Document:

EXHIBIT
10.1

ASSET PURCHASE AGREEMENT

AMONG

RED ROBIN
INTERNATIONAL, INC.

(as Buyer),

AND

TOP ROBIN VENTURES, INC.

AND

MORITE OF
CALIFORNIA

(as Sellers)

May 24, 2007

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
  Article I

  	
   

  	
  PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
  LIABILITIES

  	
  1

  
	
  1.1

  	
   

  	
  Purchased Assets

  	
  1

  
	
  1.2

  	
   

  	
  Excluded Assets

  	
  3

  
	
  1.3

  	
   

  	
  Assumed Liabilities

  	
  4

  
	
  1.4

  	
   

  	
  Excluded Liabilities

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Article II

  	
   

  	
  CONSIDERATION; CLOSING

  	
  7

  
	
  2.1

  	
   

  	
  Consideration

  	
  7

  
	
  2.2

  	
   

  	
  The Closing

  	
  7

  
	
  2.3

  	
   

  	
  Deliveries at the Closings

  	
  7

  
	
  2.4

  	
   

  	
  Closing Date Purchase Price Adjustment

  	
  10

  
	
  2.5

  	
   

  	
  Post-Closing Purchase Price Adjustment

  	
  10

  
	
  2.6

  	
   

  	
  Contingent Payment

  	
  11

  
	
  2.7

  	
   

  	
  Allocation of Purchase Price

  	
  14

  
	
  2.8

  	
   

  	
  Escrow Amount

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Article
  III

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

  	
  14

  
	
  3.1

  	
   

  	
  Organization and Capitalization of the Sellers

  	
  15

  
	
  3.2

  	
   

  	
  Authorization of Transaction

  	
  15

  
	
  3.3

  	
   

  	
  Non-contravention

  	
  15

  
	
  3.4

  	
   

  	
  Subsidiaries

  	
  15

  
	
  3.5

  	
   

  	
  Financial Statements

  	
  15

  
	
  3.6

  	
   

  	
  Events Subsequent to December 31, 2006

  	
  16

  
	
  3.7

  	
   

  	
  Absence of Undisclosed Liabilities

  	
  17

  
	
  3.8

  	
   

  	
  Legal Compliance

  	
  17

  
	
  3.9

  	
   

  	
  Title to Properties

  	
  18

  
	
  3.10

  	
   

  	
  Inventory

  	
  20

  
	
  3.11

  	
   

  	
  Franchise Agreements

  	
  20

  
	
  3.12

  	
   

  	
  Tax Matters

  	
  20

  
	
  3.13

  	
   

  	
  Intellectual Property

  	
  20

  
	
  3.14

  	
   

  	
  Contracts

  	
  21

  
	
  3.15

  	
   

  	
  Insurance

  	
  22

  
	
  3.16

  	
   

  	
  Litigation

  	
  23

  
	
  3.17

  	
   

  	
  Employees

  	
  23

  
	
  3.18

  	
   

  	
  Employee Benefits

  	
  24

  
	
  3.19

  	
   

  	
  Environment and Safety

  	
  26

  
	
  3.20

  	
   

  	
  Suppliers

  	
  27

  
	
  3.21

  	
   

  	
  Accounts and Notes Payable

  	
  27

  
	
  3.22

  	
   

  	
  Regulatory Compliance

  	
  27

  
	
  3.23

  	
   

  	
  Insider Interests

  	
  27

  
	
  3.24

  	
   

  	
  Improper Payments

  	
  28

  
	
  3.25

  	
   

  	
  Brokers

  	
  28

  
	
  3.26

  	
   

  	
  Restaurant Operations

  	
  28

  
	
  3.27

  	
   

  	
  Gift Cards

  	
  28

  
	
  3.28

  	
   

  	
  Disclosure

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IV

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
  28

  
	
  4.1

  	
   

  	
  Organization

  	
  28

  

 i
 

 

	
  4.2

  	
   

  	
  Authorization of Transaction

  	
  29

  
	
  4.3

  	
   

  	
  No Restrictions Against Purchase of Assets

  	
  29

  
	
  4.4

  	
   

  	
  Disclosure

  	
  29

  
	
  4.5

  	
   

  	
  Funds. Buyer will have at each Closing, sufficient
  funds necessary to consummate the transactions contemplated hereby

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Article V

  	
   

  	
  PRE-CLOSING COVENANTS

  	
  29

  
	
  5.1

  	
   

  	
  Employees

  	
  29

  
	
  5.2

  	
   

  	
  Cooperation and Best Efforts to Complete Transaction

  	
  29

  
	
  5.3

  	
   

  	
  Conduct of Restaurants By Sellers Prior to the
  Closing Date

  	
  30

  
	
  5.4

  	
   

  	
  Press Releases

  	
  32

  
	
  5.5

  	
   

  	
  Access to Information and Employees

  	
  32

  
	
  5.6

  	
   

  	
  Topanga Lease Extension

  	
  32

  
	
  5.7

  	
   

  	
  Confidentiality

  	
  32

  
	
  5.8

  	
   

  	
  Consultation and Reporting

  	
  32

  
	
  5.9

  	
   

  	
  Update Schedules

  	
  33

  
	
  5.10

  	
   

  	
  Franchise Agreements

  	
  33

  
	
  5.11

  	
   

  	
  Transition Activities

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VI

  	
   

  	
  CONDITIONS TO OBLIGATION OF BUYER

  	
  34

  
	
  6.1

  	
   

  	
  Representations and Warranties

  	
  34

  
	
  6.2

  	
   

  	
  Covenants and Obligations of the Seller

  	
  34

  
	
  6.3

  	
   

  	
  Consents

  	
  34

  
	
  6.4

  	
   

  	
  Absence of Material Adverse Change

  	
  35

  
	
  6.5

  	
   

  	
  Absence of Litigation

  	
  35

  
	
  6.6

  	
   

  	
  Termination of Plans

  	
  35

  
	
  6.7

  	
   

  	
  Franchise Agreements

  	
  36

  
	
  6.8

  	
   

  	
  New Real Property Leases

  	
  36

  
	
  6.9

  	
   

  	
  Permits and Liquor Licenses

  	
  36

  
	
  6.10

  	
   

  	
  Documents

  	
  36

  
	
  6.11

  	
   

  	
  Non-Solicitation Agreements

  	
  36

  
	
  6.12

  	
   

  	
  Opinion of Counsel

  	
  36

  
	
  6.13

  	
   

  	
  Title Policies

  	
  37

  
	
  6.14

  	
   

  	
  First Closing

  	
  37

  
	
  6.15

  	
   

  	
  Topanga Lease Extension

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VII

  	
   

  	
  CONDITIONS TO OBLIGATIONS OF THE SELLERS

  	
  37

  
	
  7.1

  	
   

  	
  Delivery of Consideration

  	
  37

  
	
  7.2

  	
   

  	
  Representations and Warranties

  	
  37

  
	
  7.3

  	
   

  	
  Covenants and Obligations of Buyer

  	
  37

  
	
  7.4

  	
   

  	
  Absence of Litigation

  	
  37

  
	
  7.5

  	
   

  	
  Governmental Filings

  	
  37

  
	
  7.6

  	
   

  	
  Documents

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VIII

  	
   

  	
  TERMINATION

  	
  38

  
	
  8.1

  	
   

  	
  Termination prior to First Closing

  	
  38

  
	
  8.2

  	
   

  	
  Termination Prior to Second Closing

  	
  38

  
	
  8.3

  	
   

  	
  Effect of Termination

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IX

  	
   

  	
  ADDITIONAL AGREEMENTS

  	
  39

  
	
  9.1

  	
   

  	
  Survival

  	
  39

  

 ii
 

 

	
  9.2

  	
   

  	
  Indemnification

  	
  39

  
	
  9.3

  	
   

  	
  Indemnification Procedures

  	
  40

  
	
  9.4

  	
   

  	
  Exclusive Remedy

  	
  41

  
	
  9.5

  	
   

  	
  Change of Name

  	
  41

  
	
  9.6

  	
   

  	
  Transaction Expenses

  	
  42

  
	
  9.7

  	
   

  	
  Transaction Taxes

  	
  42

  
	
  9.8

  	
   

  	
  Further Assurances; Transition Assistance

  	
  42

  
	
  9.9

  	
   

  	
  Power of Attorney; Right of Endorsement, Etc

  	
  42

  
	
  9.10

  	
   

  	
  Allocation Ad Valorem Taxes

  	
  42

  
	
  9.11

  	
   

  	
  Conduct After Closing

  	
  43

  
	
  9.12

  	
   

  	
  Manager Incentive Plan

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  Article X

  	
   

  	
  DEFINITIONS

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XI

  	
   

  	
  MISCELLANEOUS

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  No Third Party Beneficiaries

  	
  50

  
	
  11.2

  	
   

  	
  Entire Agreement

  	
  50

  
	
  11.3

  	
   

  	
  Successors and Assigns

  	
  50

  
	
  11.4

  	
   

  	
  Counterparts

  	
  50

  
	
  11.5

  	
   

  	
  Headings

  	
  50

  
	
  11.6

  	
   

  	
  Notices

  	
  50

  
	
  11.7

  	
   

  	
  Governing Law

  	
  51

  
	
  11.8

  	
   

  	
  Amendments and Waivers

  	
  52

  
	
  11.9

  	
   

  	
  Incorporation of Exhibits and Schedules

  	
  52

  
	
  11.10

  	
   

  	
  Independence of Covenants and Representations and
  Warranties

  	
  52

  
	
  11.11

  	
   

  	
  Remedies

  	
  52

  
	
  11.12

  	
   

  	
  Severability

  	
  52

  
	
  11.13

  	
   

  	
  Jurisdiction and Venue

  	
  52

  
	
  11.14

  	
   

  	
  Construction

  	
  53

  

 

 iii

THIS
ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of May 24,
2007, among RED ROBIN INTERNATIONAL, INC., a Nevada corporation (the “Buyer”) and TOP ROBIN VENTURES, INC., a California corporation (“Top Robin”), and MORITE OF CALIFORNIA, a California
partnership (“Morite”).  Top Robin and Morite are sometimes referred
to herein as a “Seller” and
collectively as the “Sellers”.  The Sellers and the Buyer are sometimes
referred to herein as a “Party”
and collectively as the “Parties”.

RECITALS

1.             Each Seller owns
personal property and interests in real property used in the operation and
development of the “Red Robin Gourmet Burgers” restaurants listed under such
Seller’s name on Exhibit A (the “Restaurants”)
pursuant to the Franchise Agreements listed under such Seller’s name on Exhibit
B (the “Franchise Agreements”).

2.             The Buyer desires to
purchase from the Sellers certain assets used or useful in the operation of the
Restaurants, and to assume certain liabilities of the Sellers specified herein,
and the Sellers desire to sell such assets in exchange for cash and the
assumption of such specified liabilities by the Buyer.

3.             The Buyer and the
Sellers desire to close the Transactions and take possession of seventeen of
the Sellers’ eighteen Restaurants on the First Closing Date and to close the
Transactions with respect to the Topanga Restaurant on a subsequent date,
referred to as the Second Closing Date, provided, that during the
interim period between the First Closing Date and the Second Closing Date the
Buyer shall take over the day-to-day operations of the Topanga Restaurant under
the terms provided in the Management Agreement to be executed by the Buyer and
the Sellers on the First Closing Date.

4.             Capitalized terms not
otherwise defined shall have the meanings set forth in Article X.

AGREEMENT

NOW, THEREFORE, in consideration
of these premises, the mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained, the Parties agree
as follows:

Article
I

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

1.1           Purchased Assets.  On and subject to the terms and
conditions of this Agreement, at the applicable Closing, the Buyer shall
purchase from each Seller, and each Seller shall sell, transfer, assign, convey
and deliver to the Buyer, all right, title and interest in and to the following
tangible and intangible assets, business, goodwill and rights of such Seller
used in the operation, maintenance or ownership of the Restaurants, other than the
Excluded Assets (all such assets, business, goodwill and rights being purchased
from the Sellers hereunder are collectively referred to as the “Purchased Assets”), as the same shall
exist immediately prior to the First Closing or Second Closing, as applicable,
free and clear of all Liens (other than Permitted Liens):

(a)           Net Working Capital
Items:

(i)            all supplies and inventories of foodstuffs,
beverages (including alcoholic beverages), raw materials and ingredients, paper
products, cleaning supplies and other supplies (the “Inventory”), except as set forth in Section 1.2(k);

(ii)           all Till Cash;

(iii)          all cash and other amounts in bank accounts
associated with outstanding gift certificates;

(iv)          accounts receivable reflected as “house charges”
on the Closing Date Balance Sheet (“House
Charges”);

(v)           deposits made and prepaid expenses incurred by
the Sellers prior to Closing in the ordinary course of business and consistent
with Sellers’ past practice, including, without limitation, prepaid utilities,
prepaid real estate or personal property taxes associated with the Purchased
Assets, amounts deposited or prepaid with respect to Assumed Contracts and
Assumed Real Property Leases, prepaid rent and prepaid taxes with respect to
the Coalinga Restaurant, the La Quinta Restaurant, and the Calabasas Restaurant
(to the extent the Buyer receives credit for such amounts under the terms of
the New Real Property Leases), but not including those items described in
Section 1.2(j) (“Prepaid Expenses”);
and

(b)           Other Items:

(i)             interests
in and to the Assumed Real Property Leases, including all of Sellers’ interests
in tenant improvements, fixtures and fittings and easements, rights of way and
other appurtenances related to such Assumed Real Property Leases;

(ii)            all interest and rights in and to the contracts,
purchase orders and other agreements or arrangements of the Sellers identified
on Schedule 1.1(b) (the “Assumed
Contracts”);

(iii)           all tangible personal property used in the normal and customary
operations of the Restaurants (whether or not located or installed in a
Restaurant), including, but not limited to, all appliances, machinery, kitchen
equipment, office equipment, furniture, fixtures, computer equipment, artwork,
pots and pans, cooking utensils, silverware, flatware, glassware and dishes;

(iv)          all motor vehicles;

(v)           Permits, registrations, certificates or similar rights relating to the
operation of the Restaurants, subject to the approval of Governmental Entities
authorizing the transfer of such Permits, except as set forth in Section
1.2(l);

(vi)          all claims, choses-in-action, warranties, refunds, rights of recovery,
rights to set-off and rights of recoupment of any kind arising on or after the
Closing date with respect to any Purchased Asset;

(vii)         all claims under insurance policies providing coverage relating to the
Restaurants;

(viii)        all rights related to unemployment, workers’
compensation and other similar insurance and related funded reserves, rebates
and dividends, in each case relating to employees of any Seller who become
employees of the Buyer;

(ix)           subject to Section 1.2(a), all rights to Intellectual Property, telephone
and facsimile numbers, e-mail addresses, websites, domain names and listings
used in the operation of the Restaurants, as well as all rights, subject to
Section 1.2(c), to receive mail and other communications

 2
 

addressed
to any Seller and specifically relating to the operation of the Restaurants
(including mail and communications from customers, suppliers, distributors,
agents and others and payments with respect to the Purchased Assets);

(x)            subject to Section 1.2, all files and materials
pertaining to Sellers’ current employees, operating manuals, studies, reports,
creative materials, advertising and promotional materials, training manuals,
and other materials and other printed or written materials relating to the
Restaurants; and

(xi)           all other assets of any nature whatsoever relating to the Restaurants or
the Purchased Assets, other than the Excluded Assets.

1.2           Excluded Assets.  Notwithstanding anything contained in
Section 1.1, the Purchased Assets shall not include the following assets and
rights of the Sellers (collectively, the “Excluded
Assets”):

(a)           the telephone number of Sellers’ corporate
offices located at 78-030 Calle Barcelona, Suite A La Quinta, CA 92253
and 2835 Townsgate Road, Westlake Village,
CA 91361, and the fixed assets, furniture and equipment located at each office;

(b)           all interests and rights in and to any contracts,
purchase orders and other agreements or arrangements of the Sellers which are
not identified on Schedule 1.1(b);

(c)           all rights to receive mail and other
communications addressed to any Seller relating to any of the Excluded Assets
or the Excluded Liabilities;

(d)           all assets relating to or owned by, and all
rights in and to, any Plan;

(e)           the Fundamental Documents, qualifications to
conduct business as a foreign partnership or corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, transfer books, certificates, if
any, in respect of partnership interests or shares, and other similar documents
relating to the organization, maintenance and existence of each Seller as a
partnership or corporation, as applicable;

(f)            all books, records, ledgers, files, documents and
correspondence, vendor and customer lists, files and materials pertaining to
Sellers’ past employees;

(g)           all bank accounts and amounts on deposit therein,
including the bank accounts owned by the Sellers in which amounts have been
deposited to cover gift checks issued by any of the Restaurants

(h)           all cash and cash equivalents, in bank accounts
or otherwise, other than Till Cash;

(i)            all accounts and other receivables, including
credit card receivables, credit card receivables in transit or notes receivable
other than House Charges;

(j)            prepaid expenses not incurred in the ordinary
course of business, all prepaid taxes other than prepaid real estate or
personal property taxes associated with the Purchased Assets, and prepaid
expenses with respect to any of Sellers’ insurance policies;

(k)           liquor and other alcoholic beverages held by
Sellers at the Simi Valley Restaurant (the “Simi
Valley Liquor”);

 3
 

(l)            liquor licenses for the Simi Valley Restaurant
and the Broadway Faire Restaurant;

(m)          all assets located at or relating to the Red
Robin Gourmet Burgers restaurant owned by Morite and located at 3825 State Street, Santa Barbara, California
93105 (the “Santa Barbara Restaurant”);

(n)           any fee interest of the Sellers in the real
property relating to the Coalinga Restaurant (the “Coalinga Real Property”);

(o)           the Real Property Lease by and between Morite and
Morrow Waite Real Estate relating to the Calabasas Restaurant (the “Existing Calabasas Lease”);

(p)           the Real Property Lease by and between Top Robin
and the Morrow Family Revocable Trust relating to the La Quinta Restaurant (the
“Existing La Quinta Lease”);

(q)           any assets located at the Restaurants which are
owned by the Buyer, including the Aloha POS system installed by the Buyer in
the Restaurants; and

(r)            all of the rights of each Seller under this
Agreement and the other Documents.

1.3           Assumed Liabilities.  On and subject to the terms and
conditions of this Agreement, each Seller shall transfer to the Buyer, and the
Buyer shall assume and discharge or perform when due in accordance with the
terms thereof, each of, but only, the following Liabilities of such Seller
(collectively, the “Assumed Liabilities”):

(a)           Net Working Capital Items:

(i)            all accounts payable, accrued expenses, accrued
utilities and accrued rent payable (other than rent payable with respect to the
Calabasas Restaurant or the La Quinta Restaurant), in each case only to the
extent (i) incurred by the Sellers prior to the First Closing in the ordinary
course of business and consistent with Sellers’ past practice for goods and
services that are delivered or performed after the First Closing for the direct
benefit of the operation of the Restaurants and (ii) reflected on the
Closing Date Balance Sheet;

(ii)           all liabilities related to gift cards as
reflected on the Closing Date Balance Sheet;

(iii)          all liabilities related to gift certificates as
reflected on the Closing Date Balance Sheet;

(b)           Other Items.

(i)            all performance obligations arising after the
First Closing or the Second Closing, as applicable, under the Assumed Real
Property Leases and the Assumed Contracts, but not including any obligation or
Liability arising out of or in connection with any breach of any such Assumed
Real Property Lease or Assumed Contract occurring as of or prior to the First
Closing; and

(ii)           all performance obligations arising after the
First Closing pursuant to the Sellers’ Manager Incentive Plan.

