Exhibit
      10.2

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of March 23, 2007 among
      Passport Restaurants, Inc.,
      a Texas
      corporation whose principal place of business is located at 804
      Pier
      View Way, Oceanside, CA 92054
      (the
“Company”),
      and
      each of the Purchaser(s) identified on the signature pages hereto (including
      their successors and assigns, the “Purchaser(s)”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”)
      and
      Rule 506 promulgated thereunder, the Company desires to issue and sell to the
      Purchasers, and the Purchasers desires to purchase from the Company, securities
      of the Company as more fully described in this Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Purchasers agree as
      follows:

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1 Definitions.
      In
      addition to the terms defined elsewhere in this Agreement: (a) capitalized
      terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Notes (as defined herein), and (b) the following terms have the meanings
      indicated in this Section 1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities
      Act.
      With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as any Purchaser will
      be
      deemed to be an Affiliate of such Purchaser.

     

    “CAMOFI”
means
      CAMOFI Master LDC.

     

    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $.001 per share, and any securities
      into which such common stock shall hereinafter have been reclassified
      into.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

     

    “Company
      Counsel”
means
      Pillsbury Winthrop Shaw Pittman LLP.

     

    “Disclosure
      Schedules”
shall
      have the meaning ascribed to such term in Section 3.1 hereof.

     

    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      ,
      directors or consultants of the Company or any Subsidiary pursuant to any stock
      or option plan duly adopted by a majority of the non-employee members of the
      Board of Directors of the Company or a majority of the members of a committee
      of
      non-employee directors established for such purpose, (b) securities upon the
      exercise of or conversion of any securities issued hereunder, convertible
      securities, options, warrants or other rights issued and outstanding on the
      date
      of this Agreement, provided that such securities have not been amended since
      the
      date of this Agreement to increase the number of such securities or (c)
      securities issued in connection with mergers, acquisitions or other business
      combinations.

     

    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(h) hereof.

     

    “Intercompany
      Indebtedness”
means
      indebtedness among or between the Company and any of the Subsidiaries party
      to
      the Subsidiary Guarantee,

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction. 

     

    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(b) hereof.

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Note”
means
      the 12% Senior Secured Note due, subject to the terms therein, September 30,
      2007, issued by the Company to the Purchasers hereunder, in the form of
Exhibit
      A.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “PPM”
means
      the Private Placement Memorandum of the Company dated as of January 2007, as
      amended.

     

    
      
        
        

      

      
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    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Qualified
      Equity Offering”
means
      an equity financing for the account of the Company in which shares of common
      stock, or securities, directly or indirectly, convertible into or exchangeable
      or exercisable for shares of common stock are issued, which financing results
      in
      cumulative aggregate proceeds to the Company of at least $5
      million.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company
      and
      the Purchasers, in the form of Exhibit
      D
      attached
      hereto.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale of the Warrant Shares by the Purchasers
      as provided for in the Registration Rights Agreement.

     

    “Required
      Minimum”
means,
      as of any date, the maximum aggregate number of shares of Common Stock then
      issued or potentially issuable in the future pursuant to the Transaction
      Documents, including any Warrant Shares issuable upon exercise in full of all
      Warrants.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Securities”
means
      the Notes, the Issued Shares, the Warrants and the Warrant Shares.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Security
      Agreement”
means
      the Security Agreement, dated the date hereof, between the Company and the
      Purchasers, in the form of Exhibit
      E
      attached
      hereto.

     

    “Security
      Documents”
means
      the Security Agreement, the Subsidiary Guarantee and any other documents and
      filings required thereunder in order to grant the Purchasers a perfected
      security interest in all of the assets of the Company, including all UCC-1
      filing receipts.

     

    “Security
      Interest and Pledge Agreements”
means
      those certain Security Interest and Pledge Agreements dated as of the date
      hereof in favor of CAMOFI pledging certain stock of the Company. 

     

    “Subscription
      Amount”
means,
      as to the Purchasers, the aggregate amount
      to be
      paid for the Notes and Warrants purchased hereunder as specified below such
      Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount”, in United States Dollars and in immediately available
      funds.

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

     

    “Subsidiary
      Guarantee”
means
      the Subsidiary Guarantee, dated the date hereof, among each of the Subsidiaries
      and the Purchasers, in the form of Exhibit
      F
      attached
      hereto.

     

    
      
        
        

      

      
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    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market or the “Pink
      Sheets”.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq SmallCap Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      OTC Bulletin Board.

     

    “Transaction
      Documents”
means
      this Agreement, the Notes, the Warrants, the Security Agreement, the Subsidiary
      Guarantee, the Registration Rights Agreement and any other documents or
      agreements executed in connection with the transactions contemplated
      hereunder.

     

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the primary Trading Market on which the Common
      Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based
      on
      a Trading Day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP
      function; (b) if the Common Stock is not then listed or quoted on the
      Trading Market and if prices for the Common Stock are then reported in the
“Pink
      Sheets” published by the Pink Sheets, LLC (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid price
      per
      share of the Common Stock so reported; or (c) in all other cases, the fair
      market value of a share of Common Stock as determined by a nationally
      recognized-independent appraiser selected in good faith by the Purchasers and
      the Company.

     

    “Warrants”
means
      the Common Stock purchase warrants, in the form of Exhibit B
      and
      delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
      hereof, which Warrants shall be exercisable immediately and have a term of
      exercise equal to five years.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      concurrent with the execution and delivery of this Agreement by the parties
      hereto, the Company agrees to sell, and each of the Purchasers severally (and
      not jointly) agrees to purchase,
      the principal amount of the Notes set forth as the “Subscription Amount” on such
      Purchaser’s signature page to this Agreement (not to exceed $1,600,000 in the
      aggregate),
      secured
      by a first priority lien, more fully described in the Security Agreement, on
      all
      assets of the Company and its Subsidiaries. Each Purchaser shall deliver to
      the
      Company via wire transfer or a certified check immediately available funds
      equal
      to its Subscription Amount (other than John Creed who is surrendering notes
      previously issued to him by the Company) and the Company shall deliver to each
      Purchaser its Note and Warrants as determined pursuant to Section 2.2(a), and
      the other items set forth in Section 2.2 issuable at the Closing. Upon
      satisfaction of the conditions set forth in Section 2.2, the Closing shall
      occur
      at the offices of the Company, or such other location as the parties shall
      mutually agree.

     

    
      
        
        

      

      
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    2.2 Deliveries.

