taxable income as a result of the
grant or exercise of such option, and any gain or loss that is
subsequently realized may be treated as long-term capital gain
or loss, as the case may be. Under these circumstances, the
Company will not be entitled to a deduction for federal income
tax purposes with respect to either the issuance of such
incentive options or the transfer of shares upon their exercise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If shares subject to incentive options are
disposed of prior to the expiration of the above time periods,
the participant will recognize ordinary income in the year in
which the disqualifying disposition occurs, the amount of which
will generally be the lesser of (i)&nbsp;the excess of the
market value of the shares on the date of exercise over the
option price, or (ii)&nbsp;the gain recognized on such
disposition. In general, such amount will be deductible by the
Company for federal income tax purposes in the same year, as
long as the amount constitutes reasonable compensation and the
Company satisfies certain federal income tax withholding
requirements. In addition, the excess, if any, of the amount
realized on a disqualifying disposition over the market value of
the shares on the date of exercise will be treated as capital
gain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A participant who acquires shares by exercise of
a nonqualified option generally realizes as taxable ordinary
income, at the time of exercise, the difference between the
exercise price and the fair market value of the shares on the
date of exercise. In general, such amount will be deductible by
the Company in the same year, provided that the amount
constitutes reasonable compensation and the Company satisfies
certain federal income tax withholding requirements. Subsequent
appreciation or decline in the value of the shares on the sale
or other disposition of the shares will generally be treated as
capital gain or loss.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Appreciation Rights.
</FONT></I><FONT size="2">A participant generally will recognize
ordinary income upon the exercise of a stock appreciation right
in an amount equal to the amount of cash received and the fair
market value of any shares received at the time of exercise,
plus the amount of any taxes withheld. Such amount will
ordinarily be deductible by the Company in the same year as long
as the amounts constitute reasonable compensation and the
Company satisfies certain federal income tax withholding
requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Restricted Stock Awards and RSUs.
</FONT></I><FONT size="2">A participant who is granted a
restricted stock award or an RSU under the Plan is not required
to include the value of such shares or RSUs in ordinary income
until the first time such participant&#146;s rights in the
shares or RSUs are transferable or are not subject to
substantial risk of
</FONT>

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

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<DIV align="left">
<FONT size="2">forfeiture, whichever occurs earlier, unless such
participant timely files an election under Section&nbsp;83(b) of
the Code to be taxed on the receipt of the shares or RSUs. In
either case, the amount of such income will be equal to the fair
market value of the shares or RSUs at the time the income is
recognized. The Company will ordinarily be entitled to a
deduction, in the amount of the ordinary income recognized by
the participant, at the same time the participant recognizes
such income, as long as the amount constitutes reasonable
compensation and the Company satisfies certain federal income
tax withholding requirements.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Performance Shares.
</FONT></I><FONT size="2">A participant who is granted a
performance share Award will generally not recognize any income
upon the grant of the Award. The participant will generally
recognize as ordinary income the fair market value of the shares
transferred upon the completion of the performance period and
the attainment of the performance goal, and the Company will
generally be entitled to a deduction equal to the fair market
value of the shares transferred to the participant at that time
as long as the amount constitutes reasonable compensation and
the Company satisfies certain federal income tax withholding
requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Stock-Based
Awards.</FONT></I><FONT size="2"> A participant who is permitted
to make an outright purchase of unrestricted common stock will
recognize ordinary income at the time of purchase if and to the
extent the purchase price is less than the fair market value of
the common stock on the date of purchase. A participant who is
permitted to make an outright purchase of restricted common
stock, depending on the nature of the restrictions, will
recognize ordinary income at the time the restrictions lapse if
and to the extent the then value of the common stock exceeds the
price paid by the participant, unless the participant makes an
election under Section&nbsp;83(b) of the Code to measure and
recognize any income at the time of purchase. The Company will
be entitled to a corresponding deduction equal to the amount of
any ordinary income recognized by a participant who makes an
outright purchase of common stock, at the time the participant
recognizes the ordinary income, provided that such amount
constitutes reasonable compensation and the Company satisfies
certain federal income tax withholding requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Section&nbsp;162(m).
</FONT></I><FONT size="2">Section&nbsp;162(m), as added to the
Code in 1993, denies a deduction to any publicly held
corporation for compensation paid to certain covered employees
in a taxable year to the extent such compensation exceeds
$1&nbsp;million. For this purpose, a covered employee means the
Company&#146;s chief executive officer and the Company&#146;s
four highest compensated officers (other than the chief
executive officer). It is possible that compensation
attributable to Awards under the Plan to a covered employee,
when combined with all other types of compensation received by
the covered employee from the Company, may cause this limitation
to be exceeded in any particular year. Certain types of
compensation, however, including so-called
&#147;performance-based compensation,&#148; are disregarded for
purposes of the deduction limitation. Compensation attributable
to stock options and SARs awarded under the Plan that have an
exercise price or base amount not less than the fair market
value of the common stock on the grant date should qualify as
performance-based compensation under the Plan. Compensation
attributable to performance shares has also been structured to
qualify for the performance-based compensation exclusion to the
$1&nbsp;million deduction limitation.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If, upon the grant, exercise, release of
restrictions or settlement of or in respect of an Award, or upon
any other event or transaction under or relating to the Plan,
the Company must pay amounts for federal income or employment
tax withholding, in the Compensation Committee&#146;s
discretion, either the Company will appropriately reduce the
amount of stock, cash or other property to be paid to the
participant or the participant must pay such amount to the
Company to enable the Company to pay, or reimburse the Company
for paying, such income or employment tax withholding. The
Compensation Committee may, in its discretion, permit the
participant to satisfy such withholding obligations (i)&nbsp;by,
in whole or in part, electing to reduce the number of shares of
common stock delivered or deliverable by the Company in respect
of an Award, (ii)&nbsp;by electing to tender common stock back
to the Company subsequent to receipt of such shares in respect
of an Award, (iii)&nbsp;in the case of a Regulation&nbsp;T Stock
Option Exercise, by irrevocably instructing the stock broker to
promptly deliver (in addition to the option price) an amount
equal to such withholding tax from the proceeds of the stock
broker&#146;s sale of or loan against some or all of the shares,
or (iv)&nbsp;if the Company has a stock repurchase program in
effect, by requesting that the Company repurchase (and retain
the repurchase price of) that number of shares issuable or
issued under the Plan having a then fair market value equal to
the amount of
</FONT>

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

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<DIV align="left">
<FONT size="2">withholding tax due. The Company also may
withhold the amount of such taxes from any other sums or
property due or to become due to the participant. The Company
may also defer issuance of shares under the Plan until payment
by the participant to the Company of the amount of any such tax.
The Compensation Committee may make such other arrangements with
respect to income or employment tax withholding as it may
determine.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing general tax discussion is intended
for the information of shareholders considering how to vote with
respect to this proposal and not as tax guidance to participants
in the Plan. Different tax rules may apply to specific
participants and transactions under the Plan.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SARs will require a charge against the
Company&#146;s earnings each year representing appreciation in
the value of such rights. In the case of SARs, such charge is
based on the difference between the market value of the common
stock on the date of grant and the current market price of the
common stock. Upon a decline in the market price of the common
stock subsequent to a charge against earnings related to the
estimated costs of SARs, reversal of prior charges is made in
the amount of such decline (but not to exceed aggregate prior
charges against earnings).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Restricted stock awards, RSUs, performance shares
and outright stock purchases will require a charge against the
Company&#146;s earnings representing the value of any benefit
conferred, which may be spread over any applicable restricted
period. Such charge is based on the market value at the time the
shares are transferred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, neither the grant nor the exercise of
an incentive option or a nonqualified option under the Plan
requires any charge against earnings, if the exercise price of
the option is equal to the fair market value of the shares on
the date of grant. If the exercise price is below the fair
market value of the shares on the date of grant, an earnings
charge to the difference will be required either at the date of
grant or possibly over the term of the option.
</FONT>

