Document:

EXHIBIT
      10.1

    

    REMOTE
      DYNAMICS, INC.

    

    2006
      STOCK PLAN

    

    As
      Adopted August 18, 2006 and Amended and Restated on June 12,
      2007

     

    

    1.
            PURPOSE.

    

    The
      purpose of this Plan is to provide incentives to attract, retain and motivate
      eligible persons whose present and potential contributions are important to
      the
      success of the Company, and its Subsidiaries (if any), by offering them an
      opportunity to participate in the Company’s future performance through awards of
      Options, the right to purchase Common Stock and Stock Bonuses. Capitalized
      terms
      not defined in the text are defined in Section 2.

    

    2.
            DEFINITIONS.

    

    As
      used
      in this Plan, the following terms will have the following meanings:

    

    “
      AWARD”
means
      any award under this Plan, including any Option, Stock Award or Stock
      Bonus.

    

    “
      AWARD
      AGREEMENT”
means,
      with respect to each Award, the signed written agreement between the Company
      and
      the Participant setting forth the terms and conditions of the
      Award.

    

    “
      BOARD”
means
      the Board of Directors of the Company.

    

    “
      CAUSE”
means
      any cause, as defined by applicable law, for the termination of a Participant’s
      employment with the Company or a Parent or Subsidiary of the
      Company.

    

    “
      CODE”
means
      the Internal Revenue Code of 1986, as amended.

    

    “
      COMPANY”
means
      Remote Dynamics, Inc., a Delaware corporation, or any successor
      corporation.

    

    “
      COMMITTEE”
means
      that committee appointed by the Board of Directors to administer and interpret
      the Plan as more particularly described in Section 5 of the Plan; provided,
      however
      , that
      the term Committee will refer to the Board of Directors during such times as
      no
      Committee is appointed by the Board of Directors.

    

    “
      DISABILITY”
means
      a disability, whether temporary or permanent, partial or total, as determined
      by
      the Committee.

    

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

    

    “
      EXERCISE
      PRICE”
means
      the price at which a holder of an Option may purchase the Shares issuable upon
      exercise of the Option.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “
      FAIR
      MARKET VALUE”
means,
      as of any date, the value of a share of the Company’s Common Stock determined as
      follows:

    

    (a)
            if such Common Stock is publicly traded and is then
      listed on a national securities exchange, its closing price on the date of
      determination on the principal national securities exchange on which the Common
      Stock is listed or admitted to trading;

    

    (b)
            if such Common Stock is quoted on the NASDAQ National
      Market or the NASDAQ SmallCap Market, its closing price on the NASDAQ National
      Market or the NASDAQ SmallCap Market, respectively, on the date of
      determination;

    

    (c)
            if neither of the foregoing is applicable, by the
      Committee in good faith.  

     

    “
      INSIDER”
means
      an officer or director of the Company or any other person whose transactions
      in
      the Company’s Common Stock are subject to Section 16 of the Exchange
      Act.

    

    “
      OPTION”
means
      an award of an option to purchase Shares pursuant to Section 6.

    

    “
      PARENT”
means
      any corporation (other than the Company) in an unbroken chain of corporations
      ending with the Company if each of such corporations other than the Company
      owns
      stock possessing 50% or more of the total combined voting power of all classes
      of stock in one of the other corporations in such chain.

    

    “
      PARTICIPANT”
means
      a person who receives an Award under this Plan.

    

    “
      PERFORMANCE
      FACTORS”
means
      the factors selected by the Committee, in its sole and absolute discretion,
      from
      among the following measures to determine whether the performance goals
      applicable to Awards have been satisfied:

    

    
      	
               

            	
               

            	
              (a)

            	
              Net
                revenue and/or net revenue growth;

            

    

    

    
      	
               

            	
               

            	
              (b)

            	
              Earnings
                before income taxes and amortization and/or earnings before income
                taxes
                and amortization growth;

            

    

    

    
      	
               

            	
               

            	
              (c)

            	
              Operating
                income and/or operating income
                growth;

            

    

    

    
      	
               

            	
               

            	
              (d)

            	
              Net
                income and/or net income growth;

            

    

    

    
      	
               

            	
               

            	
              (e)

            	
              Earnings
                per share and/or earnings per share
                growth;

            

    

    

    
      	
               

            	
               

            	
              (f)

            	
              Total
                stockholder return and/or total stockholder return
                growth;

            

    

    

    
      	
               

            	
               

            	
              (g)

            	
              Return
                on equity;

            

    

    

    
      	
               

            	
               

            	
              (h)

            	
              Operating
                cash flow return on income;

            

    

    

    
      	
               

            	
               

            	
              (i)

            	
              Adjusted
                operating cash flow return on
                income;

            

    

    

    
      	
               

            	
               

            	
              (j)

            	
              Economic
                value added; and

            

    

    

    
      	
               

            	
               

            	
              (k)

            	
              Individual
                business objectives.

            

    

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    “
      PERFORMANCE
      PERIOD”
means
      the period of service determined by the Committee, not to exceed five years,
      during which years of service or performance is to be measured for Stock Awards
      or Stock Bonuses, if such Awards are restricted.

    

    “
      PLAN”
means
      this Remote Dynamics, Inc. 2006 Stock Plan, as amended from time to
      time.

    

    “ PURCHASE
      PRICE ”
      means
      the price at which the Participant of a Stock Award may purchase the
      Shares.

    

    “
      SEC”
means
      the Securities and Exchange Commission.

    

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

    

    “
      SHARES”
means
      shares of the Company’s Common Stock reserved for issuance under this Plan, as
      adjusted pursuant to Sections 3 and 19, and any successor security.

    

    “
      STOCK
      AWARD”
means
      an award of Shares pursuant to Section 7.

    

    “
      STOCK
      BONUS”
means
      an award of Shares, or cash in lieu of Shares, pursuant to Section
      8.

    

    “
      SUBSIDIARY”
means
      any corporation (other than the Company) in an unbroken chain of corporations
      beginning with the Company if each of the corporations other than the last
      corporation in the unbroken chain owns stock possessing 50% or more of the
      total
      combined voting power of all classes of stock in one of the other corporations
      in such chain.

    

    “
      TERMINATION”
or
“
      TERMINATED”
means,
      for purposes of this Plan with respect to a Participant, that the Participant
      has for any reason ceased to provide services as an employee, officer, director,
      consultant, independent contractor or advisor to the Company or a Parent or
      Subsidiary of the Company. An employee will not be deemed to have ceased to
      provide services in the case of (i) sick leave, (ii) military leave, or (iii)
      any other leave of absence approved by the Company, provided that such leave
      is
      for a period of not more than 90 days, unless reemployment upon the expiration
      of such leave is guaranteed by contract or statute or unless provided otherwise
      pursuant to a formal policy adopted from time to time by the Company and issued
      and promulgated to employees in writing. In the case of any employee on an
      approved leave of absence, the Committee may make such provisions respecting
      suspension of vesting of the Award while on leave from the employ of the Company
      or a Subsidiary as it may deem appropriate, except that in no event may an
      Option be exercised after the expiration of the term set forth in the Option
      agreement. The Committee will have sole discretion to determine whether a
      Participant has ceased to provide services and the effective date on which
      the
      Participant ceased to provide services (the “Termination Date”).

    

    3.
            SHARES
      SUBJECT TO THE PLAN.

    

    3.1
            Number
      of Shares Available
      .
      Subject to Sections 3.2 and 19, the total aggregate number of Shares reserved
      and available for grant and issuance pursuant to this Plan, shall be 75,000,000
      Shares and will include Shares that are subject to: (a) issuance upon exercise
      of an Option but cease to be subject to such Option for any reason other than
      exercise of such Option; (b) an Award granted hereunder but forfeited or
      repurchased by the Company at the original issue price; and (c) an Award that
      otherwise terminates without Shares being issued. At all times the Company
      shall
      reserve and keep available a sufficient number of Shares as shall be required
      to
      satisfy the requirements of all outstanding Options granted under this Plan
      and
      all other outstanding but unvested Awards granted under this Plan.

    

    
      
         

      

      
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    3.2
            Adjustment
      of Shares
      . In the
      event that the number of outstanding shares is changed by a stock dividend,
      recapitalization, stock split, reverse stock split, subdivision, combination,
      reclassification or similar change in the capital structure of the Company
      without consideration, then (a) the number of Shares reserved for issuance
      under
      this Plan, (b) the Exercise Prices of and number of Shares subject to
      outstanding Options, and (c) the number of Shares subject to other outstanding
      Awards will be proportionately adjusted, subject to any required action by
      the
      Board or the stockholders of the Company and compliance with applicable
      securities laws; provided, however, that fractions of a Share will not be issued
      but will either be replaced by a cash payment equal to the Fair Market Value
      of
      such fraction of a Share or will be rounded up to the nearest whole Share,
      as
      determined by the Committee.

    

    4.
            ELIGIBILITY.

    

    ISOs
      (as
      defined in Section 6 below) may be granted only to employees (including officers
      and directors who are also employees) of the Company or of a Parent or
      Subsidiary of the Company. All other Awards may be granted to employees,
      officers, directors, consultants, independent contractors and advisors of the
      Company or any Parent or Subsidiary of the Company, provided such consultants,
      independent contractors and advisors render bona-fide services not in connection
      with the offer and sale of securities in a capital-raising transaction or
      promotion of the Company’s securities. A person may be granted more than one
      Award under this Plan.

    

    5.
            ADMINISTRATION.

    

    5.1
            Committee
      .

    

    (a)
            The Plan shall be administered and interpreted by a
      committee consisting of two (2) or more members of the Board.

     

    (b)
            Members of the Committee may resign at any time by
      delivering written notice to the Board. The Board shall fill vacancies in the
      Committee. The Committee shall act by a majority of its members in office.
      The
      Committee may act either by vote at a meeting or by a memorandum or other
      written instrument signed by a majority of the Committee.

    

    (c)
            If the Board, in its discretion, does not appoint a
      Committee, the Board itself will administer and interpret the Plan and take
      such
      other actions as the Committee is authorized to take hereunder; provided that
      the Board may take such actions hereunder in the same manner as the Board may
      take other actions under the Certificate of Incorporation and bylaws of the
      Company generally.

    

    5.2
            Committee
      Authority
      .
      Without limitation, the Committee will have the authority to:

    

    (a)
            construe and interpret this Plan, any Award Agreement
      and any other agreement or document executed pursuant to this Plan;

    

    
      
         

      

      
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    (b)
            prescribe, amend and rescind rules and regulations
      relating to this Plan or any Award;

    

    (c)
            select persons to receive Awards;

    

    (d)
            determine the form and terms of Awards;

    

    (e)
            determine the number of Shares or other consideration
      subject to Awards;

    

    (f)
            determine whether Awards will be granted singly, in
      combination with, in tandem with, in replacement of, or as alternatives to,
      other Awards under this Plan or any other incentive or compensation plan of
      the
      Company or any Parent or Subsidiary of the Company;

    

    (g)
            grant waivers of Plan or Award
      conditions;

    

    (h)
            determine the vesting, exercisability and payment of
      Awards;

    

    (i)
            correct any defect, supply any omission or reconcile
      any inconsistency in this Plan, any Award or any Award Agreement;

    

    (j)
            determine whether an Award has been earned;
      and

    

    (k)
            make all other determinations necessary or advisable
      for the administration of this Plan.

    

    5.3
            Committee
      Discretion
      . Any
      determination made by the Committee with respect to any Award will be made
      at
      the time of grant of the Award or, unless in contravention of any express term
      of this Plan or Award, at any later time, and such determination will be final
      and binding on the Company and on all persons having an interest in any Award
      under this Plan. The Committee may delegate to one or more officers of the
      Company the authority to grant an Award under this Plan to Participants who
      are
      not Insiders of the Company. No member of the Committee shall be personally
      liable for any action taken or decision made in good faith relating to this
      Plan, and all members of the Committee shall be fully protected and indemnified
      to the fullest extent permitted under applicable law by the Company in respect
      to any such action, determination, or interpretation.

    

    6.
            OPTIONS.

    

    The
      Committee may grant Options to eligible persons and will determine whether
      such
      Options will be Incentive Stock Options within the meaning of the Code (“ISO”)
      or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the
      Option, the Exercise Price of the Option, the period during which the Option
      may
      be exercised, and all other terms and conditions of the Option, subject to
      the
      following:

    

    6.1
            Form
      of Option Grant
      . Each
      Option granted under this Plan will be evidenced by an Award Agreement which
      will expressly identify the Option as an ISO or an NQSO (hereinafter referred
      to
      as the “Stock Option Agreement”), and will be in such form and contain such
      provisions (which need not be the same for each Participant) as the Committee
      may from time to time approve, and which will comply with and be subject to
      the
      terms and conditions of this Plan.

     

    
      
         

      

      
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    6.2
            Date
      of Grant
      . The
      date of grant of an Option will be the date on which the Committee makes the
      determination to grant such Option, unless otherwise specified by the Committee.
      The Stock Option Agreement and a copy of this Plan will be delivered to the
      Participant within a reasonable time after the granting of the
      Option.

    

    6.3
            Exercise
      Period
      .
      Options may be exercisable within the times or upon the events determined by
      the
      Committee as set forth in the Stock Option Agreement governing such Option;
      provided, however, that no Option will be exercisable after the expiration
      of
      ten (10) years from the date the Option is granted; and provided further that
      no
      ISO granted to a person who directly or by attribution owns more than ten
      percent (10%) of the total combined voting power of all classes of stock of
      the
      Company or of any Parent or Subsidiary of the Company (“Ten Percent
      Stockholder”) will be exercisable after the expiration of five (5) years from
      the date the ISO is granted. The Committee also may provide for Options to
      become exercisable at one time or from time to time, periodically or otherwise,
      in such number of Shares or percentage of Shares as the Committee determines,
      provided, however, that in all events a Participant will be entitled to exercise
      an Option at the rate of at least 20% per year over five years from the date
      of
      grant, subject to reasonable conditions such as continued employment; and
      further provided that an Option granted to a Participant who is an officer
      or
      director may become fully exercisable, subject to reasonable conditions such
      as
      continued employment, at any time or during any period established by the
      Company.

    

    6.4
            Exercise
      Price
      . The
      Exercise Price of an Option will be determined by the Committee when the Option
      is granted and may be not less than 85% of the Fair Market Value of the Shares
      on the date of grant; provided that: (a) the Exercise Price of an ISO will
      be
      not less than 100% of the Fair Market Value of the Shares on the date of grant;
      and (b) the Exercise Price of any Option granted to a Ten Percent Stockholder
      will not be less than 110% of the Fair Market Value of the Shares on the date
      of
      grant. Payment for the Shares purchased may be made in accordance with Section
      9
      of this Plan.

    

    6.5
            Method
      of Exercise
      .
      Options may be exercised only by delivery to the Company of a written stock
      option exercise agreement (the “Exercise Agreement”) in a form approved by the
      Committee, (which need not be the same for each Participant), stating the number
      of Shares being purchased, the restrictions imposed on the Shares purchased
      under such Exercise Agreement, if any, and such representations and agreements
      regarding the Participant’s investment intent and access to information and
      other matters, if any, as may be required or desirable by the Company to comply
      with applicable securities laws, together with payment in full of the Exercise
      Price for the number of Shares being purchased.

    

    6.6
            Termination
      .
      Notwithstanding the exercise periods set forth in the Stock Option Agreement,
      exercise of an Option will always be subject to the following:

    

    (a)
            If the Participant’s service is Terminated for any
      reason except death or Disability, then the Participant may exercise such
      Participant’s Options only to the extent that such Options would have been
      exercisable upon the Termination Date no later than three (3) months after
      the
      Termination Date (or such longer time period not exceeding five (5) years as
      may
      be determined by the Committee, with any exercise beyond three (3) months after
      the Termination Date deemed to be an NQSO).