1.4           Excluded Liabilities.  Notwithstanding
anything to the contrary contained in this Agreement, other than the Assumed
Liabilities, the Buyer shall not assume or be liable for any of the Liabilities
of any

 4
 

Seller or relating to the operation of the Restaurants
(the “Excluded Liabilities”),
including, without limitation, the following:

(a)           any of the Liabilities of any Seller under this
Agreement and the other Documents;

(b)           any of the Liabilities of any Seller for
expenses, Taxes or fees incident to or arising out of the negotiation,
preparation, approval or authorization of this Agreement, the other Documents
or the consummation (or preparation for the consummation) of the transactions
contemplated hereby or thereby (including all attorneys’ and accountants’ fees,
and brokerage or finders’ fees incurred by or imposed upon any Seller);

(c)           any Liabilities of any Seller for any
indebtedness, whether Funded Indebtedness or otherwise;

(d)           any Liability of any Seller under any other
agreement, contract, commitment, document, license or lease arising out of
events occurring prior to the First Closing (for the Restaurants other than the
Topanga Restaurant) or the Second Closing (for the Topanga Restaurant) arising
out of a breach or alleged breach thereof that occurred as of or prior to the
applicable Closing;

(e)           any Liabilities arising in connection with the
Excluded Assets;

(f)            any Liability of any Seller with respect to any
Taxes (other than ad valorem taxes), including payroll tax, business and
occupancy tax and sales tax payable with respect to periods ending on or before
the First Closing Date (for the Restaurants other than the Topanga Restaurant)
or the Second Closing Date (for the Topanga Restaurant);

(g)           any
Liability for ad valorem taxes and assessments (including any special or
supplemental assessments) on the Purchased Assets allocable to Seller under
Section 9.10 with respect to periods ending on or before the Closing Date on
which such Purchased Assets are acquired (without regard to when such taxes are
assessed or payable);

(h)           any Liability of any Seller (i) arising by
reason of any violation or alleged violation of any Liquor License, Permit or
any Law or any requirement of any Governmental Entity, (ii) arising under
any Environmental and Safety Requirements; including, without limitation, those
with respect to the ownership or operation of the Restaurants or the assets and
properties of the Restaurants by any Seller or any other Person at any time
prior to the First Closing (for the Restaurants other than the Topanga
Restaurant) or the Second Closing (for the Topanga Restaurant);
(iii) arising by reason of any violation of any Law or any requirement of
any Governmental Entity relating to or affecting the employment by Sellers of
its employees, and (iv) arising by reason of any breach or alleged breach
by any Seller of any agreement, contract, lease, license, commitment,
instrument, judgment, order or decree, in any such case to the extent such
Liability results from or arises out of events, facts or circumstances
occurring or existing on or prior to the First Closing (for the Restaurants
other than the Topanga Restaurant) or the Second Closing (for the Topanga
Restaurant), notwithstanding that the date on which any action or claim is
commenced or made is after such Closing;

(i)            any Liabilities of any Seller for which the Buyer
may become liable as a result of or in connection with the failure by the
Seller to fully and properly comply with any bulk sales or transfers laws;

(j)            any Liabilities of any Seller arising out of the
injury to or death of any Person or animal or damage to or destruction of any
property, whether based on negligence, breach of warranty, strict

 5
 

liability, enterprise liability
or any other legal or equitable theory arising from or related to products (or
parts of components thereof), sold, or for services performed by any Seller, to
the extent any of such Liabilities result from or arise out of events, facts or
circumstances occurring or existing on or prior to the First Closing (for the
Restaurants other than the Topanga Restaurant) or the Second Closing (for the
Topanga Restaurant), notwithstanding that the date on which any action or claim
is commenced or made is after such Closing;

(k)           any Liabilities of any Seller relating to any
legal action or Proceeding arising out of or in connection with any Seller’s
conduct of the Business prior to the Closing or any other conduct of any Seller
or its managers, officers, directors, employees, partners, stockholders,
consultants, agents or advisors, whether or not disclosed on the Schedules
hereto, including, without limitation the pending or threatened matters
described in Schedule 1.4(k) (the “Known Claims”);

(l)            any Liabilities of any Seller (i) for severance
pay or the like with respect to any employee of any Seller that is not offered,
or that does not accept, employment with the Buyer upon completion of the
Transactions, (ii) for wages or other compensation payable to any employee
of any Seller for periods prior to the First Closing; (iii) for COBRA
continuation coverage for M&A qualified beneficiaries, as defined in
Section 6.7; (iv) for accrued but unpaid vacation pay owed to the Sellers’
employees; or (v) for amounts owed to eligible employees pursuant to the
Sellers’ Manager Incentive Plan for services performed prior to the First
Closing Date;

(m)          any Liabilities of any Seller for bonuses or like
payments to any partner, director, officer or employee of such Seller for the
period ending on or prior to the Closing;

(n)           any Liabilities relating to any Plan of any
Seller;

(o)           any Liability of any Seller for worker’s
compensation based on an event occurring prior to the Closing Date;

(p)           any Liabilities of any Seller to any partner,
stockholder or Affiliate of such Seller;

(q)           any Liabilities of any Seller for expenses, Taxes
or fees incident to or arising out of the negotiation, preparation and
execution of the New Real Property Leases or the Topanga Lease Extension;

(r)            any Liabilities arising or pertaining to
activities conducted by either Seller after the Closing Date;

(s)           any Liabilities arising or pertaining to the
Existing Calabasas Lease or the Existing La Quinta Lease or the Sellers’
termination thereof;

(t)            any Liabilities associated with the Sellers’ fee
ownership of the Coalinga Real Property;

(u)           any other Liability of any Seller not expressly
assumed by the Buyer under Section 1.3 including any Liabilities not
appearing on the face of the Closing Date Balance Sheet (excluding the notes
thereto), any contingent Liabilities, Liabilities arising out of transactions
entered into at or prior to the First Closing, any damage, accident, injury or
death occurring, or the facts giving rise to which occurred, prior to the First
Closing or any state of facts existing at or prior to the First Closing,
regardless of when asserted, which are not expressly assumed in
Section 1.3);

Each Seller hereby acknowledges
that the Sellers are retaining the Excluded Liabilities, and the Sellers shall
pay, discharge and perform all such Excluded Liabilities promptly when due.

 6
 

Article
II

CONSIDERATION; CLOSING

2.1           Consideration.  The
aggregate consideration to be paid by the Buyer (the “Consideration”) for the Purchased Assets
and the Non-Solicitation Agreements shall consist of (a) the cash purchase
price of $47,500,000 adjusted as provided
in Section 2.4 (the “Cash Consideration”),
(b) the Contingent Payment, and (c) the assumption of the Assumed
Liabilities.

2.2           The Closing.  The closing of the transactions
contemplated by this Agreement shall occur in two stages (each, a “Closing”). 
Each Closing shall take place at the offices of Davis Graham &
Stubbs, 1550 17th Street, Denver, Colorado 80202 or such other
place as the Sellers and the Buyer shall agree in writing.

(a)           At the first Closing
(the “First Closing”), the
Parties shall consummate the purchase of all Purchased Assets (other than the
Topanga Purchased Assets) and assumption of all Assumed Liabilities (other than
the Topanga Assumed Liabilities).  The
First Closing is expected to occur effective as of 12:01 A.M. on June 17, 2007,
but shall occur within (5) five days of the satisfaction or waiver of the
conditions set forth in Article VI and Article VII (disregarding for
this purpose any such conditions to be satisfied by actions to be taken at the
First Closing), or such other date as the Sellers and the Buyer shall agree in
writing.  Subject to Section 5.12
and the terms of the Management Agreement, Buyer shall be entitled to immediate
possession of, and to exercise all rights arising under, the Purchased Assets
(including the Topanga Purchased Assets) and shall assume all Assumed
Liabilities (other than the Topanga Assumed Liabilities) from and after
12:01 A.M. on the First Closing Date, and the operation of the Restaurants
shall transfer at such time.  The date on
which the First Closing occurs shall be referred to as the “First Closing Date”.

(b)           At the second Closing
(the “Second Closing”), the
Parties shall consummate the purchase of the Topanga Purchased Assets and
assumption of the Designated Assumed Liabilities.  The Second Closing shall occur within (5)
five days of the satisfaction or waiver of the conditions set forth in
Article VI and Article VII (disregarding for this purpose any such
conditions to be satisfied by actions to be taken at the Second Closing), or
such other date as the Sellers and the Buyer shall agree in writing.  The date on which the Second Closing occurs
shall be referred to as the “Second Closing
Date”.  Buyer shall be
entitled to exercise all rights arising under the Topanga Purchased Assets and
shall assume the Topanga Assumed Liabilities from and after 12:01 A.M. on the
Second Closing Date.

2.3           Deliveries
at the Closings.

(a)           At the First Closing, and thereafter as may be
reasonably requested by Buyer, Sellers shall convey, transfer, assign, and
deliver all of their right, title and interest in the Purchased Assets (other
than the Topanga Purchased Assets) to Buyer, and shall also deliver to the
Buyer the following:

(i)            one or more bills of sale substantially in the
form attached hereto as Exhibit C (each, a “Bill of Sale”), duly executed by each applicable Seller, to
effectuate the transfer of the Purchased Assets (other than the Topanga
Purchased Assets) to the Buyer;

(ii)           one or more assignment and assumption agreements,
substantially in the form attached hereto as Exhibit D (each, an “Assignment Agreement”), duly executed by
each applicable Seller, to effectuate the assignment of the Assumed Liabilities
other than the Topanga Assumed Liabilities and the Excluded Liabilities to the
Buyer;

 7
 

(iii)          an assignment and assumption agreement for each
of the Assumed Real Property Leases (other than the Topanga Real Property
Lease) (each, a “Lease Assignment Agreement”);

(iv)          the Non-Solicitation Agreements, duly executed by
the parties thereto;

(v)           the Indemnification Escrow Agreement, duly
executed by each Seller;

(vi)          the Management Agreement, duly executed by Top
Robin;

(vii)         copies of all consents of third parties that are
(A) required from Governmental Entities for the consummation of the
transactions contemplated hereby, or (B) required in order to prevent a
Seller’s breach of or default under or a termination of any Assumed Contract,
Assumed Real Property Lease or Permit, provided, however, that at
the First Closing the Sellers shall not be required to deliver consent from the
landlord of the Topanga Restaurant;

(viii)        all operating manuals, proprietary information
and similar documents and information held by Sellers in connection with
Sellers’ status as a franchisee of Buyer and all copies and extracts therefrom;

(ix)           all plans and specifications, building permits,
certificates of occupancy, surveys, environmental and engineering reports, and
similar materials related to the Leased Real Property in Sellers’ possession or
control;

(x)            such estoppel certificates as Seller has received
from the landlords party to the Assumed Real Property Leases (other than the
Topanga Restaurant);

(xi)           a certificate, signed by an officer or partner of
such Seller, to the effect that each of the conditions specified in Section 6.1
through 6.7 have been satisfied;

(xii)          a legal opinion from Graham & Dunn P.C. dated
the First Closing Date substantially in the form attached hereto as Exhibit
F;

(xiii)         certified copies of the Fundamental Documents of
each Seller and the authorizing resolutions and incumbency certificates of each
Seller for this Agreement and the other Documents; and

(xiv)        any closing
documents reasonably requested by Fidelity National Title (the “Title Company”) in connection with
the issuance of the Title Policies.

(b)           At the First Closing, the Buyer shall deliver:

(i)            to the Indemnification Escrow Agent (for
immediate wire delivery to Morite or Top Robin in relative amounts as directed
by the Sellers), by wire transfer of immediately available U.S. funds the sum
of:

(A)         $43,080,830 less the adjustment, if any, pursuant to Section 2.4, and

(B)         $870,235, representing the First Quarter Prepayment.

(ii)           to the Indemnification Escrow Agent,  $953,000
to be held in accordance with the terms of the Indemnification
Escrow Agreement and this Agreement;

 8
 

(iii)          to each Seller, a duly executed copy of the
Indemnification Escrow Agreement;

(iv)          to each Seller, a duly executed copy of each
Assignment Agreement in order to effectuate the assumption of the Assumed
Liabilities (other than the Topanga Assumed Liabilities) by the Buyer;

(v)           to each Seller, a duly executed copy of each
Lease Assignment Agreement (other than for the Topanga Restaurant); and

(vi)          to each Seller, certified copies of the Fundamental Documents of the
Buyer, and the authorizing resolutions and incumbency certificates of the Buyer
for this Agreement and other Documents.

(c)           At the Second Closing, and thereafter as may be
reasonably requested by Buyer, Top Robin shall convey, transfer, assign, and
deliver all of its right, title and interest in the Topanga Purchased Assets to
Buyer, and shall also deliver to the Buyer the following:

(i)            one or more Bills of Sale, duly executed by Top
Robin, to effectuate the transfer of the Topanga Purchased Assets, and the
Topanga Assumed Liabilities to the Buyer;

(ii)           one or more Assignment Agreements duly executed
by Top Robin, to effectuate the assignment of the Topanga Assumed Liabilities
to the Buyer;

(iii)          a Lease Assignment Agreement for the Topanga Real
Property Lease and a copy of the consent of the landlord for the Topanga Real
Property Lease;

(iv)          such estoppel certificates as Seller has received
from the landlord party to the Topanga Real Property Lease;

(v)           a certificate, signed by an officer or partner of
Top Robin, to the effect that each of the conditions to the consummation of the
Second Closing specified in Section 6.1 through 6.7 and 6.14 have been
satisfied;

(vi)          a legal opinion from Graham & Dunn P.C. dated
the Second Closing Date substantially in the form attached hereto as Exhibit
F  provided that the opinion delivered at the Second Closing need
only address the Topanga Restaurant and Top Robin;

(vii)         any closing documents reasonably requested by the Title Company in
connection with the issuance of the Title Policies.

(d)           At the Second Closing
(or earlier, if required pursuant to paragraph (iv)), the Buyer shall deliver:

(i)            to the Indemnification Escrow Agent (for
immediate wire delivery to Top Robin), by wire transfer of immediately
available U.S. funds, $2,075,796, subject to any adjustment mutually
agreed upon by the Buyer and Top Robin;

(ii)           to the Indemnification
Escrow Agent, $47,000 to be held in accordance with the terms of the
Indemnification Escrow Agreement and this Agreement;

 9
 

(iii)          to Top Robin, $12,021
for each 4-week period (prorated for any partial period) from the First Closing
Date until the earlier of the Second Closing or the termination of this
Agreement under Section 8.2; provided, that, such amount shall be
paid on the first business day following each 4-week period;

(iv)          to each Seller, each Assignment Agreement in order to effectuate the
assumption of the Topanga Assumed Liabilities by the Buyer; and

(v)           a Lease Assignment Agreement for the Topanga Real Property Lease.

2.4           Closing
Date Purchase Price Adjustment.

(a)           At least 3
days prior to the anticipated First Closing Date, each Seller shall deliver to
Buyer an estimated Closing Date Balance Sheet of such Seller and an estimate of
the Adjustment Amount as of the anticipated First Closing Date (the “Estimated Adjustment Amount”), together
with such supporting documentation and other data as is reasonably necessary to
substantiate such estimate.  All accounting calculations and terms shall be in
accordance with GAAP and, to the extent not in violation of GAAP, consistently
applied with the Year End Balance Sheet. 
Each Seller will provide Buyer and its representatives with prompt
access to such books, records, employees and auditors of such Seller as Buyer
may reasonably request in order to verify the determination of the Estimated
Adjustment Amount.

(b)           The “Adjustment Amount” may be a positive or
negative number and shall mean the amount by which the Net Working Capital
transferred to the Buyer from such Seller at the First Closing exceeds $0.  “Net Working Capital” shall mean, with
respect to each Seller, (i) the amount of the Inventory (not including
amounts recorded with respect to the Simi Valley Liquor), Till Cash, cash
associated with outstanding gift certificates, House Charges, Broadway Faire
work in progress, Prepaid Expenses shown on such Seller’s Closing Date Balance
Sheet and included in the Purchased Assets, less (ii) the amount of
the accounts payable, accrued expenses, accrued utilities, accrued rent payable
(not including amounts recorded with respect to the Existing La Quinta Lease or
the Existing Calabasas Lease), gift certificates and gift cards included in the
Assumed Liabilities.  The calculation of
Net Working Capital shall be determined substantially as set forth in Exhibit
G.

(c)           If the Estimated Adjustment Amount is positive,
then the Cash Consideration shall be increased dollar for dollar by the amount
of such excess.  If the Estimated
Adjustment Amount is negative, then the Cash Consideration shall be decreased
dollar for dollar by the absolute value of such deficiency.

(d)           All calculation pursuant to Section 2.4 and 2.5
shall be determined assuming that all Purchased Assets (including the Topanga
Purchased Assets) and all Assumed Liabilities (including the Topanga Assumed
Liabilities) are transferred at the First Closing Date.

2.5           Post-Closing Purchase Price Adjustment.

(a)           As soon as practicable following the First
Closing Date (but not later than 60
days after the First Closing Date), each Seller shall deliver to the Buyer the
final Closing Date Balance Sheet for such Seller, a determination of the actual
Adjustment Amount (the “Actual Adjustment
Amount”) and a determination of the Post-Closing True-Up (as defined
below), together with such supporting documentation and other data as is
reasonably necessary to substantiate such determinations.  All accounting calculations and terms shall
be in accordance with GAAP and, to the extent not in violation of GAAP,
consistently applied with the Year End Balance Sheet.  For purposes of this Section 2.5, the
Buyer shall be entitled to have reasonable access to the books and records and
work papers of each of the

 10
 

Sellers and their
representatives used in preparation of the Closing Date Balance Sheets and
shall be entitled to discuss such books and records and work papers with each
of the Sellers, their representatives and those persons responsible for the
preparation thereof.

(b)           The “Post-Closing
True-Up” may be a positive or negative number and shall be an amount
equal to the Actual Adjustment Amount less the Estimated Adjustment
Amount.

(c)           If the Post-Closing True-Up is positive, then the Buyer shall deliver an
amount of cash equal to the amount of the Post-Closing True-Up to such Seller,
payable by wire transfer of immediately available U.S. funds in accordance with
the written payment instructions furnished by such Seller prior to the Closing
Date.  If the Post-Closing True-Up is negative, then
such Seller shall deliver an amount of cash equal to the absolute value of the
Post-Closing True-Up to the Buyer, payable by wire transfer of immediately
available U.S. funds in accordance with the written payment instructions
furnished by the Buyer to the Sellers. 
Any such payment of cash required pursuant to this Section 2.5
shall be deemed to be an adjustment to the Purchase Price and shall be made by
acknowledgment of the Parties within two business days after the Closing Date
Balance Sheet is deemed final and conclusive pursuant hereto.

(d)           In the event that the Buyer reasonably disagrees
with any amounts reflected on the final Closing Date Balance Sheet or the
determination of the Post-Closing True-Up, the Buyer shall so inform the
applicable Seller in writing within 15 days of the Buyer’s receipt thereof,
such writing to set forth the objections of the Buyer in reasonable
detail.  If such Seller and the Buyer
cannot reach agreement as to any disputed matter relating to the Post-Closing
True-Up within 15 days after notification by the Buyer to the Seller of a
dispute, they shall forthwith refer the dispute to an independent accounting
firm to be agreed upon by the Buyer and the Seller (the “Independent Accountant”) for resolution,
with the understanding that such Independent Accountant shall resolve all
disputed items within 20 days after such disputed items are referred to it.  All costs of the review by the Independent
Accountant shall be shared equally by the Buyer and the applicable Seller.  The decision of the Independent Accountant
with respect to all disputed matters relating to the Post-Closing True-Up shall
be deemed final and conclusive and shall be binding upon the Sellers and the
Buyer.  If the Buyer does not object to
the Closing Date Balance Sheet (and the amount of Post-Closing True-Up
calculated thereby) within the 15-day period referred to above, the amount of
the Post-Closing True-Up, as determined by the Closing Date Balance Sheet as so
prepared, shall be deemed final and conclusive and binding upon the Buyer and
the Sellers.

2.6           Contingent
Payment.

(a)           The Sellers shall be
entitled to receive and the Buyer shall pay a contingent payment in an amount
up to $3 million determined as provided in this Section 2.6 (the “Contingent Payment”).  The Contingent Payment shall be paid in
accordance with paragraph (c) and shall be calculated as follows:

(i)            The maximum prepayment
of the Contingent Payment for the sixteen week period ended April 22, 2007
shall be $923,077 (the “First Quarter
Maximum Prepayment”) and the target Gross Restaurant Sales for the
sixteen week period ended April 22, 2007 shall be $18,615,385 (the “First Quarter Target”).  The Sellers have represented that
they have attained Gross Restaurant Sales equal to $17,549,734 during such
period (equal to 94.3% of the First Quarter Target).  At Closing, the Buyer shall pay to the
Sellers an aggregate amount equal to $870,235, representing 94.3% of the First
Quarter Maximum Prepayment (the “First
Quarter Prepayment”).

(ii)           The maximum aggregate
prepayment of the Contingent Payment through the twenty-eight week period ended
July 15, 2007 shall be $1,615,385 (the “Second
Quarter Maximum Prepayment”).  The
threshold cumulative Gross Restaurant Sales for the twenty-eight week period
ended July 15, 2007 shall be $29,263,139 (the “Second
Quarter Threshold”) and the target shall be $33,005,495

 11
 

(the “Second
Quarter Target”).  Provided that the actual Gross
Restaurant Sales for the twenty-eight week period ended July 15, 2007 exceed
the Second Quarter Threshold, the Buyer shall pay to the Sellers an aggregate
amount (the “Second Quarter Prepayment”)
equal to (A) the Second Quarter Maximum Prepayment multiplied by the quotient
(but no more than 1.0) of (x) the actual Gross Restaurant Sales for the
twenty-eight week period ended July 15, 2007, divided by (y) the Second Quarter
Target, less (B) the amount of the First Quarter Prepayment paid to the
Sellers.  In no event will the sum of the
First Quarter Prepayment and the Second Quarter Prepayment exceed the Second
Quarter Maximum Prepayment.

(iii)          The maximum aggregate
prepayment of the Contingent Payment through the forty-week period ended
October 7, 2007 shall be $2,307,692 (the “Third
Quarter Maximum Prepayment”).  The
threshold cumulative Gross Restaurant Sales for the forty-week period ended
October 7, 2007 shall be $42,781,750 (the “Third
Quarter Threshold”) and the target shall be $48,252,747 (the “Third Quarter Target”).  Provided
that the actual Gross Restaurant Sales for the forty-week period ended October
7, 2007 exceed the Third Quarter Threshold, the Buyer shall pay to the Sellers
an aggregate amount (the “Third Quarter
Prepayment” and together with the First Quarter Prepayment and the
Second Quarter Prepayment, the “Prepayments”) equal to (A) the Third Quarter Maximum
Prepayment multiplied by the quotient (but no more than 1.0) of (x) the actual
Gross Restaurant Sales for the forty-week period ended October 7, 2007, divided
by (y) the Third Quarter Target, less (B) the amount of the First
Quarter Prepayment and the Second Quarter Prepayment paid to the Sellers.  In no event will the sum of the First Quarter
Prepayment, the Second Quarter Prepayment and the Third Quarter Prepayment
exceed the Third Quarter Maximum Prepayment.