<P align="left">
<B><FONT size="2">Allocation of Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All executive officer, non-executive directors
and non-executive officer employees who are deemed to be
&#147;key employees&#148; under the Plan will be eligible for
Awards under the Plan. If the proposed Plan is approved, it is
anticipated that awards will be granted to three of the
Company&#146;s executive officers, shortly thereafter, to give
them the right to purchase shares of common stock at $0.90 per
share: William D. Davis (100,000 shares), Frank M. Jerneycic
(47,000 shares) and Scott W. Smith (27,000 shares). Other than
as specified in the preceding sentence, the benefit and number
of shares to be issued, if the Plan is approved, to the
individuals or groups specified below, cannot be determined. Set
forth below is a summary of benefit and
</FONT>

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

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

<DIV align="left">
<FONT size="2">number of shares issued under the Company&#146;s
1995 Employee Stock Option Plan during the fiscal year ending
March&nbsp;28, 2003, to the individuals or groups specified
below:
</FONT>
</DIV>

<P align="left">


<!-- link1 "New Plan Benefits Childtime Learning Centers, Inc. 1995 Employee Stock Option Plan" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center">
<B><FONT size="2">New Plan Benefits</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Childtime Learning Centers, Inc. 1995 Employee
Stock Option Plan</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="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Number of shares of Common Stock</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">subject to Options Granted under</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">the 1995 Employee Stock Option</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Plan in the Fiscal Year ended</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">March&nbsp;28,&nbsp;2003</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">William D. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Executive Officer
    </FONT></TD>
    <TD><FONT size="2">&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">Frank M. Jerneycic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Financial Officer and Treasurer
    </FONT></TD>
    <TD><FONT size="2">&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">Scott W. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President of Human Resources
    </FONT></TD>
    <TD><FONT size="2">&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">Leonard C. Tylka
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Former Interim Chief Financial Officer and
    Treasurer
    </FONT></TD>
    <TD><FONT size="2">&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">Karen R. Danner
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Former Vice President of Corporate Operations
    </FONT></TD>
    <TD><FONT size="2">&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">Executive Group (6&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145,000</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">Non-Executive Director Group (7&nbsp;persons)
    </FONT></DIV>
    </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</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">Non-Executive Officer Employee Group
    </FONT></DIV>
    </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</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The dollar value of these options cannot be
determined because they depend on the market value of the
underlying shares of Common Stock on the date of exercise.
Generally, the value of the awards will equal (a)&nbsp;the
excess, if any, of the fair market value of a share of the
Company&#146;s common stock (on the date of issuance) over the
exercise price per share, multiplied by (b)&nbsp;the number of
shares issued. As of the Record Date, the fair market value of
the Company&#146;s common stock, based on the closing price on
such day (as reported on The Nasdaq SmallCap Market), was $2.51.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additional information regarding the
Company&#146;s equity compensation plans as of March&nbsp;28,
2003 follows:
</FONT>

<P align="left">


<!-- link1 "Equity Compensation Plan Information" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="center">
<B><FONT size="2">Equity Compensation Plan Information</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(as of March&nbsp;28, 2003)</FONT></B>
</DIV>

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

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><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="7%"><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="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">(b)</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">(c)</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Number of securities</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">remaining available for</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">to be issued upon</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Weighted-average</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">future issuance under</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">exercise of</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">exercise price of</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">equity compensation plans</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">outstanding options,</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">outstanding options,</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">(excluding securities</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Plan category</FONT></B></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">warrants and rights</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">warrants and rights</FONT></B></TD><TD></TD>
    <TD></TD>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">reflected in column&nbsp;(a))</FONT></B></TD><TD></TD>
</TR>

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

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans approved by security
    holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">349,403</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">325,597</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">Equity compensation plans not approved by
    security holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">297,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></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</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 colspan="2" align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" 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 align="right" valign="bottom" nowrap><FONT size="2">646,903</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</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">325,597</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 colspan="2" align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="31%" align="left" noshade>
</DIV>

<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">Does not include options for 400,000 shares
    approved by shareholders for grant to certain members of the
    Jacobson Partners Group during fiscal 2003, the grant of which
    did not become effective until consummation of the
    Company&#146;s Rights Offering subsequent to March&nbsp;28, 2003.
    </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="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief summary of the equity
compensation plans which have not been approved by the
Company&#146;s security holders:
</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;Upon his appointment in January&nbsp;2001
    as Interim President and Chief Executive Officer, James&nbsp;J.
    Morgan was granted options to purchase 60,000 shares of the
    Company&#146;s common stock at $7.00&nbsp;per share. As
    originally granted, the options were to vest at the rate of
    10,000 shares per month and were to expire January&nbsp;2003.
    After his appointment in August&nbsp;2001 as Chairman of the
    Board, the expiration of these options was extended to
    September&nbsp;2006. At that time, Mr.&nbsp;Morgan was also
    granted options to purchase an additional 50,000 shares at
    $11.00&nbsp;per share. These additional options vest after one
    year and expire September&nbsp;2006. The options automatically
    vest upon a change of control of the Company.
    </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 March&nbsp;2001, the Interim Chief
    Financial Officer, Leonard&nbsp;C. Tylka was granted options to
    purchase 10,000 shares of the Company&#146;s common stock at a
    price of $7.97&nbsp;per share. These options vest evenly over
    3&nbsp;years and expire in March&nbsp;2007. In
    September&nbsp;2001, Mr.&nbsp;Tylka was granted additional
    options to purchase 20,000 shares at $11.00&nbsp;per share.
    These additional shares vest in September&nbsp;2002 and expire
    in September&nbsp;2006. Mr.&nbsp;Tylka&#146;s options
    automatically vest upon a change of control of the Company.
    </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;On June&nbsp;26, 2002, in connection with
    the Company&#146;s acquisition of substantially all of the
    assets of Tutor Time Learning Systems, Inc., the Company entered
    into an investment advisory agreement with Jacobson Partners.
    Upon consummation of the acquisition, Jacobson Partners was paid
    an advisory fee consisting of a cash payment of $333,334 and the
    issuance of 175,438 shares of the Company&#146;s Common Stock.
    </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;On August&nbsp;15, 2002, pursuant to a
    Stock Option Agreement, the Company granted to William&nbsp;D.
    Davis, its then newly-appointed President and Chief Executive
    Officer, an option to purchase 150,000 shares of the
    Company&#146;s Common Stock, at an exercise price of $3.50. The
    option will vest annually in 20% increments (30,000 shares each)
    on August&nbsp;15, 2003, and on each subsequent anniversary of
    the grant date. The option granted to Mr.&nbsp;Davis will expire
    on August&nbsp;15, 2009.
    </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;On October&nbsp;16, 2002, as an
    inducement to their acceptance of their appointment to the
    Company&#146;s Board of Directors, each of Paula&nbsp;L. Gavin,
    Kenneth Johnsson and Brett&nbsp;D. Shevack were granted options
    to purchase 2,500 shares of the Company&#146;s Common Stock at
    $1.50&nbsp;per share. The options vest on the first anniversary
    of the grant date and expire in October&nbsp;2007.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors believes that the proposed
Plan is in the best interests of the Company and its
shareholders and, accordingly, is recommending the approval of
the proposed Plan. The approval must be by a majority of the
shareholders present, or represented by proxy, and entitled to
vote at the Meeting. Shareholder abstentions, withheld votes and
broker non-votes will not be deemed votes cast in determining
the outcome of this matter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The Board of Directors recommends a vote FOR
the proposal to approve the Childtime Learning Centers, Inc.
2003 Equity Compensation Plan, and your proxy will be so voted
unless you specify otherwise.</FONT></B>