    

    
      
         

      

      
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    (b)
            If the Participant’s service is Terminated because of
      the Participant’s death or Disability (or the Participant dies within three (3)
      months after a Termination other than for Cause or because of Participant’s
      Disability), then the Participant’s Options may be exercised only to the extent
      that such Options would have been exercisable by the Participant on the
      Termination Date and must be exercised by the Participant (or the Participant’s
      legal representative) no later than twelve (12) months after the Termination
      Date (or such longer time period not exceeding five (5) years as may be
      determined by the Committee, with any such exercise beyond (i) three (3) months
      after the Termination Date when the Termination is for any reason other than
      the
      Participant’s death or Disability, or (ii) twelve (12) months after the
      Termination Date when the Termination is for Participant’s death or Disability,
      deemed to be an NQSO).

    

    (c)
            Notwithstanding the provisions in paragraph 6.6(a)
      above, if the Participant’s service is Terminated for Cause, neither the
      Participant, the Participant’s estate nor such other person who may then hold
      the Option shall be entitled to exercise any Option with respect to any Shares
      whatsoever, after Termination, whether or not after Termination the Participant
      may receive payment from the Company or a Subsidiary for vacation pay, for
      services rendered prior to Termination, for services rendered for the day on
      which Termination occurs, for salary in lieu of notice, or for any other
      benefits. For the purpose of this paragraph, Termination shall be deemed to
      occur on the date when the Company dispatches notice or advice to the
      Participant that his service is Terminated.

    

    6.7
            Limitations
      on Exercise
      . The
      Committee may specify a reasonable minimum number of Shares that may be
      purchased on any exercise of an Option, provided that such minimum number will
      not prevent the Participant from exercising the Option for the full number
      of
      Shares for which it is then exercisable.

    

    6.8
            Limitations
      on ISO
      . The
      aggregate Fair Market Value (determined as of the date of grant) of Shares
      with
      respect to which ISO are exercisable for the first time by a Participant during
      any calendar year (under this Plan or under any other incentive stock option
      plan of the Company, Parent or Subsidiary of the Company) will not exceed
      $100,000. If the Fair Market Value of Shares on the date of grant with respect
      to which ISO are exercisable for the first time by a Participant during any
      calendar year exceeds $100,000, then the Options for the first $100,000 worth
      of
      Shares to become exercisable in such calendar year will be ISO and the Options
      for the amount in excess of $100,000 that become exercisable in that calendar
      year will be NQSOs. In the event that the Code or the regulations promulgated
      thereunder are amended after the Effective Date of this Plan to provide for
      a
      different limit on the Fair Market Value of Shares permitted to be subject
      to
      ISO, such different limit will be automatically incorporated herein and will
      apply to any Options granted after the effective date of such
      amendment.

    

    6.9
            Modification,
      Extension or Renewal
      . The
      Committee may modify, extend or renew outstanding Options and authorize the
      grant of new Options in substitution therefore, provided that any such action
      may not, without the written consent of a Participant, impair any of such
      Participant’s rights under any Option previously granted. Any outstanding ISO
      that is modified, extended, renewed or otherwise altered will be treated in
      accordance with Section 424(h) of the Code. The Committee may reduce the
      Exercise Price of outstanding Options without the consent of Participants
      affected by a written notice to them; provided, however, that the Exercise
      Price
      may not be reduced below the minimum Exercise Price that would be permitted
      under Section 6.4 of this Plan for Options granted on the date the action is
      taken to reduce the Exercise Price.

     

    
      
         

      

      
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    6.10
            No
      Disqualification
      .
      Notwithstanding any other provision in this Plan, no term of this Plan relating
      to ISO will be interpreted, amended or altered, nor will any discretion or
      authority granted under this Plan be exercised, so as to disqualify this Plan
      under Section 422 of the Code or, without the consent of the Participant
      affected, to disqualify any ISO under Section 422 of the Code.

    

    7.
            STOCK
      AWARD.

    

    A
      Stock
      Award is an offer by the Company to sell to an eligible person Shares that
      may
      or may not be subject to restrictions. The Committee will determine to whom
      an
      offer will be made, the number of Shares the person may purchase, the price
      to
      be paid (the “Purchase Price”), the restrictions to which the Shares will be
      subject, if any, and all other terms and conditions of the Stock Award, subject
      to the following:

    

    7.1
            Form
      of Stock Award
      . All
      purchases under a Stock Award made pursuant to this Plan will be evidenced
      by an
      Award Agreement (the “Stock Purchase Agreement”) that will be in such form
      (which need not be the same for each Participant) as the Committee will from
      time to time approve, and will comply with and be subject to the terms and
      conditions of this Plan. The offer of a Stock Award will be accepted by the
      Participant’s execution and delivery of the Stock Purchase Agreement and payment
      for the Shares to the Company in accordance with the Stock Purchase
      Agreement.

    

    7.2
            Purchase
      Price
      . The
      Purchase Price of Shares sold pursuant to a Stock Award will be determined
      by
      the Committee on the date the Stock Award is granted and may not be less than
      85% of the Fair Market Value of the Shares on the grant date, except in the
      case
      of a sale to a Ten Percent Stockholder, in which case the Purchase Price will
      be
      100% of the Fair Market Value. Payment of the Purchase Price must be made in
      accordance with Section 9 of this Plan.

    

    7.3
            Terms
      of Stock Awards
      . Stock
      Awards may be subject to such restrictions as the Committee may impose. These
      restrictions may be based upon completion of a specified number of years of
      service with the Company or upon completion of the performance goals as set
      out
      in advance in the Participant’s individual Stock Purchase Agreement. Stock
      Awards may vary from Participant to Participant and between groups of
      Participants. Prior to the grant of a Stock Award subject to restrictions,
      the
      Committee shall: (a) determine the nature, length and starting date of any
      Performance Period for the Stock Award; (b) select from among the Performance
      Factors to be used to measure performance goals, if any; and (c) determine
      the
      number of Shares that may be awarded to the Participant. Prior to the transfer
      of any Stock Award, the Committee shall determine the extent to which such
      Stock
      Award has been earned. Performance Periods may overlap and Participants may
      participate simultaneously with respect to Stock Awards that are subject to
      different Performance Periods and have different performance goals and other
      criteria.

    

    7.4
            Termination
      During Performance Period
      . If a
      Participant is Terminated during a Performance Period for any reason, then
      such
      Participant will be entitled to payment (whether in Shares, cash or otherwise)
      with respect to the Stock Award only to the extent earned as of the date of
      Termination in accordance with the Stock Purchase Agreement, unless the
      Committee determines otherwise.

    

    
      
         

      

      
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    8.
            STOCK
      BONUSES.

     

    8.1
            Awards
      of Stock Bonuses
      . A
      Stock Bonus is an award of Shares for extraordinary services rendered to the
      Company or any Parent or Subsidiary of the Company. A Stock Bonus will be
      awarded pursuant to an Award Agreement (the “Stock Bonus Agreement”) that will
      be in such form (which need not be the same for each Participant) as the
      Committee will from time to time approve, and will comply with and be subject
      to
      the terms and conditions of this Plan. A Stock Bonus may be awarded upon
      satisfaction of such performance goals as are set out in advance in the
      Participant’s individual Award Agreement (the “Performance Stock Bonus
      Agreement”) that will be in such form (which need not be the same for each
      Participant) as the Committee will from time to time approve, and will comply
      with and be subject to the terms and conditions of this Plan. Stock Bonuses
      may
      vary from Participant to Participant and between groups of Participants, and
      may
      be based upon the achievement of the Company, Parent or Subsidiary and/or
      individual performance factors or upon such other criteria as the Committee
      may
      determine.

    

    8.2
            Terms
      of Stock Bonuses
      . The
      Committee will determine the number of Shares to be awarded to the Participant.
      If the Stock Bonus is being earned upon the satisfaction of performance goals
      pursuant to a Performance Stock Bonus Agreement, then the Committee will: (a)
      determine the nature, length and starting date of any Performance Period for
      each Stock Bonus; (b) select from among the Performance Factors to be used
      to
      measure the performance, if any; and (c) determine the number of Shares that
      may
      be awarded to the Participant. Prior to the payment of any Stock Bonus, the
      Committee shall determine the extent to which such Stock Bonuses have been
      earned. Performance Periods may overlap and Participants may participate
      simultaneously with respect to Stock Bonuses that are subject to different
      Performance Periods and different performance goals and other criteria. The
      number of Shares may be fixed or may vary in accordance with such performance
      goals and criteria as may be determined by the Committee. The Committee may
      adjust the performance goals applicable to the Stock Bonuses to take into
      account changes in law and accounting or tax rules and to make such adjustments
      as the Committee deems necessary or appropriate to reflect the impact of
      extraordinary or unusual items, events or circumstances to avoid windfalls
      or
      hardships.

    

    8.3
            Form
      of Payment
      . The
      earned portion of a Stock Bonus may be paid to the Participant by the Company
      either currently or on a deferred basis, with such interest or dividend
      equivalent, if any, as the Committee may determine. Payment of an interest
      or
      dividend equivalent (if any) may be made in the form of cash or whole Shares
      or
      a combination thereof, either in a lump sum payment or in installments, all
      as
      the Committee will determine.

    

    9.
            PAYMENT
      FOR SHARE PURCHASES.

    

    Payment
      for Shares purchased pursuant to this Plan may be made in cash (by check) or,
      where expressly approved for the Participant by the Committee and where
      permitted by law:

    

    (a)
            by cancellation of indebtedness of the Company to the
      Participant;

    

    (b)
            by surrender of shares that either: (1) have been
      owned by the Participant for more than six (6) months and have been paid for
      within the meaning of SEC Rule 144; or (2) were obtained by the Participant
      in
      the public market;

    

    (c)
            by waiver of compensation due or accrued to the
      Participant for services rendered;

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    (d)
            with respect only to purchases upon exercise of an
      Option, and provided that a public market for the Company’s stock
      exists:

    

    (1)
            through a “same day sale” commitment from the
      Participant and a broker-dealer that is a member of the National Association
      of
      Securities Dealers (an “NASD Dealer”) whereby the Participant irrevocably elects
      to exercise the Option and to sell a portion of the Shares so purchased to
      pay
      for the Exercise Price, and whereby the NASD Dealer irrevocably commits upon
      receipt of such Shares to forward the Exercise Price directly to the Company;
      or

     

    (2)
            through a “margin” commitment from the Participant and
      a NASD Dealer whereby the Participant irrevocably elects to exercise the Option
      and to pledge the Shares so purchased to the NASD Dealer in a margin account
      as
      security for a loan from the NASD Dealer in the amount of the Exercise Price,
      and whereby the NASD Dealer irrevocably commits upon receipt of such Shares
      to
      forward the Exercise Price directly to the Company; or

    

    (e)
            by any combination of the foregoing.

    

    10.
            WITHHOLDING
      TAXES.

    

    10.1
            Withholding
      Generally
      .
      Whenever Shares are to be issued in satisfaction of Awards granted under this
      Plan, the Company may require the Participant to remit to the Company an amount
      sufficient to satisfy federal, state and local withholding tax requirements
      prior to the delivery of any certificate or certificates for such Shares.
      Whenever, under this Plan, payments in satisfaction of Awards are to be made
      in
      cash, such payment will be net of an amount sufficient to satisfy federal,
      state, and local withholding tax requirements.

    

    10.2
            Stock
      Withholding
      . When,
      under applicable tax laws, a participant incurs tax liability in connection
      with
      the exercise or vesting of any Award that is subject to tax withholding and
      the
      Participant is obligated to pay the Company the amount required to be withheld,
      the Committee may allow the Participant to satisfy the minimum withholding
      tax
      obligation by electing to have the Company withhold from the Shares to be issued
      that number of Shares having a Fair Market Value equal to the minimum amount
      required to be withheld, determined on the date that the amount of tax to be
      withheld is to be determined. All elections by a Participant to have Shares
      withheld for this purpose will be made in accordance with the requirements
      established by the Committee and will be in writing in a form acceptable to
      the
      Committee.

    

    11.
            PRIVILEGES
      OF STOCK OWNERSHIP.

    

    11.1
            Voting
      and Dividends
      . No
      Participant will have any of the rights of a stockholder with respect to any
      Shares until the Shares are issued to the Participant. After Shares are issued
      to the Participant, the Participant will be a stockholder and will have all
      the
      rights of a stockholder with respect to such Shares, including the right to
      vote
      and receive all dividends or other distributions made or paid with respect
      to
      such Shares; provided, that if such Shares are issued pursuant to a Stock Award
      with restrictions, then any new, additional or different securities the
      Participant may become entitled to receive with respect to such Shares by virtue
      of a stock dividend, stock split or any other change in the corporate or capital
      structure of the Company will be subject to the same restrictions as the Stock
      Award; provided, further, that the Participant will have no right to retain
      such
      stock dividends or stock distributions with respect to Shares that are
      repurchased at the Participant’s Purchase Price or Exercise Price pursuant to
      Section 13.

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    11.2
            Financial
      Statements
      . The
      Company will provide financial statements to each Participant prior to such
      Participant’s purchase of Shares under this Plan, and to each Participant
      annually during the period such Participant has Awards outstanding; provided,
      however, the Company will not be required to provide such financial statements
      to Participants whose services in connection with the Company assure them access
      to equivalent information.

    

    12.
            NON-TRANSFERABILITY.

    

    Awards
      of
      Shares granted under this Plan, and any interest therein, will not be
      transferable or assignable by the Participant, and may not be made subject
      to
      execution, attachment or similar process, other than by will or by the laws
      of
      descent and distribution. Awards of Options granted under this Plan, and any
      interest therein, will not be transferable or assignable by the Participant,
      and
      may not be made subject to execution, attachment or similar process, other
      than
      by will or by the laws of descent and distribution, by instrument to an inter
      vivos or testamentary trust in which the options are to be passed to
      beneficiaries upon the death of the trustor, or by gift to “immediate family” as
      that term is defined in 17 C.F.R. 240.16a-1(e). During the lifetime of the
      Participant an Award will be exercisable only by the Participant. During the
      lifetime of the Participant, any elections with respect to an Award may be
      made
      only by the Participant unless otherwise determined by the Committee and set
      forth in the Award Agreement with respect to Awards that are not
      ISOs.

    

    13.
            REPURCHASE
      RIGHTS.

    

    At
      the
      discretion of the Committee, the Company may reserve to itself and/or its
      assignee(s) in the Award Agreement a right to repurchase a portion of or all
      of
      the unvested Shares held by a Participant following such Participant’s
      Termination Date. Such repurchase by the Company shall be for cash and/or
      cancellation of purchase money indebtedness and the price per share shall be
      the
      Participant’s Exercise Price or Purchase Price, as applicable.

    

    14.
            CERTIFICATES.

    

    All
      certificates for Shares or other securities delivered under this Plan will
      be
      subject to such stop transfer orders, legends and other restrictions as the
      Committee may deem necessary or advisable, including restrictions under any
      applicable federal, state or foreign securities law, or any rules, regulations
      and other requirements of the SEC or any stock exchange or automated quotation
      system upon which the Shares may be listed or quoted.

    

    15.
            ESCROW;
      PLEDGE OF SHARES.

    

    To
      enforce any restrictions on a Participant’s Shares, the Committee may require
      the Participant to deposit all certificates representing Shares, together with
      stock powers or other instruments of transfer approved by the Committee
      appropriately endorsed in blank, with the Company or an agent designated by
      the
      Company to hold in escrow until such restrictions have lapsed or terminated,
      and
      the Committee may cause a legend or legends referencing such restrictions to
      be
      placed on the certificates.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    16.
            EXCHANGE
      AND BUYOUT OF AWARDS.

     

    The
      Committee may, at any time or from time to time, authorize the Company, with
      the
      consent of the respective Participants, to issue new Awards in exchange for
      the
      surrender and cancellation of any or all outstanding Awards. The Committee
      may
      at any time buy from a Participant an Award previously granted with payment
      in
      cash, Shares or other consideration, based on such terms and conditions as
      the
      Committee and the Participant may agree.