(iv)          The maximum aggregate
payment of the Contingent Payment through the fifty-two week and one day period
ended December 31, 2007 shall be $3,000,000 (the “Maximum Contingent Payment”).  The threshold cumulative Gross Restaurant
Sales for the fifty-two week and one day period ended December 31, 2007 shall
be $56,300,000 (the “Contingent Payment
Threshold”) and the target shall be $63,500,000 (the “Contingent Payment Target”).  Provided that the actual Gross
Restaurant Sales for the fifty-two week and one day period ended December 31,
2007 exceed the Contingent Payment Threshold, the Buyer shall pay to the
Sellers an aggregate amount equal to (A) the Maximum Contingent Payment
multiplied by the quotient (but no more than 1.0) of (x) the actual Gross
Restaurant Sales for the fifty-two week and one day period ended December 31,
2007, divided by (y) the Contingent Payment Target, less (B) the amount of
the Prepayments paid to the Sellers.  In
no event will all aggregate payments pursuant to this Section 2.6(a) exceed $3
million.

(b)           “Gross Restaurant Sales” shall mean the
total amount charged in connection with any and all sales of food, beverages,
merchandise and services made or rendered on, in or from the Restaurants and
all other sales at or relating to the Restaurants (including receipts from
public telephones, stamp machines and vending/video machines, sales of
promotional items, and redemptions of gift certificates), for the fifty-two
week and one day period ended December 31, 2007 (or such shorter period as
set forth in paragraph (a) above) determined in accordance with GAAP.  “Gross Restaurant Sales” shall not include:

(i)            the
value of meals furnished to employees or the discounted amount of any sale to
an employee of Seller (before the First Closing Date) or Buyer (on or after the
First Closing Date) (as applicable, the “Operator”);

(ii)           the amount of any
sales, use, gross receipts or similar tax imposed by any Governmental Entity
directly on sales, to the extent such tax is separately stated and collected by
Operator from its customers and paid to any governmental authorities;

(iii)          tips or gratuities paid
by customers to employees;

 12
 

(iv)          any service charge
separately made to customers and collected by Operator and turned over to its
employees in lieu of such employees receiving tips or gratuities from Tenant’s
patrons;

(v)           the sale of trade
fixtures or movable equipment by Operator after use thereof at the Restaurants;

(vi)          the proceeds of
insurance or like settlements;

(vii)         uncollected and
uncollectible accounts, walkout or bad debt expense;

(viii)        the selling price of all
merchandise returned by customers and accepted for full credit or the amount of
discounts and allowances made thereon;

(ix)           cash refunds made to
customers in the ordinary course of business;

(x)            charges paid to the
issuers of credit cards and charges for check authorization fees;

(xi)           credits given for
coupons or other discounts; and

(xii)          intercompany transfers
of food and/or inventory, provided no such transfer is made to avoid paying any
Contingent Payment hereunder.

(c)           Within fifteen days
after the end of each fiscal quarter, the Buyer shall prepare and deliver to
the Sellers a statement (each, a “Contingent
Payment Statement”) setting forth the Gross Restaurant Sales for the
fiscal year-to-date through such fiscal quarter, including a breakdown showing
the amount of gross restaurant sales for each Restaurant, and the amount of the
payment, if any, payable to the Sellers. 
The Sellers and their authorized agents, will be granted reasonable
access to the books and records of the Restaurants and the management personnel
of the Buyer for the purpose of evaluating the information set forth in the
Contingent Payment Statement.  In the
event that the Sellers dispute the Buyer’s calculation of the Gross Restaurant
Sales or the payment due, the Sellers shall notify the Buyer in writing (a “Contingent Payment Dispute Notice”) of
such dispute, setting forth in reasonable detail the basis for such
dispute.  Any such dispute shall be
resolved under the procedures set forth in Section 2.6(e).

(d)           If the Sellers either
notify the Buyer of its agreement with the Buyer’s calculation, or if the Buyer
does not deliver a Contingent Payment Dispute Notice within twenty-five days
after the end of the fiscal quarter, then the calculation of Gross Restaurant
Sales and the payment due reflected in the Contingent Payment Statement shall
be deemed to be final, conclusive and binding on the Parties, and the Buyer
shall promptly (but in no event later than thirty days after the end of each
fiscal quarter) pay to the Sellers the amount shown in the Contingent Payment
Statement, by wire transfer or immediately available U.S. funds in accordance
with the written payment instructions furnished jointly by the Sellers.  The Buyer shall have no responsibility for
the allocation of the Contingent Payment (including any Prepayment) among the
Sellers.

(e)           In response
to any timely Contingent Payment Dispute Notice delivered by the Sellers, the
Buyer and the Sellers shall first use their diligent good faith efforts to
mutually resolve such dispute themselves. 
If the Buyer and the Sellers are unable to resolve the dispute within
thirty (30) days after delivery of the Contingent Payment Dispute Notice, then
the Buyer shall permit (during regular business hours, and in a manner so as
not to unreasonably interfere with the normal business operations of the Buyer
and/or the Restaurants) an independent accounting firm mutually agreeable to
the Sellers and the

 13
 

Buyer (the “Auditing
Accountant”) to audit the Buyer’s calculation of Gross Restaurant
Sales and the Contingent Payment.  The
Buyer shall furnish the Auditing Accountant with such documents or information
as such Auditing Accountant deems necessary to complete its audit.  The Auditing Accountant’s audit shall be
limited to the purpose of determining whether the amount of Gross Restaurant
Sales and the Contingent Payment (including any Prepayment), as set forth in
the Contingent Payment Statement, are correct. 
The Buyer and the Sellers shall cause the Auditing Accountant to use its
commercially reasonable efforts to render a written report setting forth its
determination of the correct Gross Restaurant Sales and the Contingent Payment
(including any Prepayment) within forty-five (45) days after such matters are
referred to it.  The determination of the
Auditing Accountant with respect to all such matters shall be deemed final and
conclusive and shall be binding upon the Buyer and Sellers and may be entered
and enforced in any court of competent jurisdiction.  The procedures specified in this subsection
(e) shall be the sole and exclusive procedure for resolution of the amount of
Gross Restaurant Sales and the calculation of the Contingent Payment, including
any Prepayment.  In the event that the
amount of the payment as set forth in the Contingent Payment Statement is less
than the amount of the payment as determined by the Auditing Accountant by an
amount greater than five percent (5%) of the amount of the payment as
determined by the Auditing Accountant, then the fees and expenses of the
Auditing Accountant shall be borne by the Buyer; otherwise, all the fees and
expenses of the Auditing Accountant shall be the sole responsibility of the
Sellers.

2.7           Allocation of Purchase Price.  The Buyer and the Sellers
hereby agree that the Consideration shall be allocated among the Purchased
Assets and Non-Solicitation Agreements as mutually agreed among the Parties
prior to the First Closing Date.  Such
allocation shall be conclusive and binding upon the Parties for all purposes.
The Parties shall not file any Tax Return or other document with, or make any
statement or declaration to, any Governmental Entity that is inconsistent with
such allocation.

2.8           Escrow Amount.

(a)           As provided in Section
2.3(b)(ii) and 2.3(d)(ii), the Buyer shall deposit an aggregate amount of
$1,000,000 of the Consideration in an escrow account with Fidelity National
Title (the “Indemnification Escrow Agent”)
as security for the Sellers indemnification obligations pursuant to  Article IX. 
Such amount shall be held and disbursed to the Sellers in accordance
with the terms of this Agreement and the Indemnification Escrow Agreement.

(b)           Prior to the date
hereof, Buyer deposited in escrow an aggregate of $1,343,374 representing the
portion of the Cash Consideration allocable to each of the Purchased Liquor
Licenses, (together, the “Liquor License
Escrow Amounts”) in the amounts and with the escrow agent shown on Exhibit
H.  Amounts held for each Purchased
Liquor License shall be disbursed at or following the First Closing Date or
Second Closing Date (with respect to the Topanga Real Property Lease) to the
applicable Seller upon satisfaction of all regulatory conditions required in
order to complete the final transfer of such Liquor License from the applicable
Seller to the Buyer.  In the event any
Liquor License Escrow Amount is released to Seller prior to the applicable
Closing Date, the Seller agrees to hold such amounts for the Buyer’s account
until the consummation of the applicable Closing, or, upon Buyer’s request, to
return such amounts to Buyer, in which event the amount paid by Buyer at the
applicable Closing shall be increased by the amount of the Liquor License
Escrow Amount returned to Buyer.

Article
III

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

As
a material inducement to the Buyer to enter into and perform its obligations
under this Agreement, each Seller severally represents and warrants to the
Buyer as set forth below.

 14
 

3.1           Organization
and Capitalization of the Sellers.  Such Seller is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and is qualified to do business
in every jurisdiction in which the failure to so qualify could have a Material
Adverse Effect.  Schedule 3.1
sets forth, with respect to such Seller, the type of entity, its jurisdiction
of incorporation or organization, and a list of all states in which such Seller
is qualified to do business.  Also set
forth on Schedule 3.1 is a list of the partners or stockholders of such
Seller and the current ownership percentages of each such partners or
stockholder.  No other Person has any
right to or interest in the outstanding partnership interests or capital stock
of such Seller or has any right, contingent or otherwise, to purchase, acquire
or own, directly or indirectly, any partnership interest, stock or any other
equity interest in such Seller.

3.2           Authorization
of Transaction.  Such Seller has all requisite
power and authority to own and operate its Restaurants and to carry on the
operation of its Restaurants as now conducted. 
Such Seller has all requisite power and authority to execute and deliver
each Document to which it is a party and any and all instruments necessary or
appropriate in order to effectuate fully the terms and conditions of each such
Document and all related transactions and to perform its obligations under each
such Document.  Each Document to which
such Seller is a party has been duly and validly authorized by all necessary
action (corporate, partnership or otherwise) on the part of such Seller, and
each Document to which such Seller is a party has been duly executed and
delivered by such Seller, and constitutes the valid and legally binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms and conditions, subject to applicable bankruptcy, insolvency and
similar Laws affecting the enforceability of creditors’ rights generally,
general equitable principles, the discretion of courts in granting equitable
remedies and matters of public policy.

3.3           Non-contravention.  Except
as set forth on Schedule 3.3(a), neither the execution, delivery
and performance of the Documents nor the consummation of the transactions
contemplated by the Documents by such Seller, shall (a) violate any Law to
which such Seller, its Restaurants or the Purchased Assets being transferred by
such Seller is subject, (b) violate any provision of the Fundamental
Documents of such Seller, (c) violate any provision of any Permit, including
any Liquor License, (d) result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under, any contract,
agreement, instrument or other document to which such Seller is a party or
(e) result in the imposition of any Lien upon any of the Purchased Assets.
 Except as set forth on Schedule 3.3(b),
such Seller is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Entity or
any consent or approval of any other Person in order for such Seller to
consummate the transactions contemplated by the Documents.

3.4           Subsidiaries.  Such Seller does not
own, directly or indirectly, any stock, partnership or joint venture interest
in, or any security or ownership interest issued by, any other Person.

3.5           Financial
Statements.

(a)           Schedule 3.5(a)
contains the following financial statements (collectively, the “Financial Statements”):

(i)            the unaudited balance sheets of such Seller at
December 25, 2005 and December 31, 2006 (the December 31, 2006
balance sheet being referred to herein as the “Year
End Balance Sheet”) and the related consolidated statements of
operations, partners’ or stockholders’ equity and cash flows, for the fiscal
years ended December 25, 2005 and December 31, 2006 (the latter,
referred to as the “Most Recent Fiscal Year”);
and

 15
 

(ii)           the unaudited Balance Sheet of such Seller as of
March 25, 2007 (the “Latest Balance Sheet”)
and the related unaudited statements of operations, partners’ or stockholders’
equity and cash flows, for the interim period ended March 25, 2007 (together
with the Latest Balance Sheet, the “Latest
Financial Statements”).

(b)           Except as set forth in
detail on Schedule 3.5(b), the Financial Statements of such Seller
fairly present in all material respects such Seller’s financial condition,
results of operations, retained earnings and changes in cash flow as of the
dates thereof and for the periods indicated thereon and have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby,
subject, in the case of the Latest Financial Statements, to the lack of
footnotes.  Such Seller has never
received an independent audit opinion with respect to the Financial Statements.

3.6           Events Subsequent to December 31, 2006.  Except
as set forth on Schedule 3.6, since December 31, 2006,
(i) such Seller has operated its Restaurants in the ordinary course
consistent with past practice, (ii) such Seller and its Restaurants,
individually or in the aggregate, have not suffered any Material Adverse Change,
and:

(a)           such Seller has not accelerated, terminated,
modified or amended any agreement, contract, document, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving the
payment of $25,000 or more or which is otherwise material to such Seller or the
Restaurants and, to the Knowledge of such Seller, no party to the foregoing has
or intends to take any such action;

(b)           such Seller has not experienced any damage,
destruction or loss (whether or not covered by insurance) material to any of
its assets or property;

(c)           such Seller has not declared, set aside,
increased or paid any dividend, or declared or made any distribution on, or
directly or indirectly redeemed, purchased or otherwise acquired, any of its
capital stock or partnership interests;

(d)           such Seller has not entered into or amended any
employment or severance contract with any Person employed by its Restaurants or
increased the rate of compensation for or paid any bonuses to any of any its
officers or employees, except for (i) hiring of non-officer Restaurant
employees in the ordinary course of business, and (ii) immaterial raises to
non-officer Restaurant employees in the ordinary course of business consistent
with past practice;

(e)           such Seller has not paid any fee, interest,
royalty or any other payment of any kind to any Affiliate thereof;

(f)            such Seller has not incurred any indebtedness for
borrowed money, or guaranteed any such indebtedness of another Person, entered
into any agreement to maintain any financial condition of another Person or
entered into any arrangement having the economic effect of any of the
foregoing, or made any loans, advances or capital contributions to, or
investments in, any other Person;

(g)           such Seller has not mortgaged, pledged or
otherwise encumbered any Purchased Asset;

(h)           such Seller has not sold, leased, licensed,
transferred, assigned or otherwise disposed of any of its assets, tangible or
intangible, other than in the ordinary course of business to a Person who is
not an Affiliate of such Seller;

 16

(i)            such Seller has not made or agreed to make any
capital expenditure, other than those in the ordinary course of business and
consistent with past practices out of available cash, and except in connection
with the development of the Broadway Faire Restaurant;

(j)            such Seller has not made any acquisition of
assets other than acquisitions of inventory, supplies and equipment in the
ordinary course of business;

(k)           such Seller has not delayed or postponed the payment of accounts payable
or other Liabilities outside the ordinary course of business;

(l)            such Seller has not commenced, cancelled,
compromised, waived, released or settled any right, claim or Proceeding (or
series of related rights, claims or Proceedings);

(m)          such Seller has not granted any license or sublicense of any rights under
or with respect to any of such Seller’s Intellectual Property;

(n)           such Seller has not made or pledged to make any charitable contribution,
capital contribution or loan outside the ordinary course of business;

(o)           none of such Seller’s Restaurants have suffered the termination,
suspension or revocation of any Liquor License or Permit necessary for the
operations of such Restaurant;

(p)           such Seller has not materially decreased the weekly average inventory of
its Restaurants or Till Cash in its Restaurants;

(q)           there has been no other occurrence, event, incident, action, failure to
act or transaction outside the ordinary course of business involving any Seller
or any of the Restaurants; and

(r)            such Seller has not committed to do any of the
foregoing, and, to such Seller’s Knowledge, no Affiliate of such Seller has
done or committed to any of the foregoing with respect to such Seller or its
Restaurants.

3.7           Absence of Undisclosed Liabilities.  Such
Seller has no material Liabilities, except for (a) Liabilities reflected
on the face of the liabilities section of such Seller’s Latest Balance Sheet,
(b) Liabilities under agreements, contracts, commitments, licenses or
leases which are not required to be reflected on financial statements prepared
in accordance with U.S. GAAP, (c) Liabilities which have arisen since the date
of the Latest Balance Sheet in the ordinary course of business, and (d)
Liabilities set forth on Schedule 3.7.

3.8           Legal
Compliance.

(a)           In connection with the
operation of the Business, since December 31, 2000, such Seller has materially
complied and is in material compliance with, and each of its Restaurants has
materially complied and is in material compliance with, all applicable Laws,
Environmental and Safety Requirements, Orders and Permits, and no Proceeding is
pending or, to the Knowledge of such Seller, threatened, alleging any failure
to so comply.

(b)           Schedule 3.8(b)
sets forth a list of all Permits, including Liquor Licenses, under which such
Seller is operating or bound.  Such
Permits (i) constitute all Permits used or required in the operation of
the Restaurants as presently conducted, (ii) are in full force and effect
and (iii) are not subject to any pending or, to the Knowledge of such
Seller, threatened Proceeding seeking their revocation or limitation.

 17
 

(c)           During such Seller’s
operation of its Restaurants since December 31, 2000, no such Restaurant has
received a citation, warning, or reprimand for, or otherwise been notified of,
any violation of any Law governing alcoholic beverages or any Environmental and
Safety Requirements or similar municipal, state or federal Law.  To the Knowledge of such Seller, during its
operation of its Restaurants, such Seller has not served any food or foodstuff
which is claimed to have caused any illness or injury to the consumer thereof
which would reasonably be expected to have a Material Adverse Effect.

3.9           Title to
Properties.

(a)           Except as set forth on Schedule 3.9(a),
(i) such Seller owns good and marketable title, free and clear of all
Liens (other than Permitted Liens), to all of its Purchased Assets, and
(ii) with the exception of the Excluded Assets, such Purchased Assets
include all assets presently used by Seller in the conduct of its Business in
the ordinary course.

(b)           The facilities,
equipment and other tangible assets included in such Seller’s Purchased Assets
are in good condition and repair (subject to routine maintenance and repair for
similar assets of like age), fit for their particular purpose, and are usable
in the ordinary course of such Seller’s Business.  Such Seller owns or leases under valid leases
all equipment and other tangible assets necessary for the operation of its
Restaurants as conducted as of the date hereof and as of the date of the Latest
Balance Sheet.

(c)           Except as set forth on Schedule
3.9(c), the fixed assets of such Seller are in normal operating condition
(subject to routine maintenance and repair for similar assets of like age), to
Sellers’ Knowledge no major repairs are necessary concerning the fixed assets,
and the fixed assets comply in all material respects with applicable Laws and
Environmental and Safety Requirements.

(d)           Such Seller does not
own any fee interest in real property, other than Morite’s ownership of the fee
interest in the real property for the Coalinga Restaurant.

(e)           Schedule 3.9(e)
contains a complete and accurate list of all real property leased by such
Seller (the “Leased Real Property”),
separated by Restaurant location, listing the street address of such property,
as well as all buildings and other structures and material improvements located
on such Leased Real Property, the commencement and expiration dates, the
current base and percentage rent payments, the name and address of the lessor
and any requirement of consent of the lessor to assignment, if any, and a
description of uses of and facilities on such Leased Real Property.  Except for Morite’s ownership of the real
property used in connection with the Coalinga Restaurant, the Leased Real
Property constitutes all real properties used or occupied by such Seller in
connection with the operation of the Restaurants.  With respect to the Leased Real Property,
such Seller is the owner and holder of all of the leasehold estates purported
to be granted by such lease, and each lease is in full force and effect and
constitutes a valid and binding obligation of such Seller.  Such Seller has delivered to the Buyer true
and complete copies of all leases to which it is a party and referred to in Schedule 3.9(e)
(the “Real Property Leases”).  In addition, except as set forth in Schedule
3.9(e):

(i)            such Seller has not
entered into any subleases with respect to the Real Property Leases;

(ii)           the security deposit
for each of such Seller’s Real Property Leases is in the form of cash and such
Seller has not received notice from the landlord of any deduction against such
security deposit;

 18
 

(iii)          rent under each of such
Seller’s Real Property Leases has been paid through the most current month due,
and no rent is being held by the landlord thereunder more than one month in
advance;

(iv)          no default, or events
which with the passage of time or giving of notice would constitute a default,
exists under any of such Seller’s Real Property Leases;

(v)           all improvements
required to be made by the landlord under such Seller’s Real Property Leases or
by any Governmental Entity have been made, and such Seller has accepted
possession of the Leased Real Property;

(vi)          no brokerage fees or
commissions are outstanding with respect to such Seller’s Leased Real Property;

(vii)         such Seller has received
no written notice of a violation of law with respect its Leased Real Property,
including, without limitation, the Americans with Disabilities Act;

(viii)        such Seller has received
no written notice from any party objecting to such Seller’s current use of the
Leased Real Property;

(ix)           such Seller has not
waived, orally or in writing, any provisions of its Real Property Leases; and

(x)            there are no current
obligations of such Seller to repair or improve any of its Leased Real Property
and no obligations of such Seller that may require any repair or improvement to
any of its Leased Real Property upon transfer, assignment or sale of its
Restaurant or any interest in its Leased Real Property.