     

    
      	 	
              a)

            	
              On
                the Closing Date, the Company shall deliver to the counsel for the
                Purchaser the following:

            


    

     

    
      	 	
              (i)

            	
              this
                Agreement duly executed by the
                Company;

            


    

     

    
      	 	
              (ii)

            	
              one
                Note with an aggregate principal amount equal to such Purchaser’s
                Subscription Amount, registered in the name of such
                Purchaser;

            


    

     

    
      	 	
              (iii)

            	
              duly
                executed Warrants registered in the name of each Purchaser (other
                than
                John Creed) to purchase an aggregate of 2,800,000 shares of Common
                Stock
                of the Company with an exercise price of $0.0001 per
                share;

            


    

     

    
      	 	
              (iv)

            	
              the
                Registration Rights Agreement duly executed by the
                Company;

            


    

     

    
      	 	
              (v)

            	
              the
                Security Agreement, duly executed by the Company, along with all
                the
                Security Documents;

            


    

     

    
      	 	
              (vi)

            	
              the
                Subsidiary Guarantees, duly executed by the
                Subsidiaries;

            


    

     

    
      	 	
              (vii)

            	
              the
                Lock-Up Agreement, duly executed by the Company, all officers and
                directors; and

            


    

     

    
      	 	
              (viii)

            	
              Security
                Interest and Pledge Agreements executed by Christopher Thomas and
                Clyde
                Culp. 

            


    

     

    
      	 	
              b)

            	
              On
                the Closing Date, each Purchaser shall deliver or cause to be delivered
                to
                Company Counsel the following: 

            


    

     

    
      	 	
              (i)

            	
              this
                Agreement duly executed by such
                Purchaser;

            


    

     

    
      	 	
              (ii)

            	
              the
                Registration Rights Agreement duly executed by such
                Purchaser;

            


    

     

    
      	
            	
              (iii)

            	
              
                the
                  Security Agreement, duly executed by the Purchaser;
                  and

              

            


    

     

    
      	 	
              (iv)

            	
              the
                Purchaser’s Subscription Amount by wire transfer to the account of the
                Company.

            


    

     

    2.3 Closing
      Conditions. 

     

    
      	 	
              a)

            	
              The
                obligations of the Company hereunder in connection with the Closing
                are
                subject to the following conditions being
                met:

            


    

     

    
      	 	
              (i)

            	
              the
                accuracy in all material respects when made and on the Closing Date
                of the
                representations and warranties of the Purchasers contained
                herein;

            


    

     

    
      	 	
              (ii)

            	
              all
                obligations, covenants and agreements of the Purchasers required
                to be
                performed at or prior to the Closing Date shall have been performed;
                and

            


    

     

    
      	 	
              (iii)

            	
              the
                delivery by the Purchasers of the items set forth in Section 2.2(b)
                of
                this Agreement.

            


    

     

    
      
        
        

      

      
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              b)

            	
              The
                respective obligations of the Purchasers hereunder in connection
                with the
                Closing are subject to the following conditions being
                met:

            


    

     

    
      	 	
              (i)

            	
              the
                accuracy in all material respects on the Closing Date of the
                representations and warranties of the Company contained
                herein;

            


    

     

    
      	 	
              (ii)

            	
              all
                obligations, covenants and agreements of the Company required to
                be
                performed at or prior to the Closing Date shall have been
                performed;

            


    

     

    
      	 	
              (iii)

            	
              the
                Purchasers shall be satisfied with the results of its due diligence
                investigation of the Company and its acquisition
                targets;

            


    

     

    
      	 	
              (iv)

            	
              the
                Purchasers shall be satisfied with the status of the audit of the
                Company’s financial statements;

            


    

     

    
      	 	
              (v)

            	
              all
                outstanding debt of the Company (other than (1) $100,000 of indebtedness
                in favor of John Creed, which shall be exchanged for an equivalent
                amount
                of Notes, (2) the indebtedness held by European Absolute Fund and
                affiliates, (3) the indebtedness held by Robert Palmer in an aggregate
                principal amount of approximately $55,000 and (4) Intercompany
                Indebtedness) shall be retired (by the use of the proceeds of the
                Notes)
                or converted to equity;

            


    

     

    
      	 	
              (vi)

            	
              the
                Purchasers shall be satisfied with the progression of the Company’s
                Qualified Equity Offering;

            


    

     

    
      	 	
              (vii)

            	
              the
                Purchasers shall be satisfied with the security pledged as collateral
                for
                the repayment of the Notes;

            


    

     

    
      	 	
              (viii)

            	
              the
                delivery by the Company of the items set forth in Section 2.2(a)
                of this
                Agreement; 

            


    

     

    
      	 	
              (ix)

            	
              there
                shall have been no Material Adverse Effect with respect to the Company
                and
                its Subsidiaries since the date hereof;
                and

            


    

     

    
      	 	
              (x)

            	
              from
                the date hereof to the Closing Date, trading in the Common Stock
                shall not
                have been suspended by the Commission (except for any suspension
                of
                trading of limited duration agreed to by the Company, which suspension
                shall be terminated prior to the Closing), and, at any time prior
                to the
                Closing Date, trading in securities generally as reported by Bloomberg
                Financial Markets shall not have been suspended or limited, or minimum
                prices shall not have been established on securities whose trades
                are
                reported by such service, or on any Trading Market, nor shall a banking
                moratorium have been declared either by the United States or New
                York
                State authorities nor shall there have occurred any material outbreak
                or
                escalation of hostilities or other national or international calamity
                of
                such magnitude in its effect on, or any material adverse change in,
                any
                financial market which, in each case, in the reasonable judgment
                of the
                Purchaser, makes it impracticable or inadvisable to purchase the
                Notes at
                the Closing. 

            


    

     

    
      
        
        

      

      
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    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      Except
      as set forth in the PPM or the Disclosure
      Schedule
      which
      Disclosure Schedule shall be deemed a part hereof, each of the Company and
      its
      Subsidiaries hereby makes the representations and warranties set forth below
      to
      each of the Purchasers. 

     

    (a) Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth in the
      Disclosure Schedule. The Company owns, directly or indirectly, all of the
      capital stock or other equity interests of each Subsidiary free and clear of
      any
      Liens, and all the issued and outstanding shares of capital stock of each
      Subsidiary are validly issued and are fully paid, non-assessable and free of
      preemptive and similar rights to subscribe for or purchase securities. If the
      Company has no subsidiaries, then references in the Transaction Documents to
      the
      Subsidiaries will be disregarded.

     

    (b) Organization
      and Qualification.
      Each of
      the Company and the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or financial condition of the Company and the Subsidiaries, taken
      as a
      whole, or (iii) a material adverse effect on the Company’s ability to perform in
      any material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    (c) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no further
      action is required by the Company in connection therewith. Each Transaction
      Document has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms except (i) as limited by applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally and (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies.