    

    17.
            SECURITIES
      LAW AND OTHER REGULATORY COMPLIANCE.

    

    An
      Award
      will not be effective unless such Award is in compliance with all applicable
      federal and state securities laws, rules and regulations of any governmental
      body, and the requirements of any stock exchange or automated quotation system
      upon which the Shares may then be listed or quoted, as they are in effect on
      the
      date of grant of the Award and also on the date of exercise or other issuance.
      Notwithstanding any other provision in this Plan, the Company will have no
      obligation to issue or deliver certificates for Shares under this Plan prior
      to:
      (a) obtaining any approvals from governmental agencies that the Company
      determines are necessary or advisable; and/or (b) completion of any registration
      or other qualification of such Shares under any state or federal law or ruling
      of any governmental body that the Company determines to be necessary or
      advisable. The Company will be under no obligation to register the Shares with
      the SEC or to effect compliance with the registration, qualification or listing
      requirements of any state securities laws, stock exchange or automated quotation
      system, and the Company will have no liability for any inability or failure
      to
      do so.

    

    18.
            NO
      OBLIGATION TO EMPLOY.

    

    Nothing
      in this Plan or any Award granted under this Plan will confer or be deemed
      to
      confer on any Participant any right to continue in the employ of, or to continue
      any other relationship with, the Company or any Parent or Subsidiary of the
      Company or limit in any way the right of the Company or any Parent or Subsidiary
      of the Company to terminate Participant’s employment or other relationship at
      any time, with or without cause.

    

    19.
            CORPORATE
      TRANSACTIONS.

    

    19.1
        Assumption
      or Replacement of Awards by Successor
      . In the
      event of (a) a dissolution or liquidation of the Company, (b) a merger or
      consolidation in which the Company is not the surviving corporation (other
      than
      a merger or consolidation with a wholly-owned subsidiary, a reincorporation
      of
      the Company in a different jurisdiction, or other transaction in which there
      is
      no substantial change in the stockholders of the Company or their relative
      stock
      holdings and the Awards granted under this Plan are assumed, converted or
      replaced by the successor corporation, which assumption will be binding on
      all
      Participants), (c) a merger in which the Company is the surviving corporation
      but after which the stockholders of the Company immediately prior to such merger
      (other than any stockholder that merges, or which owns or controls another
      corporation that merges, with the Company in such merger) cease to own their
      shares or other equity interest in the Company, (d) the sale of substantially
      all of the assets of the Company, or (e) the acquisition, sale, or transfer
      of
      more than 50% of the outstanding shares or the Company by tender offer or
      similar transaction, any or all outstanding Awards may be assumed, converted
      or
      replaced by the successor corporation (if any), which assumption, conversion
      or
      replacement will be binding on all Participants. In the alternative, the
      successor corporation may substitute equivalent Awards or provide substantially
      similar consideration to Participants as was provided to stockholders (after
      taking into account the existing provisions of the Awards). The successor
      corporation may also issue, in place of outstanding Shares of the Company held
      by the Participant, substantially similar shares or other property subject
      to
repurchase
      restrictions no less favorable to the Participant. In the event such successor
      corporation (if any) refuses to assume or substitute Awards, as provided above,
      pursuant to a transaction described in this Subsection 19.1, (i) the vesting
      of
      any or all Awards granted pursuant to this Plan will accelerate upon a
      transaction described in this Section 19 and (ii) any or all Options granted
      pursuant to this Plan will become exercisable in full prior to the consummation
      of such event at such time and on such conditions as the Committee determines.
      If such Options are not exercised prior to the consummation of the corporate
      transaction, they shall terminate at such time as determined by the
      Committee.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    19.2
            Other
      Treatment of Awards
      .
      Subject to any greater rights granted to Participants under the foregoing
      provisions of this Section 19, in the event of the occurrence of any transaction
      described in Section 19.1, any outstanding Awards will be treated as provided
      in
      the applicable agreement or plan of merger, consolidation, dissolution,
      liquidation, or sale of assets.

    

    19.3
            Assumption
      of Awards by the Company
      . The
      Company, from time to time, also may substitute or assume outstanding awards
      granted by another company, whether in connection with an acquisition of such
      other company or otherwise, by either; (a) granting an Award under this Plan
      in
      substitution of such other company’s award; or (b) assuming such award as if it
      had been granted under this Plan if the terms of such assumed award could be
      applied to an Award granted under this Plan. Such substitution or assumption
      will be permissible if the holder of the substituted or assumed award would
      have
      been eligible to be granted an Award under this Plan if the other company had
      applied the rules of this Plan to such grant. In the event the Company assumes
      an award granted by another company, the terms and conditions of such award
      will
      remain unchanged (except that the exercise price and the number and nature
      of
      Shares issuable upon exercise of any such option will be adjusted appropriately
      pursuant to Section 424(a) of the Code). In the event the Company elects to
      grant a new Option rather than assuming an existing option, such new Option
      may
      be granted with a similarly adjusted Exercise Price.

    

    20.
            ADOPTION
      AND STOCKHOLDER APPROVAL.

    

    This
      Plan
      will become effective on the date on which it is adopted by the Board (the
      “Effective Date”). Upon the Effective Date, the Committee may grant Awards
      pursuant to this Plan. The Company intends to seek stockholder approval of
      the
      Plan within twelve (12) months after the date this Plan is adopted by the Board;
      provided, however, if the Company fails to obtain stockholder approval of the
      Plan during such 12-month period, pursuant to Section 422 of the Code, any
      Option granted as an ISO at any time under the Plan will not qualify as an
      ISO
      within the meaning of the Code and will be deemed to be an NQSO.

    

    21.
            TERM
      OF PLAN/GOVERNING LAW.

    

    Unless
      earlier terminated as provided herein, this Plan will terminate ten (10) years
      from the date this Plan is adopted by the Board or, if earlier, the date of
      stockholder approval. This Plan and all agreements thereunder shall be governed
      by and construed in accordance with the laws of the State of
      Delaware.

    

    22.
            AMENDMENT
      OR TERMINATION OF PLAN.

    

    The
      Board
      may at any time terminate or amend this Plan in any respect, including without
      limitation amendment of any form of Award Agreement or instrument to be executed
      pursuant to this Plan; provided, however, that the Board will not, without
      the
      approval of the stockholders
      of the Company, amend this Plan in any manner that requires such stockholder
      approval.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    23.
            NONEXCLUSIVITY
      OF THE PLAN.

    

    Neither
      the adoption of this Plan by the Board, the submission of this Plan to the
      stockholders of the Company for approval, nor any provision of this Plan will
      be
      construed as creating any limitations on the power of the Board to adopt such
      additional compensation arrangements as it may deem desirable, including,
      without limitation, the granting of stock options and bonuses otherwise than
      under this Plan, and such arrangements may be either generally applicable or
      applicable only in specific cases.

    

    24.
           ACTION
      BY COMMITTEE.

    

    Any
      action permitted or required to be taken by the Committee or any decision or
      determination permitted or required to be made by the Committee pursuant to
      this
      Plan shall be taken or made in the Committee’s sole and absolute
      discretion.

     

    
      
         

      

      
        -14-EXECUTION
      COPY

    

    STOCK
      PURCHASE AGREEMENT

     

    This
      STOCK PURCHASE AGREEMENT (this
      “Agreement”)
      is
      entered into on June 7, 2007 effective as of the opening of business on May
      31,
      2007 by and among MIAMI
      SUBS CAPITAL PARTNERS I, INC.,
      a
      Florida corporation (“Purchaser”),
      MIAMI
      SUBS CORPORATION,
      a
      Florida corporation (the “Company”),
      and
NATHAN’S
      FAMOUS, INC.,
      a
      Delaware corporation (“Seller”).
      Purchaser and Seller are referred to collectively as the “Parties”
and
      each individually as a “Party.”

     

    RECITALS

     

    WHEREAS,
      Seller
      owns all of the issued and outstanding common stock of the Company;
      and

     

    WHEREAS,
      Seller
      wishes to sell the Company, and Purchaser wishes to purchase from Seller, all
      of
      the shares of common stock of the Company on the terms and conditions
      hereinafter set forth.

     

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

     

    ARTICLE
      I  

    PURCHASE
      AND SALE OF SHARES

     

    1.1  Purchase
      and Sale of Shares.

     

    (a)  Purchase
      of Shares.
      Subject
      to the terms and conditions hereinafter set forth, on the Closing Date, Seller
      agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller,
      all
      of the issued and outstanding shares (consisting of 200 shares of common stock,
      $0.01 par value) of the Company (the “Shares”),
      for
      an aggregate price of Three Million Two Hundred Fifty Thousand Dollars
      ($3,250,000) (the “Purchase
      Price.)

     

    (b)  Purchase
      Price.
      As
      payment in full for the Shares, Purchaser shall, against delivery of a
      certificate or certificates evidencing the Shares together with a stock power,
      deliver to Seller a
      cash
      payment of Eight Hundred Fifty Thousand Dollars ($850,000) by wire transfer
      of
      immediately available funds to such account as Seller has designated on
      Schedule 1.1(b), along with Purchaser’s Promissory Note (the “Purchaser’s
      Promissory Note”),
      in
      the form attached hereto as Exhibit A-1.

     

    (c)  Additional
      Closing Deliveries.
      At the
      Closing, Purchaser shall also deliver the Austin Personal Guaranty (the
“Austin
      Personal Guaranty”),
      in
      the form attached hereto as Exhibit A-2, the Galloway Personal Guaranty
      (the “Galloway
      Personal Guaranty”),
      in
      the form attached hereto as Exhibit A-3 and the Security Agreement (the
“Security
      Agreement”),
      in the
      form attached hereto as Exhibit A-4, all duly executed by the respective
      parties thereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.2  Closing.

     

    The
      closing (the “Closing”)
      of the
      transactions contemplated herein shall be held simultaneously with the execution
      and delivery of this Agreement at the offices of Farrell Fritz, P.C.,
      1320 Reckson Plaza, Uniondale, New York 11556, or such other time
      and/or place as the Parties otherwise agree (the “Closing
      Date”).

     

    ARTICLE
      II 

    REPRESENTATIONS
      AND WARRANTIES OF SELLER

     

     
      Seller represents and warrants to Purchaser as follows:

     

     2.1   Organization;
      Qualification; Subsidiaries.

     

    (a)  The
      Company.
      The
      Company is a corporation, duly organized, validly existing and in good standing
      under the laws of the State of Florida with full corporate power and authority
      to carry on its business as it is now being conducted and to own, operate and
      lease its properties and assets. The Company is duly qualified or licensed
      to do
      business and is in good standing in every jurisdiction in which the conduct
      of
      its business or the ownership or lease of its properties, require it to be
      so
      qualified or licensed, except where the failure to be so qualified or licensed
      would not have a Material Adverse Effect.

     

    (b)  Subsidiaries.
      Set
      forth on Schedule 2.1(b)
      is a
      list of all Subsidiaries of the Company. Each such Subsidiary is a corporation,
      duly organized, validly existing and in good standing under the laws of its
      jurisdiction of formation with full corporate power and authority to carry
      on
      its business as it is now being conducted and to own, operate and lease its
      properties and assets. Each Subsidiary is duly qualified or licensed to do
      business and is in good standing in every jurisdiction in which the conduct
      of
      its business or the ownership or lease of its properties, require it to be
      so
      qualified or licensed, except where the failure be so qualified or licensed
      would not have a Material Adverse Effect.
      Schedule 2.1(c) is a list of all jurisdictions in which the Company is
      licensed to do business.

     

    2.2  Authorization
      of Transaction.
      The
      Seller has full corporate power and authority to execute and deliver this
      Agreement, the other Transaction Documents and to perform its obligations
      hereunder and thereunder. This Agreement and each other document, instrument
      or
      agreement executed and delivered by Seller in connection with the transactions
      contemplated hereunder has been duly executed and delivered by Seller and
      constitutes the valid and legally binding obligation of Seller, enforceable
      against it in accordance with its terms and conditions, except
      as
      the enforceability thereof may be limited by bankruptcy, insolvency or other
      laws relating to or affecting creditors’ rights.

     

    2.3  No
      Conflict or Violation.
      Except
      as set forth on Schedule 2.3,
      neither
      the execution and delivery of this Agreement or any of the other Transaction
      Documents, nor the consummation of the transactions contemplated hereby and
      thereby, will:

     

    (a)  result
      in
      a violation of or a conflict with any provision of the organizational documents
      of Seller, the Company or any of its Subsidiaries;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)  result
      in
      a breach of, a default under, or give any third party the right to modify,
      terminate or accelerate any obligation under, any term or provision of any
      Contract to which Seller, the Company or any of its Subsidiaries is a party
      or
      by which any of their assets are bound; or

     

    (c)  result
      in
      a violation by Seller, the Company or any of its Subsidiaries of, or require
      any
      authorization, consent, approval, exemption, notice, filing or other action
      due
      to or required from, or filing with, any Authority pursuant to any Regulation
      or
      Order except, in the case of clauses (b) and (c), where the occurrence of
      such event or failure to obtain such authorization, consent, or similar approval
      will not result in a Material Adverse Effect.

     

    2.4  Consents
      and Approvals.
      No
      consent, approval or authorization of, or declaration, filing or registration
      with, any Authority is required to be made or obtained by Seller, the Company
      or
      any of its Subsidiaries in connection with the execution, delivery and
      performance of this Agreement and the consummation of the transactions
      contemplated hereby, except where the failure to obtain such consents, approvals
      or authorizations, or make such declarations, filings or registrations, would
      not in the aggregate impair the ability of Seller to perform its obligations
      hereunder or result in a Material Adverse Effect.

     

    2.5  Capitalization.

     

    (a)  There
      are
      200 Shares of the Company issued and outstanding on a fully diluted basis and
      all such Shares are owned beneficially and of record by Seller. All of the
      Shares are duly authorized, validly issued, fully paid and non-assessable,
      and
      have been issued in compliance with all applicable securities Regulations.
      Neither Seller nor the Company has any Contracts containing any profit
      participation features, stock appreciation rights or phantom stock options,
      or
      similar Contracts that allow any Person to participate in the equity or profits
      of the Company. No Shares of the Company are reserved for issuance and there
      are
      no outstanding preemptive rights, Options, Claims, Contracts, convertible or
      exchangeable securities or other commitments, contingent or otherwise, relating
      to the Shares of the Company or pursuant to which the Company is or may become
      obligated to issue or exchange any of its Shares. There are no Contracts between
      or among the Company’s equity holder and any other Persons that are binding upon
      Seller or the Company with respect to the voting, transfer, encumbrance of
      any
      Shares of the Company or Options or with respect to any aspect of the Company’s
      governance or dividends or distributions.

     

    (b)  All
      of
      the outstanding equity interests of each Subsidiary are owned by the Company,
      are duly authorized, validly issued, fully paid and nonassessable, and have
      been
      issued in compliance with all applicable securities Regulations except where
      the
      failure to be in compliance would not have a Material Adverse Effect. Neither
      Seller, the Company nor any of its Subsidiaries has any Contracts containing
      any
      profit participation features, stock appreciation rights or phantom stock
      options, or similar Contracts that allow any Person to participate in the equity
      or profits of any Subsidiary. The Company has good and valid title to all of
      the
      shares of outstanding capital stock of each Subsidiary free and clear of all
      Liens, Contracts and Orders. No equity interests of any Subsidiary are reserved
      for issuance and there are no outstanding preemptive rights, Options, Claims,
      Contracts, convertible or exchangeable securities or other commitments,
      contingent or otherwise, relating to the equity interests of any Subsidiary
      or
      pursuant to which any Subsidiary is or may become obligated to issue or exchange
      any of its equity interests. There are no Contracts between or among Seller,
      the
      Company, or any Subsidiary and any other Persons that are binding upon Seller,
      the Company or any Subsidiary with respect to the voting, transfer, encumbrance
      of any Shares of such Subsidiary or Options or with respect to any aspect of
      the
      Subsidiary’s governance or dividends or distributions.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.6  Title
      to Personal Property.
      Except
      as set forth in Schedule 2.6,
      the
      Company has good and marketable title to, or a valid leasehold interest in,
      the
      properties and assets used to conduct its business, including the properties
      and
      assets shown on the Most Recent Financial Statements or acquired after the
      date
      thereof, in each case free and clear of all Encumbrances, except for
      (i) properties and assets disposed of in the Ordinary Course of Business
      since the date of the Most Recent Financial Statements and (ii) those
      properties and assets transferred to Seller and listed on Schedule
      2.6.
      Except
      as set forth on Schedule 2.6,
      the
      assets currently owned or leased by the Company or any of its Subsidiaries
      constitute all of the assets necessary to conduct its business in accordance
      with past practices as of the date of the Most Recent Balance Sheet and as
      of
      the date hereof, and are located at 6300 NW 31st Avenue,
      Ft. Lauderdale, Florida (the “Premises”).