(f)            With respect to such
Seller’s Leased Real Property, except as set forth in Schedule 3.9(f):

(i)            such Seller has not
received written notice that any portion thereof is subject to any pending
condemnation Proceeding by any public or quasi-public authority and, to the
Knowledge of such Seller, there is no threatened condemnation Proceeding with
respect thereto;

(ii)           no notice of any
increase in the assessed valuation of such Leased Real Property and no notice
of any contemplated special assessment has been received by such Seller and, to
the Knowledge of such Seller, there is no threatened increase in the assessed
valuation or special assessment pertaining to such Leased Real Property;

(iii)          there are no leases or
other agreements, written or oral, to which such Seller is a party, granting to
any party or parties (other than a Seller) the right of use or occupancy of any
portion of any parcel of such Leased Real Property;

(iv)          other than the Sellers,
there are no parties in possession of any of such Leased Real Property;

(v)           there have been no
discussions or correspondence with the respective landlords of such Leased Real
Property concerning renewal terms therefor of which the Buyer has not been
notified; and

 19
 

(vi)          the physical condition
of such Leased Real Property is sufficient to permit the continued operation of
such Seller’s Restaurants as presently conducted subject to the provision of
usual and customary maintenance and repair performed in the ordinary course
with respect to similar properties of like age and construction.

3.10         Inventory. 
Such Seller’s Inventory is saleable or usable in the ordinary course
of business for its intended use by such Seller and, subject to any reserves
set forth on such Seller’s Latest Balance Sheet, none of such Inventory is
obsolete, damaged, or defective.

3.11         Franchise Agreements.  Such Seller has performed in all material
respects its obligation to pay royalties to the Buyer as required pursuant to
its Franchise Agreements.  Such Seller
has performed in all material respects its obligations under its Franchise
Agreement to expend the required amount for media advertising from January 1,
2006 through the Closing Date.

3.12         Tax
Matters.  Such Seller
(A) has timely paid all Taxes required to be paid by it through the date
hereof (including any Taxes shown due on any Tax Return) and (B) has filed
or caused to be filed in a timely manner (within any applicable extension
periods) all Tax Returns required to be filed by it with the appropriate
Governmental Entities in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns are true and complete.  Except as set forth in Schedule 3.12,
(i) there are no Liens for Taxes on such Seller’s Purchased Assets other
than Permitted Liens, and such Seller has not been notified by the Internal
Revenue Service or any other taxing authority that any issues have been raised
(and are currently pending) by the Internal Revenue Service or any other taxing
authority in connection with any Tax Return of such Seller, and no waivers of
statutes of limitations have been given or requested with respect to such
Seller; (ii) there are no pending Tax audits of any Tax Returns of such
Seller; (iii) to such Seller’s Knowledge, no unresolved deficiencies or
additions to Taxes have been proposed, asserted or assessed against such
Seller; (iv) such Seller has made full and adequate provision on its
Latest Balance Sheet for all Taxes payable by it for all periods prior to the
date of the Latest Balance Sheet; (v) such Seller has not and will not
incur any Tax Liability from and after the date of its Latest Balance Sheet
other than Taxes incurred in the ordinary course of business; (vi) such
Seller has complied in all material respects with all applicable Laws relating
to the collection or withholding of Taxes (such as sales Taxes or withholding
of Taxes from the wages of employees), and such Seller is not liable for any
Taxes for failure to comply with such Laws; (vii) such Seller is not now
and has not been a party to any Tax sharing agreement; (viii) none of such
Seller’s Assumed Liabilities includes an obligation to make (or possibly make)
any payments that will be non-deductible under, or would otherwise constitute a
“parachute payment” within the meaning of, Section 280G of the Code (or
any corresponding provision of state, local or foreign income Tax law);
(ix) such Seller has not agreed to and is not required to make any
adjustments pursuant to Section 481 of the Code, and the Internal Revenue
Service has not proposed to such Seller any such adjustments or changes in such
Seller’s accounting methods; (x) such Seller does not have any liability
for the Taxes of any other Person under any provision of applicable law or
regulation, by contract, as transferee or successor, or otherwise; (xi) upon
consummation of the transactions contemplated by the Documents, none of such
Seller’s Purchased Assets will be subject to the “anti-churning” rules of Code
Section 197(f)(9); and (xii) such Seller is not a “foreign person”
for purposes of Code Section 1445.

3.13         Intellectual
Property.

(a)           Schedule 3.13(a)
identifies (i) all Intellectual Property used by such Seller in connection
with its Business (other than Excluded Assets), (ii) each license,
agreement or other permission which such Seller or any of its Affiliates has
granted to any third party with respect to such Intellectual Property, and
(iii) each item of Intellectual Property that any third party owns and
that such Seller uses in

 20
 

connection with the operation of its Restaurants
pursuant to license, sublicense, agreement or permission (clauses (ii) and
(iii) are collectively referred to as “Licensed
Intellectual Property”).

(b)           Except as set forth on Schedule 3.13(b),

(i)            Neither such Seller
nor, to such Seller’s Knowledge, any of its Affiliates has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of third parties or committed any acts of unfair
competition, and neither such Seller nor, to such Seller’s Knowledge, any of
its Affiliates has received any charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation, conflict or act
of unfair competition;

(ii)           Such Seller owns, has
the right to use, sell, license and dispose of, and has the right to bring
actions for the infringement of, and, where necessary, has made timely and
proper application for, all Intellectual Property (other than the Licensed
Intellectual Property) used in the operation of such Seller’s Restaurants as
currently conducted and, to the Knowledge of the Seller, such rights to use,
sell, license, dispose of and bring actions are exclusive with the respect to
such Intellectual Property (other than the Licensed Intellectual Property);

(iii)          there are no royalties,
honoraria, fees or other payments payable by such Seller or its Affiliates to
any Person by reason of the ownership, use, license, sale or disposition of
such Intellectual Property;

(iv)          no activity, service or
procedure currently conducted by such Seller or its Affiliates violates any
agreement governing the use of Licensed Intellectual Property;

(v)           such Seller has taken
commercially reasonable and practicable steps designed to safeguard and
maintain the secrecy and confidentiality of, and its proprietary rights in, all
Intellectual Property;

(vi)          neither such Seller nor
any of its Affiliates has sent to any third party in the past five years or
otherwise communicated to another Person any charge, complaint, claim, demand
or notice asserting infringement or misappropriation of, or other conflict
with, any Intellectual Property right of such Seller by such other Person or
any acts of unfair competition by such other Person, nor, to the Knowledge of
such Seller, is any such infringement, misappropriation, conflict or act of
unfair competition occurring or threatened; and

(vii)         to the Knowledge of such
Seller, its consummation of the transactions contemplated by the Documents will
not adversely impact any of the Intellectual Property utilized in the operation
of the Restaurants.

3.14         Contracts

(a)           Schedule 3.14(a)
is a complete and accurate list of each written or oral:

(i)            contract, agreement,
commitment, understanding or arrangement to which either Seller is a party
involving the payment or receipt of $25,000 or more in any twelve-month period;

(ii)           contract for the
employment of any officer, employee, or other Person providing services to
either Seller’s Restaurant on a full-time, part-time, consulting or other
basis;

 21
 

(iii)          instrument, agreement or
indenture relating to Funded Indebtedness or to mortgaging, pledging or
otherwise subjecting either Seller’s assets to Lien;

(iv)          guarantee of any
obligation of a Seller for borrowed money or otherwise;

(v)           agreement with respect
to the lending of funds by either Seller;

(vi)          lease or agreement
(other than the Real Property leases) under which either Seller is the lessee
of or the holder or operator of any real or personal property owned by any
other party;

(vii)         lease or agreement under
which either Seller is the lessor of or permits any third party to hold or
operate any real or personal property owned or controlled by such Seller;

(viii)        assignment, license or
agreement with respect to any form of intangible property of either Seller,
including, without limitation, any Intellectual Property or confidential
information;

(ix)           contract or group of
related contracts with the same party for the purchase or sale of products or
services for use in either Seller’s Restaurants;

(x)            contract containing
bonding, insurance or other similar requirements relating to the operation of
either Seller’s Restaurants;

(xi)           contract with any
Affiliate of such Seller relating to the operation of such Seller’s
Restaurants; or

(xii)          contract for the lease
of capital equipment that, in accordance with GAAP, is required to be
capitalized on the Financial Statements.

(b)           Each item listed on Schedule
3.14(a) (each, a “Contract”)
is valid and enforceable against such Seller and, to the Knowledge of such
Seller, the other parties thereto.  Such
Seller has performed in all material respects all obligations required to be
performed by it and is not in material default under or in material breach of
nor in receipt of any claim of material default or material breach under any
such Contract; and no event has occurred which with the passage of time or the
giving of notice or both would result in such Seller’s material default or
material breach under any such Contract. 
To the Knowledge of such Seller, no other party to any such Contract is
in default under or in breach of such document. 
Such Seller has supplied the Buyer with a true, correct and complete
copy of each of the Contracts, together with all amendments, waivers or other
changes thereto, and a complete description of all oral agreements to which such
Seller is a party.

3.15         Insurance.  Schedule 3.15 lists and briefly
describes each insurance policy, self insurance arrangement and bonding
arrangement maintained by such Seller with respect to the properties, assets
and business of its Restaurants (including, without limitation, any bonding
arrangement required under any contract or applicable Law), and all currently
pending claims thereunder.  All of such
Seller’s insurance policies and bonding arrangements are in full force and
effect, and such Seller is not in default with respect to its obligations under
any of such insurance policies or bonding arrangements.  Such Seller has not received any notification
of cancellation or modification of any of such insurance policies or bonding
arrangements and does not have any claim outstanding which could be expected to
cause a material increase in such Seller’s insurance rates.  To the Knowledge of such Seller, there are no
facts or circumstances which exist that might relieve any insurer under such
insurance policies or bonding arrangements of its obligations to satisfy in
full all claims thereunder.

 22
 

3.16         Litigation.  Except as set forth on Schedule 3.16,
there are no Proceedings pending or, to the Knowledge of such Seller,
threatened against such Seller which relate to or could affect the operations
or financial results of its Restaurants and, to the Knowledge of such Seller,
there is no Basis for any of the foregoing. 
Schedule 3.16 also sets forth all Proceedings (or threatened
Proceedings known to Seller) involving such Seller during the last five years
which (i) alleged serious criminal conduct by such Seller,
(ii) resulted in such Seller paying or receiving an amount in excess of
$15,000 in connection with the adjudication or compromise of any Proceeding related
to the operation of a Restaurants or (iii) had a Material Adverse Effect
on such Seller.

3.17         Employees.

(a)           Schedule 3.17(a)
lists all current employees at such Seller’s Restaurants whose annual
compensation for 2006 exceeded or whose annual compensation for 2007 is
expected to exceed $100,000, their permanent classifications (if applicable),
their current hourly rates of compensation or base salaries (as applicable),
their total 2006 compensation and 2007 compensation through March 31, 2007, the
commencement date of their employment, and accrued bonus, accrued sick leave
and accrued vacation benefits as of such Seller’s Latest  Balance Sheet Date.  In addition, to the extent any current
employees of such Seller are on leaves of absence, Schedule 3.17(a)
indicates the nature of such leave of absence and each such employee’s
anticipated date of return to active employment.  No executive, key employee or group of
employees of such Seller listed on Schedule 3.17(a) has indicated
any plans to (i) terminate employment (other than immediately after the
First Closing in order to accept employment with the Buyer) or (ii) not
accept employment with the Buyer immediately after the First Closing.

(b)           To such Seller’s
Knowledge, such Seller has complied with all Laws relating to the hiring of
employees and the employment of labor, including provisions thereof relating to
immigration and citizenship (including proper completion and processing of
Forms I-9 for all employees), wages, hours, equal opportunity, work safety,
working conditions, employment of minors, collective bargaining and the payment
of social security and other Taxes.  To
the Knowledge of such Seller, there are no material labor relations problems
with respect to its Restaurants (including, without limitation, any union
organization activities, threatened or actual strikes or work stoppages or
material grievances).  To the Knowledge
of such Seller, there has been no criminal activity or the prior conviction,
indictment, guilty plea or plea of nolo
contendere on the part of any of its Restaurants’ employees or any
other actual or alleged activity or actions of any such employees that could
reasonably be expected to disqualify any such employee or such Seller from
providing services to any current or potential customers.

(c)           Except as set forth on Schedule 3.17(c),
(i) such Seller is not delinquent in payments to any of the employees at
its Restaurants for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to date or amounts required to
be reimbursed to such employees, and upon termination of the employment of any
such employees, neither the Buyer nor such Seller will by reason of anything
done prior to the First Closing be liable to any of such employees for
severance pay or any other payments, (ii) there is no employment or wage
and hour claim pending or, to the Knowledge of such Seller, threatened against
or involving its Restaurants, (iii) there is no claim with the U.S. Equal
Employment Opportunity Commission or similar Governmental Entity pending or, to
the Knowledge of such Seller, threatened against or involving its Restaurants,
(iv) there is no unfair labor practice complaint against such Seller pending
before the National Labor Relations Board or any other Governmental Entity
relating to labor practices at its Restaurants, (v) there is no labor
strike, material dispute, slowdown or stoppage actually pending or, to the
Knowledge of such Seller, threatened against or involving its Restaurants,
(vi) no labor union currently represents the employees of such Seller’s
Restaurants, (vii) to the Knowledge of such Seller, no labor union has
taken any action with respect to organizing the employees of its Restaurants,
and (vii) neither any grievance that might result in a Material Adverse
Effect nor any arbitration proceeding arising out of or under collective
bargaining agreements is

 23
 

pending and no claim thereto has been asserted against
such Seller.  Such Seller is not a party
to or bound by any collective bargaining agreement, union contract or similar
agreement.

(d)           Neither the execution
and delivery of this Agreement by such Seller, nor such Seller’s consummation
of the Transactions contemplated hereby will (i) result in any payment
(including, without limitation, severance, unemployment compensation, golden
parachute, bonus or otherwise) becoming due to any director, manager or
employee of such Seller, under any Plan or otherwise; (ii) increase any
benefits otherwise payable under any Plan or otherwise; or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.

(e)           To Seller’s Knowledge,
no valid claim may be asserted by any third party against such Seller or any of
the Designated Persons (as hereinafter defined) with respect to (i) the
employment by, or association with such Seller’s Restaurants of any of the
present officers or employees of or consultants to such Seller (said officers,
employees and/or consultants being hereinafter collectively referred to as the “Designated Persons”) or (ii) the use,
in connection with the Restaurants, by any of the Designated Persons of any
information which such Seller or any of the Designated Persons is prohibited
from using, in each case under any prior agreements, arrangements or other
preexisting set of facts, including, without limitation, any such agreement or
arrangement between any of the Designated Persons, or any legal or equitable
considerations applicable to, among other things, unfair competition, trade
secrets or proprietary information.

3.18         Employee
Benefits.

(a)           Employee Benefit
Plans.  Schedule 3.18(a)
sets forth a true and complete list of all of such Seller’s Employee Benefit
Plans (as used in this Section 3.18, the “Plans”) (i) that cover any present or
former employees of its Restaurants (A) that are, or within the six year
period prior to the date of this Agreement, were maintained, sponsored or
contributed to by such Seller or (B) with respect to which such Seller is,
could be or was, within the six year period prior to the date of this
Agreement, obligated to contribute or has any Liability or potential Liability,
whether direct or indirect or (ii) with respect to which such Seller has
any Liability or potential Liability on account of the maintenance or sponsorship
thereof or contribution thereto by any present or former ERISA Affiliate of
such Seller.

(b)           Administration and
Compliance of the Plans.  With
respect to each Plan of such Seller:

(i)            all required, declared
or discretionary (in accordance with historical practices) payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to or as
of the First Closing Date have been made or properly accrued on such Seller’s
Latest Balance Sheet or, with respect to accruals properly made after the date
of its Latest Balance Sheet, on the books and records of such Seller;

(ii)           there is no unfunded
Liability relating to such Plan which is not reflected on the Latest Balance
Sheet of such Seller or, with respect to accruals properly made after the date
of the Latest Balance Sheet, on the books and records of such Seller;

(iii)          such Seller has timely
deposited all amounts withheld from employees for pension, welfare or other
benefits into the appropriate trusts or accounts, and no contribution, premium
payment or other payment has been or will be made in support of the Plan that
is in excess of the allowable deduction for federal income Tax purposes for the
year with respect to which the contribution was made or will be made (whether
under Section 162, Section 280G, Section 404, Section 419, Section 419A of the
Code or otherwise);

 24
 

(iv)          there have been no
material violations of ERISA or other applicable Law, including, but not
limited to, rules and regulations promulgated by the Department of Labor, the
Pension Benefit Guaranty Corporation, and the Department of Treasury, in the
Plan’s administration;

(v)           there have been no
transactions prohibited by Section 406 of ERISA or Section 4975 of the Code; no
fiduciary (as defined in Section 3(21) of ERISA) has any Liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the administration of the Plan or investment of Plan assets;

(vi)          no claim, action, suit,
proceeding, hearing or investigation with respect to the administration of the
Plan or the investment of Plan assets (other than routine claims for benefits)
is pending or, to the Knowledge of such Seller, threatened; and to the
Knowledge of such Seller, there is no Basis for any such action, suit,
proceeding, hearing, or investigation;

(vii)         such Plan is not
currently under examination or audit by the Department of Labor, the Internal
Revenue Service, or any other Governmental Entity, no matter is pending before
the Internal Revenue Service with respect to such Plan under the Internal
Revenue Service Employee Plans Compliance Resolution System Voluntary
Correction Program or Audit Closing Agreement Program, and with respect to such
Plan, such Seller has no liability (either directly or as a result of
indemnification) for (and the transactions contemplated by this Agreement will
not cause any liability for):  (A) any
excise Taxes under Section 4971 through Section 4980B, Section 4999, Section
5000 or any other Section of the Code, (B) any penalty under Section 502(i), Section
502(l), Part 6 of Title I or any other provision of ERISA or (C) any excise
Taxes, penalties, damages or equitable relief as a result of any prohibited
transaction, breach of fiduciary duty or other violation under ERISA or any
other applicable Law;

(viii)        such Seller has classified
all individuals (including but not limited to independent contractors and
leased employees) appropriately under its Plan; if any individuals have not
been appropriately classified under such Plan or if such Seller’s classification
is later determined to be erroneous or is retroactively revised, such error in
classification will not cause such Seller or the affected Plan to incur any
liability, loss or damage;

(ix)           if the Plan is intended
to be “qualified,” within the meaning of Section 401(a) of the
Code, the Plan is either (A) a prototype plan entitled to rely on the opinion
letter issued by the Internal Revenue Service as to the qualified status of
such Plan under Section 401(a) of the Code to the extent provided in Revenue
Procedure 2005-16 or (B) has been determined by the Internal Revenue Service to
be so qualified and the related trusts are exempt from Tax under
Section 501(a) of the Code, and nothing has occurred that has or could
reasonably be expected to adversely affect such reliance, qualification or
exemption;

(x)            if the Plan is a “nonqualified
deferred compensation plan” (as defined in Section 409A(d)(1) of the Code): (A)
it has been operated since January 1, 2005 in good faith compliance with
Section 409A of the Code, IRS Notice 2005-1, and the proposed regulations under
Section 409A of the Code; (B) it has not been materially modified (as
determined under the proposed regulations) after October 3, 2004, if it was in
effect prior to January 1, 2005; (C) no event has occurred in relation to such
Plan that would be treated by Section 409A(b) of the Code as a transfer of
property for purposes of Section 83 of the Code; and (D) no stock option,
equity unit option, or stock appreciation right granted under the Plan has an
exercise price or measurement floor that has been or may be less than the fair
market value of the underlying stock or equity units (as the case may be) as of
the date such option or stock appreciation right was granted or has any feature
for the deferral of compensation other than the deferral of recognition of
income until the later of exercise or disposition of such option or stock
appreciation right;

 25
 

(xi)           if the Plan is a “group
health plan” within the meaning of Section 5000 of the Code, the Plan
has been maintained in compliance with Section 4980B of the Code and Title
I, Part 6 of ERISA (collectively, “COBRA”) and no tax payable on account of
Section 4980B of the Code has been or is expected to be incurred;

(xii)          except as may be
required under Laws of general application, the Plan does not obligate such
Seller to provide any employee or former employee, or their spouses, family
members or beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other “welfare-type” benefits;

(xiii)         such Seller has provided
the Buyer with true and complete copies, to the extent applicable, of all
documents pursuant to which the Plan is maintained and administered, the most
recent summary plan description, the four most recent annual reports (Form 5500
and attachments) and financial statements attached thereto, and all
governmental rulings, determinations, and opinions (and pending requests
therefor) issued to the Plan or on which the Plan relies; and

(xiv)        all reports and filings with
Governmental Entities (including the Department of Labor, the IRS and the SEC)
required in connection with the Plan have been timely made, and all disclosures
and notices required by Law or Plan provisions to be given to participants and
beneficiaries in connection with each Plan have been properly and timely made.

(c)           Multiemployer Plans,
Etc.  Neither such Seller nor any of
its ERISA Affiliates are or have ever maintained or been obligated to
contribute to a Multiple Employer Plan, a Multiemployer Plan, a Defined Benefit
Pension Plan or a Plan subject to the minimum funding standards under Section
302 of ERISA or Section 412 of the Code.