<P align="left">


<!-- link1 "IV. MATTERS RELATING TO THE AUDIT COMMITTEE" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="center">
<B><FONT size="2">IV.&nbsp;MATTERS RELATING TO THE AUDIT
COMMITTEE</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Report of the Audit Committee of the Board of
Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee (&#147;Committee&#148;)
operates under a formal written charter, which was approved on
August&nbsp;16, 2000, by the Board of Directors. The members of
the Audit Committee as of March&nbsp;28, 2003 were Jason&nbsp;K.
Feld, Paula&nbsp;L. Gavin and Brett&nbsp;D. Shevack, each of
whom were appointed to the Audit Committee in October&nbsp;2002.
Prior to October&nbsp;2002, Milton H. Dresner, a former director
of the Company, and James&nbsp;J. Morgan were members of the
Audit Committee. Each of the current members of the Audit
Committee is, and Mr.&nbsp;Dresner, during the term of his
service on the Audit Committee was, independent as defined under
the standards promulgated by the National Association of
Securities Dealers. Mr.&nbsp;Morgan, who was appointed to
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<DIV align="left">
<FONT size="2">the Audit Committee in January&nbsp;2002, was not
independent, as defined under such standards, due to the
compensation paid to him under his consulting agreement with the
Company, which ended in November, 2002, and his relationship
with Jacobson Partners. See &#147;Consulting Agreements&#148;
and &#147;Compensation Committee Interlocks and Insider
Participation&#148; under Part&nbsp;II, &#147;Compensation of
Executive Officers,&#148; above. The Board of Directors had
determined to appoint Mr.&nbsp;Morgan to the Audit Committee,
despite his lack of independence, because of his experience and
knowledge in financial and accounting matters.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee&#146;s primary function is to
assist the Company&#146;s Board of Directors in executing its
oversight role with respect to the Company&#146;s financial
matters. This role includes: (1)&nbsp;monitoring the adequacy
and integrity of the Company&#146;s reporting processes,
internal controls, and information management systems;
(2)&nbsp;reviewing the independence and performance of the
Company&#146;s independent accountants; (3)&nbsp;monitoring
Company compliance with various financial regulatory
requirements; and (4)&nbsp;facilitating appropriate
communications among the Board of Directors, senior management
and the independent public accountants, PricewaterhouseCoopers
LLP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee has reviewed and discussed with
management and the independent accountants the audited financial
statements for the year ended March&nbsp;28, 2003. In addition,
the Committee has discussed with PricewaterhouseCoopers LLP, the
matters required to be discussed by Statement on Auditing
Standards No.&nbsp;61 (Communication with Audit Committees). The
Committee has also received from its independent public
accountants the written disclosure required by Independence
Standards Board Standard No.&nbsp;1 (Independence Discussion
with Audit Committees) and has discussed with
PricewaterhouseCoopers LLP their independence from the Company
and its management.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee has considered whether the
provision of non-audit services to the Company by the
independent public accountant is compatible with the public
accountant&#146;s independence and has concluded that it is.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the Committee&#146;s reviews and
discussions outlined above, the Committee recommended to the
Board of Directors that the Company&#146;s audited financial
statements be included in the Company&#146;s Annual Report on
Form&nbsp;10-K for the fiscal year ended March&nbsp;28, 2003.
</FONT>

<P align="left">
<FONT size="2">Submitted by the Audit Committee of the Board of
Directors:
</FONT>

<P align="left">
<FONT size="2">Paula L. Gavin, Chairperson
</FONT>

<DIV align="left">
<FONT size="2">Jason K. Feld
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Brett D. Shevack
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Audit and Non-Audit Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the aggregate fees
billed to the Company for the fiscal year ended March&nbsp;28,
2003, by the Company&#146;s independent public accountants,
PricewaterhouseCoopers LLP:
</FONT>

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

<TR>
    <TD width="86%"><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 align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audit fees, including reviews of quarterly
    reports on Form&nbsp;10-Q
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">289,000</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">Financial information system, design &#38;
    implementation
    </FONT></DIV>
    </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</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 other 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">76,883</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">23
</FONT>
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<P align="left">


<!-- link1 "V. OTHER MATTERS" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="center">
<B><FONT size="2">V.&nbsp;OTHER MATTERS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Compliance with Section&nbsp;16(a) of the
Securities Exchange Act of 1934</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;16(a) of the Securities Exchange Act
of 1934 requires the Company&#146;s directors and executive
officers, and persons who own more than ten percent of a
registered class of the Company&#146;s equity securities, to
file with the Securities and Exchange Commission
(&#147;SEC&#148;) initial reports of ownership and reports of
changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the
Company with copies of all Section&nbsp;16(a) forms they file.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the Company&#146;s knowledge, based solely on
review of the copies of such reports furnished to the Company
and written representations that no other reports were required
during the fiscal year ended March&nbsp;28, 2003, all
Section&nbsp;16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial
owners were complied with for fiscal 2003, except (a)&nbsp;each
of Paula Gavin, Kenneth Johnsson and Brett Shevack filed a late
Form&nbsp;4 report with regard to an exempt grant of stock
options awarded upon their appointment as directors of the
Company; (b)&nbsp;Melanie de Vries filed a late Form&nbsp;3
report due upon her appointment as an executive officer of the
Company and a late Form&nbsp;4 report with respect to an exempt
grant of stock options made under the Company&#146;s 1995
Employee Stock Option Plan; (c)&nbsp;Scott Smith filed a late
Form&nbsp;3 report due upon his appointment as an executive
officer of the Company; (d)&nbsp;James Morgan filed two late
Form&nbsp;4 reports with respect to acquisitions of common stock
arising out of his membership in the Jacobson Partners Group;
(e)&nbsp;George Kellner amended two Form&nbsp;4 reports to
correct the number of acquired shares reported in each such
report; (f)&nbsp;Benjamin Jacobson (as representative for the
Jacobson Partners Group) filed an amendment to his Form&nbsp;3
report to report additional holdings arising out of his
membership in the Jacobson Partners Group, a late Form&nbsp;4
report relating to an acquisition by another member of the
Jacobson Partners Group, a late Form&nbsp;4 report relating to
the same acquisition, representing his indirect, pecuniary
interest in such shares, a late Form&nbsp;5 report to report
additional holdings and an acquisition by certain members of the
Jacobson Partners Group; and (g)&nbsp;Nathan Gantcher (a member
of the Jacobson Partners Group) filed a late Form&nbsp;4 report
with respect to an for one acquisition of common stock.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the Company nor the members of its Board
of Directors intend to bring before the Meeting any matters
other than those set forth in the Notice of Annual Meeting of
Shareholders, and they have no present knowledge that any other
matters will be presented for action at the meeting by others.
If any other matters properly come before such meeting, however,
it is the intention of the persons named in the enclosed form of
proxy to vote in accordance with their best judgement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A shareholder proposal which is intended to be
presented at the 2004 Annual Meeting of Shareholders must be
received by the Secretary of the Company at its principal
executive offices, 21333&nbsp;Haggerty Road, Suite&nbsp;300,
Novi,&nbsp;MI 48375, by March&nbsp;3, 2004, to be considered for
inclusion in the Company&#146;s Proxy Statement and proxy
related to that meeting. Such proposals should be sent by
certified mail, return receipt requested.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shareholder proposals to be presented at the
Company&#146;s 2004 Annual Meeting of Shareholders, but that are
not intended to be considered for inclusion in the
Company&#146;s Proxy Statement and proxy related to that
meeting, must be received by the Company no later than
May&nbsp;17, 2004 to be considered timely. Such proposals should
be sent to the Company&#146;s Secretary at the Company&#146;s
principal executive offices, 21333&nbsp;Haggerty Road,
Suite&nbsp;300, Novi,&nbsp;MI 48375, by certified mail, return
receipt requested. If the Company does not have notice of the
matter by that date, the Company&#146;s form of proxy in
connection with that meeting may confer discretionary authority
to vote on that matter, and the persons named in the
Company&#146;s form of proxy will vote the share represented by
such proxies in accordance with their best judgment.
</FONT>

<P align="center"><FONT size="2">24
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has selected
PricewaterhouseCoopers LLP to serve as the Company&#146;s
independent auditors for fiscal 2004. PricewaterhouseCoopers LLP
has served in such capacity since July&nbsp;1990.
Representatives from PricewaterhouseCoopers LLP will be present
at the Annual Meeting of Shareholders, will have an opportunity
to make a statement if they wish, and will be available to
respond to appropriate questions.
</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">By Order of the Board of Directors
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">IRA L. YOUNG
    </FONT></TD>
</TR>

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

</TABLE>

<P align="left">
<FONT size="2">Dated: July&nbsp;1, 2003
</FONT>

<P align="center"><FONT size="2">25
</FONT>

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<P align="left">


<!-- link1 "Appendix A" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="right">
<B><FONT size="2">Appendix&nbsp;A</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CHILDTIME LEARNING CENTERS, INC.</FONT></B>