     

    
      
        
        

      

      
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    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the other transactions contemplated
      thereby do not and will not: (i) conflict with or violate any provision of
      the
      Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
      or other organizational or charter documents, or (ii) conflict with, or
      constitute a default (or an event that with notice or lapse of time or both
      would become a default) under, result in the creation of any Lien upon any
      of
      the properties or assets of the Company or any Subsidiary, or give to others
      any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected, or
      (iii) conflict with or result in a violation of any law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which the Company or a Subsidiary is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of the Company or a Subsidiary is bound or affected; except
      in
      the case of each of clauses (ii) and (iii), such as could not have or reasonably
      be expected to result in a Material Adverse Effect.

     

    (e) Filings,
      Consents and Approvals.
      Except
      as set forth in the Disclosure Schedule or specified by the Transaction
      Documents, the Company is not required to obtain any consent, waiver,
      authorization or order of, give any notice to, or make any filing or
      registration with, any court or other federal, state, local or other
      governmental authority or other Person in connection with the execution,
      delivery and performance by the Company of the Transaction Documents, except
      for
      (i) compliance with state “blue sky laws”, (ii) the filing of a Form D with the
      Commission and (iii) such filings as are specified in the Registration Rights
      Agreement.

     

    (f) Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens imposed by the Company
      other
      than restrictions on transfer provided for in the Transaction Documents. The
      Warrant Shares, when issued in accordance with the terms of the Transaction
      Documents, will be validly issued, fully paid and nonassessable, free and clear
      of all Liens imposed by the Company. The Company has reserved from its duly
      authorized capital stock a number of shares of Common Stock for issuance of
      the
      Warrant Shares at least equal to the Required Minimum on the date hereof. The
      Company has not, and to the knowledge of the Company, no Affiliate of the
      Company has sold, offered for sale or solicited offers to buy or otherwise
      negotiated in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchasers, or that would be integrated with the offer
      or sale of the Securities for purposes of the rules and regulations of any
      Trading Market, except for the Concurrent Subscription and for the issuance
      of
      debt to John Creed and to individual investors pursuant to the Company’s recent
      private placement memorandum.

     

    (g) Capitalization.
      The
      capitalization of the Company is as set forth in the Description of Securities
      section of the Disclosure Schedule. No Person has any right of first refusal,
      preemptive right, right of participation, or any similar right to participate
      in
      the transactions contemplated by the Transaction Documents. Except as set forth
      in the Disclosure Schedule, as a result of the purchase and sale of the
      Securities, there are no outstanding options, warrants, script rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities, rights or obligations convertible into or exchangeable for, or
      giving any Person any right to subscribe for or acquire, any shares of Common
      Stock, or contracts, commitments, understandings or arrangements by which the
      Company or any Subsidiary is or may become bound to issue additional shares
      of
      Common Stock, or securities or rights convertible or exchangeable into shares
      of
      Common Stock. The issuance and sale of the Securities will not obligate the
      Company to issue shares of Common Stock or other securities to any Person (other
      than the Purchasers) and will not result in a right of any holder of Company
      securities to adjust the exercise, conversion, exchange or reset price under
      such securities. All of the outstanding shares of capital stock of the Company
      are validly issued, fully paid and nonassessable, have been issued in compliance
      with all federal and state securities laws, and none of such outstanding shares
      was issued in violation of any preemptive rights or similar rights to subscribe
      for or purchase securities. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required for
      the
      issuance and sale of the Securities. There are no stockholders agreements,
      voting agreements or other similar agreements with respect to the Company’s
      capital stock to which the Company is a party or, to the knowledge of the
      Company, between or among any of the Company’s stockholders.

     

    
      
        
        

      

      
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    (h) Financial
      Statements.
      Since
      2005, the financial statements of the Company comply in all material respects
      with applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

    (i) Material
      Changes.
      Since
      the date of the latest audited financial statements, (i) there has been no
      event, occurrence or development that has had or that could reasonably be
      expected to result in a Material Adverse Effect, (ii) the Company has not
      incurred any liabilities (contingent or otherwise) other than (A) trade payables
      and accrued expenses incurred in the ordinary course of business consistent
      with
      past practice and (B) liabilities not required to be reflected in the Company's
      financial statements pursuant to GAAP or required to be disclosed in filings
      made with the Commission, (iii) the Company has not altered its method of
      accounting, (iv) the Company has not declared or made any dividend or
      distribution of cash or other property to its stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock and (v) the Company has not issued any equity securities to any officer,
      director or Affiliate, except pursuant to existing Company stock option plans.
      The Company does not have pending before the Commission any request for
      confidential treatment of information.

     

    (j) Litigation.
      Other
      than as set forth in the Disclosure Schedule under the caption “Legal
      Proceedings,” there is no action, suit, inquiry, notice of violation, proceeding
      or investigation pending or, to the knowledge of the Company, threatened against
      or affecting the Company, any Subsidiary or any of their respective properties
      before or by any court, arbitrator, governmental or administrative agency or
      regulatory authority (federal, state, county, local or foreign) (collectively,
      an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
      officer thereof, is or has been the subject of any Action involving a claim
      of
      violation of or liability under federal or state securities laws or a claim
      of
      breach of fiduciary duty. There has not been, and to the knowledge of the
      Company, there is not pending or contemplated, any investigation by the
      Commission involving the Company or any current or former director or officer
      of
      the Company. Other than as set forth in the Disclosure Schedule and to the
      best
      of the knowledge of the Company, the Commission has not issued any stop order
      or
      other order suspending the effectiveness of any registration statement filed
      by
      the Company or any Subsidiary under the Exchange Act or the Securities
      Act.

     

    
      
        
        

      

      
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    (k) Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could reasonably
      be
      expected to result in a Material Adverse Effect.

     

    (l) Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      except in each case as could not have a Material Adverse Effect.

     

    (m) Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as, except where
      the failure to possess such permits could not have or reasonably be expected
      to
      result in a Material Adverse Effect (“Material
      Permits”),
      and
      neither the Company nor any Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any Material Permit.

     

    (n) Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Permitted Liens (as defined
      in
      the Note) and Liens that do not materially affect the value of such property
      and
      do not materially interfere with the use made and proposed to be made of such
      property by the Company and the Subsidiaries and Liens for the payment of
      federal, state or other taxes, the payment of which is neither delinquent nor
      subject to penalties. Any real property and facilities held under lease by
      the
      Company and the Subsidiaries are held by them under valid, subsisting and
      enforceable leases of which the Company and the Subsidiaries are in compliance
      in all material respects.

     

    (o) Patents
      and Trademarks.
      The
      Company and the Subsidiaries have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights necessary or material for use
      in
      connection with their respective businesses and which the failure to so have
      could have a Material Adverse Effect (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a written notice that the
      Intellectual Property Rights used by the Company or any Subsidiary violates
      or
      infringes upon the rights of any Person. To the knowledge of the Company, all
      such Intellectual Property Rights are enforceable and there is no existing
      infringement by another Person of any of the Intellectual Property
      Rights.