(d)           Effect of the
Agreement.  The consummation of the
transactions contemplated by this Agreement will not (i) cause such Plan to
increase benefits payable to any participant or beneficiary, (ii) entitle any
current or former employee of such Seller to severance pay, unemployment
compensation or any other payment, benefit or award or (iii) accelerate or
modify the time of payment or vesting.

3.19         Environment
and Safety.

(a)           Such Seller has
complied and is in compliance with all Environmental and Safety Requirements
(including without limitation all permits, licenses and other authorizations
that may be required thereunder) for the occupation of its Leased Real Property
and the operation of its Restaurants or otherwise related to its Leased Real
Property or the operations of its Restaurants. 
Such Seller has accurately prepared and timely filed with the
appropriate Governmental Entities all reports, notifications and filings
required pursuant to Environmental and Safety Requirements affecting its Leased
Real Property or Restaurants.  With
respect to such Leased Real Property and Restaurants, such Seller has not
received any notice of any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice against it alleging any violation
of, any liability (contingent or otherwise) or any corrective or remedial
obligation under any Environmental and Safety Requirements or involving any of
its current or past operations or any Leased Real Property used by such
Seller.  With respect to such Leased Real
Property and Restaurants, such Seller has not expressly or, to such Seller’s
Knowledge, by operation of law, assumed, undertaken or become subject to any
Liability of any other Person under any Environmental and Safety
Requirements.  To such Seller’s
Knowledge, none of the following currently exists, has existed during Seller’s
occupancy, has ever existed at the Leased Real Property:  (i) underground storage tanks,
(ii) asbestos-containing material in any form or condition,
(iii) materials or equipment containing polychlorinated biphenyls or
(iv) landfills, surface impoundments or disposal areas.  No Environmental Lien has attached to any
Leased Real Property.  Such Seller has
not been notified that

 26
 

it is potentially responsible or liable under or
received any requests for information or other correspondence concerning its
Leased Real Property or Restaurants under CERCLA or any similar law.  Regarding the Leased Real Property or the
Restaurants, such Seller has not entered into or received any Orders pursuant
to Environmental and Safety Requirements and under which there are continuing
obligations.

(b)           Neither such Seller
nor, to its Knowledge, any previous owner or operator of the Leased Real
Property, has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to Liabilities
pursuant to CERCLA, SWDA or any other Environmental and Safety Requirement,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damage or attorney fees, or any
investigative, corrective or remedial obligations.  The transactions contemplated by this
Agreement do not impose upon such Seller any obligations under any
Environmental and Safety Requirements for site investigation or cleanup, or
notification to any Governmental Entities or third parties.  No known past or present facts, events or conditions
relating to the Leased Real Property or the Restaurants of such Seller would
prevent compliance by such Seller or the Buyer with, or give rise to any
Liability or investigatory, corrective or remedial obligation of the Buyer with
respect to, Environmental and Safety Requirements, including, without
limitation, any Liability related to environmental contamination or violations
of health and safety requirements.

(c)           Such Seller has
provided the Buyer with true, correct, and complete copies of all environmental
reports and studies in the possession, custody or control of such Seller with
respect to the operation of its Restaurants or any of its Leased Real Property
and, to the Knowledge of such Seller, there are no other environmental reports
or studies with respect thereto.

3.20         Suppliers.  Schedule 3.20 lists the ten
largest suppliers of materials, products or services to the Sellers, taken as a
whole, during the 12-month period ended December 31, 2006.  Except as set forth on Schedule 3.20,
no such supplier has terminated or significantly reduced its business such
Seller in the last 12 months.  Such
Seller has not received any notice and does not otherwise have any reason to
believe that any of the suppliers listed in Schedule 3.20 intends
to terminate or reduce its business with such Seller.

3.21         Accounts
and Notes Payable.  There
are no accounts or notes payable in connection with the operation of such
Seller’s Restaurants that have not been paid within 30 days of the invoice
date.

3.22         Regulatory
Compliance.  Since
December 31, 2000, no Governmental Entity regulating such Restaurants has
commenced, or to the Knowledge of such Seller, threatened to commence, any
investigation or proceeding relating to the operation of such Restaurants, and
such Seller has not been responsible for, subject to, become aware or otherwise
been notified of, and does not now have any Liability (and to the Knowledge of
such Seller there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
it giving rise to any Liability), arising out of any injury to individuals,
animals or property as a result of or in connection with any of the services
performed by such Seller or any food or beverage sold at such Restaurants.

3.23         Insider
Interests.  Except for
compensation to regular employees of such Seller’s Restaurants, no current or
former Affiliate of such Seller, is now, or has been during the last five
fiscal years, (i) a party to any transaction or contract involving such
Restaurants, (ii) indebted in respect of any such Restaurant, or
(iii) the direct or indirect owner of an interest in any Person which is a
present or potential competitor, supplier or lessor to such Restaurant (other
than non-affiliated holdings in publicly held

 27
 

companies), nor does any such Person receive income
from any source which should properly accrue to such Seller.  Except as set forth on Schedule 3.23,
neither such Seller nor any Affiliate of such Seller is a guarantor or otherwise
liable for any Liability (including indebtedness) of such Seller or related to
the operations of its Restaurants.

3.24         Improper
Payments.  Neither such
Seller nor any manager, officer, employee, agent or any other Person acting on
its behalf, has directly or indirectly, given or agreed to give any money, gift
or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any Governmental Entity or
other Person who was, is, or may be in a position to help or hinder the
operations of such Seller’s Restaurants (or assist in connection with any
actual or proposed transaction) that might subject such Seller or its Affiliates
to any damage or penalty in any Proceeding.

3.25         Brokers.  No agent, broker, investment banker, Person
or firm has acted on behalf, or under the authority, of such Seller or will be
entitled to any fee or commission directly or indirectly from the Buyer or such
Seller in connection with any of the transactions contemplated hereby.

3.26         Restaurant
Operations.  There is no pending, or to the
Knowledge of such Seller, threatened or proposed proceeding or governmental
action to modify the zoning classification of, or to condemn or take by the
power of eminent domain (or to purchase in lieu thereof), or to impose special
assessments on, or otherwise to take or restrict in any way the right to use,
alter or occupy all or any part of any of such Seller’s Restaurants in any
material respect.

3.27         Gift Cards.   Such Seller’s Latest Balance Sheet
reflects all liabilities of such Seller with respect to gift cards, except for
liabilities with respect to gift cards sold in the ordinary course of business
after the date of the Latest Balance Sheet. 
Since the inception of the gift card program, such Seller has not
recorded any revenue with respect to sales of gift cards other than amounts
recorded upon redemption of the gift card.

3.28         Disclosure.

(a)           No representation or
warranty of such Seller in this Agreement (including the Schedules attached
hereto) omits to state a material fact necessary to make the statements herein
or therein, in light of the circumstances in which they were made, not
misleading.

(b)           There is no fact known
to such Seller that has specific application to such Seller or its Restaurants
(other than general economic or industry conditions) that materially adversely
affects or, as far as such Seller can reasonably foresee, materially threatens,
the assets, business, prospects, financial condition, or results of operations
of such Seller or its Restaurants that has not been set forth in this Agreement
including the Schedules.

Article
IV

REPRESENTATIONS AND WARRANTIES OF BUYER

As
a material inducement to the Sellers to enter into and perform their
obligations under this Agreement, the Buyer represents and warrants to the
Sellers as follows:

4.1           Organization.  The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.

 28
 

4.2           Authorization
of Transaction.  The Buyer
has full power and authority to execute and deliver each Document to which it
is a party and any and all instruments necessary or appropriate in order to
effectuate fully the terms and conditions of the Documents and all related
transactions and to perform its obligations under the Documents.  Each Document to which the Buyer is a party
has been duly authorized by all necessary corporate action on the part of the
Buyer and has been duly executed and delivered by the Buyer and constitutes the
valid and legally binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms and conditions, subject to applicable
bankruptcy, insolvency and similar Laws affecting the enforceability of
creditors’ rights generally, general equitable principles, the discretion of
courts in granting equitable remedies and matters of public policy.

4.3           No
Restrictions Against Purchase of Assets.  Neither the execution, delivery and performance
of the Documents nor the consummation of the transactions contemplated thereby,
nor compliance by the Buyer with any of the provisions thereof, will
(i) violate, conflict with, or result in a material breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under any of the terms, conditions
or provisions of the Fundamental Documents of the Buyer, or under any note,
bond, mortgage, indenture, deed of trust, or other agreement to which the Buyer
is bound, or by which the Buyer or any of its properties or assets may be bound
or affected, which in either case would prevent the consummation by the Buyer
of the transactions contemplated hereby or by the Documents, or (ii) violate
any Law applicable to the Buyer or any of its properties or assets which would
prevent the Buyer’s consummation of the transactions contemplated hereby or by
the Documents.  No consent or approval
by, notice to, or registration with, any Governmental Entity is required on the
part of the Buyer in connection with the execution and delivery of this
Agreement or the consummation by the Buyer of the transactions contemplated
hereby which would prevent the Buyer’s consummation of the transactions
contemplated hereby.

4.4           Disclosure.  No representation or warranty of the Buyer in
this Agreement (including the Schedules attached hereto) omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.

4.5           Funds. Buyer will have at each Closing,
sufficient funds necessary to consummate the transactions contemplated hereby.

Article
V

PRE-CLOSING COVENANTS

5.1           Employees.  Within five (5) days of the date hereof, Buyer shall notify Sellers in
writing of the employees that will not be offered employment by Buyer following
the Transaction.  Any severance amounts
to be paid to such employees shall be determined and paid by Sellers.

5.2           Cooperation
and Best Efforts to Complete Transaction.

(a)           Each Party shall
cooperate with the other and use its reasonable best efforts to (i) obtain
all necessary and appropriate consents and authorizations of third parties and
Government Entities to the Transactions contemplated hereunder, (ii) satisfy
all requirements prescribed by law, and all conditions set forth in this
Agreement for the consummation of the Transactions contemplated herein, and
(iii) effect the Transactions contemplated herein in accordance with this
Agreement at the earliest practicable date.

(b)           Sellers shall not
interfere with Buyer’s efforts to cause key employees of the Restaurants
(defined as employees performing the functions of general manager, assistant
manager, and kitchen manager) to remain as employees of Buyer following the
Transaction.

 29
 

(c)           Sellers shall use commercially reasonable efforts to obtain an estoppel
certificate from each landlord under the Assumed Real Property Leases,
certifying that the Assumed Real Property Lease is in full force and effect
with no defaults, the date to which rent under the Assumed Real Property Lease
has been paid, and such other information as reasonably requested by Buyer, in
form and substance reasonably satisfactory to Buyer.

5.3           Conduct of Restaurants By Sellers Prior to the Closing
Date.  During the period
from the date of this Agreement to the First Closing Date, the Sellers shall
operate the Restaurants as they are currently being operated and only in the
ordinary course.

(a)           Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the First Closing Date, the Sellers shall:

(i)            use commercially
reasonable efforts to preserve and maintain the services of their employees,
their relationships with suppliers and customers;

(ii)           use commercially reasonable
efforts to preserve their current level of sales volume;

(iii)          maintain their existing
policies of insurance at current levels;

(iv)          maintain the Purchased
Assets in normal operating condition;

(v)           purchase and maintain
inventories for each Restaurant in such quantities and quality as necessary to
operate the Restaurants in accordance with Seller’s historical practice;

(vi)          make all payments for
rent or other amounts due under the Real Property Leases when such payments
become due; and

(vii)         continue the development
and construction of the Broadway Faire Restaurant in the ordinary course of
business.

(b)           Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the First Closing Date, without the prior written consent of the Buyer, the
Sellers shall not:

(i)            enter into, terminate
or materially modify or amend any agreement, contract, document, lease or
license (or series of related agreements, contracts, leases or licenses)
involving the payment of $25,000 or more, or waive, release, compromise or
assign any material rights or claims except for (i) the purchase of inventory
in the ordinary course of business under existing contracts without alteration
or amendment, (ii) individual purchase order for one-time, spot purchases and
(iii) the Topanga Lease Extension;

(ii)           declare, set aside,
increase or pay any dividend, or declare or make any distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any capital stock
or partnership interests, other than amounts that will not in the aggregate,
adversely affect the Sellers’ ability to operate the Restaurants in the
ordinary course prior to the First Closing Date;

(iii)          enter into or amend any
employment or severance contract with any Person employed by the Restaurants or
increase the rate of compensation or pay any bonuses to its officers or
employees, except for (i) hiring of non-officer Restaurant employees in the
ordinary course of business, (ii) immaterial raises to non-officer Restaurant
employees in the ordinary course of business consistent

 30
 

with past practice, and (iii) payments to eligible
employees at Closing pursuant to the Manager Incentive Plan;

(iv)          pay any fee, interest, royalty or any other payment of any kind to any
Affiliate thereof, other than dividends or similar payments to
shareholders or partners that will not in the aggregate, adversely affect the
Sellers’ ability to operate the Restaurants in the ordinary course prior to the
First Closing Date;

(v)           incur any indebtedness
for borrowed money, or guarantee any such indebtedness of another Person, enter
into any agreement to maintain the financial condition of another Person or
enter into any arrangement having the economic effect of any of the foregoing,
or make any loans, advances or capital contributions to, or investments in, any
other Person;

(vi)          mortgage, pledge or
otherwise encumber any of the Purchased Assets or suffer to exist any Lien on
any of the Purchased Assets, except for Permitted Liens;

(vii)         sell, lease, license,
transfer, assign or otherwise dispose of any Purchased Assets, except for
supplies and inventory disposed of in the ordinary course of business;

(viii)        make or agree to make any
new capital expenditures, other than those made in the ordinary course of
business and consistent with past practices out of available cash and in
connection with the development of the Broadway Faire Restaurant;

(ix)           delay or postpone the payment of accounts payable or other Liabilities
outside the ordinary course of business;

(x)            commence, cancel, compromise, waive, release or
settle any material right, claim or Proceeding (or series of related rights,
claims or Proceedings);

(xi)           enter into or commit to
enter into any contract, agreement or commitment that would be required to be
set forth on Schedule 3.14, other than in the ordinary course of
business;

(xii)          commit or omit to do any
act that would cause a breach of any covenant contained in this Agreement or
would cause any representation or warranty contained in this Agreement to
become untrue in any material respect;

(xiii)         commit any material
violation of applicable Law;

(xiv)        fail to maintain its
books, accounts and records in the usual manner on a basis consistent with that
heretofore employed or change any accounting method, policy, practice or
application previously employed;

(xv)         fail to pay, or to make
adequate provision for the payment of, all Taxes, interest payments and
penalties due and payable to any city, state, the United States, or any other
taxing authority, except those being contested in good faith by appropriate
proceedings and for which sufficient reserves have been established, or make
any elections with respect to Taxes;

(xvi)        decrease the Inventory or
Till Cash in any Restaurant in a manner not consistent with past practice;

 31
 

(xvii)       acquire, enter into letters
of intent, or agree to acquire (i) any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (ii) any assets that are material, individually or in
the aggregate, to Sellers, except purchases of inventory in the ordinary course
of business consistent with past practice, or (iii) any restaurant or fee
or leasehold interest upon which a restaurant is, or will be, operated;

(xviii)      adopt any new employee
benefit plan or terminate or withdraw from, or make any material change in or
to, any existing employee benefit plans; or

(xix)         authorize any of, or
agree or commit to do any of, the foregoing actions.

5.4           Press Releases.  Buyer shall prepare the press releases
announcing the execution and closing of this Agreement and shall consult with
the Sellers prior to issuance.  The
Parties shall not issue any other press release or make any other public statement
without first consulting with each other, provided, however, that
no such prior consultation shall be required with respect to those disclosures
made by Buyer in filings with the Securities and Exchange Commission, or if
disclosure is required by applicable Law or court process (in which case the
Party issuing such release or making such public statement shall use its best
efforts to provide prior notice thereof to the other Parties).

5.5           Access to Information and Employees.  Prior to the First Closing Date (with respect
to Restaurants other than the Topanga Restaurant) or the Second Closing Date
(with respect to the Topanga Restaurant) and upon advance notice, the Sellers
shall afford to the officers, employees, accountants, counsel, financial
advisors and other representatives of the Buyer, reasonable access during
normal business hours to the premises, books and records, and all financial and
legal information with respect to the Restaurants as Buyer shall reasonably
request, including access to accountants and attorneys knowledgeable with
respect to the Restaurants.

5.6           Topanga Lease Extension.  Prior to the Second Closing Date, Top
Robin shall negotiate an extension to the current Topanga Real Property Lease,
which extension shall be executed by the Buyer if it is reasonably satisfactory
to the Buyer (the “Topanga Lease Extension”),
provided that the Buyer shall not be obligated to approve the Topanga
Lease Extension if it results in an increase of more than five percent (5%) in
the amount of rent payable pursuant to such lease, over the amount payable
under the current Real Property Lease for the Topanga Restaurant.  Top Robin shall not be required to accept as
a condition to the Topanga Lease Extension any material increase in its
obligations with respect to the Topanga Real Property Lease, including, without
limitation, any material fee assessed by the landlord as a condition to the
extension, provided that nothing contained in this Section 5.6 shall
amend the condition to the Second Closing set forth in Section 6.15.

5.7           Confidentiality.  The Parties agree that the
Confidentiality Agreement executed by the Parties in connection with the
Transactions contemplated herein (the “Confidentiality
Agreement”) shall continue in full force and effect through the
Second Closing Date or the termination of this Agreement in accordance with
Article VIII.

5.8           Consultation and Reporting.  During the period from the date of this
Agreement to the First Closing Date (with respect to Restaurants other than the
Topanga Restaurant) or the Second Closing Date (with respect to the Topanga
Restaurant), Sellers will confer on a regular and frequent basis with Buyer to
report material operational matters and to report on the general status of
ongoing operations including profits margins, cost increases and adverse
trends.  Sellers will notify Buyer of any
unexpected emergency or other change in the normal course of Business or in the
operation of its properties and of any governmental complaints, investigations,
adjudicatory proceedings, or hearings (or communications indicating that the
same may be contemplated) and will keep Buyer fully informed of such events and

 32

permit Buyer prompt access to all materials in
connection therewith.  The Parties shall,
upon obtaining knowledge of any of the following, promptly notify each other
of:

(a)           Any notice or other
communication from any Person alleging that the consent of such Person is or
may be required in connection with the Transaction contemplated herein;

(b)           Any notice or other
communication from any Governmental Entity in connection with the Transaction
contemplated herein; and

(c)           Any material actions,
suits, claims, investigations or other judicial proceeding commenced or
threatened against any such Party.

5.9           Update Schedules.  Each Party hereto will promptly disclose
to the others any information contained in its representations and warranties
and on the related Schedules that, because of an event occurring after the date
hereof, is incomplete or no longer correct such that the conditions set forth
in Sections 6.1 and 6.2, or Sections 7.2 and 7.3, as applicable, would not be
satisfied, provided, however that none of such
disclosures will be deemed to modify, amend or supplement the representations
and warranties of such Party, unless the other Party consents to such
modification, amendment or supplement in writing.

5.10         Franchise Agreements.

(a)          Until the
First Closing Date (with respect to Restaurants other than the Topanga
Restaurant) or the Second Closing Date (with respect to the Topanga
Restaurant), Sellers shall continue to be bound by and shall comply with all
provisions of the Franchise Agreements in a manner reasonably designed to
maintain the current operations of the Restaurants.

(b)           Buyer, on behalf of
itself and its Affiliates, hereby agrees that each Franchise Agreement shall
terminate  and have no further force or
effect with respect to each Restaurant as of the First Closing (except that the
Franchise Agreements shall, as applicable, continue in full force and effect
with respect to the Topanga Restaurant until the Second Closing).  Buyer hereby waives any notice period for
such termination that may be provided for in such Franchise Agreements.  Buyer hereby releases and waives any other
claims it may have against Sellers, whether known or not known, arising out of
or relating to the Franchise Agreements, effective upon the First Closing (or,
solely with respect to the Topanga Restaurant, effective upon the Second
Closing), and expressly waives any benefits of Section 1542 of the Civil Code
of the State of California, which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.”

5.11         Transition
Activities.

(a)           Beginning at the close
of business on the day immediately preceding the First Closing Date, the
Sellers shall provide unlimited access to each of the Restaurants to the Buyer
and its representatives.  At such time,
Buyer shall be entitled to take all actions necessary to prepare such
Restaurant for operations at the start of business on the First Closing Date,
including, without limitation, to remove and/or install at such Restaurant any
additional fixtures, furniture, equipment or other property of the Buyer.

 33
 

(b)           In the event the Buyer
reasonably determines that it will be unable during the period of time provided
in Section 5.11(a) to install any necessary equipment or other property or
otherwise prepare any Restaurant for the commencement of operations at the
start of business on the First Closing Date, the Sellers shall provide
reasonable access to such Restaurant during normal business hours on each day
prior to the First Closing Date and allow Buyer to take all necessary actions
in order to prepare the Restaurant for commencement of operations by the Buyer
on the First Closing Date, including, without limitation, to install at such
Restaurant any additional fixtures, furniture, equipment or other property of
the Buyer, provided  however, that the pre-Closing activities of
the Buyer pursuant to this Section 5.11(b) shall not materially interfere with
the ordinary course operations of the Restaurant by the Seller prior to the
First Closing Date.

(c)           Sellers shall remove
all liquor inventory from the Simi Valley Restaurant on or before the First
Closing Date.