     

    2.7  Real
      Property.

     

    (a)  Neither
      the Company nor any of its Subsidiaries owns any real property. Schedule 2.7(a)
      contains
      a true and complete list of all real property with respect to which the Company
      or any of its Subsidiaries is a lessee, sublessee, licensee or other occupant
      or
      user (the “Real
      Property”).
      Seller has provided to Purchaser a true and complete copy of each lease,
      sublease or other occupancy agreement (including any amendments and renewal
      letters) relating to the Real Property, together with all amendments and
      modifications thereto as listed on Schedule 2.7(a)
      (collectively, the “Real
      Property Leases”).

     

    (b)  Except
      as
      set forth in Schedule 2.7(b), each of the Company and its Subsidiaries has
      a valid, enforceable and subsisting leasehold estate in, and the right to quiet
      enjoyment of, each parcel of Real Property for the full term of the lease
      thereof. Except as set forth in Schedule 2.7(b), each such Real Property
      Lease is a legal, valid and binding agreement, enforceable in accordance with
      its terms, except as may be limited by bankruptcy, insolvency or other laws
      relating to or affecting creditors’ rights, of the Company or such Subsidiary,
      as applicable, and, to the Knowledge of Seller, of each other Person that is
      a
      party thereto and, to the Knowledge of Seller, no material breach or event
      of
      default has occurred or is continuing thereunder.

     

    (c)  All
      Real
      Property is adequate and suitable for the purposes for which it is presently
      being used and, to the Knowledge of Seller, there are no condemnation or
      appropriation proceedings pending or threatened against any such Real Property
      or the improvements thereon. Except as set forth in Schedule 2.7(c),
      to the
      Knowledge of Seller, there are no existing violations of any Regulations and
      Orders of any Authority, and the Seller has received no written notice of
      violation of any restrictive covenants or deed restrictions, applicable to
      any
      parcel of Real Property.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d)  To
      the
      Knowledge of Seller, the current use and operation of the Real Property does
      not
      violate any Permit of the Company or any Subsidiary and each of the Company
      and
      its Subsidiaries has been issued all Permits necessary to operate the Real
      Property as currently operated. except where the failure to obtain such Permits
      will not have a Material Adverse Effect.

     

    (e)  Neither
      the Company nor any of its Subsidiaries has received written notice of any,
      nor
      to the Knowledge of Seller are there any threatened, pending liens or special
      assessments against any of the Real Property by any Authority.

     

    (f)  Neither
      the Company nor any of its Subsidiaries has received with respect to the Real
      Property, any written notice from any insurance company or Authority of
      (i) any condition, defect, or inadequacy affecting any of the Real Property
      that, if not corrected, would result in termination of insurance coverage or
      materially increase its cost, (ii) any proceedings or, to the Knowledge of
      Seller any threatened proceedings, that is reasonably likely to cause the
      change, redefinition, or other modification of the zoning classification, or
      (iii) any condemnation proceedings or, to the Knowledge of Seller any
      threatened proceedings, to widen or realign any street or highway adjacent
      to
      any of the Real Property.

     

    2.8  Financial
      Statements; No Undisclosed Liabilities.

     

    (a)  Financial
      Statements.
      Attached
      hereto as Schedule 2.8(a)
      to the
      Disclosure Schedule are the following financial statements (collectively the
      “Financial
      Statements”):
      (i) audited consolidated Balance Sheets and Statements of Income, Cash
      Flows and Stockholders Equity for the Company and its consolidated Subsidiaries
      for each of the fiscal years ended March 26, 2006 (“Most
      Recent Fiscal Year End”)
      and
      March 27, 2005, and (ii) unaudited consolidated Balance Sheets and
      Statements of Income, Cash Flows and Stockholders Equity of the Company and
      its
      consolidated subsidiaries for the fiscal year ended March 25, 2007 (the
“Most
      Recent Financial Statements”).
      The
      Financial Statements (including the notes thereto) have been prepared from
      the
      books and records of the Company and its consolidated Subsidiaries, have been
      prepared using GAAP applied on a consistent basis throughout the periods covered
      thereby and present fairly the assets and liabilities of the Company and its
      consolidated Subsidiaries as of such dates and the results of operations of
      the
      Company and its consolidated Subsidiaries for such periods.

     

    (b)  Absence
      of Undisclosed Liabilities.
      Except
      as set forth on Schedule 2.8(b),
      the
      Company has no material obligation or liability (whether accrued, absolute,
      contingent, unliquidated or otherwise, whether due or to become due arising
      out
      of any transaction entered at or prior to the date hereof, or any action or
      inaction at or prior to the date hereof, or any state of facts existing at
      or
      prior to the date hereof, other than: (a) liabilities reflected on the Most
      Recent Financial Statements; (b) liabilities and obligations which have
      arisen after the date of the Most Recent Financial Statements in the Ordinary
      Course of Business which would not result, individually or in the aggregate,
      in
      a Material Adverse Effect; (c) obligations under Contracts described on
Schedule 2.13
      or under
      Contracts entered into in the Ordinary Course of Business consistent with past
      practice which are not required to be disclosed on such Section (but not
      liabilities for any breach of any such Contract occurring on or prior to the
      Closing Date); and (d) other liabilities and obligations expressly
      disclosed in the Disclosure Schedule.

    
       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
         

        2.9  Subsequent
          Events.  Except as listed on Schedule 2.9,
          since
          March 25, 2007, there has not been any change in the business or financial
          condition of the Company which has or is reasonably likely to
          result  in
          a
          Material Adverse Effect with respect to the Company. Without limiting the
          generality of the foregoing and except as listed on Schedule 2.9,
          since
          March 25, 2007, neither the Company nor any of its Subsidiaries
          has:

      

    

     

    (a)  sold,
      leased, transferred, licensed, or assigned any material assets, tangible or
      intangible, outside the Ordinary Course of Business;

     

    (b)  entered
      into any Contracts (or series of related Contracts) involving expenditures
      of
      more than $50,000 per annum, nor modified any such existing Contracts, outside
      the Ordinary Course of Business;

     

    (c)  accelerated,
      terminated, made modifications to, or canceled any material Contract to which
      the Company is a party or by which it is bound (nor has any other party thereto
      done the same);

     

    (d)  imposed
      any Encumbrance upon any of its assets, tangible or intangible;

     

    (e)  made
      or
      authorized any change in the organizational documents of the
      Company;

     

    (f)  experienced
      any material damage, destruction, or loss (whether or not covered by insurance)
      to its property;

     

    (g)  granted
      any increase in the base compensation of or made any other change in the
      employment terms or benefits of any of its directors, officers and employees,
      except for regularly scheduled salary adjustments made in the Ordinary Course
      of
      Business to individuals who are not Affiliates and that are set forth in
Schedule 2.9(g)
      and
      changes in employment terms applicable to all employees generally;

     

    (h)  made
      or
      been subject to any change in its accounting practices, procedures or
      methods;

     

    (i)  discharged
      or satisfied any Lien or paid any obligation or liability, other than current
      liabilities paid in the Ordinary Course of Business;

     

    (j)  declared,
      set aside or made any payment or distribution of cash or other property to
      its
      equity holder or its other Affiliates with respect to such equity holder’s
      equity securities or otherwise, or purchased, redeemed or otherwise acquired
      any
      equity securities (including any Options to acquire its equity
      securities);

     

    (k)  made
      capital expenditures or commitments therefor that amount in the aggregate to
      more than $50,000 (other than capital expenditures that are fully funded prior
      to the Closing);

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (l)  except
      as
      otherwise contemplated by this Agreement, delayed or postponed the payment
      of
      any accounts payable or commissions or any other liability or obligation or
      agreed or negotiated with any party to extend the payment date of any accounts
      payable or commissions or any other material liability or obligation or
      accelerated the collection of (or discounted) any accounts or notes receivable
      outside the Ordinary Course of Business;

     

    (m)  made
      any
      charitable pledges exceeding in the aggregate $5,000;

     

    (n)  entered
      into any synthetic lease or similar arrangement or any off-balance sheet
      financing arrangement;

     

    (o)  lost
      any
      franchisee or received written notice from any franchisee that it intends to
      (i) amend the terms of any agreement between such franchisee and the
      Company or any Subsidiary, or (ii) terminate or not renew any agreement it
      may have with the Company or any Subsidiary;

     

    (p)  lost
      any
      supplier or received written notice from any material supplier that it intends
      to (i) reduce the level of business that it does with the Company or any
      Subsidiary, (ii) amend the terms of any agreement between such supplier and
      the Company or any Subsidiary, or (iii) terminate or not renew any
      agreement it may have with the Company or any Subsidiary;

     

    (q)  taken
      any
      action or failed to take any action that has had or would reasonably have been
      expected to have the effect of accelerating to the Pre-Closing Period royalties
      or other revenues that would otherwise be expected to be paid or incurred after
      the Closing; or

     

    (r)  committed
      to do any of the foregoing (except to the extent that any such actions relate
      to
      the transfer of assets or liabilities to Seller as disclosed in the Disclosure
      Schedules).

     

    2.10  Legal
      Compliance.

     

    (a)  Except
      as
      set forth on Schedule 2.10(a),
      to the
      Knowledge of Seller, the Company is and has been for the two years preceding
      the
      date hereof in material compliance with all Regulations and Orders of any
      Authority applicable to it. Except as set forth on Schedule 2.10(a),
      to the
      Knowledge of Seller, for the two years preceding the date hereof no written
      notice has been received by and no written claims have been filed against the
      Company or any of its Subsidiaries alleging a material violation of any
      Regulation or Order.

     

    (b)  To
      the
      Knowledge of Seller, the Company holds, and is in material compliance with,
      all
      Permits of any Authority required for the conduct of its business and the
      ownership of its properties except where the failure to so comply would not
      have
      a Material Adverse Effect. To the Knowledge of Seller, no written notices have
      been received by the Company or any of its Subsidiaries alleging the failure
      to
      hold any of the foregoing. To the Knowledge of Seller, all of such Permits
      will
      be available for use by the Company or such Subsidiary immediately after the
      Closing.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    2.11  Tax
      Matters.

     

    (a)  Except
      as
      set forth on Schedule 2.11(a):
      (i) the Company has timely filed all federal income Tax Returns and all
      other material Tax Returns it was required to file; (ii) all such Tax
      Returns were correct and complete in all material respects and all Taxes due
      and
      owing of the Company (whether or not shown on any Tax Return and whether or
      not
      any Tax Return was required) have been paid except where the failure to file
      such Tax Returns or to pay such Taxes would not have a material adverse effect;
      (iii) the Company is not the beneficiary of any extension of time within
      which to file any Tax Return; (iv) the Company has maintained adequate
      provision for Taxes (excluding amounts deferred to take into account timing
      differences between book and tax) payable by the Company; (v) no claim has
      ever been made by a Taxing Authority in writing in a jurisdiction where the
      Company does not currently file Tax Returns that it is or may be subject to
      taxation by that jurisdiction; and (vi) there are no Encumbrances on any of
      the assets of the Company that arose in connection with any failure (or alleged
      failure) to pay any Tax, except for Liens for Taxes not yet due and
      payable.

     

    (b)  Except
      as
      set forth on Schedule 2.11(b),
      there
      is no material dispute or claim concerning any Tax liability of the Company
      either (i) claimed or raised by any Taxing Authority in writing or
      (ii) as to which the Seller has actual knowledge based upon personal
      contact with the agent of such Taxing Authority. The Company has not received
      from any Taxing Authority any written notice of proposed adjustment, deficiency,
      underpayment of Taxes or any other such notice which has not been satisfied
      by
      payment, been withdrawn or is being contested in good faith. There is no
      material dispute or claim concerning any Tax liability of the Company either
      claimed or raised by any Taxing Authority in writing. The Company has:
      (A) withheld all required amounts from its employees, agents, contractors
      and nonresidents and remitted such amounts to the proper agencies; (B) paid
      all employer contributions and premiums; and (C) filed all federal, state,
      local and foreign returns and reports with respect to employee income Tax
      withholding, social security, unemployment Taxes and premiums, all in material
      compliance with the withholding Tax provisions of the Code as in effect for
      the
      applicable year and other applicable federal, state, local or foreign
      laws.

     

    (c)  Except
      as
      set forth on Schedule 2.11(c),
      no Tax
      Return of the Company has been audited, or is currently the subject of audit.
      The Company has delivered or made available to
      Purchaser correct and complete copies of all federal and foreign Tax Returns
      of
      the Company, examination reports, and statements of deficiencies assessed
      against, or agreed to by the Company since December 31, 2001. The Company
      has not waived any statute of limitations in respect of Taxes or agreed to
      any
      extension of time with respect to any Tax assessment or deficiency.

     

    (d)  The
      Company is not a party to any joint venture, partnership or other arrangement
      or
      contract that could be treated as a partnership for Federal income tax purposes.
      The Company has not entered into any sale leaseback or leveraged lease
      transaction that fails to satisfy the requirements of Revenue Procedure 2001-28
      (or similar provisions of foreign law) or any safe harbor lease transaction.
      The
      Company has not acquired or owns any assets that directly or indirectly secure
      any debt the interest on which is tax exempt under Section 103 of the
      Code.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (e)  The
      Company shall not be required to include in a taxable period ending after the
      Closing Date taxable income attributable to income that accrued in a prior
      taxable period but was not recognized in any prior taxable period as a result
      of
      the installment method of accounting, the completed contract method of
      accounting, the long-term contract method of accounting, the cash method of
      accounting or Section 481 of the Code or any comparable provision of state,
      local, or foreign tax law or a “closing
      agreement”
as
      described in Section 7121 of the Code.

     

    
      (f)  The
        Company has not engaged in any “reportable
        transaction”
or
        transaction that is substantially similar to a “reportable
        transaction”,
        as
        defined in Section 1.6011-4 of the Treasury Regulations.

    

     

    (g)  None
      of
      Company or any of its Subsidiaries has made any payments, is obligated to make
      any payments, or is a party to any agreement that under certain circumstances
      could obligate it to make any payments that will not be deductible under section
      280G of the Internal Revenue Code. None of Company or any of its Subsidiaries
      has been a U.S. real property holding corporation within the meaning of
      Section 897(c)(2) of the Internal Revenue Code during the applicable period
      specified in Section 897(c)(1)(A)(ii) of the Internal Revenue
      Code.

     

    (h)  Except
      as
      set forth in Schedule 2.11(h), none of Company or any of its Subsidiaries
      (i) has been a member of an Affiliated Group filing a consolidated federal
      income Tax Return and (ii) has liability for the Taxes of any Person under
      Treasury Regulation section 1.1502-6 (or any similar provision of state, local,
      or foreign law), as a transferee or successor, by contract or
      otherwise.

     

    (i)  Since
      January 1, 2001, none of Company or any of its Subsidiaries has been a
      party to a transaction that is reported to qualify as a reorganization within
      the meaning of Code section 368, distributed a corporation in a transaction
      that is reported to qualify under Code section 355, or been distributed in
      a transaction that is reported to qualify under Code
      section 355.

     

    (j)  None
      of
      Company or any of its Subsidiaries has had a permanent establishment in any
      foreign country and does not and has not engaged in a trade or business in
      any
      foreign country.