<!-- link1 "2003 Equity Compensation Plan" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="center">
<B><FONT size="2">2003 Equity Compensation Plan</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Definitions:
</I>As used herein, the following definitions shall apply:
</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">(a)&nbsp;&#147;Award&#148; shall mean any stock
    option, stock appreciation right, restricted stock, restricted
    stock unit, performance share award or other stock-based award
    granted under the Plan.
    </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">(b)&nbsp;&#147;Committee&#148; shall mean a
    committee consisting of two or more members of the Board of
    Directors of the Corporation, each of whom (1)&nbsp;shall be an
    &#147;outside director&#148; as defined under
    Section&nbsp;162(m) of the Internal Revenue Code of 1986, as
    amended (the <B><I>&#147;Code&#148;</I></B>), and the Treasury
    Regulations thereunder, and (2)&nbsp;may be a &#147;non-employee
    director&#148; as defined under Rule&nbsp;16b-3 of the Rules and
    Regulations under the Securities Exchange Act of 1934, as
    amended, or any similar or successor provision, as appointed by
    the Board of Directors of the Corporation to administer the Plan.
    </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">(c)&nbsp;&#147;Corporation&#148; shall mean
    Childtime Learning Centers, Inc., a Michigan corporation, or any
    successor thereof.
    </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">(d)&nbsp;&#147;Discretion&#148; shall mean in the
    sole discretion of the Committee, with no requirement whatsoever
    that the Committee follow past practices, act in a manner
    consistent with past practices, or treat a Participant (as
    hereinafter defined) in a manner consistent with the treatment
    afforded other Participants with respect to the Plan.
    </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">(e)&nbsp;&#147;Incentive Option&#148; shall mean
    an option to purchase Common Stock of the Corporation which
    meets the requirements set forth in the Plan and also meets the
    definition of an incentive stock option set forth in
    Section&nbsp;422 of the Code.
    </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">(f)&nbsp;&#147;Nonqualified Option&#148; shall
    mean an option to purchase Common Stock of the Corporation which
    meets the requirements set forth in the Plan but does not meet
    the definition of an incentive stock option set forth in
    Section&nbsp;422 of the Code.
    </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">(g)&nbsp;&#147;Other stock-based award&#148;
    shall mean any right granted under Paragraph 20 of the Plan.
    </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">(h)&nbsp;&#147;Participant&#148; shall mean any
    individual or class of individual designated by the Committee
    under Paragraph&nbsp;6 for participation in the Plan who is or
    becomes (i)&nbsp;a key employee (including an officer or
    director who is also a key employee) of the Corporation or any
    Subsidiary, (ii)&nbsp;a director who is not an employee of the
    Corporation or any Subsidiary (hereinafter sometimes referred to
    as an &#147;outside director&#148;), and (iii)&nbsp;a consultant
    or advisor of the Corporation or any Subsidiary.
    </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">(i)&nbsp;&#147;Performance share&#148; shall mean
    a grant of Common Stock of the Corporation upon the attainment
    of one or more performance goals during a performance period
    established by the Committee, as provided in Paragraph&nbsp;19.
    </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">(j)&nbsp;&#147;Plan&#148; shall mean this
    Childtime Learning Centers, Inc. 2003 Equity Compensation Plan.
    </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">(k)&nbsp;&#147;Restricted stock&#148; shall mean
    a grant of Common Stock of the Corporation which is subject to
    restrictions against transfer, forfeiture and such other terms
    and conditions determined by the Committee, as provided in
    Paragraph&nbsp;18.
    </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">(l)&nbsp;&#147;Restricted stock unit&#148; shall
    mean a grant of a right to obtain the value of a share of Common
    Stock of the Corporation which is subject to restrictions
    against transfer, forfeiture and such other terms and conditions
    determined by the Committee, as provided in Paragraph&nbsp;18.
    </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">(m)&nbsp;&#147;Stock appreciation right&#148;
    shall mean a right to receive the appreciation in value, or a
    portion of the appreciation in value, of a specified number of
    shares of the Common Stock of the Corporation, as provided in
    Paragraph&nbsp;12.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-1
</FONT>

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<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">(n)&nbsp;&#147;Subsidiary&#148; shall mean any
    corporation, limited liability company, partnership or any other
    entity in which the Corporation owns, directly or indirectly,
    stock or other ownership interest therein, possessing more than
    twenty-five percent (25%) of the combined voting power of all
    classes of stock or other ownership interest.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Purpose of
Plan: </I>The purpose of the Plan is to provide key employees
(including officers and directors who are also key employees),
outside directors, consultants and advisors of the Corporation
and its Subsidiaries with incentives to make significant and
extraordinary contributions to the long-term performance and
growth of the Corporation and its Subsidiaries, to join the
interests of key employees, outside directors, consultants and
advisors with the interests of the shareholders of the
Corporation, and to facilitate attracting and retaining key
employees, outside directors, consultants and advisors with
exceptional abilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Administration:
</I>The Plan shall be administered by the Committee. Subject to
the provisions of the Plan, the Committee shall determine, from
those who are or become eligible to be Participants under the
Plan, the persons or class of persons to be granted Awards, the
type of Awards and the amount or maximum amount of stock or
rights covered by Awards to be granted to each such person or
class of person, and the terms and conditions of any Awards.
Subject to the provisions of the Plan, the Committee is
authorized to interpret the Plan, to promulgate, amend and
rescind rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for its
administration. Interpretation and construction of any provision
of the Plan by the Committee shall, unless otherwise determined
by the Board of Directors of the Corporation, be final and
conclusive. A majority of the Committee shall constitute a
quorum, and the acts approved by a majority of the members
present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee, shall be the
acts of the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification
of Committee Members: </I>In addition to such other rights of
indemnification as they may have, the members of the Committee
shall be indemnified by the Corporation against the reasonable
expenses, including attorneys&#146; fees, actually and
necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection
with the Plan or any Award granted hereunder, and against all
amounts paid by them in settlement thereof (provided such
settlement is approved by the Board of Directors of the
Corporation) or paid by them in satisfaction of a judgment in
any such action, suit or proceeding, except in relation to
matters as to which it shall be determined in such action, suit
or proceeding that such Committee member has acted in bad faith;
provided, however, that within sixty (60)&nbsp;days after
receipt of notice of institution of any such action, suit or
proceeding, a Committee member shall offer the Corporation in
writing the opportunity, at its own cost, to handle and defend
the same.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Maximum Number
of Shares Subject to Plan: </I>The maximum number of shares of
stock which may be issued pursuant to Awards granted under the
Plan or with respect to which Awards may be granted under the
Plan shall not exceed in the aggregate 1,500,000 shares of
Common Stock of the Corporation (subject to adjustments as
provided in this Paragraph&nbsp;5). Any shares that are
delivered by the Corporation, and any awards or grants that are
made by, or become obligations of, the Corporation through the
assumption by the Corporation or a Subsidiary of, or in
substitution for, outstanding awards or grants previously made
by an acquired company, shall not be counted against the number
of shares available under the Plan. Consistent with the purpose
of the Plan and with a view to avoiding over or under counting,
the Committee shall, in its Discretion, determine the number of
shares to charge against the shares remaining available under
the Plan as a result of the grant or settlement of Awards made
under the Plan. If any shares covered by an Award or to which an
Award relates are forfeited, or if an Award otherwise terminates
without the delivery of shares or of other consideration, then
the shares covered by such Award, or to which such Award
relates, or the number of shares otherwise counted against the
aggregate number of shares available under the Plan with respect
to such Award, to the extent of any such forfeiture or
termination, shall again be, or shall become, available for
granting Awards under the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The maximum number of shares with respect to
which Awards may be granted to any Participant during the term
of the Plan shall not exceed 1,500,000 shares of Common Stock of
the Corporation (subject to adjustments as provided in this
Paragraph&nbsp;5). All shares with respect to which an Award is
granted shall be
</FONT>