     

    
      
        
        

      

      
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    (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to $1,000,000. Neither the Company nor any Subsidiary
      has any reason to believe that it will not be able to renew its existing
      insurance coverage as and when such coverage expires or to obtain similar
      coverage from similar insurers as may be necessary to continue its business
      without a significant increase in cost.

     

    (q) Transactions
      With Affiliates and Employees.
      None of
      the officers or directors of the Company and, to the knowledge of the Company,
      none of the employees of the Company is presently a party to any transaction
      with the Company or any Subsidiary (other than for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the knowledge of the Company, any
      entity in which any officer, director, or any such employee has a substantial
      interest or is an officer, director, trustee or partner, in each case in excess
      of $50,000 other than (i) for payment of salary or consulting fees for services
      rendered, (ii) reimbursement for expenses incurred on behalf of the Company;
      (iii) for other employee benefits, including stock option agreements under
      any
      stock option plan of the Company and (iv) existing arrangements with Restaurant
      Acquisition Partners.

     

    (r) Reserved.
      

     

    (s) Certain
      Fees.
      Except
      as set forth in the Disclosure Schedule under the caption “Recent Sales of
      Unregistered Securities; Use of Proceeds from Securities,” no brokerage or
      finder’s fees or commissions are or will be payable by the Company to any
      broker, financial advisor or consultant, finder, placement agent, investment
      banker, bank or other Person with respect to the transactions contemplated
      by
      this Agreement. The Purchasers shall have no obligation with respect to any
      fees
      or with respect to any claims made by or on behalf of other Persons for fees
      of
      a type contemplated in this Section that may be due in connection with the
      transactions contemplated by this Agreement.

     

    (t) Private
      Placement.
      Assuming the accuracy of each of the Purchaser’s representations and warranties
      set forth in Section 3.2, no registration under the Securities Act is required
      for the offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby.

     

    (u) Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Securities, will not be or be an Affiliate of, an “investment
      company” within the meaning of the Investment Company Act of 1940, as amended.
      The Company shall conduct its business in a manner so that it will not become
      subject to the Investment Company Act.

     

    (v) Registration
      Rights.
      Except
      as contemplated by the transactions hereunder or as set forth in the Disclosure
      Schedule, no Person has any right to cause the Company to effect the
      registration under the Securities Act of any securities of the
      Company.

     

    
      
        
        

      

      
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    (w) Reserved.
      

     

    (x) Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company's Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to any Purchaser as a result
      of
      the Purchasers and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including without limitation as a result
      of the Company's issuance of the Securities and the Purchasers’ ownership of the
      Securities.

     

    (y) Disclosure.
      All
      disclosure provided to the Purchasers regarding the Company, its business and
      the transactions contemplated hereby, including the Disclosure Schedules to
      this
      Agreement, furnished by or on behalf of the Company with respect to the
      representations and warranties made herein are true and correct with respect
      to
      such representations and warranties and do not contain any untrue statement
      of a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in light of the circumstances under which they were
      made, not misleading. The Company acknowledges and agrees that no Purchaser
      makes or has made any representations or warranties with respect to the
      transactions contemplated hereby other than those specifically set forth in
      Section 3.2 hereof.

     

    (z) No
      Integrated Offering.
      Assuming
      the accuracy of each of the Purchaser’s representations and warranties set forth
      in Section 3.2, neither the Company, nor any of its affiliates, nor any Person
      acting on its or their behalf has, directly or indirectly, made any offers
      or
      sales of any security or solicited any offers to buy any security, under
      circumstances that would cause this offering of the Securities to be integrated
      with prior offerings (where such integration would violate the Securities Act)
      by the Company for purposes of the Securities Act or any applicable shareholder
      approval provisions, including, without limitation, under the rules and
      regulations of any exchange or automated quotation system on which any of the
      securities of the Company are listed or designated.

     

    (aa) Solvency.
      To the
      best of its knowledge, based on the financial condition of the Company as of
      the
      Closing Date after giving effect to the receipt by the Company of the proceeds
      from the sale of the Securities hereunder, (i) the Company's fair saleable
      value
      of its assets exceeds the amount that will be required to be paid on or in
      respect of the Company's existing debts and other liabilities (including known
      contingent liabilities) as they mature; (ii) the Company's assets do not
      constitute unreasonably small capital to carry on its business for the current
      fiscal year as now conducted and as proposed to be conducted including its
      capital needs taking into account the particular capital requirements of the
      business conducted by the Company, and projected capital requirements and
      capital availability thereof; and (iii) the current cash flow of the Company,
      together with the proceeds the Company would receive, were it to liquidate
      all
      of its assets, after taking into account all anticipated uses of the cash,
      would
      be sufficient to pay all amounts on or in respect of its debt when such amounts
      are required to be paid. The Company does not intend to incur debts beyond
      its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt). The Company has
      no
      knowledge of any facts or circumstances which lead it to believe that it will
      file for reorganization or liquidation under the bankruptcy or reorganization
      laws of any jurisdiction within one year from the Closing Date. The Financial
      Reports set forth as of the dates thereof all outstanding secured and unsecured
      Indebtedness of the Company or any Subsidiary, or for which the Company or
      any
      Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company's balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments
      in excess of $50,000 due under leases required to be capitalized in accordance
      with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    
      
        
        

      

      
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    (bb) Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

    (cc) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Securities for sale only to the
      Purchasers and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act.

     

    (dd) Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any
      corrupt funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses related to foreign or domestic political activity, (ii) made any
      unlawful payment to foreign or domestic government officials or employees or
      to
      any foreign or domestic political parties or campaigns from corporate funds,
      (iii) failed to disclose fully any contribution made by the Company (or made
      by
      any person acting on its behalf of which the Company is aware) which is in
      violation of law, or (iv) violated in any material respect any provision of
      the
      Foreign Corrupt Practices Act of 1977, as amended

     

    (ee) Accountants.
      The
      Company’s accountants are Tschopp, Whitcomb & Orr, P.A.. To the Company’s
      knowledge, such accountants, who the Company expects will express their opinion
      with respect to the financial statements for the year ending December 31, 2006,
      are a registered public accounting firm as required by the Securities
      Act.

     

    (ff) Seniority.
      As of
      the Closing Date, no indebtedness or other equity of the Company is senior
      to,
      or pari passu with, the Notes in right of payment, whether with respect to
      interest or upon liquidation or dissolution, or otherwise, other than (1)
      indebtedness secured by purchase money security interests (which is senior
      only
      as to underlying assets covered thereby) and capital lease obligations (which
      is
      senior only as to the property covered thereby) (2) the
      indebtedness in favor of Robert Palmer, (3) Intercompany Indebtedness and (4)
      indebtedness in favor of European Absolute Fund and affiliates.

     

    (gg) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect to
      any
      fees owed to its accountants and lawyers. By making this representation the
      Company does not, in any manner, waive the attorney/client privilege or the
      confidentiality of the communications between the Company and its
      lawyers.