     

    2.12  Intellectual
      Property.

     

    (a)  The
      Company’s Intellectual Property Rights are set forth on Schedule 2.12(a),
      including (i) any Intellectual Property Rights owned by the Company or any
      Subsidiary and filed or registered with any Authority, (ii) any
      unregistered Intellectual Property Rights owned by the Company or any Subsidiary
      which are material to the current business of the Company, and (iii) any
      Intellectual Property Rights licensed by the Company or any Subsidiary. The
      Company or such Subsidiary owns all right, title and interest with respect
      to,
      or has all necessary rights to use and license its licensees to use, in either
      case as specified in Schedule 2.12(a),
      all of
      the Intellectual Property Rights set forth on Schedule 2.12(a),
      free
      and clear of all Encumbrances. The Intellectual Property Rights specified in
      Schedule 2.12(a)
      constitute all of the Intellectual Property Rights used or owned by the Company
      or its Subsidiaries and all Intellectual Property Rights that are necessary
      for
      the conduct of the Company’s and its licensee’s business as currently conducted.
      All registrations for the Company’s Intellectual Property Rights are owned of
      record by the Company, have been duly maintained and are in full force and
      effect. No filing or payment of any kind was or is required to be made with
      respect to any of the filings for any of the Company’s Intellectual Property
      Rights at any time prior to the Closing Date which has not been made or paid
      in
      a timely manner or will not be made or paid in a timely manner, as applicable.
      To the Knowledge of Seller, all licenses granted to the Company or one of its
      Subsidiaries with respect to Intellectual Property Rights are authorized, valid
      and in full force and effect, no breach of any such license has occurred in
      the
      past or is occurring presently, nor shall any such license terminate as a result
      of the execution and performance of this Agreement or the consummation of the
      transactions contemplated hereunder.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b)  To
      the
      Knowledge of Seller, (i) no other Person has any rights to any of the
      Intellectual Property Rights owned or used by the Company or any of its
      Subsidiaries in the United States except pursuant to Contracts or licenses
      specified on Schedule 2.12(b),
      (ii) no other Person is infringing, misappropriating or otherwise violating
      any such Intellectual Property Rights in the United States that the Company
      or
      any of its Subsidiaries owns or uses, (iii) no Intellectual Property Rights
      of the Company or any of its Subsidiaries are subject to any outstanding Order
      or Claim in the United States, and (iv) neither the Company, any of its
      Subsidiaries nor any of its or their licensees has infringed, misappropriated
      or
      otherwise violated, or is infringing, misappropriating or otherwise violating,
      any third party Intellectual Property Rights or any other third party
      proprietary right, nor has any such Claim been made against any of them, nor,
      to
      the Knowledge of Seller, is there any basis for such a Claim. There is no
      allegation or Claim or, to the Knowledge of Seller, any basis for any allegation
      or Claim that any of the Company’s Intellectual Property Rights are subject to
      claims or defenses that could impair or preclude enforcement of said rights
      in
      the United States, including, without limitation, laches, misuse, acquiescence,
      statute of limitations, abandonment or fraudulent registration.

     

    (c)  There
      is
      no Intellectual Property Right developed by a shareholder, director, officer,
      independent contractor, consultant or employee of the Company or Seller that
      is
      used in the business of the Company or any of its Subsidiaries that has not
      been
      transferred to, or is not owned free and clear of any Encumbrances by, the
      Company. Reasonable precautions have been taken to protect the secrecy and
      value
      of all trade secrets forming a material part of the Company’s Intellectual
      Property Rights, including, without limitation, all proprietary and confidential
      business methods, techniques and practices, such precautions including, without
      limitation, implementation and enforcement of confidentiality policies and
      practices and requiring all employees and contractors having access to any
      confidential and proprietary information used in the business to execute and
      deliver written confidentiality agreements obligating them to maintain the
      confidentiality of same.

     

    (d)  There
      are
      no computer systems used by the Company or any of its Subsidiaries. The
      Company currently uses Intellectual Property owned by the Seller, as listed
      on
      Schedule 2.12(d).

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    2.13  Franchise
      Operations and Reporting.

     

    (a)  Franchisees
      and Franchise Agreements. Schedule 2.13(a)
      accurately identifies all Franchise Agreements (collectively “Franchise
      Agreements”)
      which
      grant or purport to grant to a third party the right to operate or to develop
      “Miami Subs” restaurants within a geographic area, to which the Company is a
      party, that are currently in effect, by name of franchisee, licensee or operator
      (“Franchisee”),
      date
      of agreement, and location of restaurant(s).
      Company
      is not party to any Area Development Agreements which are currently in effect,
      subject to the standard territorial restrictions contained in the Franchise
      Agreements and subject to Section 2.13(b)(vi) below.

     

    (i)  Except
      as
      set forth in Schedule 2.13(a)(i),
      each
      currently-effective Franchise Agreement is substantially similar to the form
      of
      Franchise Agreement (the “Standard
      Form Franchise Agreement”)
      incorporated into the applicable Uniform Franchise Offering Circular
      (“UFOC”)
      that
      was delivered to the Franchisee prior to the sale of that particular franchise
      by the Company (or its predecessors) to the Franchisee. Except
      as
      set forth in Schedule 2.13(a)(i),
      no
      other contracts exist between the Company and any third party granting any
      such
      third party the right, or any option or right of first refusal, to conduct
      business under the name “Miami
      Subs”
or
      any
      other Intellectual Property Rights owned or used by the Company.

     

    (ii)  Except
      as
      set forth in Schedule 2.13(a)(ii),
      to the
      Knowledge of Seller, there are no existing defaults by the Company or any of
      its
      Subsidiaries, and no event has occurred which, with notice or lapse of time,
      or
      both, would constitute a default by the Company or any of its Subsidiaries,
      under any such Franchisee Agreement. , which default could reasonably be
      expected to have a Material Adverse Effect upon the business of the Company
      when
      taken as a whole, nor would such default permit a Franchisee to terminate such
      Franchise Agreement and such termination could reasonably be expected to have
      a
      Material Adverse Effect upon the business of the Company when taken as a
      whole.

     

    (iii)  Except
      as
      set forth in Schedule 2.13(a)(iii),
      to the
      Knowledge of Seller, the material terms of the Franchise Agreements are
      enforceable, except as enforcement may be limited by applicable laws, including
      but not limited to franchise relationship laws and bankruptcy, insolvency,
      reorganization, moratorium and other laws and case precedents affecting
      franchisor-franchisee relations and/or creditors rights generally, and except
      insofar as the availability of equitable remedies may be limited by applicable
      law. 

     

    (iv)  Except
      as
      set forth in Schedule 2.13(a)(iv),
      the
      Company has not granted a waiver, forbearance or consent which is currently
      in
      effect with respect to any provision of any Franchise Agreement regarding a
      current Franchisee’s obligation to make payments of royalty fees, contributions
      to any marketing development fund, or expenditures for advertising
      purposes.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (v)  Except
      as
      set forth in Schedule 2.13(a)(v),
      each
      current Franchisee is current in its financial obligations to the Company,
      including without limitation, for payments due for franchise, development,
      or
      license fees, royalties and advertising contributions.

     

    (b)  Franchise
      Legal Compliance.
      Seller
      has previously delivered a complete copy of the Company’s current Uniform
      Franchise Offering Circular (“UFOC”),
      dated
      as of [September 19, 2006], and a copy of each of the Company’s past UFOCs
      issued on or after January 1, 2003, each of which UFOCs contain the
      information necessary for the Company to comply, as of the effective date of
      each UFOC, with its disclosure obligations arising under the FTC Rule and the
      requirements of the Registration Regulations of those states in which the
      company has, since January 1, 2003, obtained registration or exemption of
      franchise offers and sales, as such states are listed in
      Schedule 2.13(b)(ii). In connection with the Company’s UFOC and franchise
      registration and disclosure obligations, and its franchise offers and
      sales:

     

    (i)  Since
      January 1, 2003, the Company has prepared and maintained each UFOC in
      compliance with: (A) the Uniform Franchise Offering Circular Guidelines
      adopted by the North American Securities Administrators Association on
      April 25, 1993 (“UFOC
      Guidelines”);
      and/or (B) the Trade Regulation Rule on Disclosure Requirements and
      Prohibitions Concerning Franchising and Business Opportunity Ventures
      promulgated by the Federal Trade Commission, 16 C.F.R. Part 436 (the
“FTC
      Rule”);
      and
      (C) the Regulations of those states of the United States that require such
      registration before the Company may offer and/or sell franchises or business
      opportunities (“Registration
      Regulations”),
      as
      specified in Schedule 2.13(b)(ii).

     

    (ii)  Schedule 2.13(b)(ii)
      is a
      true and correct list of the U.S. jurisdictions in which either the Company
      or
      any of its Subsidiaries is currently, or has at any time since January 1,
      2003 been, registered, exempt from registration (in cases where written
      notification of exemption is required by Regulations), or otherwise authorized
      to offer and sell franchises, under a Registration Regulation. 

     

    (iii)  Except
      as
      set forth in Schedule 2.13(b)(iii),
      in
      those states in which the Company has conducted business since January 1,
      2003, the Company has made all necessary Registration Regulation filings and
      obtained the requisite authorizations from the state authorities necessary
      to
      carry on the business of a franchisor offering and selling franchises, as
      conducted as of the date of this Agreement, except where the failure to obtain
      such filings and authorizations would not, individually or in the aggregate,
      have a Material Adverse Effect upon the business of the Company when taken
      as a
      whole.

     

    (iv)  Except
      as
      set forth in Schedule 2.13(b)(iv),
      the
      Company is not now subject to a notice of violation of the FTC Rule or any
      Registration Regulations, and the Company is not now the subject of any cease
      and desist order issued by the Federal Trade Commission or any state
      authorities, regarding the Company’s franchising activities. Except as set forth
      in Schedule 2.13(b)(v), there
      have been no consent orders, assurances of discontinuance, notices of violation,
      offers of settlement, settlement orders or other orders or rulings entered
      into
      by the Company since January 1, 2003, which are in effect that would
      prohibit or impede the Company’s ability to offer or sell franchises or enter
      into Franchise Agreements or Area Development Agreements. Except as set forth
      in
Schedule 2.13(b)(iv),
      there
      are no consent orders, settlement agreements, stop orders or other proceedings,
      to the Knowledge of Seller, threatened that would prohibit or impede the
      Company’s ability to offer or sell franchises or enter into Franchise
      Agreements, except supplemental filings that may be required to reflect the
      transactions contemplated by this Agreement.

     

    
      
        
        

      

      
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    (v)  Except
      as
      set forth in Schedule 2.13(b)(v),
      the
      Company has not entered into franchise, development, license, or any similar
      form of agreement for “Miami Subs” restaurants to be operated outside the United
      States.

     

    (vi)  Except
      as
      set forth in Schedule 2.13(b)(iv),
      there
      are no proceedings pending, or to the Knowledge of the Seller, threatened,
      alleging failure to comply with the Registration Regulations of any
      jurisdiction.

     

    (vii)  There
      are
      no independent sales representatives, area developers, agents, employees,
      contractors, brokers or consultants authorized by the Company to offer or sell
      franchises during the period commencing on January 1, 2003, and continuing
      through the date of this Agreement.

     

    (c)  Franchise
      Operations.
      Except
      to the extent it could not reasonably be expected to have a Material Adverse
      Effect:

     

    (i)  Except
      as
      set forth in Schedule 2.13(c)(i),
      the
      Company and its Subsidiaries have not assigned or pledged any Franchise
      Agreement or its or their rights thereunder, and have good and valid title
      to
      such Franchise Agreements, and the Company is the sole holder of each Franchise
      Agreement and the rights of the franchisor thereunder, free and clear of any
      lien or encumbrance of any kind or nature.

     

    (ii)  Except
      as
      set forth in Schedule 2.13(c)(ii),
      the
      Company’s franchise operation manuals do not impose any obligations or set forth
      any requirements that are inconsistent with any of the Franchise Agreements,
      Area Development Agreements and/or UFOCs.

     

    (iii)  Except
      as
      set forth in Schedule 2.13(c)(iii),
      with
      respect to all terminations since January 1, 2003, the Company has complied
      with all applicable state franchise termination, unfair practices, and/or
      relationship Regulations, including, but not limited to, those Regulations’
requirements with respect to the proper notice of default, time to cure, and
      the
      actual termination of any Franchisee or business opportunity operator
      (“Relationship
      Regulations”).

     

    
      
        
        

      

      
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    (iv)  Except
      as
      set forth in Schedule 2.13(c)(iv),
      the
      Company and its Subsidiaries have no currently effective contracts with any
      formal or informal franchisee association or group of franchisees regarding
      any
      Franchise Agreement, Standard Form Franchise Agreement, Standard Form Area
      development Agreement, or franchise operational matter.

     

    (d)  Terminations.
      The
      UFOCs previously delivered to Purchaser contain a complete and accurate list
      of
      the name, last known address and telephone number of all Franchisees whose
      Franchise Agreements and/or Area Development Agreements were terminated,
      cancelled, not renewed, reacquired by the Company or who have otherwise ceased
      to do business during the period commencing on January 1, 2003, and
      continuing through the date of this Agreement.

     

    (e)  Past
      Transfers. Schedule 2.13(e)
      sets
      forth a complete and accurate list of all Franchisees whose Franchise Agreements
      were transferred or sold to a new or existing Franchisee during the period
      commencing on January 1, 2003, and continuing through the date of this
      Agreement.

     

    (f)  Pending
      Sales.
      Except
      as set forth on Schedule 2.13(d),
      there
      are no offers by the Company of Franchise Agreements and/or Area Development
      Agreements which are pending or in progress as of the date of this
      Agreement
      and
      which, to the Knowledge of Seller, are likely to mature into opportunities
      to
      sign a Franchise Agreement and/or an Area Development Agreement.

     

    (g)  Pending
      Transfers.
      Except
      as set forth on Schedule 2.13(g),
      there
      are no transfers of Franchise Agreements proposed to the Company by any
      Franchisee which are pending or in progress as of the date of this
      Agreement.

     

    (h)  Claims
      by Associations.
      Except
      as set forth in Schedule 2.13(h),
      as of
      the date of this Agreement: (i) the Company has not received any claims or
      demands or other notices from any franchisee association or other group
      representing or purporting to represent two or more of the Company’s Franchisees
      regarding any alleged breach or default by the Company of any term or provision
      of any of the Franchise Agreements and/or Area Development Agreements;
      (ii) the Company is not engaged in any dispute of any kind whatsoever with
      any franchisee association or other group representing or purporting to
      represent two or more of the Company’s Franchisees; and (iii) to the
      Knowledge of Seller, there are no arbitrations, mediations or civil actions
      pending or threatened between the Company and any franchisee association or
      other group representing or purporting to represent two or more of the Company’s
      Franchisees.

     

    (i)  Pending
      Franchisee Claims.
      Except
      as set forth in Schedule 2.13(i),
      there
      are no arbitrations, mediations or civil actions pending between the Company
      and
      any of the Franchisees as of the date of this Agreement and, except as set
      forth
      in Schedule 2.13(i),
      the
      Company is not engaged in any formal written dispute with any Franchisee (or
      other party claiming to be a Franchisee of the Company) or any party related
      thereto as of the date of this Agreement.

     

    
      
        
        

      

      
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    (j)  Notices
      of Breach, Default or Termination.
      Except
      as set forth in Schedule 2.13(j),
      there
      are no unresolved written assertions or claims by the Company against any
      current Franchisee for any breach of any of the Franchise Agreements that remain
      uncured.