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

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<DIV align="left">
<FONT size="2">counted for purposes of this per-person share
limitation, regardless of whether the Participant did not
realize the benefit of the Award as a result of forfeiture,
cancellation, expiration, termination or other event. If a stock
option or a stock appreciation right is modified after grant to
reduce its exercise price or grant value, the modified stock
option or stock appreciation right shall be treated as a newly
granted stock option or stock appreciation right for purposes of
this per-person share limitation, with the shares covered by
both the original and the modified grant counting against the
number of available shares under this per-person limitation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares with respect to each
outstanding Award, the option price with respect to outstanding
stock options, the grant value with respect to outstanding stock
appreciation rights, the aggregate number of shares available at
any time under the Plan, and the maximum number of shares with
respect to which Awards may be made to an individual Participant
during the term of the Plan shall be subject to such adjustment
as the Committee, in its Discretion, deems appropriate to
reflect such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of
or by the Corporation; provided, however, that no fractional
shares shall be issued pursuant to the Plan, no Awards may be
granted under the Plan with respect to fractional shares, and
any fractional shares resulting from such adjustments shall be
eliminated from any outstanding Award.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Participants:
</I>The Committee shall determine and designate from time to
time, in its Discretion, those individuals who are or who become
key employees (including officers and directors who are also key
employees), outside directors, consultants or advisors of the
Corporation or any Subsidiary to receive Awards who, in the
judgment of the Committee, are or will become responsible for
the direction and financial success of the Corporation or any
Subsidiary. Subject to the provisions of the Plan, the Committee
may authorize in advance the grant of Awards to individuals or
classes of individuals who are not at the time of Committee
authorization, but who subsequently become, key employees,
outside directors, consultants or advisors of the Corporation or
any Subsidiary; provided, however, that (i)&nbsp;for all
purposes of the Plan, the date of grant of any Award made to an
individual pursuant to such authorization shall be no earlier
than the date on which such individual becomes an employee,
outside director, consultant or advisor of the Corporation or
any Subsidiary, and (ii)&nbsp;such authorization shall prescribe
the principal terms or range of terms of the Awards that may be
made to such individuals or classes of individuals including,
without limitation, the type or types of Awards and the number
or maximum number of shares to be covered by such Awards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Written
Agreement: </I>Each Award granted under the Plan shall be
evidenced by a written agreement between the Corporation and the
Participant which shall contain such provisions as may be
approved by the Committee. Such agreements shall constitute
binding contracts between the Corporation and the Participant,
and every Participant, upon acceptance of such agreement, shall
be bound by the terms and restrictions of the Plan and of such
agreement. The terms of each such agreement shall be in
accordance with the Plan, but the agreements may include such
additional provisions and restrictions determined by the
Committee, provided that such additional provisions and
restrictions do not violate the terms of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Allotment of
Shares: </I>Subject to the terms of the Plan, the Committee
shall determine and fix, in its Discretion, the number or
maximum number of shares with respect to which each Participant
may be granted Awards; provided, however, that no Incentive
Option may be granted under the Plan to any one Participant
which would result in the aggregate fair market value,
determined as of the date the option is granted, of underlying
stock with respect to which Incentive Options are exercisable
for the first time by such Participant during any calendar year
under any plan maintained by the Corporation (or any parent or
Subsidiary of the Corporation) exceeding $100,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Options:
</I>Subject to the terms of the Plan, the Committee, in its
Discretion, may grant to Participants either Incentive Options,
Nonqualified Options or any combination thereof; provided,
however, that an Incentive Option may only be granted to an
employee of the Corporation or a Subsidiary, and in the case of
a Subsidiary only if (i)&nbsp;the Subsidiary is treated as a
disregarded entity owned by the Corporation, or (ii)&nbsp;the
Subsidiary is a corporation (or is treated as a disregarded
entity owned by a corporation) fifty percent or more of the
combined voting power of all classes of stock of which is owned,
directly or indirectly, by the Corporation. Each option granted
under the Plan shall designate the number of shares covered
thereby, if any,
</FONT>

<P align="center"><FONT size="2">A-3
</FONT>

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<DIV align="left">
<FONT size="2">with respect to which the option is an Incentive
Option, and the number of shares covered thereby, if any, with
respect to which the option is a Nonqualified Option.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Option
Price: </I>Subject to the rules set forth in this
Paragraph&nbsp;10, the Committee, in its Discretion, shall
establish the price per share for which the shares covered by
the option may be purchased. With respect to an Incentive
Option, such option price shall not be less than 100% of the
fair market value of the stock on the date on which such option
is granted; provided, however, that with respect to an Incentive
Option granted to a Participant who at the time of the grant
owns (after applying the attribution rules of
Section&nbsp;424(d) of the Code) more than 10% of the total
combined voting stock of the Corporation or of any parent or
Subsidiary, the option price shall not be less than 110% of the
fair market value of the stock on the date such option is
granted. With respect to a Nonqualified Option, the option price
shall not be less than 50% of the fair market value of the stock
on the date such option is granted. Fair market value of a share
shall be determined by the Committee and may be determined by
taking the mean between the highest and lowest quoted selling
prices of the Corporation&#146;s stock on any exchange or other
market on which the shares of Common Stock of the Corporation
shall be traded on such date or, if there are no sales on such
date, on the next preceding or following day on which there are
sales. The option price shall be subject to adjustment in
accordance with the provisions of Paragraph&nbsp;5 of the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Payment of
Stock Option Price: </I>At the time of the exercise in whole or
in part of any stock option granted hereunder, payment of the
option price in full in cash or, with the consent of the
Committee, in Common Stock of the Corporation or by a promissory
note payable to the order of the Corporation which is acceptable
to the Committee, shall be made by the Participant for all
shares so purchased. Such payment may, with the consent of the
Committee, also consist of a cash down payment and delivery of
such a promissory note in the amount of the unpaid exercise
price. In the Discretion of, and subject to such conditions as
may be established by, the Committee, payment of the option
price may also be made by the Corporation retaining from the
shares to be delivered upon exercise of the stock option that
number of shares having a fair market value on the date of
exercise equal to the option price of the number of shares with
respect to which the Participant exercises the option. In the
Discretion of the Committee, a Participant may exercise an
option, if then exercisable, in whole or in part, by delivery to
the Corporation of written notice of the exercise in such form
as the Committee may prescribe, accompanied by irrevocable
instructions to a stock broker to promptly deliver to the
Corporation full payment for the shares with respect to which
the option is exercised from the proceeds of the stock
broker&#146;s sale of or loan against some or all of the shares
(a &#147;Regulation&nbsp;T Stock Option Exercise&#148;). In the
event the Corporation then has in effect a stock repurchase
program, in its Discretion and subject to such terms and
conditions as it may impose, the Committee may permit a
Participant to exercise an option and pay the option price by
delivering to the Corporation a written notice of exercise which
includes a request that the Corporation repurchase (and retain
the repurchase price of) that number of the option shares having
a fair market value on the date of exercise equal to the option
price of the number of shares with respect to which the
Participant exercises the option. Such payment may also be made
in such other manner as the Committee determines is appropriate,
in its Discretion. No Participant shall have any of the rights
of a shareholder of the Corporation under any stock option until
the actual issuance of shares to said Participant, and prior to
such issuance no adjustment shall be made for dividends,
distributions or other rights in respect of such shares, except
as provided in Paragraph&nbsp;5.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock
Appreciation Rights: </I>Subject to the terms of the Plan, the
Committee may grant stock appreciation rights to Participants
either in conjunction with, or independently of, any stock
options granted under the Plan. A stock appreciation right
granted in conjunction with a stock option may be an alternative
right wherein the exercise of the stock option terminates the
stock appreciation right to the extent of the number of shares
purchased upon exercise of the stock option and,
correspondingly, the exercise of the stock appreciation right
terminates the stock option to the extent of the number of
shares with respect to which the stock appreciation right is
exercised. Alternatively, a stock appreciation right granted in
conjunction with a stock option may be an additional right
wherein both the stock appreciation right and the stock option
may be exercised. A stock appreciation right may not be granted
in conjunction with an Incentive Option under
</FONT>