Article
VI

CONDITIONS TO OBLIGATION OF BUYER

The
obligation of the Buyer to consummate the transactions to be performed by it in
connection with each Closing is subject to satisfaction or waiver of the
following conditions as of such Closing:

6.1           Representations and Warranties.

(a)           With respect to the First Closing, the representations and
warranties of the Sellers set forth in Article III, disregarding
all qualifications as to materiality, Material Adverse Effect and Material
Adverse Change, shall be true and correct on and as of the First Closing Date
as if made on the First Closing Date (except for any such representations and
warranties that, by their terms, speak only as of a specific date), except
where the failure of representations and warranties to be true and correct
would not have a Material Adverse Effect on the Purchased Assets or where such
failure arises as a result of a material casualty loss or damage to any
Restaurant, whether or not covered by insurance.

(b)           With respect to the Second Closing, the representations and
warranties of the Sellers set forth in Article III, disregarding
all qualifications as to materiality, Material Adverse Effect and Material
Adverse Change, shall be true and correct on and as of the Second Closing Date
as if made on the Second Closing Date, (except for any such representations and
warranties that, by their terms, speak only as of a specific date), except
where the failure of representations and warranties to be true and correct
would not have a Material Adverse Effect on the Topanga Purchased Assets; provided
that with respect to the Second Closing, the representations and
warranties in Article III shall be deemed to include only those matters
that address the ownership or operation of the Topanga Restaurant.

6.2           Covenants and Obligations of the Seller.  With respect to the First Closing and the Second Closing, each
Seller shall have performed and complied in all material respects with all of
its covenants and obligations under this Agreement which are to be performed or
complied with by such Seller prior to such Closing Date.

6.3           Consents.

(a)           With respect to the
First Closing, other than consents from the landlords for the Topanga
Restaurant, all consents by third parties (including Governmental Entities)
shall have been obtained that are (a) required from Governmental Entities
for the consummation of the transactions contemplated hereby, or (b) that
are required in order to prevent a Seller’s breach of or a default under or a
termination of any Assumed Contract, Assumed Real Property Lease or Permit,
including, without limitation, duly

 34
 

executed consents in form and substance reasonably
satisfactory to the Buyer and its counsel, to the assignment and assumption
thereof, to the extent such consents are required under applicable Law or the
terms thereof; and

(b)           With respect to the
Second Closing, all consents by third parties (including consents from the
landlord for the Topanga Restaurant and consents from Governmental Entities)
shall have been obtained that are (a) required from Governmental Entities
for the consummation of the transactions contemplated hereby, or (b) that
are required in order to prevent a Seller’s breach of or a default under or a
termination of any Assumed Contract, Assumed Real Property Lease or Permit,
including, without limitation, duly executed consents in form and substance
satisfactory to the Buyer and its counsel, to the assignment and assumption
thereof, to the extent such consents are required under applicable Law or the
terms thereof.

6.4           Absence of Material Adverse
Change.

(a)           With respect to the First Closing, since December 31, 2006,
there shall have been no Material Adverse Change suffered by the Restaurants in
the aggregate and there shall have been no material casualty loss or damage to
any single Restaurant, whether or not covered by insurance.  Notwithstanding the foregoing, if any single
Restaurant (but not more than one) has suffered such a material casualty loss
or damage (the “Damaged Restaurant”),
the Parties agree to enter into such amendments or supplements to this
Agreement as may be necessary to close the Transaction with respect to all
Restaurants other than the Damaged Restaurant. 
Such amended Agreement shall provide that the Buyer shall (A) deduct the
amount of the Consideration allocable to the Damaged Restaurant, (B) deduct a
proportionate amount of the funds to be deposited with the Indemnification
Escrow Agent, and (C) not purchase or assume any Purchase Assets or  Assumed Liabilities relating to the Damaged
Restaurant.

(b)           With respect to the Second Closing, since the First Closing, there
shall have been no Material Adverse Change suffered by the Topanga Restaurant.

6.5           Absence of Litigation.  With respect to the First Closing and the
Second Closing, as of such Closing, there shall not be (a) any Order of
any nature issued by a Governmental Entity with competent jurisdiction
directing that the transactions to be consummated at such Closing as provided
for herein or any material aspect of them not be consummated as herein provided
or (b) any Proceeding before any Governmental Entity pending wherein an
unfavorable Order would prevent the performance of this Agreement or the other
Documents or the consummation of any material aspect of the transactions or
events contemplated hereby, declare unlawful any material aspect of the
transactions or events contemplated by this Agreement or the other Documents,
cause any material aspect of the transaction contemplated by this Agreement or
the other Documents to be rescinded or materially affect the right of the Buyer
to own, operate or control the Purchased Assets or the Restaurants.

6.6           Termination of Plans.  With respect to the First Closing only, all
Plans covering employees of the Restaurants will be terminated on or before the
First Closing Date.  All obligations of
Sellers to employees as of the First Closing Date (including unused vacation)
shall have been paid by the Sellers on or before the First Closing Date.  To the extent required by applicable law, the
Sellers shall provide COBRA continuation coverage (within the meaning of
Section 4980B of the Code and the Treasury regulations thereunder) to all
individuals who are M & A qualified beneficiaries (within the meaning
assigned to such term under Q&A-4 of Treasury Regulation Section
54.4980B-9) with respect to the sale of the Purchased Assets to the Buyer for
the duration of the period to which such individuals are entitled to such
coverage.  The Sellers shall take any and
all necessary actions to ensure that neither the Buyer nor any of its
Affiliates are required to provide such continuation coverage to any such
individual at any time.

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The Sellers shall calculate and pay all amounts earned
by eligible employees pursuant to the Manager Incentive Plan for all periods
period to the Closing Date.

6.7           Franchise Agreements.  With respect to the First Closing,
Sellers shall have paid any and all royalties, advertising fees, finance
charges and other payments required to be paid under the Franchise Agreements
for all periods up to and including the First Closing Date.

6.8           New Real Property Leases.

(a)           The Buyer shall have
received sufficient documentation evidencing the termination of the Existing
Calabasas Lease and the Existing La Quinta Lease as of the Closing Date.

(b)           The Buyer shall have
entered into a real property lease with the landlord for each of the Coalinga,
Calabasas and La Quinta Restaurants (the “New
Real Property Leases”) in a form acceptable to the Buyer in its sole
discretion.

6.9           Permits
and Liquor Licenses.

(a)           With respect to the
First Closing, Buyer shall have obtained from the issuing Governmental Entity,
all permits, licenses, including Liquor Licenses, and approvals of all
Governmental Entities necessary for Buyer’s operation of all of the
Restaurants, other than the Topanga Restaurant. 
Notwithstanding the foregoing, if the Buyer shall have failed to obtain
on or before June 30, 2007 the necessary Liquor License to operate one or more
of (i) the Simi Valley Restaurant, (ii) the Broadway Faire Restaurant, or (iii)
up to one other Restaurant other than the Simi Valley Restaurant or the
Broadway Faire Restaurant (together, the “Excluded
Restaurants”), the Parties agree to enter into such amendments or
supplements to this Agreement as may be necessary to close the Transaction with
respect to all Restaurants other than the Excluded Restaurants.  Such amended Agreement shall provide that the
Buyer shall (A) withhold the amount of the Consideration allocable to the
Excluded Restaurant, (B) withhold a proportionate amount of the funds to be
deposited with the Indemnification Escrow Agent, (C) operate the Excluded
Restaurants pursuant to a Management Agreement substantially in the form
attached hereto as Exhibit I, and (D) close the Transaction with respect
to each Excluded Restaurant promptly following the date on which the Liquor
License with respect to such Excluded Restaurant is obtained.  Notwithstanding the preceding sentence, in
the event the execution of the Management Agreement is impermissible under
applicable law, the Parties shall modify such agreement to the least possible
extent in order to accomplish substantially the same arrangement in a manner
that is permissible under applicable law.

(b)           With respect to the
Second Closing, Buyer shall have obtained from the issuing Governmental Entity,
all permits, licenses, including Liquor Licenses, and approvals of all
Governmental Entities necessary for Buyer’s operation of all of the Topanga
Restaurant.

6.10         Documents.  With respect to the First Closing and the
Second Closing, all of the Documents to be delivered in connection with such
Closing shall have been duly executed and delivered, as applicable, by the
Sellers and shall be in full force and effect.

6.11         Non-Solicitation Agreements.  With respect to the First Closing only,
the Buyer shall have entered into a Non-Solicitation Agreement substantially in
the form of Exhibit E attached hereto with each of William M.
Morrow and Earl F. Soller (the “Non-Solicitation
Agreements”).

6.12         Opinion of Counsel.  With
respect to the First Closing and the Second Closing, the Buyer shall
have received a legal opinion from Graham
& Dunn P.C. substantially in the form attached hereto as

 36
 

Exhibit
F, provided  that
that opinion delivered at the Second Closing need only address Top Robin and
the Topanga Restaurant.

6.13         Title Policies.  With respect to the First Closing and the
Second Closing, the Title Company shall issue to Buyer an ALTA Leasehold Policy
of Title Insurance with respect to the Leased Real Property that is the subject
to of such Closing in the form acceptable to Buyer, and in the amounts, as the
pro forma policies previously delivered to Buyer by Title
Company and concurrently delivered to Seller (the “Title Policies”). 
Seller shall pay for the cost of a standard coverage leasehold policy
with respect to each Assumed Real Property Lease and Buyer shall pay for the
cost of any extended coverage and endorsements requested by Buyer.  Prior to the applicable Closing Date, the
Parties shall mutually agree on the insured value for each of the Title
Policies.

6.14         First Closing.  With respect to the Second Closing only, all
conditions to the First Closing contained in this Article VI shall have been
satisfied or waived at the First Closing.

6.15         Topanga Lease Extension.  With respect to the Second Closing only, the
Buyer shall have executed the Topanga Lease Extension.

Article
VII

CONDITIONS TO OBLIGATIONS OF THE SELLERS

The
obligation of the Sellers to consummate the transactions to be performed by
them in connection with the First Closing Date and the Second Closing Date is
subject to satisfaction or waiver of the following conditions as of the
Closing:

7.1           Delivery
of Consideration.  The
Buyer shall have delivered the Consideration in accordance with the provisions
of Section 2.3.

7.2           Representations
and Warranties.  The
representations and warranties of the Buyer set forth in Article IV,
disregarding qualifications as to materiality, Material Adverse Change and
Material Adverse Effect, shall be true and correct in all respects on and as of
such Closing Date as if made on such Closing Date (except for any such
representations and warranties that, by their terms, speak only as of a
specific date), except where the failure of representations and warranties to
be true and correct would not have a Material Adverse Effect on Buyer.

7.3           Covenants and Obligations of Buyer.  With respect to the First Closing and the Second
Closing, Buyer shall have performed and complied in all material
respects with all of its covenants and obligations under this Agreement which
are to be performed or complied with by Buyer prior to such Closing Date.

7.4           Absence
of Litigation.  As of the
applicable Closing, there shall not be (a) any Order of any nature issued
by a Governmental Entity with competent jurisdiction directing that the
transactions provided for herein or any material aspect of them not be
consummated as herein provided, or (b) any Proceeding before any
Governmental Entity pending wherein an unfavorable Order would prevent the
performance of this Agreement or the other Documents or the consummation of any
material aspect of the transactions or events contemplated hereby, declare
unlawful any material aspect of the transactions or events contemplated by this
Agreement or the other Documents or cause any material aspect of the
transaction contemplated by this Agreement or the other Documents to be
rescinded.

7.5           Governmental
Filings.  All filings or
registrations with any Governmental Entities which are required for or in
connection with the execution and delivery by the Buyer of the Documents or the
consummation of the transactions contemplated thereby shall have been obtained
or made.

 37
 

7.6           Documents.  All of the Documents shall have been duly
executed and delivered by the Buyer and shall be in full force and effect.

Article
VIII

TERMINATION

8.1           Termination
prior to First Closing.  This Agreement may be terminated
and the Transaction contemplated herein abandoned at any time before the First
Closing Date as follows:

(a)           Mutual Consent.  By
the mutual consent of Sellers and Buyer;

(b)           Material Breach.  By
either Buyer or Sellers if there has been a material breach or inaccuracy by
the other Party with respect to any representation or warranty contained in
this Agreement or of any covenant contained in this Agreement, which breach or
inaccuracy:

(i)            is not
cured by Sellers within thirty (30) days after receiving written notice thereof
from Buyer to the extent that such breach or inaccuracy is capable of being
cured; and

(ii)           results
in the failure of Buyer’s conditions in Section 6.1(b) and 6.2 of the Purchase
Agreement to be satisfied, and such condition is not waived by the
non-breaching Party.

(c)           Abandonment.  By
either Buyer or Sellers if (i) all conditions to the First Closing
required hereby have not been met or waived on or before October 1, 2007, or
(ii) the First Closing has not occurred on or before such date; provided,
however, that neither Sellers nor Buyer shall be entitled to terminate
this Agreement pursuant to this subparagraph (c) if such Party has been in
material violation of any of its representations, warranties, or covenants in
this Agreement and such violation has been a material factor in delaying the
Closing;

(d)           Government Action.  By
either Buyer or Sellers, if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions and such order, decree, ruling or
other action shall have become final and nonappealable.

8.2           Termination Prior to Second Closing.  This
Agreement may be terminated and the Transaction contemplated herein abandoned
(with respect only to the Topanga Restaurant) at any time after the First
Closing Date but before the Second Closing Date as follows:

(a)           Mutual Consent.  By the mutual consent of Sellers and Buyer;

(b)           Material Breach.  By either Buyer or Sellers if there has been
a material breach or inaccuracy by the other Party with respect to any
representation or warranty contained in this Agreement or of any covenant
contained in this Agreement, which breach or inaccuracy is not cured by Sellers
within thirty (30) days after receiving written notice thereof from Buyer, and
which breach or inaccuracy results in the failure of Buyer’s conditions in
Section 6.1(b) and 6.2 to be satisfied, and such condition is not waived by the
non-breaching Party;

(c)           Abandonment.  (i) By the Buyer at any time upon 30 days
written notice to the Sellers, or (ii) by the Seller at any time after January
31, 2009, upon 30 days written notice to the Buyer;

(d)           Government Action.  By either Buyer or Sellers, if any
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise

 38
 

prohibiting the transactions and such order, decree,
ruling or other action shall have become final and nonappealable.

8.3           Effect of
Termination.

(a)           Upon termination of
this Agreement pursuant to this Article VIII prior to the First Closing,
this Agreement shall be void and of no effect, and shall result in no
obligation of or liability to any Party or their respective directors,
officers, employees, agents or shareholders, unless such termination was the
result of breach of any representation, warranty, covenant or agreement in this
Agreement in which case the Party who so breached the representation, warranty,
covenant or agreement shall be liable to the other Party for appropriate
damages.

(b)           Upon termination of
this Agreement pursuant to this Article VIII after the First Closing but prior
to the Second Closing, the provisions of this Agreement pertaining solely to
the Second Closing shall be void and of no effect and no Party shall have any
obligation or liability with respect to the Second Closing, unless such
termination was the result of breach of any representation, warranty, covenant
or agreement in this Agreement in which case the Party who so breached the
representation, warranty, covenant or agreement shall be liable to the other
Party for appropriate damages. 
Termination of this Agreement after the First Closing but prior to the
Second Closing shall not affect either Party’s rights, obligations and
liabilities under this Agreement with respect to the First Closing.

Article
IX

ADDITIONAL AGREEMENTS

9.1           Survival. 
The representations, warranties and covenants set forth in this
Agreement or in any certificate or other writing delivered in connection with
this Agreement shall survive the Closings and the consummation of the
transactions contemplated hereby, until the earlier of 5:00 p.m. Colorado time
on the date that is one (1) year following the First Closing Date (or the
Second Closing Date, solely with respect to the Topanga Restaurant), following
which time and date no claim for indemnification may be made hereunder; provided
however, that claims for Adverse Consequences with respect to the
inaccuracy of representations and breach of warranties contained in (i)
Sections 3.9(b), (c) and (f)(vi) (Title to Properties),
and Section 5.3(a)(iv) (Conduct of Restaurants by
Sellers Prior to the Closing Date) (collectively, the “Operational Representations/Covenants”)
may only be asserted until the date that is ninety (90) days following the
First Closing Date (or the Second Closing Date, solely with respect to the
Topanga Restaurant), and (ii) Section 3.1 (Organization
and Capitalization of the Sellers), 3.2 (Authorization of Transaction), 3.12 (Tax Matters), 3.18 (Employee Benefits) or 3.19 (Environment and Safety) may be asserted
until the expiration of the applicable statute of limitations (giving effect to
any waivers or extensions thereof) for which any third party claims may be
asserted.

9.2           Indemnification.

(a)           Each Seller agrees,
jointly and severally, to indemnify, defend and hold harmless the Buyer and its
Affiliates, successors, assigns, officers, directors, stockholders and
employees (collectively, the “Buyer Group”)
against any Adverse Consequences that any member of the Buyer Group may suffer,
sustain or become subject to as the result of, or arising from or in connection
with:

(i)            the breach by either
Seller of any of its representations, warranties or covenants contained in this
Agreement, any other Document or in any exhibit, schedule or attachment hereto
or thereto or in any certificate delivered by such Seller in connection
herewith or therewith;

 39
 

(ii)           any Excluded Liability
of either Seller, including but not limited to, any Liability relating to the  Known Claims.

(b)           The Buyer shall
indemnify and hold harmless the Sellers and their respective successors,
assigns, managers, officers, directors, stockholders, partners and employees
(collectively, the “Seller Group”)
against any Adverse Consequences which they may suffer, sustain or become
subject to as the result of, arising from or in connection with:

(i)            a breach of any representation,
warranty, covenant or agreement by the Buyer contained in this Agreement, any
other Document or in any exhibit, schedule or attachment hereto or thereto or
in any certificate delivered by the Buyer in connection herewith or therewith;
and

(ii)           Buyer’s ownership of
the Purchased Assets or operation of the Restaurants after the applicable
Closing Date; and

(iii)          any Assumed Liability
relating to the ownership or operation of the Restaurants or the Purchased
Assets at any time after the applicable Closing Date.

(c)           Notwithstanding
the foregoing, (i) no Seller shall be required to indemnify the Buyer Group for
Adverse Consequences until the aggregate amount of all Adverse Consequences
sustained by the Buyer Group exceeds $250,000 (“Threshold”),
provided that, in the event the aggregate amount of Adverse Consequences
exceeds the Threshold, the Sellers only shall be liable to indemnify the Buyer
Group for all Adverse Consequences incurred in excess of the Threshold; and
(ii) the Sellers’ obligations to indemnify the Buyer Group based on Section
9.2(a)(i) hereunder, in the aggregate, shall not exceed $5,000,000 (“Cap”). 
Notwithstanding the preceding sentence: (A) Sellers’ obligations to
indemnify the Buyer Group for Adverse Consequences based on Section 9.2(a)(i)
in connection with the Operational Representations/Covenants hereunder shall
not exceed $500,000 in the aggregate, and (B) neither the Threshold nor the Cap
shall apply to the Sellers’ indemnification obligations for Adverse
Consequences based on Section 9.2(a)(ii). 
The Buyer’s right to seek payment of any indemnification claim from the
Indemnification Escrow Agent shall be governed by this Agreement and the Escrow
Agreement.

(d)           No right of
any of the Buyer Group for indemnification hereunder shall be affected by any
examination made for or on behalf of the Buyer, the knowledge of any of the
Buyer’s officers, directors, stockholders, employees or agents, or the
acceptance by the Buyer of any certificate or opinion, other than the Schedules
delivered with this Agreement.

9.3           Indemnification Procedures.

(a)           If any third party
shall notify any Party to this Agreement (the “Indemnified
Party”) with respect to any matter which may give rise to a claim
for indemnification against any other Party to this Agreement (the “Indemnifying Party”) under
Section 9.2, then the Indemnified Party shall notify each Indemnifying
Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced by the
delay.  Any Indemnifying Party will have
the right to defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party so long
as (A) the Indemnifying Party notifies the Indemnified Party in writing
within 30 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party is electing to defend the Indemnified Party
in respect of the Adverse Consequences the Indemnified Party suffers resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the

 40
 

Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, and (C) the Indemnifying Party conducts the defense
of the Third Party Claim actively and diligently.  The Indemnified Party may participate in the
defense of such claim with co-counsel of its choice; provided, however,
that the fees and expenses of the Indemnified Party’s counsel shall be at the
expense of the Indemnified Party unless (A) the Indemnifying Party has
agreed in writing to pay such fees and expenses, (B) the Indemnifying
Party has failed to assume the defense and employ counsel as provided herein or
(C) a claim shall have been brought or asserted against the Indemnifying
Party as well as the Indemnified Party, and there may be one or more factual or
legal defenses available to the Indemnified Party that are in conflict with
those available to the Indemnifying Party, in which case such co-counsel shall
be at the expense of the Indemnifying Party; provided, however,
that the Indemnifying Party will not be required to pay the fees and expenses
of more than one separate principal counsel (and any appropriate local counsel)
for all Indemnified Parties.  If, within
such 30-day period, the Indemnifying Party does not assume the defense of such
matter or fails to defend the matter in the manner set forth above, the
Indemnified Party may defend against the matter in any manner that it
reasonably may deem appropriate and may consent to the entry of any judgment
with respect to the matter or enter into any settlement with respect to such
matter, with the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. The Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of defending against such claim
(including reasonable attorneys’ fees and expenses) and the Indemnifying Party
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the claim to the fullest extent provided herein.