     

    2.14  Contracts.
       Schedule 2.14
      lists
      the following Contracts to which the Company or any of its Subsidiaries is
      currently a party or is subject to and which have not, as of the date hereof,
      been fully performed:

     

    (a)  any
      agreement (or group of related agreements) for the purchase of inventory,
      products, machinery, equipment or other personal property or real property,
      or
      for the furnishing or receipt of services requiring payments in excess of
      $50,000 per year;

     

    (b)  any
      Contract (or group of related Contracts) for the consignment or lease of
      machinery, equipment or other personal property or real property to or from
      any
      Person requiring payments in excess of $10,000 per year;

     

    (c)  any
      capitalized lease, pledge, conditional sale or title retention
      agreement;

     

    (d)  any
      agreement concerning a partnership, joint venture or investment or relating
      to
      any distributorship or franchise;

     

    (e)  any
      agreement (or group of related agreements) under which it has created, incurred,
      assumed, or guaranteed any Indebtedness for borrowed money or any other
      obligation, or any capitalized lease obligation, or under which there is imposed
      an Encumbrance on any of its assets, tangible or intangible;

     

    (f)  any
      agreement concerning confidentiality or noncompetition or otherwise prohibiting
      the Company from freely engaging in any business or requiring it to exclusively
      sell or purchase to or from any Person;

     

    (g)  any
      Contract with any of its Affiliates (including Seller), officer or director
      or
      any family member of an Affiliate (including Seller), officer or
      director;

     

    (h)  any
      agreement containing commitments of suretyship, guarantee or
      indemnification;

     

    (i)  any
      mortgage, indenture, note, bond or other agreement relating to Indebtedness
      provided by the Company or any of its Subsidiaries;

     

    (j)  any
      agreement involving an Authority;

     

    (k)  any
      collective bargaining agreement;

     

    (l)  any
      agreement for the employment of any individual on a full-time, part-time,
      consulting or other basis providing for payments in excess of $50,000 per
      year;

     

    (m)  any
      agreement providing severance benefits or payments upon the sale of the Company
      or any of its Subsidiaries;

     

    
      
        
        

      

      
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    (n)  any
      agreement under which the consequences of a default or termination could
      reasonably be expected to have a Material Adverse Effect;

     

    (o)  any
      advertising or marketing Contracts or similar agreements;

     

    (p)  Contracts
      providing for “take
      or pay”
or
      similar unconditional purchase or payment obligations;

     

    (q)  Contracts
      relating to the acquisition of any business (whether by merger, sale of stock,
      sale of assets or otherwise) entered into since December 31, 2003;

     

    (r)  any
      other
      agreement (or group of related agreements) the performance of which involves
      consideration in excess of $25,000 per year; or

     

    (s)  any
      commitment to do any of the foregoing.

     

    Seller
      has delivered, or made available, to
      Purchaser a correct and complete copy of each written agreement listed in
Schedule 2.14
      (as
      amended to date) and a written summary setting forth the material terms and
      conditions of each oral agreement referred to in Schedule 2.14.
      With
      respect to each agreement listed or required to be listed in Schedule 2.14:
      (A) the agreement is, with respect to the Company or such Subsidiary,
      legal, valid, binding, enforceable, and in full force and effect in all material
      respects; (B) neither the Company nor any Subsidiary is in and, to the
      Knowledge of Seller, no other party thereto is in, material breach or default,
      and no event has occurred which with notice or lapse of time would constitute
      a
      material breach or default by the Company or any Subsidiary, or permit
      termination, modification, or acceleration under the Contract; and
      (C) neither the Company nor any of its Subsidiaries has, and to the
      Knowledge of Seller no other party has, repudiated any material provision of
      the
      Contract.

     

    2.15  Accounts
      Receivable and Payable.

     

    (a)  Accounts
      Receivable and Payable. Schedule 2.15(a)
      contains
      an accounts receivable and accounts payable aging as of May 31, 2007. The
      accounts receivable of the Company listed in Schedule 2.15(a)
      have
      been generated in the Ordinary Course of Business, reflect valid obligations
      due
      to the Company for the payment of goods or services provided by the business
      and, except as otherwise noted in Schedule 2.15(a)
      and, to
      the Knowledge of Seller, subject to allowances for doubtful accounts as
      reflected on the Most Recent Financial Statements which are determined in
      accordance with GAAP, are collectible in the ordinary course of business
      consistent with past practice. Except as set forth on Schedule 2.15(a),
      all
      accounts payable of the business were incurred in the Ordinary Course of
      Business consistent with past custom and practice and are valid payables for
      products or services purchased by the Company.

     

    (b)  Purchase
      Orders. Schedule 2.15(b)
      is a
      true and complete list as of May 31, 2007, of all purchase orders under
      which Company is or will become obligated to pay any particular
      Person.

     

    
      
        
        

      

      
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    2.16  Insurance. 
      Schedule 2.16
      identifies and contains a description of each insurance policy (including
      policies providing property, casualty, liability, and workers’ compensation
      coverage and bond and surety arrangements) with respect to which the Company
      or
      any of its Subsidiaries is a party, a named insured, or otherwise the
      beneficiary of coverage. All of such insurance policies are issued in the name
      of Seller. All known claims, if any, made against the Company or any of its
      Subsidiaries that are covered by insurance have been disclosed to and, except
      for delivery of standard reservation of rights notices or as set forth in
Schedule 2.16,
      accepted by the appropriate insurance companies and are being defended by such
      appropriate insurance companies and are described in Schedule 2.16.
      Except
      as set forth on Schedule 2.16,
      neither
      the Company nor any of its Subsidiaries has any self-insurance or co-insurance
      programs.

     

    2.17  Litigation.
      Except
      as set forth on Schedule 2.17,
      to the
      Knowledge of Seller there are no (and, during the two years preceding the date
      hereof, there have not been any) Claims pending or threatened against or
      affecting the Company, any of its Subsidiaries, officers, directors, managers
      or
      employees of the Company or any of its Subsidiaries with respect to the business
      or the Company’s proposed business activities which (i) involve a claim for
      money damages in excess of $25,000, (ii) would be reasonably expected to
      have a Material Adverse Effect, or (iii) question the validity of this
      Agreement or impair the ability of Seller or the Company to consummate the
      transactions contemplated hereby.

     

    2.18  Books
      and Records.
      The
      stock records of the Company and its Subsidiaries fairly and accurately reflect
      in all respects the record ownership of all of the outstanding Shares. The
      financial records and books of account of the Company and its Subsidiaries
      are
      complete and accurate in all material respects and have been maintained in
      accordance with GAAP. The minute books of the Company and its Subsidiaries
      are
      complete and accurate in all material respects.

     

    2.19  Employment
      Matters.

     

    (a)  Except
      as
      set out in Schedule 2.19:
      (i) no current officer or employee of the Company or any of its
      Subsidiaries is a party to any employment agreement or union or collective
      bargaining agreement; (ii) no union has been certified or recognized as the
      collective bargaining representative of any of such employees or has attempted
      to engage in negotiations with the Company or any of its Subsidiaries regarding
      terms and conditions of employment; (iii) to the Knowledge of Seller, no
      unfair labor practice charge, work stoppage, picketing or other such activity
      relating to labor matters has occurred or is pending; (iv) to the Knowledge
      of
      Seller no executive or key employee of the Company or any of its Subsidiaries
      or
      any group of employees of the Company or any of its Subsidiaries has any plans
      to terminate employment with the Company; (v) neither the Company nor any
      of its Subsidiaries has any independent contractors who have provided services
      to the Company or any of its Subsidiaries for a period of six consecutive months
      or longer; and (vi) to the Knowledge of Seller, no employee of the Company
      or any of its Subsidiaries is subject to any noncompete, nondisclosure,
      confidentiality, employment, consulting or similar agreements relating to,
      affecting or in conflict with the present or proposed business activities of
      the
      Company or any of its Subsidiaries. To the Knowledge of Seller, there are no
      current or threatened attempts (and there has been no current or threatened
      attempts within the past two years) to organize or establish any labor union
      to
      represent any employees of the Company or any of its Subsidiaries.

     

    (b)  Except
      as
      set out in Schedule 2.19(b),
      to
      the
      Knowledge of Seller no charges, complaints or claims relating to the alleged
      violation of Title VII of the Civil Rights Act of 1964, the Americans with
      Disabilities Act, the Age Discrimination in Employment Act of 1967, the
      Pregnancy Discrimination Act, the New York State Human Rights Law, the
      New York City Human Rights Law, the Family and Medical Leave Act, the Fair
      Labor Standards Act, the New York Labor Law or any other employment law are
      pending or, to the Knowledge of Seller, have been threatened.

     

    
      
        
        

      

      
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    (c)  Either
      the Company or its Subsidiaries, as applicable, has withheld or collected from
      its employees the amount of all Taxes required to be withheld or collected
      therefrom and has paid the same when due to the proper Authority. Schedule 2.19(c)
      correctly sets forth the name and current annual salary of each employee of
      the
      Company and its Subsidiaries and whether any employees are absent from active
      employment, including, but not limited to, leave of absence or disability.
      Schedule 2.19(c)
      contains
      a list of all employees of the Company and its Subsidiaries who are not citizens
      or permanent residents of the United States (together with a listing of each
      such employee’s work authorization status and work authorization expiration
      date).

     

    (d)  Schedule 2.19(d)
      sets
      forth the bonuses paid and reasonably expected to be paid to the officers and
      employees of the Company and its Subsidiaries for the fiscal years ended
      March 27, 2005, March 26, 2006 and March 25, 2007.

     

    (e)  Schedule 2.19(e)
      lists
      all consultants currently hired by the Company and its Subsidiaries, their
      rate
      of pay, the date when they began their assignment with the Company and the
      estimated completion date of their services.

     

    2.20  Employee
      Benefits.

     

    (a)  Schedule 2.20(a)
      lists
      all Employee Benefit Plans (including, for avoidance of doubt, each Benefit
      Arrangement) as to which the Company sponsors, maintains, contributes or is
      obligated to contribute, or under which the Company has or may have any
      liability. With respect to each Employee Benefit Plan of the Company, the
      Company has delivered to Purchaser true, accurate and complete copies of each
      of
      the following: (i) if the plan has been reduced to writing, the plan
      document together with all amendments thereto; (ii) if the plan has not
      been reduced to writing, a written summary of all material plan terms;
      (iii) if applicable, copies of any trust agreements, custodial agreements,
      insurance policies, administrative agreements and similar agreements, and
      investment management or investment advisory agreements; (iv) copies of any
      summary plan descriptions, employee handbooks or similar employee
      communications; (v) in the case of any plan that is intended to be
      qualified under Code Section 401(a), a copy of the most recent
      determination letter or opinion letter, as applicable, from the IRS and any
      related correspondence, and a copy of any pending request for such
      determination; (vi) in the case of any funding arrangement intended to
      qualify as a VEBA under Code Section 501(c)(9), a copy of the IRS letter
      determining that it so qualifies; (vii) in the case of any plan for which
      Forms 5500 are required to be filed, a copy of the three most recently
      filed Forms 5500, with all required schedules attached;
      and
      (viii) in the case of any Employee Benefit Plan that includes a “cash or
      deferred arrangement” as defined in Section 401(k)(2) of the Code, copies
      of the non-discrimination testing results for the three most recent plan
      years.

     

    
      
        
        

      

      
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    (b)  The
      Company has never maintained or contributed to or been required to contribute
      to
      a Multiemployer Plan nor any defined benefit plan subject to Title IV of
      ERISA and Section 412 of the Code. None of the Employee Benefit Plans are
      or ever have been a multiple employer plan as defined in ERISA.

     

    (c)  Each
      of
      the Employee Benefit Plans intended to be qualified under Section 401(a) of
      the Code (i) satisfies in form the requirements of such Section, except to
      the extent amendments are not required by law to be made until a date after
      the
      Closing Date, (ii) has received a favorable determination letter or opinion
      letter, as applicable, from the IRS regarding such qualified status, which
      covers all amendments to the Employee Benefit Plans for which the determination
      letter process is open, and all amendments upon which such favorable letter
      was
      made contingent have been timely executed, and (iii) to the Knowledge of
      Seller has not been operated or amended in a way that could adversely affect
      its
      qualified status. To the Knowledge of Seller, nothing has occurred with respect
      to any Employee Benefit Plan that has subjected or will subject any participant
      in, or beneficiary of, an Employee Benefit Plan with respect to the Company
      to a
      tax under Code Section 4973 for which the Company could be liable. Each
      Employee Benefit Plan with respect to the Company that is a qualified defined
      contribution plan and is intended to be an “ERISA Section 404(c) Plan”
within the meaning of the applicable Department of Labor relations.

     

    (d)  With
      respect to each of the Employee Benefit Plans: (i) each has been
      administered in all material respects in compliance with its terms and with
      all
      Regulations, including, but not limited to, ERISA and the Code; (ii) no
      actions, suits, claims or disputes are pending, or to the Knowledge of Seller
      threatened; (iii) no audits, inquiries, reviews, proceedings, claims, or
      demands are pending with any Authority; (iv) there are no facts which could
      give rise to any material liability in the event of any such investigation,
      claim, action, suit, audit, review, or other proceeding; and (v) all
      material reports, returns and similar documents required to be filed with any
      Authority or distributed to any plan participant have been duly and timely
      filed
      or distributed.

     

    (e)  To
      the
      Knowledge of Seller, each Employee Benefit Plan which is a group health plan
      (within the meaning of section 5000(b)(1) of the Code) complies with and
      has been maintained and operated in all respects in accordance with each of
      the
      requirements of section 4980B of the Code and Part 6 of
      Subtitle B of Title I of ERISA.

     

    (f)  All
      required contributions to, and premium payments on account of, each Employee
      Benefit Plan with respect to the Company are current.

     

    (g)  Except
      as
      required under Section 601 et seq. of ERISA or Section 4980B of the
      Code, no Employee Benefit Plan with respect to the Company provides health
      benefits or life or disability insurance coverage following retirement or other
      termination of employment.

     

    (h)  No
      Employee Benefit Plan that is a group health plan is a self-insured
      plan.

     

    (i)  To
      the
      Knowledge of Seller, no Employee Benefit Plan fiduciary nor any Employee Benefit
      Plan has engaged in any transaction in violation of Section 406 of ERISA or
      any “prohibited transaction” (as defined in section 4975(c)(1) of the Code)
      and there has been no “reportable event” (as defined in Section 4043 of
      ERISA) with respect to any Employee Benefit Plan.

     

    
      
        
        

      

      
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      (j) Each
        individual who is performing services or who has performed services for the
        Company and is or was treated by the Company as an independent contractor
        has
        been appropriately classified as such under all applicable legal requirements,
        and no such individual participates or has the right to participate in any
        Employee Benefit Plan with respect to the Company, even if reclassified as
        an
        employee of the Company.

       

    

    (k)  The
      Company has not entered into any contractual obligation which obligates the
      Company to pay any retention bonuses or otherwise committed to pay any retention
      bonuses.

     

    (l)  Except
      as
      specified on Schedule 2.20(l),
      (i) the Company is not and will not be obligated to pay separation,
      severance, termination or similar benefits as a result of any transaction
      contemplated by this Agreement or any other Transaction Document, nor will
      any
      such transaction accelerate the time of payment or vesting, or increase the
      amount, of any benefit or other compensation due to any individual; and
      (ii) the transactions contemplated by this Agreement and the other
      Transaction Documents will not be the direct or indirect cause of any amount
      paid or payable by the Company being classified as an excess parachute payment
      under Section 280G of the Code.

     

    (m)  Each
      Employee Benefit Plan that is a “nonqualified deferred compensation plan” (as
      defined under Section 409A(d)(1) of the Code) has been operated and
      administered in good faith compliance, in all material respects, with
      Section 409A of the Code and the Treasury Regulations and other
      administrative guidance promulgated thereunder.

     

    2.21  Environmental,
      Health, and Safety Regulations.

     

    (a)  Other
      than as set forth in Schedule 2.21(a),
      to the
      Knowledge of Seller, each of the Company and its Subsidiaries (i) has
      complied, and is in compliance, with all Environmental, Health, and Safety
      Regulations in all material respects (and no Claim has been filed or commenced
      against the Company and its Subsidiaries alleging any such failure to comply),
      (ii) has obtained and been in material compliance with all of the terms and
      conditions of all Permits which are required under the Environmental, Health,
      and Safety Regulations, and (iii) has complied in all material respects
      with all other limitations, restrictions, conditions, standards, prohibitions,
      requirements, obligations, schedules, and timetables which are contained in
      the
      Environmental, Health, and Safety Regulations.

     

    (b)  Other
      than as set forth in Schedule 2.21(b),
      to the
      Knowledge of Seller neither this Agreement nor the consummation of the
      transactions contemplated hereby will result in any obligations for site
      investigation or cleanup, or notification to or consent of government agencies
      or third parties, pursuant to any so-called “transaction-triggered”
or
      “responsible
      transfer”
      Environmental, Health, and Safety Regulations.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (c)  Other
      than as set forth in Schedule 2.21(c),
      none of
      the Company or any of its Subsidiaries has received any notice of violation
      of
      any Environmental, Health, and Safety Regulations from Authority or other third
      party and has not been named as a potentially responsible party with respect
      to
      any release of any Hazardous Substance.