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<DIV align="left">
<FONT size="2">circumstances in which the exercise of the stock
appreciation right affects the right to exercise the Incentive
Option or vice versa, unless the stock appreciation right, by
its terms, meets all of the following requirements:
</FONT>
</DIV>
<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">(a)&nbsp;the stock appreciation right will expire
    no later than the Incentive Option;
    </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">(b)&nbsp;the stock appreciation right may be for
    no more than the difference between the option price of the
    Incentive Option and the fair market value of the shares subject
    to the Incentive Option at the time the stock appreciation right
    is 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">(c)&nbsp;the stock appreciation right is
    transferable only when the Incentive Option is transferable, and
    under the same conditions;
    </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">(d)&nbsp;the stock appreciation right may be
    exercised only when the Incentive Option is eligible to be
    exercised; and
    </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">(e)&nbsp;the stock appreciation right may be
    exercised only when the fair market value of the shares subject
    to the Incentive Option exceeds the option price of the
    Incentive Option.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon exercise of a stock appreciation right, a
Participant shall be entitled to receive, without payment to the
Corporation (except for applicable withholding taxes), an amount
equal to the excess of or, in the Discretion of the Committee, a
portion of the excess of (i)&nbsp;the then aggregate fair market
value of the number of shares with respect to which the
Participant exercises the stock appreciation right, over
(ii)&nbsp;the aggregate fair market value of such number of
shares at the time the stock appreciation right was granted.
This amount shall be payable by the Corporation, in the
Discretion of the Committee, in cash, in shares of Common Stock
of the Corporation, in other property or any combination thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Granting and
Exercise of Stock Options and Stock Appreciation Rights:</I>
Subject to the provisions of this Paragraph&nbsp;13, each stock
option and stock appreciation right granted hereunder shall be
exercisable at any such time or times or in any such
installments as may be determined by the Committee; provided,
however, that the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which
Incentive Options are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
A Participant may exercise a stock option or stock appreciation
right, if then exercisable, in whole or in part, by delivery to
the Corporation of written notice of the exercise, in such form
as the Committee may prescribe, accompanied, in the case of a
stock option, by payment for the shares with respect to which
the stock option is exercised as provided in Paragraph&nbsp;12
(unless the Committee, in its Discretion, permits a cashless
form of option exercise permitted by Paragraph&nbsp;12). Except
as provided in Paragraph&nbsp;17, stock options and stock
appreciation rights may be exercised only while the Participant
is an employee, outside director, consultant or advisor, as the
case may be, of the Corporation or a Subsidiary. Successive
stock options and stock appreciation rights may be granted to
the same Participant, whether or not the stock option(s) and
stock appreciation right(s) previously granted to such
Participant remain unexercised. A Participant may exercise a
stock option or stock appreciation right, if then exercisable,
notwithstanding that stock options and stock appreciation rights
previously granted to such Participant remain unexercised.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Non-transferability
of Stock Options and Stock Appreciation Rights: </I>No stock
option or stock appreciation right granted under the Plan to a
Participant shall be transferable by such Participant otherwise
than by will, or by the laws of descent and distribution, and
stock options and stock appreciation rights shall be
exercisable, during the lifetime of the Participant, only by the
Participant. Notwithstanding the foregoing, in its Discretion
and subject to such terms and conditions as it may prescribe,
the Committee may permit a Participant to transfer a
Nonqualified Option or a related or independently granted stock
appreciation right.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Term of Stock
Options and Stock Appreciation Rights: </I>If not sooner
terminated, each stock option and stock appreciation right
granted hereunder shall expire not more than ten (10)&nbsp;years
from the date of the granting thereof; provided, however, that
with respect to an Incentive Option granted to a Participant
who, at the time of the grant, owns (after applying the
attribution rules of Section&nbsp;424(d) of the Code) more than
10% of the total combined voting stock of all classes of stock
of the Corporation or any parent or Subsidiary, such option
shall expire not more than five (5)&nbsp;years after the date of
granting thereof.
</FONT>

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

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Continuation
of Employment: </I>The Committee may require, in its Discretion,
that any Participant under the Plan to whom a stock option or a
stock appreciation right shall be granted shall agree in writing
as a condition of the granting of such stock option or stock
appreciation right to remain an employee, consultant, advisor or
outside director of the Corporation or a Subsidiary, as the case
may be, for a designated minimum period from the date of the
granting of such stock option or stock appreciation right as
shall be fixed by the Committee, and the Committee may further
require, in its Discretion, that any Participant agree in
writing to comply with any confidentiality, non-solicitation,
non-competition and non-disparagement provisions and covenants
that the Committee may require as a condition precedent to the
exercise of a stock option or a stock appreciation right.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination
of Employment: </I>If the employment of an employee Participant
terminates, if the consultancy or advisorship of a consultant or
advisor Participant terminates, or if an outside director
Participant ceases to be a director (hereinafter collectively
referred to as a &#147;termination of employment&#148;), the
Committee may, in its Discretion, permit the exercise of stock
options and stock appreciation rights granted to such
Participant (a)&nbsp;for a period not to exceed three months
following such termination of employment (or one year following
termination of employment on account of the Participant&#146;s
death or permanent disability) with respect to Incentive Options
or related stock appreciation rights, and (b)&nbsp;for a period
not to extend beyond the expiration date with respect to
Nonqualified Options or related or independently granted stock
appreciation rights. In no event, however, shall a stock option
or a stock appreciation right be exercisable subsequent to its
expiration date. A stock option or stock appreciation right may
only be exercised after a Participant&#146;s termination of
employment to the extent exercisable on the date of termination
of employment; provided, however, that if the termination of
employment is due to the Participant&#146;s death, permanent
disability or retirement at a retirement age permitted under the
Corporation&#146;s or Subsidiary&#146;s retirement plan or
policies, or if the termination of employment results from
action by the Corporation or a Subsidiary without cause or from
an agreement between the Corporation or a Subsidiary and the
Participant (hereinafter collectively referred to as a
&#147;qualifying termination of employment&#148;), the
Committee, in its Discretion, may permit all or part of the
stock options and stock appreciation rights granted to such
Participant to thereupon become exercisable in full or in part.
For purposes of this Paragraph&nbsp;17 and any other provision
of the Plan where the term is used, the Committee&#146;s
definition of &#147;cause&#148; shall be final and conclusive.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted
Stock or Restricted Stock Units: </I>Subject to the terms of the
Plan, the Committee may award Participants shares of restricted
stock and/or the Committee may grant Participants restricted
units with respect to a specified number of shares of stock. All
shares of restricted stock and all restricted stock units
granted to Participants under the Plan shall be subject to the
following terms and conditions (and to such other terms and
conditions prescribed by the Committee):
</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">(a)&nbsp;At the time of each award of restricted
    shares or restricted stock units, there shall be established for
    the shares or units a restricted period, which period may differ
    among Participants and may have different expiration dates with
    respect to portions of shares or units covered by the same award.
    </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">(b)&nbsp;Shares of restricted stock or restricted
    stock units awarded to Participants may not be sold, assigned,
    transferred, pledged, hypothecated or otherwise encumbered
    during the restricted period applicable to such shares or units.
    Except for such restrictions on transfer, a Participant may be
    provided all of the rights of a shareholder in respect of
    restricted shares including, but not limited to, the right to
    receive dividends on, and the right to vote, the shares. A
    Participant shall have no ownership interest in shares of stock
    with respect to which restricted stock units are granted;
    provided, however, that the Committee may, in its Discretion,
    permit payment to such Participant of dividend equivalents on
    such units equal to the amount of dividends, if any, which are
    paid on that number of shares with respect to which the
    restricted stock units are granted.
    </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">(c)&nbsp;If there is a termination of employment
    of a Participant, all shares or units theretofore awarded to the
    Participant which are still subject to the restrictions imposed
    by Paragraph&nbsp;18(b) shall upon such termination of
    employment be forfeited and transferred back to the Corporation,
    without payment of any consideration by the Corporation;
    provided, however, that in the event of a qualifying termination
    of
    </FONT></TD>
</TR>