     

    
      
        
        

      

      
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    (hh) Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm's length purchaser with respect to the Transaction
      Documents and the transactions contemplated hereby. The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to this Agreement and
      the
      transactions contemplated hereby and any advice given by any Purchaser or any
      of
      their respective representatives or agents in connection with this Agreement
      and
      the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to the Purchasers
      that the Company’s decision to enter into this Agreement has been based solely
      on the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives. The Company further acknowledges that in
      addition to purchasing Securities, the Purchasers or their affiliates may
      directly or indirectly own Common Stock and Preferred Stock in the Company
      and
      that such parties, exercising their rights hereunder may adversely impact their
      other holdings as well as the other equity holders in the Company.

     

    (ii) Lock-Up
      Agreement.
      The
      Company shall obtain from each officer and director, of the Company, a lock-up
      agreement satisfactory to the Purchasers, which prohibits the sale of stock
      in
      the Company for one year from the date of Closing.

     

    3.2 Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby represents and warrants (severally and not jointly) as of
      the
      date hereof and as of the Closing Date to the Company as follows:

     

    (a) Organization;
      Authority.
      The
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations thereunder. The execution, delivery and performance by
      the
      Purchaser of the transactions contemplated by this Agreement have been duly
      authorized by all necessary corporate or similar action on the part of the
      Purchaser. Each Transaction Document to which it is a party has been duly
      executed by the Purchaser, and when delivered by the Purchaser in accordance
      with the terms hereof, will constitute the valid and legally binding obligation
      of the Purchaser, enforceable against it in accordance with its terms, except
      (i) as limited by general equitable principles and applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally, (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies and (iii) insofar as indemnification and contribution
      provisions may be limited by applicable law.

     

    (b) Purchaser
      Representation.
      The
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof, has no present intention of distributing any of such Securities and
      has
      no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not limiting
      the Purchaser’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws). The Purchaser is acquiring the Securities hereunder in the
      ordinary course of its business. The Purchaser does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

     

    
      
        
        

      

      
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    (c) Purchaser
      Status.
      At the
      time the Purchaser was offered the Securities, it was, and at the date hereof
      it
      is, and on each date on which it exercises any Warrants it will be either:
      (i)
      an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
      (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as
      defined in Rule 144A(a) under the Securities Act. The Purchaser is not required
      to be registered as a broker-dealer under Section 15 of the Exchange
      Act.

     

    (d) Experience
      of the Purchaser.
      The
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      The Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment.

     

    (e) General
      Solicitation.
      The
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    The
      Company acknowledges and agrees that the Purchaser does not make or has not
      made
      any representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in this Section
      3.2.


     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

     

    (a) The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement and the Registration Rights Agreement.

     

    (b) Each
      Purchaser agrees to the imprinting, so long as is required by this Section
      4.1(b), of a legend on any of the Securities in the following form:

     

    NEITHER
      THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER
      LOAN SECURED BY SUCH SECURITIES.

     

    
      
        
        

      

      
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    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and the Registration Rights Agreement and, if required under the terms of such
      arrangement, a Purchaser may transfer pledged or secured Securities to the
      pledgees or secured parties. Such a pledge or transfer would not be subject
      to
      approval of the Company and no legal opinion of legal counsel of the pledgee,
      secured party or pledgor shall be required in connection therewith. Further,
      no
      notice shall be required of such pledge. At the appropriate Purchaser’s expense,
      the Company will execute and deliver such reasonable documentation as a pledgee
      or secured party of Securities may reasonably request in connection with a
      pledge or transfer of the Securities, including, if the Securities are subject
      to registration pursuant to the Registration Rights Agreement, the preparation
      and filing of any required prospectus supplement under Rule 424(b)(3) under
      the
      Securities Act or other applicable provision of the Securities Act to
      appropriately amend the list of Selling Stockholders thereunder.

     

    (c) Certificates
      evidencing the Issued Shares and Warrant Shares shall not contain any legend
      (including the legend set forth in Section 4.1(b) hereof): (i) while a
      registration statement (including the Registration Statement) covering the
      resale of such security is effective under the Securities Act, or (ii) following
      any sale of such Issued Shares or Warrant Shares pursuant to Rule 144, or (iii)
      if such Issued Shares or Warrant Shares are eligible for sale under Rule 144(k),
      or (iv) if such legend is not required under applicable requirements of the
      Securities Act (including judicial interpretations and pronouncements issued
      by
      the staff of the Commission). The Company shall cause its counsel to issue
      a
      legal opinion to the Company’s transfer agent promptly after the Effective Date
      if required by the Company’s transfer agent to effect the removal of the legend
      hereunder. If all or any portion of a Warrant is exercised at a time when there
      is an effective registration statement to cover the resale of the Warrant
      Shares, or if such Warrant Shares may be sold under Rule 144(k) or if such
      legend is not otherwise required under applicable requirements of the Securities
      Act (including judicial interpretations thereof) then such Warrant Shares shall
      be issued free of all legends. The Company agrees that following the Effective
      Date or at such time as such legend is no longer required under this Section
      4.1(c), it will, no later than three Trading Days following the delivery by
      a
      Purchaser to the Company or the Company's transfer agent of a certificate
      representing Issued Shares or Warrant Shares (with notice to the Company of
      delivery to the transfer agent), as applicable, issued with a restrictive legend
      (such third Trading Day, the “Legend
      Removal Date”),
      deliver or cause to be delivered to the Purchaser a certificate representing
      such shares that is free from all restrictive and other legends. The Company
      may
      not make any notation on its records or give instructions to any transfer agent
      of the Company that enlarge the restrictions on transfer set forth in this
      Section.

     

    (d) In
      addition to a Purchaser’s other available remedies, the Company shall pay to a
      Purchaser, in cash, as partial liquidated damages and not as a penalty, for
      each
      $1,000 of Warrant Shares (based on the VWAP of the Common Stock on the date
      such
      Securities are submitted to the Company’s transfer agent) delivered for removal
      of the restrictive legend and subject to this Section 4.1(c), $5 per Trading
      Day
      (increasing to $10 per Trading Day 5 Trading Days after such damages have begun
      to accrue) for each Trading Day after the Legend Removal Date until such
      certificate is delivered without a legend. Such liquidated damages shall not
      be
      incurred during any period in which the delay is occasioned by the Company’s
      transfer agent or other independent party not acting at the Company’s direction
      to delay the issuance and not as a result of any negligence or wrongdoing on
      the
      Company’s part. Nothing herein shall limit a Purchaser’s right to pursue actual
      damages for the Company's failure to deliver certificates representing any
      Securities as required by the Transaction Documents, and a Purchaser shall
      have
      the right to pursue all remedies available to it at law or in equity including,
      without limitation, a decree of specific performance and/or injunctive
      relief.