     

    2.22  Transaction
      With Affiliates.
      Except
      as disclosed on Schedule 2.22,
      none of
      the Company’s or its Subsidiaries’ shareholders, directors, officers or
      employees nor any of their respective Affiliates is involved in any business
      arrangement or relationship with the Company or any of its Subsidiaries (whether
      written or oral), except on arms-length terms no less favorable to the Company
      or its Subsidiaries than those which could be obtained with a third party which
      is not an Affiliate, and none of the Company’s or its Subsidiaries’
shareholders, directors, officers or employees nor any of their respective
      Affiliates owns any property or right, tangible or intangible, which is used
      by
      the Company or any of its Subsidiaries.

     

    2.23  Suppliers.
      Schedule 2.23
      sets
      forth a list of the top ten suppliers of the Company and its Subsidiaries (by
      volume of purchases from such suppliers), for the twelve-month period ended
      March 25, 2007. Neither the Company nor any of its Subsidiaries has
      received any written notice from any such supplier to the Company or any of
      its
      Subsidiaries to the effect that, and the Seller has no Knowledge that, such
      supplier will stop, decrease the rate of, or change the terms (whether related
      to payment, price or otherwise) with respect to, supplying materials, products
      or services to the Company (whether as a result of the consummation of the
      transactions contemplated hereby or otherwise) other than changes that may
      be
      made by any such supplier (including, without limitation, changes to prices,
      inventory charges, distributor mark-ups, delivery frequency and credit terms)
      due to the fact that after the Closing the Company will be purchasing products
      on a single-company basis, rather than as part of a larger franchise
      operation.

     

    2.24  FIRPTA.
      Seller
      is not a foreign corporation for the purposes of the Code Sections 871, 882
      or 1445.

     

    2.25  Brokers’
      Fees.
      Neither
      Seller, the Company nor any of its Subsidiaries has any liability or obligation
      to pay any fees or commissions to any broker, finder or agent with respect
      to
      the transactions contemplated by this Agreement based on any arrangement made
      by
      or on behalf of the Seller, the Company or such Subsidiaries.

     

    2.26  Disclosures.
      The
      representations and warranties of the Seller contained in this Agreement
      (including any exhibit or schedule hereto) do not contain any untrue statement
      of a material fact or omit to state a material fact necessary in order to make
      the statements contained herein or therein, in light of the circumstances under
      which they were made and taking into account the express limitations set forth
      in each such representation and warranty, not misleading.

     

    
      
        
        

      

      
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    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    Purchaser
      hereby represents and warrants to Seller as follows:

     

    3.1  Organization
      of Purchaser.
      Purchaser is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Florida, and has all requisite power and
      authority to conduct its business as it is presently being conducted and to
      own
      and lease its properties and assets.

     

    3.2  Authorization;
      Validity.
      Purchaser has all necessary power and authority to enter into this Agreement
      and
      the other Transaction Documents and has taken all action necessary to consummate
      the transactions contemplated hereby and thereby and to perform its obligations
      hereunder and thereunder. This Agreement has been duly executed and delivered
      by
      Purchaser and is a legal, valid and binding obligation of Purchaser enforceable
      against Purchaser in accordance with its terms, except
      as
      the enforceability thereof may be limited by bankruptcy, insolvency or other
      laws relating to or affecting creditors’ rights.

     

    3.3  No
      Conflict or Violation.
      Neither
      the execution and delivery of this Agreement nor the other Transaction
      Documents, nor the consummation of the transactions contemplated hereby and
      thereby, will result in:

     

    (a)  a
      violation of or a conflict with any provision of the organizational documents
      of
      Purchaser;

     

    (b)  a
      breach
      of, a default under, giving any third party the right to modify, terminate
      or
      accelerate any obligation under, any term or provision of any Contract to which
      Purchaser is a party or by which its assets are bound; or

     

    (c)  a
      violation by Purchaser in any material respect of, or require any authorization,
      consent, approval, exemption, notice, filing or other action due to or required
      from, or filing with, any Authority pursuant to any Regulation or
      Order.

     

    except,
      in the case of clauses (b) and (c), where the occurrence of such event or
      failure to obtain such authorization, consent, or similar approval will not
      result in a Material Adverse Effect.

     

    3.4  Consents
      and Approvals.
      No
      consent, approval or authorization of, or declaration, filing or registration
      with, any Authority, or any other Person, is required to be made or obtained
      by
      Purchaser in connection with the execution, delivery and performance of this
      Agreement and the consummation of the transactions contemplated hereby, except
      where the failure to obtain such consents, approvals or authorizations, or
      make
      such declarations, filings or registrations, would not in the aggregate impair
      the ability of Purchaser to perform its obligations hereunder or result in
      a
      Material Adverse Effect.

     

    3.5  Certain
      Litigation.
      There
      is no action, proceeding or investigation pending to which Purchaser is a party
      or, to Purchaser’s knowledge, threatened, against Purchaser, which questions the
      validity of this Agreement or impairs the ability of Purchaser to consummate
      the
      transactions contemplated hereby.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    3.7  Brokers’
      Fees. The Purchaser has no liability or obligation to pay any fees or
      commissions to any broker, finder or agent with respect to the transactions
      contemplated by this Agreement based on any arrangement made by or on behalf
      of
      the Purchaser.

     

    3.8  Disclosures.
      The
      representations and warranties of the Purchaser contained in this Agreement
      (including any exhibit or schedule hereto) do not contain any untrue statement
      of a material fact or omit to state a material fact necessary in order to make
      the statements contained herein or therein, in light of the circumstances under
      which they were made and taking into account the express limitations set forth
      in each such representation and warranty, not misleading.

     

    ARTICLE
      IV

    COVENANTS

     

    4.1  Further
      Assurances.
      On and
      after the Closing Date, Seller and Purchaser will take all appropriate action
      and execute (or cause to be executed) all documents, instruments or conveyances
      of any kind which may be reasonably necessary or advisable to carry out any
      of
      the provisions hereof.

     

    4.2  Lease
      of Office Space.
      Promptly following the Closing Date, the parties shall enter into the Corporate
      Headquarters Lease Agreement (the “Corporate
      Headquarters Lease Agreement”).
      The
      Corporate Headquarters Lease Agreement will provide that the Seller will
      sublease to Purchaser the Company’s current corporate headquarters (located at
      6300 NW 31st Avenue,
      Ft. Lauderdale, Florida) on the following terms: (a) Seller will
      sublease the building to Purchaser, excluding (i) Jerry Woda’s current
      office, Lori March’s old office and the adjacent assistant work spaces (which
      space shall be retained and occupied by Seller (the “Retained Office Space”),
      (ii) the portion of the building currently subleased to a non-affiliated
      third party (which space shall remain so subleased until such time as Seller
      shall determined), and (iii) the building’s common areas (e.g., reception,
      conference room, kitchen and bath rooms), which shall be shared by Seller,
      Company and Sellers’s subtenant); (b) the term of the Corporate
      Headquarters Lease Agreement will be one year following the Closing of the
      Transaction, during which period no charge for rent will be made by Seller.
      Any
      extension of such sublease shall be subject to mutual approval of Seller and
      Purchaser, it being understood that: (i) neither Party will have any
      obligation to extend such sublease; and (ii) if extended, Seller will
      expect to receive market rental rates from Purchaser; and (c) Purchaser
      shall be responsible for a proportionate share of real estate taxes, utilities
      and all common area/maintenance expenses at all times during such lease. During
      the term of such lease, Purchaser will be entitled to the use of the existing
      telephone system, personal computers and local computer network (subject to
      Schedules 2.12(d) and 4.6 and the terms of Section 4.6) and office furniture
      on
      an “as is, where is” basis. 

     

    
      
        
        

      

      
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    4.3  Tax
      Matters.

     

    (a)  Elections,
      Amendments and Refunds.
      (i) Except as otherwise provided, the Purchaser shall not make any tax
      elections with regard to the Company or any of its Subsidiaries which may impact
      the Company’s or any Subsidiary’s Taxes with respect to tax periods (or portions
      thereof) ending on or prior to the Closing Date, or the transactions
      contemplated by this Agreement, including, without limitation, a change in
      the
      Company’s or any Subsidiary’s method of accounting, without the express written
      consent of the Seller. The Purchaser agrees to indemnify and defend the Seller
      and hold the Seller harmless from and against any and all Taxes (including
      any
      Taxes with respect to any taxable period, or portion thereof, ending on or
      prior
      to the Closing Date) that are imposed upon the Company or any of its
      Subsidiaries as a result of such election. (ii) The Purchaser shall not,
      and shall not cause the Company or any of its Subsidiaries, to amend any Tax
      Return for any tax period (or portion thereof) ending on or before the Closing
      Date without the express written consent of the Seller. (iii) Any income
      tax refunds that are received by the Purchaser or the Company or any of its
      Subsidiaries and any amounts credited against income tax to which the Purchaser
      or the Company or any of its Subsidiaries become entitled, that relate to the
      tax periods, or portions thereof, ending on or before the Closing Date shall
      be
      for the account of the Seller, and the Purchaser shall pay over to the Seller
      any such refund or the amount of any such credit within ten (10) days after
      receipt or entitlement thereto. (iv) Purchaser shall not, and shall cause
      Company not to, take any action with respect to Taxes, which would increase,
      directly or indirectly, the amount of Taxes for which the Seller would have
      an
      obligation to indemnify the Purchaser pursuant to this Section 4.3, or
      which would increase the Seller’s Tax liability with respect to the transactions
      contemplated herein.

     

    (b)  Seller
      shall indemnify and hold Purchaser Indemnitees harmless from and against and
      shall reimburse each Purchaser Indemnitee for, any and all income Taxes
      incurred, suffered or accrued at any time by any Purchaser Indemnitee arising
      out of or attributable to:

     

    (i)
      any
      liability for the Taxes of Company and any of its Subsidiaries for any taxable
      period or portion thereof ending on or before the Closing Date (excluding any
      Taxes attributable to any action taken by the Purchaser at any time after the
      Closing, including without limitation, on the Closing Date) but only to the
      extent that the amount of such Taxes exceeds the reserve for Taxes shown on
      the
      Company’s Most Recent Financial Statements;

     

    (ii)
      all
      liabilities of the Company and any of its Subsidiaries as a result of the
      applicability of Treas. Reg. §1.1502-6 or otherwise for income Taxes of any
      other corporation affiliated with the Company and any of its Subsidiaries on
      or
      prior to the Closing Date but only to the extent that the amount of such Taxes
      exceeds the reserve for Taxes shown on the Company’s Most Recent Financial
      Statements; and

     

    (iii)
      any
      misrepresentation or breach of any representation, warranty or obligation set
      forth in Section 2.11.

     

    (c)  In
      the
      case of income Taxes that are payable with respect to a Straddle
      Period:

     

    (i)  For
      all
      taxable periods ending on or before the Closing Date, Seller shall cause the
      Company to join in Seller’s consolidated income Tax Returns and, in
      jurisdictions requiring separate reporting from Seller and/or the Company,
      to
      file separate state and local Tax Returns. Seller shall pay all Taxes of the
      Company that may be due after the Closing Date that are allocable to the period
      prior to and including the Closing Date. In order to appropriately apportion
      any
      of these Taxes relating to a period that includes (but that would not but for
      this section, close on) the Closing Date, the parties hereto will, to the extent
      permitted by applicable law, elect with the relevant taxing authorities to
      treat
      for all purposes the Closing Date as the last day of the taxable period of
      Company and its Subsidiaries.

     

     

    
      
        
        

      

      
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    (ii)  The
      Purchaser shall cause the Company to file Tax Returns for all periods other
      than
      periods ending on or before the Closing Date. If any Taxes shown as due on
      such
      Tax Returns are indemnifiable by the Seller in accordance with
      Section 7.2(b) hereof, (A) such Tax Returns shall be prepared in a
      manner consistent with prior practice of the Company unless otherwise required
      by applicable laws; (B) the Purchaser shall provide the Seller with copies
      of each such Tax Return at least 30 days prior to the due date for filing such
      Tax Return; and (C) the Seller shall have the right to review and comment
      on each such Tax Return for 15 days following the receipt thereof and the
      Purchaser shall accept any changes reasonably requested by the
      Seller.

     

    (iii)  the
      portion of any such Tax that is allocable to the portion of the taxable period
      ending on the Closing Date shall be, (A) in the case of Taxes other than
      property Taxes determined under the closing of the books method and (B) in
      the case of property Taxes imposed on a periodic basis with respect to the
      assets of the Company or any of its Subsidiaries, deemed to be the amount of
      such Taxes for the entire Straddle Period (after giving effect to amounts which
      may be deducted from or offset against such Taxes with respect to such periods
      under the relevant Tax law) (or in the case of such Taxes determined on an
      arrears basis, the amount of such Taxes for the immediately preceding period),
      multiplied by a fraction the numerator of which is the number of days in the
      Straddle Period ending on the Closing Date and the denominator of which is
      the
      number of days in the entire Straddle Period. Any credit or refund resulting
      from an overpayment of Taxes for a Straddle Period shall be prorated based
      upon
      the method employed in this paragraph (b). In the case of any Tax based
      upon or measured by capital (including net worth or long-term debt) or
      intangibles, any amount thereof required to be allocated under this
      Section 4.3 shall be computed by reference to the level of such items on
      the Closing Date.

     

    (d)  The
      Parties hereto agree to treat any indemnity payment as an adjustment to the
      Purchase Price or as a capital contribution, except as otherwise required by
      Regulation. The limitations on indemnification contained in Article
      V
      shall
      not be applicable to this Section 4.3.

     

    (e)  Tax
      Periods Ending on or Before the Closing Date.
      Seller
      shall prepare or cause to be prepared and file or cause to be filed all Tax
      Returns for the Company (or any extensions for the filing thereof) for all
      periods ending on or prior to the Closing Date or for which the date of
      measurement for such Tax occurs on or prior to the Closing Date which are filed
      after the Closing Date. All such Tax Returns shall be prepared in accordance
      with past practice. Seller shall permit Purchaser to review and comment on
      each
      such Tax Return prior to filing.

    
      
        
        

      

      
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    (f)  Cooperation
      on Tax Matters.
      Seller
      and Purchaser shall cooperate fully, as and to the extent reasonably requested
      by the other Party, in connection with the filing of Tax Returns pursuant to
      this Section 4.3 and any audit, litigation or other proceeding with respect
      to Taxes; provided, however, that to the extent that such audit, litigation
      or
      other proceeding relates to periods ending on or before the Closing Date or
      could result in an indemnification obligation of the Seller, then the Seller
      shall have the right to control the defense or settlement of such audit,
      litigation or proceeding. Such cooperation shall include signing any Tax Return,
      amended Tax Returns, Claims or other documents necessary to settle any Tax
      controversy, the retention and (upon the other party’s request) the provision of
      records and information which are reasonably relevant to any such Claim and
      making employees available on a mutually convenient basis to provide additional
      information and explanation of any material provided hereunder. The Company
      and
      the Seller agree (A) to retain all books and records with respect to Tax
      matters pertinent to Company and the Affiliated Group relating to any taxable
      period beginning before the Closing Date until the expiration of the statute
      of
      limitations (and, to the extent notified by the Purchaser or the Seller, any
      extensions thereof) of the respective taxable periods, and to abide by all
      record retention agreements entered into with any Taxing Authority, and
      (B) to give the other party reasonable written notice prior to
      transferring, destroying or discarding any such books and records and, if the
      other party so requests, the Company or the Seller, as the case may be, shall
      allow the other party to take possession of such books and records.

     

    (g)  Tax
      Sharing Agreements.
      Any tax
      sharing agreement between Seller and any of its subsidiaries and the Company
      is
      terminated as of the Closing Date and shall have no further force and effect
      for
      any taxable year (whether the current year, a future year or a past
      year).

     

    (h)  The
      Purchaser and the Seller further agree, upon request, to use their best efforts
      to obtain any certificate or other document from any governmental authority
      or
      any other Person as may be necessary to mitigate, reduce or eliminate any Tax
      that could be imposed (including, but not limited to, with respect to the
      transactions contemplated hereby).