(b)           If an Indemnified Party’s
notice of indemnification does not relate to a claim or the commencement of an
action or proceeding by a third party, the Indemnifying Party shall have 30
days after receipt of such notice to object to the subject matter and the
amount of the claim for indemnification set forth in such notice by delivering
written notice thereof to the Indemnified Party.  If the Indemnifying Party does not so object
within such 30-day period, it shall be conclusively deemed to have agreed to
the matters set forth in such notice of indemnification.  If the Indemnifying Party sends notice to the
Indemnified Party objecting to the matters set forth in such notice of
indemnification, the Parties shall use their best efforts to settle such claim
for indemnification.  If the Parties are
unable to settle such dispute, then the Indemnified Party shall seek resolution
of the dispute by initiating litigation in any jurisdiction in which litigation
arising under this Agreement may be commenced by the Parties hereto.

9.4           Exclusive Remedy.  The Parties hereby agree that the foregoing
provisions of this Article IX shall be the sole and exclusive means of recovery
of a Party hereto or any other Person entitled to indemnification under this
Agreement; provided,  however, that with respect to claims based
on fraud or any claim made under Section 9.2(a)(ii), the foregoing provisions
shall not preclude the exercise of any other rights or remedies available to a
Party hereto or any other Person hereunder at law or in equity, and shall be in
addition to any other rights or remedies to which a Party hereto or any other
Person entitled to indemnification under this Article IX and his, her or its
assigns, as the case may be, may be entitled at law or in equity.

9.5           Change of
Name.  Within thirty (30) days after the
Second Closing Date, Top Robin shall change its name to delete the use of the
name “Robin.”  Immediately upon the
Second Closing, Sellers shall cease using the name “Robin”, and similar or
derivative names in all of their activities and thereafter, the Sellers agree
not to use “Robin” or “Red Robin” in connection with any business or commercial
activity except with the prior written consent of the Buyer.  In the event the Second Closing does not
occur, Top Robin may continue to use the name “Robin” and similar or derivative
names only in connection with the ownership and operation of the Topanga
Restaurant.

 41
 

9.6           Transaction Expenses.  The Buyer shall pay all of its expenses
incurred in connection with the Transactions contemplated hereby.  The Sellers shall pay all of their expenses
incurred in connection with the Transactions contemplated hereby.  This provision shall not limit any Party’s
right to include expenses in any claim for damages against any other Party who
breaches a legally binding provision of the Documents.

9.7           Transaction Taxes.  The Buyer shall bear and pay, and shall
reimburse the Sellers if the Sellers are held responsible for, any sales, use,
transfer, stamp, registration, value added or similar taxes imposed on the
sale, conveyance or transfer of the Purchase Assets.  In no event shall the Buyer be liable for any
income, capital gain, franchise or other similar taxes arising or imposed as a
result of the transactions contemplated herein.

9.8           Further
Assurances; Transition Assistance.

(a)           Each of the Parties
agrees that it will from time to time on or after each Closing promptly do,
execute, acknowledge and deliver and will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, certificates, bills
of sale, assignments, transfers, conveyances, powers of attorney, assurances
and other documents as may be reasonably requested by any of the other Parties
for better assigning, transferring, granting, conveying, assuring and
conferring right, title and interest to the Buyer of the Purchased Assets and
for the better assumption by the Buyer of the Assumed Liabilities.  Without limiting the generality of the
foregoing, the Parties agree to cooperate with each other and to provide each
other with all information and documentation reasonably necessary to permit the
preparation and filing of all federal, state, local, and other Tax returns and
Tax elections with respect to the Restaurants.

(b)           For a period of five
years following the First Closing Date, the Sellers will maintain all books, records and other materials used or
compiled in connection with the operation of the Restaurants, including,
without limitation, all records of electronic communication, and shall provide
Buyer or its representatives with prompt access to such books and records as
Buyer may reasonably request upon five (5) business days’ advance notice in
order to operate the Restaurants in the ordinary course of business.

9.9           Power of Attorney; Right of Endorsement, Etc.  Effective as of the
Closing, each of the Sellers hereby constitutes and appoints the Buyer and its
successors and assigns the true and lawful attorney of such Seller with full
power of substitution, in the name of the Buyer or the name of such Seller, on
behalf of and for the benefit of the Buyer, (a) to collect all Purchased
Assets, (b) to endorse, without recourse, checks, notes and other
instruments in connection with the operation of the Restaurants and
attributable to the Purchased Assets, (c) to institute and prosecute all
proceedings which the Buyer may deem proper in order to collect, assert or
enforce any claim, right or title in or to the Purchased Assets, (d) to
defend and compromise all actions, suits or proceedings with respect to any of
the Purchased Assets (except with respect to indemnification claims under this
Article IX) and (e) to do all such reasonable acts and things with respect
to the Purchased Assets as the Buyer may deem advisable; provided, however,
that the power of attorney granted hereby shall not be effective with respect
to the Topanga Restaurant until the Second Closing.  The Sellers agree that the foregoing powers
are coupled with an interest and shall be irrevocable by the Sellers directly
or indirectly by the dissolution of any of the Sellers or in any other
manner.  The Buyer shall retain for its
own account any amounts collected pursuant to the foregoing powers, and the
Sellers shall promptly pay to the Buyer any amounts received by the Sellers
after the applicable Closing with respect to the Purchased Assets.

9.10         Allocation Ad Valorem Taxes.  The Sellers shall pay any Liability for ad
valorem taxes and assess­ments (including any special or supplemental
assessments) on the Purchased Assets allocable to periods ending on or before
the applicable Closing Date (without regard to when such taxes are assessed

 42
 

or payable). 
For purposes of this Section 9.10, in the case of any ad valorem taxes
that are imposed on a periodic basis and are payable for a tax period that
includes (but does not end on) the applicable Closing Date, the portion of such
tax related to the tax period ending on the applicable Closing Date will be
deemed to be the amount of such tax for the entire tax period multiplied by a
fraction, the numerator of which is the number of days in the tax period ending
on the applicable Closing Date and the denominator of which is the number of
days in the entire tax period.  If the
Parties are unable to determine the exact amount of taxes for proration at the
applicable Closing, or if the taxes or assessments for periods ending on or
before the applicable Closing Date are reassessed subsequent to the applicable
Closing, the Parties will make the appropriate financial adjustments at the
time the assessment is determined.

9.11         Conduct After Closing.

(a)           For a period of one
year after the Second Closing Date (or the First Closing Date, if the Second
Closing Date does not occur) (the “Post-Closing
Period”), each Seller shall continue in good standing under its
jurisdiction of formation and the Sellers shall in the aggregate maintain at
all times a Net Worth equal to or greater than the Minimum Aggregate Net
Worth.  “Net
Worth” for each Seller shall be (i) the amount of such Seller’s
cash, cash equivalents and Permitted Investments (as defined in the
Indemnification Escrow Agreement), in each case only to the extent such assets
are free and clear of all Liens, plus (ii) the fair market value of real
property held by Seller, minus (iii) the amount of such Seller’s
Liabilities.  “Minimum Aggregate Net Worth” shall mean  $1,000,000.

(b)           No later than ten (10)
business days after the end of each calendar quarter during the Post-Closing
Period, each Seller shall deliver to the Buyer a certificate signed by an
officer of such Seller, certifying the amount of such Seller’s Net Worth as of
the last day of the preceding calendar quarter. 
The certificate shall be accompanied by such Seller’s unaudited balance
sheet and a bank statement or other similar supporting documentation as Buyer
may reasonably request in order to confirm such Seller’s determination of its
Net Worth.  If any Seller (i) fails to
deliver the officer’s certificate and balance sheet required pursuant to this
Section 9.11(b) and such failure continues uncured for ten (10) business days
after receiving notice from the Buyer or (ii) fails at any time to maintain the
amount of Net Worth prescribed in Section 9.11(a), then the Sellers shall
immediately transfer to the Indemnification Escrow Agent by wire transfer of
immediately available funds an aggregate amount equal to the Minimum Aggregate
Net Worth.  Amounts deposited with the
Indemnification Escrow Agent pursuant to this Section 9.11(b) shall constitute “Escrow
Funds,” as defined in the Escrow Agreement and shall be paid to the Buyer upon
resolution of indemnification claims or reimbursed to the Seller in accordance
with the Indemnification Escrow Agreement.

(c)           The Sellers shall not
conduct any business activities in connection with the operation of the
Restaurants following the First Closing other than (i) its activities in
connection with the operation of the Topanga Restaurant or any other Restaurant
for which Closing has not yet occurred; 
and (ii) activities in connection with the performance of its obligations pursuant to this Agreement and
the other Documents or as necessary in connection with the payment, discharge
and performance of all Excluded Liabilities.

9.12         Manager Incentive Plan.  Buyer hereby agrees to maintain and honor the
Manager Incentive Plan for eligible employees who continue to be employed with
the Restaurants until at least December 31, 2007, provided that the
Sellers shall calculate and pay at the Closing Date all amounts earned by
eligible employees for services performed prior to the Closing Date.

 43
 

Article
X

DEFINITIONS

In
addition to the words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively,
unless the context clearly requires otherwise:

“Actual
Adjustment Amount” has the meaning set forth in Section 2.5(a).

 “Adjustment Amount” has the meaning set
forth in Section 2.4(b).

“Adverse
Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, expenses, and fees,
including court costs and attorneys’ fees and expenses (whether such attorneys’
fees and expenses arise out of a dispute or claim between the Parties or out of
a dispute involving third parties).

“Affiliate”
means, with respect to any Person, any of (a) a director, officer or
stockholder of such Person and (b) any other Person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, another Person.  The term “control” includes, without
limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

“Assumed
Liabilities” has the meaning assigned to such term in Section 1.3.

“Assumed
Real Property Leases” means all the Real Property Leases, other than the
lease relating to the Calabasas Restaurant and the lease relating to the La
Quinta Restaurant.

“Basis”
means any past or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction that forms or could form the basis for any specified
consequence.

“Bill
of Sale” has the meaning assigned to such term in Section 2.3(a)(i).

“Broadway
Faire Restaurant” means the restaurant currently being constructed by Top
Robin at 3385 W. Shaw Avenue, Fresno, CA 93711.

“Business”
means the operation of the Restaurants.

“Buyer”
has the meaning assigned to such term in the preamble of this Agreement.

“Buyer
Group” has the meaning assigned to such term in Section 9.2(a).

“Calabasas
Restaurant” means the Restaurant located at 24005 Calabasas Road,
Calabasas, CA 91302.

“Cash
Consideration” has the meaning assigned to such term in Section 2.1.

“CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability
Act, as amended, and the rules and regulations promulgated thereunder.

“Closing”
has the meaning assigned to such term in Section 2.2.

 44
 

“Closing
Date Balance Sheet” means the balance sheet of each of the Sellers as of
the First Closing Date (immediately prior to the First Closing and without
taking into account the Transactions) prepared in on a basis consistent with
the Year End Balance Sheet.

“Coalinga
Restaurant” means the Restaurant located at 25016 W. Dorris Ave., Coalinga,
CA 93210.

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated thereunder.

“Consideration”
has the meaning assigned to such term in Section 2.1.

“Contingent
Payment Dispute Notice” has the meaning assigned to such term in
Section .

“Contracts”
has the meaning assigned to such term in Section 3.14.

“Defined
Benefit Pension Plan” shall have the meaning set forth in
Section 3(35) of ERISA.

“Designated
Persons” has the meaning set forth in Section 3.17(e).

“Documents”
means this Agreement and each Bill of Sale, Assignment Agreement, Lease
Assignment Agreement, the Non-Solicitation Agreements, the Management
Agreement, the Indemnification Escrow Agreement, the Liquor License Escrow
Agreements and any other agreement entered into to consummate the Transactions.

“Employee
Benefit Plan” means every plan, fund, contract, program, agreement and
arrangement (whether written or not) for the benefit of present or former
employees, including those intended to provide medical, surgical, health care,
hospitalization, dental, vision, life insurance, death, disability, legal
services, severance, sickness or accident benefits (whether or not defined in
Section 3(1) of ERISA); pension, profit sharing, stock bonus, retirement,
supplemental retirement or deferred compensation benefits (whether or not tax
qualified and whether or not defined in Section 3(2) of ERISA); or salary
continuation, unemployment, supplemental unemployment, severance, termination
pay, change-in-control, vacation or holiday benefits (whether or not defined in
Section 3(3) of ERISA), that is (a) maintained or contributed to by any
Seller, (b) that any Seller has committed to implement, establish, adopt or
contribute to in the future,  (c) for
which any Seller is or may be financially liable as a result of the direct
sponsor’s affiliation with any Seller, or any Seller’s shareholders (whether or
not such affiliation exists at the date of this Agreement and notwithstanding
that the Plan is not maintained by any Seller for the benefit of its employees
or former employees) or (d) for or with respect to which any Seller is or may
become liable under any common law successor doctrine, express successor
liability provisions of Law, provisions of a collective bargaining agreement,
labor or employment Law or agreement with a predecessor employer.

“Employee
Pension Benefit Plan” shall have the meaning set forth in Section 3(2)
of ERISA.

“Employee
Welfare Benefit Plan” shall have the meaning set forth in Section 3(1)
of ERISA.

“Environmental
and Safety Requirements” means all Laws, Orders, contractual obligations
and all common law concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including, without
limitation, all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials,

 45
 

substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, including,
but not limited to, the Solid Waste Disposal Act, as amended, 42 U.S.C. § 6901,
et  seq., the Clean Air Act, as amended, 42 U.S.C. §§ 7401 et
seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C. §§
1251 et  seq., the Emergency Planning and Community Right-to-Know
Act, as amended, 42 U.S.C. §§ 11001 et  seq., the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C.
§§ 9601 et  seq., the Hazardous Materials Transportation Uniform
Safety Act, as amended, 49 U.S.C. §§ 1804 et  seq., the
Occupational Safety and Health Act of 1970, as amended, and the rules and
regulations promulgated thereunder.

“ERISA
Affiliate” means, with respect to any Person, any other Person that is a
member of a “controlled group of corporations” with, or is under “common
control” with, or is a member of the same “affiliated service group”
with such Person as defined in Section 414(b), 414(c), or 414(m) or 414(o)
of the Code.

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder.

“Estimated
Adjustment Amount” has the meaning set forth in Section 2.4.

“Excluded
Assets” has the meaning assigned to such term in Section 1.2.

“Excluded
Liabilities” has the meaning set forth in Section 1.4.

“Franchise
Agreements” means the License Agreements set forth on Exhibit B.

“Financial
Statements” has the meaning assigned to such term in Section 3.5(a).

“First
Closing” has the meaning set forth in Section 2.1(a).

“First
Closing Date” has the meaning set forth in Section 2.1(a).

“Fundamental
Documents” means the documents by which any Person (other than an
individual) establishes its legal existence or which govern its internal
affairs.  For example, the Fundamental
Documents of a corporation would include its charter and bylaws and the
Fundamental Documents of a partnership would include its certificate of
partnership and partnership agreement.

“Funded
Indebtedness” means the aggregate amount (including the current portions
thereof) of all (i) indebtedness of any Seller for money borrowed from
others and purchase money indebtedness (other than accounts payable in the
ordinary course of business); (ii) indebtedness of the type described in
clause (i) above guaranteed, directly or indirectly, in any manner by any
Seller, or in effect guaranteed, directly or indirectly, in any manner by any
Seller, through an agreement, contingent or otherwise, to supply funds to, or
in any other manner invest in, the debtor, or to purchase indebtedness, or to
purchase and pay for property if not delivered or pay for services if not
performed, primarily for the purpose of enabling the debtor to make payment of
the indebtedness or to assure the owners of the indebtedness against loss, but
excluding endorsements of checks and other instruments in the ordinary course;
(iii) indebtedness of the type described in clause (i) above secured
by any Lien upon property owned by any Seller, even though the Seller has not
in any manner become liable for the payment of such indebtedness; and
(iv) interest expense accrued but unpaid, and all prepayment premiums, on
or relating to any of such indebtedness.

 46
 

“GAAP”
means United States generally accepted accounting principles, applied on a
consistent basis.

“Governmental
Entity” means any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, Federal, state,
county or local.

“Indemnification
Escrow Agreement” means the Escrow Agreement in the form attached hereto as
Exhibit J.

“Indemnified
Party” has the meaning assigned to such term in Section 9.3(a).

“Indemnifying
Party” has the meaning assigned to such term in Section 9.3(a).

“Intellectual
Property” means (a) all inventions, all improvements thereto and all
patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all registered and unregistered trademarks,
service marks, trade dress, logos, trade names, domain names, url’s, and
corporate and limited liability company names, including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
trade secrets, customer lists, supplier lists, pricing and cost information,
business and marketing plans and other confidential business information,
(e) all computer programs and related software, (f) all other
proprietary rights and (g) all copies and tangible embodiments thereof.

“Inventory”
has the meaning set forth in Section 1.1(a).

“Knowledge”
means a Person’s actual knowledge.  For
the purposes of this Agreement, the “Sellers Knowledge” or the “Knowledge of
the Sellers” shall mean Bill Morrow,
Earl Soller, Scott Soller and the general manager of each Restaurant.

“La
Quinta Restaurant” means the Restaurant located at 78-722 Highway 111, La
Quinta, CA 92253.

“Latest
Balance Sheet” has the meaning set forth in Section 3.5(a)(ii).

“Latest
Financial Statements” has the meaning set forth in Section 3.5(a)(ii).

“Law”
means any constitution, law, statute, treaty, rule, directive, requirement or
regulation or Order of any Governmental Entity.

“Leased
Real Property” has the meaning set forth in Section 3.9(e).

“Liability”
means any liability or obligation, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated and whether due or to become due, regardless of when asserted.

“Licensed
Intellectual Property” has the meaning assigned to such term in
Section 5.13(a).

“Lien”
means any security interest, pledge, bailment (in the nature of a pledge or for
purposes of security), mortgage, deed of trust, the grant of a power to confess
judgment, conditional sales and title retention agreement (including any lease
in the nature thereof), claim, liability, charge, encumbrance,

 47
 

easements, reservations, restrictions, clouds, rights
of first refusal or first offer, options, or other similar arrangement or
interest in real or personal property.

“Liquor
Licenses” means all permanent, definitive Permits issued by any
Governmental Entities related to, or regulating, the manufacture and sale of
alcoholic beverages at the Restaurants, including those listed on Schedule
3.8(b).

“Management
Agreement” means that certain Management Services Agreement, by and between
the Buyer and Top Robin, in the form attached hereto as Exhibit I.

“Material
Adverse Change” or “Material Adverse Effect” means, with respect to
any Person, (i) any material adverse change in the business, operations,
assets, condition (financial or otherwise), operating results, liabilities or
number of employees of such Person, (ii) any material casualty loss or damage
to the assets of such Person, whether or not covered by insurance, or (iii) to
the extent such change has a reasonable likelihood of materially adversely
affecting operating results of the Restaurants following the Transaction, a
material adverse change in customer relations at the Restaurants.

 “Most Recent Fiscal Year” shall have
the meaning set forth in Section 3.5(a)(i)

“Multiemployer
Plan” shall have the meaning set forth in Section 3(37) of ERISA.

“Multiple
Employer Plan” shall have the meaning set forth in Section 413(c) of
the Code.

“Net
Working Capital” has the meaning set forth in Section 2.4(b).

“Non-Solicitation
Agreements” has the meaning set forth in Section 6.11.

“Orders”
means judgments, writs, decrees, compliance agreements, injunctions or orders
of and Governmental Entity or arbitrator.

“Parties”
means the Buyer and the Sellers.

“Permits”
means all permits, licenses, authorizations, registrations, franchises,
approvals, certificates, variances and similar rights obtained, or required to
be obtained, from Governmental Entities.

“Permitted
Liens” means (i) Liens for Taxes not yet due and payable or being contested
in good faith by appropriate proceedings and for which there are adequate
reserves on the books, (ii) workers or unemployment compensation Liens
arising in the ordinary course of business; (iii) mechanic’s, materialman’s,
supplier’s, vendor’s or similar Liens arising in the ordinary course of
business securing amounts that are not delinquent, and (iv) zoning
ordinances, easements and other restrictions of legal record affecting real
property which would be revealed by a survey and would not, individually or in
the aggregate, materially interfere with the usefulness of such real property
to the Business.

“Person”
shall be construed broadly and shall include an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, or a
Governmental Entity (or any department, agency, or political subdivision
thereof).

“Plans”
has the meaning assigned to such term in Section 3.18(a).

“Post-Closing
True-Up” has the meaning set forth in Section 2.5(b).

 48

“Prepaid
Expenses” has the meaning set forth in Section 1.1(a)(v).

“Proceeding”
means any action, suit, proceeding, complaint, charge, hearing, inquiry or
investigation before or by a Governmental Entity or arbitrator.

“Prohibited
Transaction” has the meaning set forth in Section 406 of ERISA and
Section 4975 of the Code.

“Purchased
Assets” has the meaning set forth in Section 1.1.

“Purchased
Liquor Licenses” means the Liquor Licensees other than the Liquor Licenses
used in the operation of the Simi Valley Restaurant or the Broadway Faire
Restaurant.