     

    
      
        
        

      

      
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    (e) Each
      Purchaser agrees that the removal of the restrictive legend from certificates
      representing Securities as set forth in this Section 4.1 is predicated upon
      the
      Company’s reliance that such Purchaser will sell any Securities pursuant to
      either the registration requirements of the Securities Act, including any
      applicable prospectus delivery requirements, or an exemption
      therefrom.

     

    4.2 Acknowledgment
      of Dilution.
      The
      Company acknowledges that the issuance of the Securities may result in dilution
      of the outstanding shares of Common Stock, which dilution may be substantial
      under certain market conditions. The Company further acknowledges that its
      obligations under the Transaction Documents, including without limitation its
      obligation to issue the Warrant Shares pursuant to the Transaction Documents,
      are unconditional and absolute and not subject to any right of set off,
      counterclaim, delay or reduction, regardless of the effect of any such dilution
      or any claim the Company may have against any Purchaser and regardless of the
      dilutive effect that such issuance may have on the ownership of the other
      stockholders of the Company.

     

    4.3 Furnishing
      of Information.
      As long
      as any Purchaser owns Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
      the
      Company is not required to file reports pursuant to the Exchange Act, it will
      prepare and furnish to such Purchaser and make publicly available in accordance
      with Rule 144(c) such information as is required for such Purchaser to sell
      the
      Securities under Rule 144. The Company further covenants that it will take
      such
      further action as any holder of Securities may reasonably request, all to the
      extent required from time to time to enable such Person to sell such Securities
      without registration under the Securities Act within the limitation of the
      exemptions provided by Rule 144.

     

    4.4 Integration.
      The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchasers or that would be integrated with the offer
      or sale of the Securities for purposes of the rules and regulations of any
      Trading Market.

     

    4.5 Exercise
      Procedures.
      The
      form of Notice of Exercise included in the Warrants sets forth the totality
      of
      the procedures required of the Purchasers in order to exercise the Warrants.
      No
      additional legal opinion or other information or instructions shall be required
      of the Purchasers to exercise their Warrants. The Company shall honor exercises
      of the Warrants and shall deliver Warrant Shares in accordance with the terms,
      conditions and time periods set forth in the Transaction Documents.

     

    
      
        
        

      

      
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    4.6 Securities
      Laws Disclosure; Publicity.
      The
      Company and the Purchasers shall consult with each other in issuing any other
      press releases with respect to the transactions contemplated hereby, and neither
      the Company nor the Purchasers shall issue any such press release or otherwise
      make any such public statement without the prior consent of the Company, with
      respect to any press release of the Purchasers, or without the prior consent
      of
      the Purchasers, with respect to any press release of the Company, which consent
      shall not unreasonably be withheld, except if such disclosure is required by
      law, in which case the disclosing party shall promptly provide the other party
      with prior notice of such public statement or communication. Notwithstanding
      the
      foregoing, the Company shall not publicly disclose the name of the Purchasers,
      or include the name of the Purchasers in any filing with the Commission or
      any
      regulatory agency or Trading Market, without the prior written consent of such
      Purchaser, except (i) as required by federal securities law in connection with
      a
      registration statement and (ii) to the extent such disclosure is required by
      law
      or Trading Market regulations, in which case the Company shall provide the
      such
      Purchaser with prior notice of such disclosure permitted under subclause (i)
      or
      (ii).

     

    4.7 Shareholder
      Rights Plan.
      No
      claim will be made or enforced by the Company or, to the knowledge of the
      Company, any other Person that any Purchaser is an “Acquiring Person” under any
      shareholder rights plan or similar plan or arrangement in effect or hereafter
      adopted by the Company, or that any Purchaser could be deemed to trigger the
      provisions of any such plan or arrangement, by virtue of receiving Securities
      under the Transaction Documents or under any other agreement between the Company
      and such Purchaser. The Company shall conduct its business in a manner so that
      it will not become subject to the Investment Company Act.

     

    4.8 Non-Public
      Information.
      The
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide any Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Purchaser shall have executed a written agreement regarding
      the confidentiality and use of such information. The Company understands and
      confirms that the Purchasers shall be relying on the foregoing representations
      in effecting transactions in securities of the Company.

     

    4.9 Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      for
      the retirement of debt, prototype development, initial costs of the Qualified
      Equity Offering, general operating expenses and the payment of transaction
      costs
      relating to the sale of the Securities hereunder.

     

    4.10 Reimbursement.
      If any
      Purchaser becomes involved in any capacity in any Proceeding by or against
      any
      Person who is a stockholder of the Company (except as a result of sales,
      pledges, margin sales and similar transactions by a Purchaser to or with any
      current stockholder), solely as a result of such Purchaser’s acquisition of the
      Securities under this Agreement, the Company will reimburse such Purchaser
      for
      its reasonable legal and other expenses (including the cost of any investigation
      preparation and travel in connection therewith) incurred in connection
      therewith, as such expenses are incurred. The reimbursement obligations of
      the
      Company under this paragraph shall be in addition to any liability which the
      Company may otherwise have, shall extend upon the same terms and conditions
      to
      any Affiliates of such Purchaser who are actually named in such action,
      proceeding or investigation, and partners, directors, agents, employees and
      controlling persons (if any), as the case may be, of such Purchaser and any
      such
      Affiliate, and shall be binding upon and inure to the benefit of any successors,
      assigns, heirs and personal representatives of the Company, the Purchasers
      and
      any such Affiliate and any such Person. The Company also agrees that neither
      the
      Purchasers nor any such Affiliates, partners, directors, agents, employees
      or
      controlling persons shall have any liability to the Company or any Person
      asserting claims on behalf of or in right of the Company solely as a result
      of
      acquiring the Securities under this Agreement.

     

    
      
        
        

      