</TABLE>

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

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<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">employment, the Committee may, in its Discretion,
    release some or all of the shares or units from the restrictions.
    </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">(d)&nbsp;Shares of restricted stock granted under
    the Plan may be evidenced in such manner as the Committee may
    deem appropriate, including, without limitation, book-entry
    registration or issuance of stock certificates. If stock
    certificates are issued in respect of shares of restricted
    stock, such certificates shall be registered in the name of the
    Participant, deposited with the Corporation or its designee,
    together with a stock power endorsed in blank, and, in the
    Discretion of the Committee, a legend shall be placed upon such
    certificates reflecting that the shares represented thereby are
    subject to restrictions against transfer and forfeiture.
    </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">(e)&nbsp;At the expiration of the restricted
    period applicable to restricted shares, the Corporation shall
    deliver to the Participant or the legal representative of the
    Participant&#146;s estate stock certificates for such shares. If
    stock certificates were previously issued for the shares and a
    legend has been placed on such certificates, the Corporation
    shall cause such certificates to be reissued without the legend.
    </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">(f)&nbsp;At the expiration of the restricted
    period applicable to restricted stock units, the Corporation
    shall pay to the Participant an amount equal to the then fair
    market value of the shares. In the Discretion of the Committee,
    such amount may be paid in cash, stock, other property or any
    combination thereof. Moreover, in the Discretion of the
    Committee, such amount may be paid in a lump sum or in
    installments, currently upon expiration of the restricted period
    or on a deferred basis, with provision for the payment or
    crediting of a dividend equivalent or reasonable rate of
    interest on installment or deferred payments in the Discretion
    of the Committee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">In the case of events such as stock dividends,
stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Corporation, any stock, securities
or other property which a Participant receives or is entitled to
receive by reason of his ownership of restricted shares shall,
unless otherwise determined by the Committee, be subject to the
same restrictions applicable to the restricted shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Performance
Shares: </I>The Committee may grant to a Participant the right
to obtain performance shares subject to the following terms and
conditions:
</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">(a)&nbsp;The Participant&#146;s right to obtain
    performance shares shall be subject to attainment of one or more
    performance goals over a performance period prescribed by the
    Committee.
    </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">(b)&nbsp;The performance goal applicable to an
    award to a Participant of the right to obtain performance shares
    shall be based upon free cash flow, cash flow return on
    investment, stock price, market share, sales, revenues, earnings
    per share, return on equity, total stockholder return, costs,
    net income, working capital turnover, inventory or receivable
    turnover and/or margins of the Corporation, a Subsidiary, or a
    division or unit thereof. The specific targets and other details
    of the performance goal shall be established by the Committee in
    its Discretion. A performance goal must, however, be objective
    so that a third party with knowledge of the relevant facts could
    determine whether the goal has been attained.
    </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">(c)&nbsp;The performance goal applicable to an
    award to a Participant of the right to obtain performance shares
    shall be established by the Committee in writing at any time
    during the period beginning on the date of the award and ending
    on the earlier of (i)&nbsp;ninety (90) days after commencement
    of the performance period applicable to the award, or
    (ii)&nbsp;expiration of the first 25% of the performance period;
    provided, however, that there must be substantial uncertainty
    whether a performance goal will be attained at the time it is
    established by the Committee.
    </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">(d)&nbsp;The performance goal established by the
    Committee must prescribe an objective formula or standard, that
    could be applied by a third party having knowledge of the
    relevant performance results, to compute the number of
    performance shares issuable to the Participant if the goal is
    attained.
    </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">(e)&nbsp;Unless otherwise determined by the
    Committee in the case of a Participant who dies or becomes
    permanently disabled, performance shares shall be issued to a
    Participant only after (i)&nbsp;expiration of the performance
    period and attainment of the performance goal applicable to the
    award, and (ii)&nbsp;issuance of a written certification by the
    Committee (including approved minutes of the meeting
    </FONT></TD>
</TR>

</TABLE>

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

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><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">of the Committee at which the certification is
    made) that the performance goal and any other material terms of
    the award have been attained or satisfied.
    </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">(f)&nbsp;No Participant shall have any of the
    rights of a shareholder of the Corporation in respect of the
    shares covered by a performance share award until the actual
    issuance of the shares to said Participant and, prior to such
    issuance, no adjustments shall be made for dividends,
    distributions or other rights in respect of such shares, except
    as provided in Paragraph&nbsp;5.
    </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">(g)&nbsp;In its Discretion and subject to such
    terms and conditions as it may impose, the Committee may permit
    a Participant to elect to defer receipt of performance shares to
    a time later than the time the shares otherwise would be issued
    to the Participant. In such event, the Committee may, in its
    Discretion, provide for the payment by the Corporation of an
    additional amount representing interest at a reasonable rate or
    the actual rate of return on one or more predetermined specific
    investments, as determined by the Committee.
    </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">(h)&nbsp;In the Discretion of the Committee, in
    lieu of settling a performance share award by issuance of shares
    of Common Stock of the Corporation to a Participant, all or a
    portion of the award may be settled by payment of cash or other
    property to the Participant in an amount or having a value equal
    to the then value of the otherwise issuable shares; provided,
    however, that the amount of cash and the value of any other
    property paid to any Participant during any calendar year in
    settlement of a performance share award shall not exceed
    $1,000,000.
    </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">(i)&nbsp;Unless otherwise determined by the
    Committee, performance shares or rights therein awarded to a
    Participant may not be sold, assigned, transferred, pledged,
    hypothecated or otherwise encumbered by the Participant at any
    time before actual issuance of the shares to the Participant.
    </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">(j)&nbsp;In its Discretion, the Committee may
    subject a performance share award to a Participant to any other
    terms or conditions not inconsistent with the foregoing,
    including, without limitation, a requirement that the
    Participant remain an employee of the Corporation or a
    Subsidiary (including at or above a specified salary grade), or
    that the Participant remain a consultant, advisor or outside
    director of the Corporation or a Subsidiary, for the entire
    performance period applicable to the award.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Performance share awards under the Plan are
intended to constitute qualified performance-based compensation
for purposes of Section&nbsp;162(m)(4)(C) of the Code and the
Treasury Regulations thereunder, and the provisions of this
Paragraph&nbsp;19 (and the other provisions of the Plan relating
to performance share awards) shall be interpreted and
administered to effectuate that intent. Moreover, the Committee
may revise or modify the requirements of this Paragraph&nbsp;19
or the terms of outstanding performance share awards to the
extent the Committee determines, in its Discretion, that such
revision or modification is necessary for such awards to
constitute qualified performance-based compensation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
Stock-Based Awards: </I>The Committee may grant to Participants
such other awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or
related to, shares of Common Stock of the Corporation as are
deemed by the Committee, in its Discretion, to be consistent
with the purposes of the Plan; provided, however, that such
grants must comply with applicable law. Without limitation, the
Committee may permit a Participant to make a current, outright
purchase of shares of Common Stock of the Corporation, which
shares may or may not be subject to any restrictions or
conditions, for a price equal to, less than or greater than the
then fair market value of the shares, with the price payable by
the Participant in such form and manner and at such time as
determined by the Committee in its Discretion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investment
purpose: </I>If the Committee, in its Discretion, determines
that as a matter of law such procedure is or may be desirable,
it may require a Participant, upon any acquisition of stock
hereunder and as a condition to the Corporation&#146;s
obligation to deliver certificates representing such shares, to
execute and deliver to the Corporation a written statement in
form satisfactory to the Committee, representing and warranting
that the Participant&#146;s acquisition of shares of stock shall
be for such person&#146;s own account, for investment and not
with a view to the resale or distribution thereof and that any
subsequent offer for sale or sale of any such shares shall be
made either pursuant to (a)&nbsp;a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended
(the &#147;Securities Act&#148;), which Registration Statement
has
</FONT>