“Real
Property Leases” has the meaning set forth in Section 3.9(e).

“Restaurants”
means the restaurants set forth on Exhibit A.

“Second
Closing” has the meaning assigned to such term in Section 2.2(b).

“Second
Closing Date” has the meaning assigned to such term in Section 2.2(b).

“Seller”
and “Sellers” have the meanings assigned to such terms in the preamble
of this Agreement.

“Seller
Group” has the meaning assigned to such term in Section 9.2(b).

“Simi
Valley Restaurant” means the Restaurant located at 1555 Town Center Way,
Simi Valley, CA 93063.

“Subsidiary”
means any Person (other than a natural person) with respect to which a
specified Person (or a Subsidiary thereof) has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.

“SWDA”
means the Solid Waste Disposal Act, as amended, and the rules and regulations
promulgated thereunder.

“Tax”
as used in this Agreement, means any of the Taxes, and “Taxes” means,
with respect to any Person, all income taxes (including any tax on or based
upon net income, gross income, income, earnings, profits or selected items of
income, earnings or profits) and all gross receipts, sales, use, ad valorem,
transfer, franchise, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
alternative or add-on minimum taxes, customs duties and other taxes, fees,
assessments or charges of any kind whatsoever, together with all interest and
penalties, additions to tax and other additional amounts imposed by any taxing
authority (domestic or foreign) on such Person (if any).

“Tax
Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

“Termination
Date” means the date on which this Agreement is terminated in accordance
with the provisions of Article VIII.

 49
 

“Till
Cash” means the register cash and backup change maintained at each
Restaurant.

“Title
Policies” has the meaning set forth in Section 6.13.

“Topanga
Assumed Liabilities” means those Assumed Liabilities of the Sellers which
are related to or arose in connection with the operation of the Topanga
Restaurant.

“Topanga
Purchased Assets” means those Purchased Assets which are used or held for
use by the Sellers in the operation of the Topanga Restaurant.

“Topanga
Restaurant”) means the Restaurant located at 6600 Topanga Canyon Road,
Canoga Park, California 91303.

“Transactions”
means the acquisition by Buyer of the Restaurants pursuant to the terms of this
Agreement.

“Year
End Balance Sheet” has the meaning set forth in Section 3.5(a)(i).

Article
XI

MISCELLANEOUS

11.1         No Third Party Beneficiaries.  Except as expressly set forth in
Section 9.2, this Agreement, including, without limitation, Section 9.12
hereof, shall not confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.

11.2         Entire Agreement.  This Agreement, the other Documents referred
to herein and the Confidentiality Agreement constitute the entire agreement
among the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, that may have related
in any way to the subject matter of any Document including, without limitation,
the Letter of Intent dated January 2007, between Buyer and the Sellers.

11.3         Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.  No Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Parties; provided, however,
that the Buyer may assign any of its rights under any of the Documents to any
Affiliate of the Buyer and/or make a collateral assignment of its rights for
the benefit of its lenders; provided, however, that no assignment
prior to the Second Closing (or the First Closing, if the Second Closing does
not occur) shall relieve Buyer of its obligations hereunder, and Buyer shall
guarantee the performance of all such obligations by its assignee.

11.4         Counterparts.  This Agreement may be executed in two or more
counterparts, including by facsimile, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.

11.5         Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

11.6         Notices.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing.  Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given when delivered personally to
the recipient, telecopied to the intended recipient at the telecopy

 50
 

number set forth therefor below (with hard copy to
follow), or sent to the recipient by reputable express courier service (charges
prepaid) and addressed to the intended recipient as set forth below:

If to any of the Sellers:

Top Robin Ventures

78-030 Calle
Barcelona Ste A

La Quinta, CA
92253

Telephone: (760)
777-8300

Facsimile: (760)777-8313

Attention: Stephanie Powers-Lucas

with a copy to:

Graham & Dunn
P.C.

Pier 70

2801 Alaskan Way

Seattle, WA 98121

Telephone: (206)
624-8300

Facsimile: (206) 340-9599

Attention: Jack Strother

If to the Buyer:

Red Robin
International, Inc.

6312 S. Fiddler’s Green Circle, #200N

Greenwood Village, CO 
80111

Telephone: 303-846-6060

Facsimile: 303-846-6013

Attention: Dennis B. Mullen

with a copy to:

Davis Graham & Stubbs
LLP

1550 17th Street, Suite 500

Denver, CO 80202

Telephone:  (303) 892-9400

Facsimile:  (303) 892-7400

Attention:  Ronald
R. Levine II

Any
Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient.  Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

11.7         Governing Law.  This Agreement will be governed by and
construed in accordance with the laws of the State of Colorado without giving
effect to its conflicts of laws provisions.

 51
 

11.8         Amendments and Waivers.
 No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties.  No waiver by any Party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

11.9         Incorporation of Exhibits
and Schedules.  The
Exhibits, Schedules and other attachments identified in this Agreement are part
of this Agreement as if set forth in full herein.

11.10       Independence of Covenants
and Representations and Warranties.  All covenants hereunder shall be given
independent effect so that if a certain action or condition constitutes a
default under a certain covenant, the fact that such action or condition is
permitted by another covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant.  In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject
matter is correct or is not breached will not affect the incorrectness of or a
breach of a representation and warranty hereunder.  Notwithstanding the above, each disclosure
made in a Schedule to this Agreement shall be deemed to modify the particular
representation, warranty, covenant or agreement to which such Schedule directly
applies, and to any other representation, warranty, covenant or agreement to
which the relevance of such disclosure is readily apparent based on the
substance of such disclosure.

11.11       Remedies.  The Parties shall each have and retain all
other rights and remedies existing in their favor at Law or equity, including,
without limitation, any actions for specific performance and/or injunctive or
other equitable relief to enforce or prevent any violations of the provisions
of this Agreement.  Without limiting the
generality of the foregoing, the Sellers hereby agree that in the event any
Seller fails to convey any Purchased Assets to the Buyer in accordance with the
provisions of this Agreement, the Buyer’s remedy at law may be inadequate.  In such event, the Buyer shall have the
right, in addition to all other rights and remedies it may have, to specific
performance of the obligations of such Seller to convey such Purchased Assets.

11.12       Severability.  It is the desire and intent of the Parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. 
Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

11.13       Jurisdiction and Venue.

(i)            Each of the Parties hereby
irrevocably and unconditionally submits, for itself or and its property, to the
nonexclusive jurisdiction of any Colorado state court or federal court of the
United States of America sitting in Colorado, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or for recognition or enforcement of any judgment, and each of the
Parties hereby irrevocably and unconditionally agrees that all claims in
respect of any

 52
 

such action or proceeding may be heard and determined
in any such Colorado state court or, to the extent permitted by law, in such federal
court.  Each of the Parties agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

(ii)           Each of the Parties irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to the Agreement in
any Colorado state court.  Each of the
Parties irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

11.14       Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent arises, this Agreement
shall be construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.  The word “including” shall mean including
without limitation.

* * * * *

 53

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

	
  Buyer:

  	
  RED ROBIN INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Katherine L. Scherping

  
	
   

  	
   

  	
  Name: Katherine
  L. Scherping

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sellers:

  	
  TOP ROBIN VENTURES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Earl F. Soller

  
	
   

  	
   

  	
  Name: Earl F.
  Soller

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORITE OF
  CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Earl F. Soller

  
	
   

  	
   

  	
  Name: Earl F.
  Soller

  
	
   

  	
   

  	
  Title: Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William Morrow

  
	
   

  	
   

  	
  Name: William
  Morrow

  
	
   

  	
   

  	
  Title: PartnerExhibit
4.1

THIRD
SUPPLEMENTAL INDENTURE

THIS
THIRD SUPPLEMENTAL INDENTURE (this “Third Supplemental
Indenture”) is entered into as of June 4 2007 among ERP OPERATING
LIMITED PARTNERSHIP, an Illinois limited partnership (the “Partnership”),
having its principal offices at Two North Riverside Plaza, Suite 400,
Chicago, Illinois 60606, and THE BANK OF NEW YORK TRUST COMPANY, N.A. (as
successor in trust to J.P. Morgan Trust Company, National Association, as
successor in trust to Bank One Trust Company, NA, as successor to The First
National Bank of Chicago), a bank duly organized and existing under the laws of
the United States, as Trustee hereunder (the “Trustee”),
having a Corporate Trust Office at 2 North LaSalle Street, Suite 1020, Chicago,
Illinois 60602, Attention: Global Corporate Trust

WHEREAS, the Partnership
and the Trustee entered into that certain Indenture, dated as of October 1,
1994 (the “Original Indenture”), the First
Supplemental Indenture thereto, dated as of September 9, 2004 (the “First Supplemental Indenture”) and the Second
Supplemental  Indenture thereto, dated as
of August 23, 2006 (the “Second Supplemental
Indenture”), relating to the Partnership’s senior debt securities
(the “Securities”);

WHEREAS, pursuant to
Section 901 of the Indenture, the Partnership and the Trustee may enter
into supplemental indentures to establish the terms and provisions of a series
of Securities issued pursuant to the Indenture;

WHEREAS, pursuant to
Section 301 of the Indenture, the Partnership desires to establish the
terms of Securities of all series created on or after the date of this Third
Supplemental Indenture; and

WHEREAS, the Partnership
and the Trustee have duly authorized the execution and delivery of this Third
Supplemental Indenture to establish the terms of the Securities created on or
after the date of this Third Supplemental Indenture, have done all things
necessary to make this Third Supplemental Indenture (together with the Original
Indenture, the First Supplemental Indenture and the Second Supplemental
Indenture, the “Indenture”) a valid agreement of
the parties hereto, in accordance with its terms, and the Partnership has
complied with all covenants and conditions precedent to the execution and
delivery of this Third Supplemental Indenture;

NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, and for other good and valuable consideration the receipt of
which is hereby acknowledged, and for the equal and proportionate benefit of
the Holders of the Securities, the Partnership and the Trustee agree as
follows:

ARTICLE I

RELATION TO BASE INDENTURE; DEFINITIONS

Section 1.1             Relation to Base Indenture.  This Third
Supplemental Indenture constitutes an integral part of the Indenture.

Section 1.2             Definitions.  For all purposes of
this Third Supplemental Indenture, except as otherwise expressly provided for
or unless the context otherwise requires:

(1)                                  Capitalized
terms used but not defined herein shall have the respective meanings assigned
to them in the Indenture;

(2)                                  The
definition of the term “Total Assets” provided for herein applies solely to
this Third Supplemental Indenture and the covenants set forth in
Article II hereof; and

(3)                                  All
references herein to Articles and Sections, unless otherwise specified, refer
to the corresponding Articles and Sections of this Third Supplemental
Indenture.

“Acquired Debt” means
Debt of a Person (i) existing at the time such Person becomes a Subsidiary
or (ii) assumed in connection with the acquisition of assets from such
Person, in each case, other than Debt incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary or such acquisition.  Acquired Debt shall be deemed to be incurred
on the date of the related acquisition of assets from any Person or the date
the acquired Person becomes a Subsidiary.

“Capitalization Rate”
means 6.75%.

“Capitalized Property
Value” means, as of any date, the aggregate sum of all Property EBITDA for each
such property for the prior four quarters and capitalized at the applicable
Capitalization Rate, provided, however, that if the value of a particular
property calculated pursuant to this clause is less than the undepreciated book
value of such property determined in accordance with GAAP, such undepreciated
book value shall be used in lieu thereof with respect to such property.  “Property EBITDA” is defined as, for any
period of time, without duplication net earnings (loss), excluding net
derivative gains (losses) and gains (losses) on dispositions of real estate,
before deductions for the Partnership and its Subsidiaries (including amounts
reported in discontinued operations) for (i) interest expense (including
prepayment penalties); (ii) provision for taxes based on income;
(iii) depreciation, amortization and all other non-cash items, as
determined in good faith by the Partnership, deducted in arriving at net income
(loss); (iv) extraordinary items; (v) non-recurring items, as
determined in good faith by the Partnership; and (vi) minority interest.  In each case for such period, amounts will be
as reasonably determined by the Partnership in accordance with GAAP, except to
the extent GAAP is not applicable with respect to the determination of non-cash
and non-recurring items.  For purposes of
this definition, Property EBITDA will not include corporate level general and
administrative expenses and other corporate expenses such as land holding
costs, employee and trustee stock and stock option expense and pursuit cost
write-offs as determined in good faith by the Partnership.

“Consolidated EBITDA”
means, for any period of time, without duplication, net earnings (loss),
including the net incremental gains (losses) on sales of condominium units,
vacant land and other non-depreciated real property and excluding net
derivative gains (losses) and gains (losses) on dispositions of REIT
depreciable real estate investments as reflected in the reports filed by the
Partnership under the Exchange Act, before deductions for the Partnership and
its Subsidiaries (including amounts reported in discontinued operations) for
(i) interest expense (including prepayment penalties); (ii) provision
for taxes based on income; (iii) depreciation,

 2
 

amortization and all
other non-cash items, as determined in good faith by the Partnership, deducted
in arriving at net income (loss); (iv) extraordinary items;
(v) non-recurring items, as determined in good faith by the Partnership;
and (vi) minority interest.  In each
case for such period, amounts will be as reasonably determined by the
Partnership in accordance with GAAP, except to the extent GAAP is not
applicable with respect to the determination of non-cash and non-recurring
items.  Consolidated EBITDA will be
adjusted, without duplication, to give pro forma effect:  (x) in the case of any assets having been
placed-in-service or removed from service since the beginning of the period and
on or prior to the date of determination, to include or exclude, as the case
may be, any Consolidated EBITDA earned or eliminated as a result of the
placement of such assets in service or removal of such assets from service as
if the placement of such assets in service or removal of such assets from
service occurred at the beginning of the period; and (y) in the case of
any acquisition or disposition of any asset or group of assets since the
beginning of the period and on or prior to the date of determination,
including, without limitation, by merger, or share or asset purchase or sale,
to include or exclude, as the case may be, any Consolidated EBITDA earned or
eliminated as a result of the acquisition or disposition of those assets as if
the acquisition or disposition occurred at the beginning of the period.

“Stabilized Property”
means (i) with respect to an acquisition of an income producing property,
a property becomes stabilized when the Partnership or its Subsidiaries have
owned the property for at least four (4) full quarters and (ii) with
respect to new construction or redevelopment property, a property becomes
stabilized four (4) full quarters after the earlier of (a) eighteen (18)
months after substantial completion of construction or redevelopment, and
(b) the quarter in which the physical occupancy level of the property is
at least ninety-three percent (93%).

“Total Assets” means the
sum of:  (1) for Stabilized Properties,
Capitalized Property Value; and (2) for all other assets of the
Partnership and its Subsidiaries, undepreciated book value as determined in
accordance with GAAP (but excluding accounts receivable and intangibles).

“Total Unencumbered
Assets” means the sum of:  (1) the
Capitalized Property Values of Stabilized Properties not subject to an
encumbrance and (2) for all other assets of the Partnership and its
Subsidiaries not subject to an encumbrance, undepreciated book value of such
assets as determined in accordance with GAAP (but excluding accounts receivable
and intangibles).

“Unsecured Debt” means
all Debt of the Partnership and its Subsidiaries except Secured Debt.

 3
 

ARTICLE II

LIMITATIONS ON INCURRENCE OF DEBT

In lieu of the covenants set forth in Section
1004 of the Original Indenture and Article Two of the First Supplemental
Indenture, which shall not apply to the Future Securities (as defined below),
there are established the following covenants for the benefit of the Holders of
each series of Securities issued subsequent to the date hereof (“Future Securities”) and to which such
Future Securities shall be subject:

Section 2.1             The Partnership will not, and will
not permit any Subsidiary to, incur any Debt, other than intercompany Debt
(representing Debt to which the only parties are the Company, the Partnership
and/or any of its Subsidiaries (but only so long as such Debt is held solely by
any of the Company, the Partnership and any Subsidiary)) that is subordinate in
right of payment to the Securities, if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds thereof,
Debt would exceed 65% of Total Assets at the reporting date.

Section 2.2             In addition to the limitations set
forth in Section 2.1 of this Third Supplemental Indenture, the Partnership
will not, and will not permit any Subsidiary to, incur any Debt if the ratio of
Consolidated EBITDA to the Maximum Annual Service Charge for the four
consecutive fiscal quarters most recently ended prior the date on which such
additional Debt is to be incurred shall have been less than 1.5, on a pro forma
basis after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (i) such Debt and any
other Debt incurred by the Partnership and its Subsidiaries since the first day
of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Debt, had occurred at the beginning of such
period; (ii) the repayment or retirement of any other Debt by the
Partnership and its Subsidiaries since the first day of such four-quarter
period had been repaid or retired at the beginning of such period (except that,
in making such computation, the amount of Debt under any revolving credit
facility shall be computed based upon the average daily balance of such Debt
during such period); (iii) in the case of Acquired Debt or  Debt incurred in connection with any acquisition since the
first day of such four-quarter period, the related acquisition had occurred as
of the first day of such period with the appropriate adjustments with respect
to such acquisition being included in such pro forma calculation; (iv) any
income earned as a result of any increase in Total Assets since the end of such
four-quarter period had been earned, on an annualized basis, for such period;
and (v) in the case of any acquisition or disposition by the Partnership
or its Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation.

Section 2.3             In addition to the limitations set
forth in Sections 2.1 and 2.2 of this Third Supplemental Indenture, the
Partnership will not, and will not permit any Subsidiary to, incur any Debt
secured by any mortgage, lien, charge, pledge, encumbrance or security interest
of any kind upon any of the property of the Partnership or any Subsidiary,
whether owned at the date hereof or hereafter acquired, if, immediately after
giving effect to the incurrence of such 

 4
 

additional Debt and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Partnership and its Subsidiaries on a consolidated
basis which is secured by any mortgage, lien, charge, pledge, encumbrance or
security interest on property of the Partnership or any Subsidiary is greater
than 40% of the Partnership’s Total Assets.

Section 2.4             In addition to the limitations set
forth in Sections 2.1, 2.2 and 2.3 of this Third Supplemental Indenture,
the Partnership shall maintain Total Unencumbered Assets of not less than 125%
of the aggregate outstanding principal amount of the Partnership’s Unsecured
Debt.

Section 2.5             For purposes of this Article Two,
Debt shall be deemed to be “incurred” by the Partnership or a Subsidiary
whenever the Partnership or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof.

ARTICLE III

MISCELLANEOUS PROVISIONS

Section 3.1             Counterparts.  This Third Supplemental Indenture may be
executed in counterparts, each of which shall be deemed an original, but all of
which shall together constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.

Section 3.2             Trustee’s Acceptance.  The Trustee hereby accepts this Third
Supplemental Indenture and agrees to perform the same under the terms and
conditions set forth in the Indenture.

Section 3.3             Reference to the Effect on the
Indenture.

(a)           On
and after the effective date of this Third Supplemental Indenture, each
reference in the Indenture to “this Indenture,” “hereunder,” “hereof,” or “herein”
shall mean and be a reference to the Indenture as supplemented by this Third
Supplemental Indenture unless the context otherwise requires.

(b)           Except
as specifically modified or amended by this Third Supplemental Indenture, the
Indenture is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect.  Upon the execution and delivery of this Third
Supplemental Indenture by the Partnership and the Trustee, this Third
Supplemental Indenture shall form a part of the Indenture for all
purposes.  Any and all references,
whether within the Indenture or in any notice, certificate or other instrument
or document, shall be deemed to include a reference to this Third Supplemental
Indenture (whether or not made), unless the context shall otherwise require.

Section 3.4             Governing Law.  THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).

 5
 

Section 3.5             Trust Indenture Act Controls.  If any provision of this Third Supplemental
Indenture limits, qualifies or conflicts with another provision of this Third
Supplemental Indenture or the Indenture that is required to be included by the
Trust Indenture Act of 1939, as amended (the “Act”),
as in force at the date this Third Supplemental Indenture is executed, the
provision required by the Act shall control.

Section 3.6             Benefits of Third Supplemental
Indenture or the Securities.  Nothing
in this Third Supplemental Indenture or the Securities, express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this Third Supplemental Indenture or the Securities.

Section 3.7             Successors.  All agreements of the Partnership in this
Third Supplemental Indenture shall bind its successors.  All agreements of the Trustee in this Third
Supplemental Indenture shall bind its successors.

Section 3.8             Concerning the Trustee.  The Trustee shall not be responsible for any
recital herein (other than the fourth recital as it applies to the Trustee) as
such recitals shall be taken as statements of the Partnership, or the validity
of the execution by the Partnership of this Third Supplemental Indenture.  The Trustee makes no representations as to
the validity or sufficiency of this Third Supplemental Indenture.

Section 3.9             Certain Duties and
Responsibilities of the Trustee.  In
entering into this Third Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.

Section 3.10           Titles.  Section titles are for descriptive purposes
only and shall not control or alter the meaning of this Third Supplemental
Indenture as set forth in the text.

Section 3.11           Severability.  In case any one or more of the provisions in
this Third Supplemental Indenture shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.

[signature
page follows]

 6
 

IN WITNESS WHEREOF, the
parties hereto have caused this Third Supplemental Indenture to be duly
executed as of the day and year first above written.

	
  

  	
  ERP OPERATING LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Equity Residential, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 7

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