      
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    4.11 Indemnification
      of Purchasers.
      Subject
      to the provisions of this Section 4.11, the Company will indemnify and hold
      each
      of the Purchasers and their directors, officers, shareholders, partners,
      employees and agents (each, a “Purchaser
      Party”)
      harmless from any and all third party losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any Purchaser Party may suffer or incur as a result of or
      relating to (a) any breach of any of the representations, warranties, covenants
      or agreements made by the Company in this Agreement or in the other Transaction
      Documents or (b) any action instituted against a Purchaser, or any of them
      or
      their respective Affiliates, by any stockholder of the Company who is not an
      Affiliate of such Purchaser, with respect to any of the transactions
      contemplated by the Transaction Documents (unless such action is based upon
      a
      breach of such Purchaser’s representation, warranties or covenants under the
      Transaction Documents or any agreements or understandings the Purchaser may
      have
      with any such stockholder or any violations by such Purchaser of state or
      federal securities laws or any conduct by such Purchaser which constitutes
      fraud, gross negligence, willful misconduct or malfeasance). If any action
      shall
      be brought against any Purchaser Party in respect of which indemnity may be
      sought pursuant to this Agreement, the Purchaser Party shall promptly notify
      the
      Company in writing, and the Company shall have the right to assume the defense
      thereof with counsel of its own choosing. Any Purchaser Party shall have the
      right to employ separate counsel in any such action and participate in the
      defense thereof, but the fees and expenses of such counsel shall be at the
      expense of the Purchaser Party except to the extent that (i) the employment
      thereof has been specifically authorized by the Company in writing, (ii) the
      Company has failed after a reasonable period of time to assume such defense
      and
      to employ counsel or (iii) in such action there is, in the reasonable opinion
      of
      such separate counsel, a material conflict on any material issue between the
      position of the Company and the position of the Purchaser Party. The Company
      will not be liable to any Purchaser Party under this Agreement (i) for any
      settlement by a Purchaser Party effected without the Company’s prior written
      consent, which shall not be unreasonably withheld or delayed; or (ii) to the
      extent, but only to the extent that a loss, claim, damage or liability is
      attributable to any Purchaser Party’s breach of any of the representations,
      warranties, covenants or agreements made by the Purchasers in this Agreement
      or
      in the other Transaction Documents or any violations by the Purchaser of state
      or federal securities laws or any conduct by the Purchasers which constitutes
      fraud, gross negligence, willful misconduct or malfeasance.

     

    4.12 Reservation
      and Listing of Securities.

     

    (a) The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Transaction Documents in such amount as may be
      required to fulfill its obligations in full under the Transaction
      Documents.

     

    (b) If,
      on
      any date, the number of authorized but unissued (and otherwise unreserved)
      shares of Common Stock is less than the Required Minimum on such date, then
      the
      Board of Directors of the Company shall use commercially reasonable efforts
      to
      amend the Company's certificate or articles of incorporation to increase the
      number of authorized but unissued shares of Common Stock to at least the
      Required Minimum at such time, as soon as possible and in any event not later
      than the 75th day after such date.

     

    (c) The
      Company shall, if applicable: (i) in the time and manner required by the Trading
      Market, prepare and file with such Trading Market an additional shares listing
      application covering a number of shares of Common Stock at least equal to the
      Required Minimum on the date of such application, (ii) take all steps necessary
      to cause such shares of Common Stock to be approved for listing on the Trading
      Market as soon as possible thereafter, (iii) provide to the Purchasers evidence
      of such listing, and (iv) maintain the listing of such Common Stock on any
      date
      at least equal to the Required Minimum on such date on such Trading Market
      or
      another Trading Market. 

     

    
      
        
        

      

      
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    4.13 Subsequent
      Equity Sales.
      In
      addition to the limitations set forth herein, from the date hereof until the
      earlier of (i) the third anniversary of the date of this Agreement and (ii)
      such
      time as no Purchaser holds any of the Securities, the Company shall be
      prohibited from effecting or entering into an agreement to affect any Subsequent
      Financing involving a “Variable
      Rate Transaction”
or
      an
“MFN
      Transaction”
(each
      as defined below). The term “Variable
      Rate Transaction”
shall
      mean a transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock.
      The
      term “MFN
      Transaction”
shall
      mean a transaction in which the Company issues or sells any securities in a
      capital raising transaction or series of related transactions which grants
      to an
      investor the right to receive additional shares based upon future transactions
      of the Company on terms more favorable than those granted to such investor
      in
      such offering. Any Purchaser shall be entitled to obtain injunctive relief
      against the Company to preclude any such issuance, which remedy shall be in
      addition to any right to collect damages. Notwithstanding the foregoing, the
      Company may engage in a Variable Rate Transaction for the purposes of acquiring
      Original Roadhouse Grill so long as such acquisition closes prior to or
      simultaneous with any Qualified Equity Offering.

     

    4.14 Issuance
      of Additional Shares/Warrants upon Qualified Equity Offering.
      Upon
      the closing of the first Qualified Equity Offering consummated after the date
      hereof, the Purchasers shall be issued shares of Common Stock and/or warrants
      (the split of such shares of Common Stock and warrants to be determined by
      the
      Purchasers in their sole discretion) such that after taking into account the
      shares of Common Stock or Common Stock Equivalents issued in connection with
      the
      Qualified Equity Offering (plus any additional shares of Common Stock or Common
      Stock Equivalents issued subsequent to the date hereof) the Purchasers in the
      aggregate (assuming the Purchasers continue to own all of the Warrants issued
      pursuant to this Agreement) will own 15% of the Common Stock of the Company
      on a
      fully diluted basis (assuming the conversion of all convertible notes and the
      exercise of all options and warrants). Such shares of Common Stock and/or
      warrants shall be issued to the Purchasers pro rata based upon the aggregate
      principal amount of such Purchaser’s Note outstanding immediately prior to the
      consummation of the Qualified Equity Offering. 

     

    4.15 Most
      Favored Nation Provision.
      Any
      time prior to the first anniversary of this Agreement, if the Company effects
      a
      subsequent financing (other than a Qualified Equity Offering that is a public
      offering or an Exempt Issuance (which for the sake of clarity includes
      securities issued by the Company only to sellers and not third parties in
      connection with an acquisition or business combination)), the Purchasers may
      elect, in their sole discretion, to exchange all or some of its Notes and
      Warrants (treated for this purpose only as a unit) then held by it for the
      securities issued in a subsequent financing based on the then outstanding
      principal amount of the Note plus any other fees then owed by the Company to
      the
      Purchasers, at the effective price at which such securities are sold in such
      subsequent financing.

     

    4.16 Additional
      Participation Right.
      For a
      period of two years after the Closing Date, the Purchasers shall have the right
      to participate in up to 100% of any debt or equity financing, other than a
      Qualified Equity Offering that is a public offering or an Exempt Issuance (for
      the sake of clarity, the Purchasers have the right to do all or a portion of
      the
      financing, to the exclusion of any other party, regardless of the amount) of
      the
      Company on the same terms as those offered to such third party providing the
      financing by giving notice to the Company within 10 Business Days after receipt
      of an investment request. 

     

    
      
        
        

      

      
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    4.17 John
      Creed. Anything
      to the contrary notwithstanding, John Creed shall not be deemed to be a
      Purchaser and his Note shall not be deemed to be issued hereunder for the
      purposes of Sections 4.14, 4.15 and 4.16. 

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1 Termination.
      This
      Agreement may be terminated by any Purchaser, by written notice to the other
      parties, if the Closing has not been consummated on or before March 30, 2006;
      provided that no such termination will affect the right of any party to sue
      for
      any breach by the other party (or parties).