<P align="center"><FONT size="2">A-8
</FONT>
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<DIV align="left">
<FONT size="2">become effective and is current with respect to
the shares being offered and sold, or (b)&nbsp;a specific
exemption from the registration requirements of the Securities
Act, but in claiming such exemption the Participant shall, prior
to any offer for sale or sale of such shares, obtain a favorable
written opinion from counsel for or approved by the Corporation
as to the availability of such exemption. The Corporation may
endorse an appropriate legend referring to the foregoing
restriction upon the certificate or certificates representing
any shares issued or transferred to the Participant under the
Plan.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">22.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rights to
Continued Employment: </I>Nothing contained in the Plan or in
any Award granted pursuant to the Plan, nor any action taken by
the Committee hereunder, shall confer upon any Participant any
right with respect to continuation of employment or service as
an employee, consultant, advisor or outside director of the
Corporation or a Subsidiary nor interfere in any way with the
right of the Corporation or a Subsidiary to terminate such
person&#146;s employment or service at any time with or without
cause.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">23.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Withholding
Payments: </I>If, upon the grant, exercise, release of
restrictions or settlement of or in respect of an Award, or upon
any other event or transaction under or relating to the Plan,
there shall be payable by the Corporation or a Subsidiary any
amount for income or employment tax withholding, in the
Committee&#146;s Discretion, either the Corporation shall
appropriately reduce the amount of stock, cash or other property
to be paid to the Participant or the Participant shall pay such
amount to the Corporation or Subsidiary to enable it to pay or
to reimburse it for paying such income or employment tax
withholding. The Committee may, in its Discretion, permit
Participants to satisfy such withholding obligations, in whole
or in part, by electing to have the amount of Common Stock
delivered or deliverable by the Corporation in respect of an
Award appropriately reduced, or by electing to tender Common
Stock back to the Corporation subsequent to receipt of such
stock in respect of an Award. The Corporation or any of its
Subsidiaries shall also have the right to withhold the amount of
such taxes from any other sums or property due or to become due
from the Corporation or any of its Subsidiaries to the
Participant upon such terms and conditions as the Committee
shall prescribe. The Corporation may also defer issuance of
stock under the Plan until payment by the Participant to the
Corporation or any of its Subsidiaries of the amount of any such
tax. In the case of a Regulation&nbsp;T Stock Option Exercise,
the Committee may in its Discretion permit the Participant to
irrevocably instruct a stock broker to promptly deliver to the
Corporation an amount (in addition to the option exercise price)
equal to any withholding tax owing in respect of such option
exercise from the proceeds of the stock broker&#146;s sale of or
loan against some or all of the shares. In the event the
Corporation then has in effect a stock repurchase program, in
its discretion and subject to such terms and conditions as it
may impose, the Committee may permit Participants to satisfy
their withholding tax obligations by requesting that the
Corporation repurchase (and retain the repurchase price of) that
number of shares issuable or issued under the Plan having a then
fair market value equal to the amount of withholding tax due.
The Committee may make such other arrangements with respect to
income or employment tax withholding as it shall determine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">24.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Change in
Control: </I>Notwithstanding any other provision of the Plan or
any provision of a grant or award agreement, in the event the
Committee determines that there has been or will be a change in
control of the Corporation or of any Subsidiary, the Committee
may, without the consent of the holder, provide for any
treatment of outstanding Awards which it determines, in its
Discretion, to be appropriate. Such treatment may include,
without limitation, acceleration of vesting of stock options and
stock appreciation rights, release of restrictions applicable to
restricted stock or restricted stock units, or deeming
performance share awards to have been earned. In determining
whether there has been or will be a change in control of the
Corporation or of any Subsidiary, the Committee may utilize a
definition it deems appropriate of a change in control,
including any such definition contained in any existing
agreement between the Corporation or a Subsidiary and one of its
senior executives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">25.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effectiveness
of Plan: </I>The Plan shall be effective on the date the Board
of Directors of the Corporation adopts the Plan, provided that
the shareholders of the Corporation approve the Plan within
twelve (12)&nbsp;months of that date. Awards may be granted
prior to shareholder approval of the Plan, but each such Award
shall be subject to shareholder approval of the Plan. Without
limitation, no stock option or stock appreciation right may be
exercised and no performance or other shares may be issued prior
to shareholder approval, and any restricted stock or restricted
stock units awarded are subject to forfeiture if such
shareholder approval is not obtained.
</FONT>

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

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">26.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination,
Duration and Amendments of Plan: </I>The Plan may be abandoned
or terminated at any time by the Board of Directors of the
Corporation. Unless sooner terminated by the Board of Directors,
the Plan shall terminate on the date ten (10)&nbsp;years after
its adoption by the Board of Directors, and no Awards may be
granted thereafter. The termination of the Plan shall not affect
the validity of any Award outstanding on the date of termination.
</FONT>

<P align="left">
<FONT size="2">For the purpose of conforming to any changes in
applicable law or governmental regulations, or for any other
lawful purpose, the Board of Directors of the Corporation shall
have the right, without approval of the shareholders of the
Corporation, to amend or revise the terms of the Plan at any
time; provided, however, that no such amendment or revision
shall (i)&nbsp;with respect to the Plan, increase the maximum
number of shares in the aggregate which are subject to the Plan
or with respect to which Awards may be made to individual
Participants (subject, however, to the provisions of
Paragraph&nbsp;5), materially change the class of persons
eligible to be Participants under the Plan, establish additional
and different business criteria on which performance share goals
are based, or materially increase the benefits accruing to
Participants under the Plan, without approval or ratification of
the shareholders of the Corporation; or (ii)&nbsp;with respect
to an Award previously granted under the Plan, except as
otherwise specifically provided in the Plan, alter or impair any
such Award without the consent of the holder thereof.
</FONT>

<P align="center"><FONT size="2">A-10
</FONT>
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<P align="left"><FONT size="2"><IMG SRC="k77727childlogo.gif" alt="(logo)">
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
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&nbsp;
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Mark this box with an X if you have made changes<br>
to your name or address details below.</FONT></TD>
</TR>
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<P align="left"><FONT size="2"><B>Annual Meeting Proxy Card</B>
</FONT>

<P align="left"><FONT size="2">A  <B>Election of Directors</B><BR>
The Board of Directors Recommends a Vote FOR the listed nominees.
</FONT>
<CENTER>
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    <TD valign="top" colspan="5"><FONT size="2">1. Election of Directors: 3&nbsp;year term Nominees:</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" colspan="5"><FONT size="2">2. Election of Directors: 1&nbsp;year term Nominee:</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>For</B>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>Withhold</B>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>For</B>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>Withhold</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">01. Benjamin R. Jacobson</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">03. Kenneth Johnsson
</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">02. Brett D. Shevack</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
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<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2">B  <B>Issues</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top" colspan="7"><FONT size="2">The Board of Directors recommends a vote FOR the following proposal</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">2. The approval of the Childtime Learning<br>&nbsp;&nbsp;&nbsp;&nbsp;Centers,
Inc. 2003 Equity Compensation Plan</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>For</B><BR>
<FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>Against</B><BR>
<FONT face="Wingdings">&#111;</FONT>
</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>Abstain</B><BR>
<FONT face="Wingdings">&#111;</FONT></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"><FONT size="2">C  <B>Authorized Signatures &#151; Sign Here &#151; This section must be completed for your instructions to be executed.</B><BR>
NOTE: Please sign exactly as your name(s) appear(s) on this Proxy. Joint owners should
indicate capacity in which they are signing. Trustees, Executors, etc., should indicate capacity in which they are signing.
</FONT>
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<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
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    <TD width="39%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Signature 1 &#151; Please keep signature within the box</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Signature 2 &#151; Please keep signature within the box
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Date (mm/dd/yyyy)</FONT></TD>
</TR>

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

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&#091;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&#091;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&#091;&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;&#093;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Proxy &#151; Childtime Learning Centers, Inc.</B>
</FONT>

<P align="left"><FONT size="2"><B>Meeting Details</B>
</FONT>
<P align="left"><FONT size="2"><B>Address<BR>
Proxy Solicited on behalf of the Board of Directors for the Annual Meeting of Shareholders &#151; July&nbsp;30, 2003</B>
</FONT>
<P align="left"><FONT size="2">The undersigned appoints William D. Davis and Frank M. Jerneycic and each of
them, as proxies, with full power of substitution and revocation, to vote, as
designated on the reverse side hereof, all the Common Stock of Childtime
Learning Centers, Inc. which the undersigned has power to vote, with all powers
which the undersigned would possess if personally present, at the annual
meeting of shareholders thereof to be held on July&nbsp;30, 2003 or at any
adjournment thereof.
</FONT>
<P align="left"><FONT size="2">Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named on this proxy, the approval of the proposed plan and in the
discretion of the proxies on any other matter that may properly come before the
meeting.
</FONT>
<P align="left"><FONT size="2"><B>PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.</B>
</FONT>

<P align="left"><FONT size="2">(Continued and to be signed on the reverse side.)
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>




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