     

    5.2 Fees.
      At
      the
      Closing, the Company has agreed to (i) reimburse Centrecourt Asset Management
      LLC (“Centrecourt”)
      $25,000, for its legal fees and expenses of counsel, (ii) reimburse
      Centrecourt’s reasonable out-of-pocket due diligence expenses, of
      which
      $15,000 has already been paid
      and
      (iii) pay Centrecourt $52,500 as a structuring fee. Except as expressly set
      forth in the Transaction Documents to the contrary, each party shall pay the
      fees and expenses of its advisers, counsel, accountants and other experts,
      if
      any, and all other expenses incurred by such party incident to the negotiation,
      preparation, execution, delivery and performance of this Agreement. The Company
      shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
      in connection with the issuance of any Securities.

     

    5.3 Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules.

     

    5.4 Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading
      Day,
      (b) the next Trading Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto on a day that is not a Trading Day or later
      than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

     

    5.5 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and the
      Purchasers or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right.

     

    
      
        
        

      

      
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    5.6 Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    5.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Purchasers. Any Purchaser may assign any or all of its rights
      under this Agreement to any Person to whom the Purchaser assigns or transfers
      any Securities, provided such transferee agrees in writing to be bound, with
      respect to the transferred Securities, by the provisions hereof that apply
      to
      the “Purchaser”.

     

    5.8 No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.11.

     

    5.9 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of New York. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of New York, borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or inconvenient venue for such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law. The parties hereby waive all rights to a trial by jury. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding.

     

    5.10 Survival.
      The
      representations and warranties contained herein shall survive the Closing and
      the delivery, exercise and/or conversion of the Securities, as applicable for
      the applicable statue of limitations.

     

    5.11 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    
      
        
        

      

      
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    5.12 Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    5.13 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Purchaser
      exercises a right, election, demand or option under a Transaction Document
      and
      the Company does not timely perform its related obligations within the periods
      therein provided, then such Purchaser may rescind or withdraw, in its sole
      discretion from time to time upon written notice to the Company, any relevant
      notice, demand or election in whole or in part without prejudice to its future
      actions and rights; provided,
      however,
      in the
      case of a rescission of an exercise of a Warrant, such Purchaser shall be
      required to return any shares of Common Stock subject to any such rescinded
      exercise notice.

     

    5.14 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Securities.

     

    5.15 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Purchasers and the Company
      will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be adequate.


     

    5.16 Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Purchaser pursuant
      to
      any Transaction Document or a Purchaser enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

     

    5.17 Usury.
      To the
      extent it may lawfully do so, the Company hereby agrees not to insist upon
      or
      plead or in any manner whatsoever claim, and will resist any and all efforts
      to
      be compelled to take the benefit or advantage of, usury laws wherever enacted,
      now or at any time hereafter in force, in connection with any claim, action
      or
      proceeding that may be brought by any Purchaser in order to enforce any right
      or
      remedy under any Transaction Document. Notwithstanding any provision to the
      contrary contained in any Transaction Document, it is expressly agreed and
      provided that the total liability of the Company under the Transaction Documents
      for payments in the nature of interest shall not exceed the maximum lawful
      rate
      authorized under applicable law (the “Maximum
      Rate”),
      and,
      without limiting the foregoing, in no event shall any rate of interest or
      default interest, or both of them, when aggregated with any other sums in the
      nature of interest that the Company may be obligated to pay under the
      Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
      contract rate of interest allowed by law and applicable to the Transaction
      Documents is increased or decreased by statute or any official governmental
      action subsequent to the date hereof, the new maximum contract rate of interest
      allowed by law will be the Maximum Rate applicable to the Transaction Documents
      from the effective date forward, unless such application is precluded by
      applicable law. If under any circumstances whatsoever, interest in excess of
      the
      Maximum Rate is paid by the Company to any Purchaser with respect to
      indebtedness evidenced by the Transaction Documents, such excess shall be
      applied by such Purchaser to the unpaid principal balance of any such
      indebtedness or be refunded to the Company, the manner of handling such excess
      to be at such Purchaser's election.

     

    
      
        
        

      

      
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    5.18 Liquidated
      Damages.
      The
      Company’s obligations to pay any partial liquidated damages or other amounts
      owing under the Transaction Documents is a continuing obligation of the Company
      and shall not terminate until all unpaid partial liquidated damages and other
      amounts have been paid notwithstanding the fact that the instrument or security
      pursuant to which such partial liquidated damages or other amounts are due
      and
      payable shall have been canceled.

     

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      	
              PASSPORT
                RESTAURANTS, INC.

            	 	
              Address
                for Notice:

            
	
               

               

              
                

              

              Name:

              Title:

            	 	
               

              Passport
                Restaurants, Inc.

              804
                Pier View Way 

              Oceanside,
                CA 92054

            
	
               

              With
                a copy to (which shall not constitute notice):

               

              Pillsbury
                Winthrop Shaw Pittman LLP

              1540
                Broadway 

              New
                York, NY 10036

              Attn:
                Ronald A. Fleming, Jr.

              Ron.Fleming@pillsburylaw.com

              Facsimile:
                212-298-9931

            	 	 


    

    


    REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASERS FOLLOWS

     

    
      
        
        

      

      
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    PURCHASER
      SIGNATURE PAGES TO PASSPORT SECURITIES PURCHASE AGREEMENT

    


    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

     

    Name
      of
      Investing Entity: CAMOFI Master LDC

    Signature
      of Authorized Signatory of Investing Entity:
      __________________________________

    Name
      of
      Authorized Signatory:
      ____________________________________________________

    Title
      of
      Authorized Signatory:
      _____________________________________________________

    Email
      Address of Authorized
      Entity:________________________________________________

    


    Address
      for Notice of Investing Entity:

    


    Address
      for Delivery of Securities for Investing Entity (if not same as
      above):

    


    


    Subscription
      Amount:

    Warrant
      Shares:

    EIN
      Number: PROVIDE
      THIS UNDER SEPARATE COVER

    


    SIGNATURE
      PAGES CONTINUE

    
       

      
        
        

      

      
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    PURCHASER
      SIGNATURE PAGES TO PASSPORT SECURITIES PURCHASE AGREEMENT

    


    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

     

    Name
      of
      Investing Entity: CAMHZN Master LDC

    Signature
      of Authorized Signatory of Investing Entity:
      __________________________________

    Name
      of
      Authorized Signatory:
      ____________________________________________________

    Title
      of
      Authorized Signatory:
      _____________________________________________________

    Email
      Address of Authorized
      Entity:________________________________________________

    


    Address
      for Notice of Investing Entity:

    


    Address
      for Delivery of Securities for Investing Entity (if not same as
      above):

     

    


    Subscription
      Amount:

    Warrant
      Shares:

    EIN
      Number: PROVIDE
      THIS UNDER SEPARATE COVER

    


    SIGNATURE
      PAGES CONTINUE

     

    
      
        
        

      

      
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