     

    (i)  Indemnification
      Limitations:
      (i) If the amount with respect to which any claim is made under this
      Section 4.3 (an “Indemnity Claim”) gives rise to a currently realizable Tax
      Benefit to the party making the claim (or would give rise to such a benefit
      if
      the party making the claim were a taxable entity), the indemnity payment shall
      be reduced by the amount of the Tax Benefit available to the party making the
      claim. To the extent such Indemnity Claim does not give rise to a currently
      realizable Tax Benefit, if the amount with respect to which any Indemnity Claim
      is made gives rise to a subsequently realized Tax Benefit to the party that
      made
      the claim, such party shall refund to the indemnifying party the amount of
      such
      Tax Benefit when, as and if realized. For the purposes of this Agreement, any
      subsequently realized Tax Benefit shall be treated as though it were a reduction
      in the amount of the initial Indemnity Claim, and the liabilities of the parties
      shall be redetermined as though both occurred at or prior to the time of the
      indemnity payment. For purposes of this paragraph, a “Tax Benefit” means an
      amount by which the Tax liability of the party (or group of corporations
      including the party) is reduced (including, without limitation, by deduction,
      reduction of income by virtue of increased tax basis or otherwise, entitlement
      to refund, credit or otherwise) plus any related interest received from the
      relevant taxing authority. Where a party has other losses, deductions, credits
      or items available to it, the Tax Benefit from any losses, deductions, credits
      or items relating to the Indemnity Claims shall be deemed to be realized only
      after the utilization of such other losses, deductions, credits or items. For
      the purposes of this paragraph, a Tax Benefit is “currently realizable” to the
      extent it can be reasonably anticipated that such Tax Benefit will be realized
      in the current taxable period or year or in any tax return with respect thereto
      (including through a carryback to a prior taxable period) or in any taxable
      period or year prior to the date of the Indemnity Claim.

    
      
        
        

      

      
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    4.4  Employee
      Matters.
      The
      Parties hereby agree that for a period of one year from the date of Closing,
      (i) the Procurement Personnel will report to a designate of each of Company
      and Seller and (ii) all decisions regarding the compensation, retention,
      hiring, or termination of such Procurement Personnel shall be made jointly
      by
      Seller and the Company.

     

    

    4.5  Co-Branding.

     

    (a)  Existing
      Co-Branded Locations.
      Schedule 4.5(a) sets forth the Miami Subs locations existing as of the
      Closing Date which contain “Nathan’s Famous” and/or “Arthur Treacher’s” and/or
“Kenny Rogers Roasters” co-branded menu-line extensions (the “Existing
      Co-Branded Locations”). From and after the Closing Date, each such co-branded
      menu-line extension shall be permitted to remain in operation within the
      Existing Co-Branded Location concerned, subject to the following:

     

    (i)  The
      “Miami Subs” concept remains the primary or “host” concept at each such Existing
      Co-Branded Location at all times, and the extent to which any of the co-branded
      menu-line extensions are featured, advertised and/or promoted may not be
      substantially increased;

     

    (ii)  The
      franchisee or operator at each such Existing Co-Branded Location shall comply
      at
      all times with the terms and conditions of the license or co-branding agreement
      pursuant to which such co-branding rights were granted;

     

    (iii)  Any
      new
      franchisee or operator of any Existing Co-Branded Location shall be subject
      to
      Seller’s prior written approval (not to be unreasonably withheld) and shall be
      required, as a condition of such approval, to execute a co-branding agreement
      in
      a form reasonably satisfactory to Seller;

     

    (iv)  No
      royalties shall be due to Seller in connection with such continued sale of
      “Kenny Rogers Roasters” products; however, Purchaser/Company shall be obligated
      to pay to NFI (or its appropriate affiliate) thirty-five (35%) percent of all
      royalties contractually due from Miami Subs franchisees/operators in connection
      with such continued sale of “Nathan’s Famous” and “Arthur Treacher’s”
products;

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (v) Purchaser/Miami
      Subs shall have no obligation to continue to operate any co-branded menu line
      extension within any Existing Co-Branded Location, it being understood, however,
      that to the extent that any co-branded menu line extension continues to operate
      at any Existing Co-Branded Location (or any new “Miami Subs” location as
      described below), the menu of such co-branded menu line extension may not be
      modified from the menu as of the Closing Date (except that Purchaser/Miami
      Subs
      shall have the right to remove the hamburger from the “Nathan’s Famous”
menu).

     

    (b)  New
      Locations
      - In
      connection with any new “Miami Subs” locations Purchaser desires to develop
      after the Closing Date, Seller acknowledges that it will grant the right to
      the
      franchisee/operator of such location to include “Nathan’s Famous” and “Arthur
      Treacher’s” (but not “Kenny Rogers Roasters”) co-branded menu line extensions,
      subject to the following:

     

    

    (i)  The
      identity of the franchisee/operator, and the proposed location of the new
      restaurant shall both be subject to Seller’s prior written approval, which may
      be withheld in Seller’s absolute discretion; and

     

    

    (ii)  If
      approved pursuant to 4.5(b)(i) above: (A) the franchisee/operator of the new
      restaurant will be required to sign a license agreement with Seller (or its
      appropriate affiliate) pursuant to which Seller will be entitled to a fee of
      $5,000 per co-branded concept installed; (B) the franchisee/operator
      concerned will be required to pay to Purchaser/Miami Subs the same royalty
      on
      all sales of all of the co-branded menu items as it pays on “Miami Subs” menu
      items (but in no event less than 4% of net sales); and (C) Purchaser/Miami
      Subs shall pay Seller 35% of all such royalties due pursuant to 4.5(b)(ii)(B)
      above.

     

    4.6  Accounting
      Functions.
      From and
      after the Closing Date through the date that is six months from the Closing
      Date, Seller will provide Purchaser with the accounting services listed on
      Schedule 4.6 (the “Accounting Services”), for a monthly fee of $5,000;
provided,
      however,
      that
      Purchaser may terminate this arrangement at any time upon 30 days written notice
      to Seller. The monthly fee for the Accounting Services shall be paid to Seller
      on the Closing Date and on each monthly anniversary thereof during such
      six-month period.

     

    4.7  Procurement.

    (a)  From
      and
      after the Closing Date through the date that is one year from the Closing Date,
      Seller and Purchaser agree to share all Procurement Costs with Seller
      responsible for 45% and Company responsible for 55%. The Company shall continue
      to pay the Procurement Personnel in accordance with the normal payroll practices
      of the Company. Seller shall reimburse the Company for 45% of such payroll
      costs, less the cost of the monthly license fee for the Procurement Software,
      which reimbursement shall be made no later than the fifteenth day of the next
      succeeding month. Right of termination with notice of 60 days to
      NF.

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (b)  Unless
      mutually agreed in writing, for a period of one (1) year following the
      Closing, neither Seller nor Purchaser shall terminate, amend, modify, alter
      or
      otherwise change any manufacturing, supply and/or distribution agreement
      pursuant to which both the “Nathan’s Famous” and “Miami Subs” restaurant systems
      are currently jointly covered. Additionally, neither Seller nor Purchaser shall
      have any liability for purchases and/or distribution of food or other items
      which relate to the other’s restaurant system. In addition, if Purchaser
      determines to discontinue the use of any item specific to the “Miami Subs”
system which is already in inventory, Seller will have no liability for any
      costs relating thereto and Purchaser shall hold Seller harmless in connection
      therewith.

     

    4.8  Use
      of
      Name.
       Seller agrees that from and after the Closing they will not use the name
“Miami Subs” or any derivations thereof (or any name deceptively similar to such
      names in any business enterprise or in any commercial relationship

     

    4.9  Contract
      Reaffirmation.
      Purchaser acknowledges that Company is a party to a beverage supply agreement
      with Coca Cola North American Fountain (“Coke”) dated May 25, 2000 (the
“Coke Agreement”). Purchaser and Company agree that (i) they will be solely
      responsible for any sums required to be paid or re-paid to Coke pursuant to
      the
      Coke Agreement and (ii) they will indemnify Seller for any liability
      arising as a result of Company failing to perform under the Coke
      Agreement.

     

    4.11  
       Post-Closing
      Checks Received by Seller.
      Seller
      shall promptly forward to Purchaser any checks made payable to the Company
      or
      one of its Subsidiaries received by Seller after the Closing Date.

     

    4.12    Post-Closing
      Rebates.
      Any
      rebates received by the Seller after the Closing Date which are derived from
      the
      purchase of products by Company’s franchisees shall be paid to Company, except
      that Company shall have no right to receive any portion of rebates derived
      from
      the sale to Company’s franchisees of Nathan’s Famous, Arthur Treacher’s and/or
      Kenny Rogers Roasters menu items. In addition, to the extent that Company or
      Purchaser receives any rebates derived from the purchase of any products by
      restaurants in the Nathan’s Famous restaurant system, Company and/or Purchaser
      shall pay such amounts to Seller. 

    

     

    ARTICLE
      V

    INDEMNIFICATION

     

    5.1  Survival,
      Representations and Warranties.
      The
      respective representations and warranties of Seller and Purchaser contained
      herein or in any certificates or other documents delivered at the Closing shall
      not be deemed waived or otherwise affected by any investigation made by any
      Party hereto or any Party’s officers, directors, managers, stockholders,
      employees or agents. The representations and warranties provided for in this
      Agreement shall survive for eighteen (18) months beyond the Closing Date,
      except that the representations and warranties set forth in:
      (i) Section 2.5
      (Capitalization), shall survive indefinitely; and
      (ii) Sections 2.11
      (Tax
      Matters) and 2.21
      (Environmental Matters) shall survive for a period of six (6) years. The
      provisions of this Section 5.1
      shall
      not limit any covenant or agreement of the Parties hereto which, by its terms,
      contemplates performance after the Closing Date and any breach of such covenant
      or agreement shall not be subject to the Loss Threshold or Cap (as such terms
      are hereinafter defined). Notwithstanding the foregoing, any representation
      or
      warranty in respect of which indemnity may be sought under
      Sections 5.2
      and
5.3
      below,
      and the indemnity with respect thereto, shall survive the time at which it
      would
      otherwise terminate pursuant to this Section 5.1
      if
      notice of the inaccuracy or breach thereof giving rise to such right of
      indemnity shall have been given to the Party against whom such indemnity may
      be
      sought prior to such time (regardless of when the Losses in respect thereof
      may
      actually be incurred) in good faith and such extension of the survival period
      shall be limited solely to the items expressly specified in such
      notice.

    
      
        
        

      

      
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    5.2  Indemnification
      Obligations of Seller.

     

    (a)  Seller
      agrees to indemnify Purchaser and its Affiliates (including the Company after
      the Closing Date), stockholders, officers, directors, employees, agents,
      representatives and successors and assigns (collectively, the “Purchaser
      Indemnitees”)
      in
      respect of, and save and hold each Purchaser Indemnitee harmless against and
      pay
      on behalf of or reimburse each Purchaser Indemnitee as and when incurred, any
      Losses which any Purchaser Indemnitee suffers, sustains or becomes subject
      to as
      a result of or by virtue of:

     

    (i)  any
      facts
      or circumstances which constitute a misrepresentation or breach by Seller of
      any
      representation or warranty set forth in this Agreement (including any Schedule),
      or any certificate delivered by Seller pursuant to this Agreement; provided
      however, that Seller is given written notice of such Loss during the applicable
      survival period on Section 5.1 above; 

     

    (ii)  any
      nonfulfillment or breach of any covenant of Seller set forth in this Agreement;
      and 

     

    (iii)  any
      liability in excess of $10,000 in respect of the litigation entitled
Queenster
      Madison, personal Representative of the Estate of Terry Madison v. Hollywood
      Subs, Inc. and Miami Subs Corporation, Case No. 06-011404 CACE
      12.

     

    (b)  Notwithstanding
      the foregoing, Seller shall not be required to indemnify Purchaser Indemnitees
      in respect of any Losses any Purchaser Indemnitee suffers, sustains or becomes
      subject to as a result of or by virtue of any of the occurrences referred to
      in
      Section 5.2(a)
      unless
      the aggregate amount of all such Losses exceeds $100,000 (the “Loss
      Threshold”);
      provided,
      however,
      that in
      the event that the Loss Threshold is exceeded, Seller shall be required to
      indemnify Purchaser Indemnitees for 30% of the first $100,000 of Losses;
provided
      further, however, that
      in
      no event shall Seller be obligated to indemnify Purchaser Indemnitees for such
      Losses in excess of $450,000 (the “Cap”).
      The Loss
      Threshold and Cap shall not apply to the Seller’s obligation to provide
      indemnification pursuant to Section 5.2(a). Notwithstanding the above, the
      Cap
      shall not apply if any liability requiring indemnification was caused by the
      fraud or intentional misrepresentations or intentional omissions of Seller,
      its
      officers, directors, employees and agents.

    
      
        
        

      

      
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    (c)  Notwithstanding
      anything to the contrary set forth in this Agreement, nothing in this Agreement
      shall limit or restrict any of Purchaser Indemnitees’ right to maintain or
      recover any amounts in connection with any action or claim based upon fraud
      or
      intentional misrepresentation.

     

    5.3  Indemnification
      Obligation of Purchaser.

     

    (a)  Purchaser
      agrees to indemnify Seller and each of its Affiliates, stockholders, officers,
      directors, employees, agents, representatives and successors and assigns
      (collectively, the “Seller
      Indemnitees”)
      in
      respect of, and save and hold Seller Indemnitee harmless against and pay on
      behalf of or reimburse each Purchaser Indemnitee as and when incurred, any
      Losses which Seller Indemnitee suffers, sustains or becomes subject to as a
      result of or by virtue of:

     

    (i)  any
      facts
      or circumstances which constitute a misrepresentation or breach by Purchaser
      of
      any representation or warranty set forth in this Agreement or any certificate
      delivered by Purchaser pursuant to this Agreement; provided,
      however,
      that
      Purchaser is given written notice of such Loss during the applicable survival
      period specified in Section 5.1
      above;

     

    (ii)  any
      nonfulfillment or breach of any covenant or agreement of Purchaser set forth
      in
      this Agreement; or

     

    (iii) any
      Hazardous Substances that Purchaser stores, treats, generates, transports or
      releases at any property previously or currently owned or operated by the
      Company or any of its Subsidiaries, including, without limitation, the Real
      Property, or at any off-site property in violation of any Environmental, Health,
      and Safety Regulations.

     

    (b)  Notwithstanding
      the foregoing, Purchaser shall not be required to indemnify Seller Indemnitees
      in respect of any Losses any of Seller Indemnitees suffers, sustains or becomes
      subject to as a result of or by virtue of any of the occurrences referred to
      in
      Section 5.3(a)
      above
      unless the aggregate amount of all such Losses exceeds the Loss Threshold;
      provided,
      however,
      that in
      such event, Purchaser shall be responsible for the full amount of all such
      Losses from the first dollar of Losses suffered; provided
      further, however,
      that in
      no event shall Purchaser be obligated to indemnify Seller Indemnitees for such
      Losses in excess of the Cap. Notwithstanding the above, the Cap shall not apply
      if any liability requiring indemnification was caused by the fraud or
      intentional misrepresentations or intentional omissions of Purchaser, its
      officers, directors, employees and agents.

     

    5.4  Indemnification
      Procedures.

     

    (a)  Except
      as
      provided in subsection (e) below, any Person making a claim for
      indemnification pursuant to Section 5.2
      or
5.3
      above
      (each, an “Indemnified
      Party”)
      must
      give the Party from whom indemnification is sought (an “Indemnifying
      Party”)
      written notice of such claim promptly after the Indemnified Party receives
      any
      written notice of any Claim against or involving the Indemnified Party by any
      Person or otherwise discovers the liability, obligation or facts giving rise
      to
      such claim for indemnification; provided,
      however,
      that the
      failure to notify or delay in notifying an Indemnifying Party will not relieve
      the Indemnifying Party of its obligations pursuant to Section 5.2
      or
5.3
      above,
      as applicable, except where such failure actually and materially harms the
      Indemnifying Party.

    
      
        
        

      

      
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    (b)  With
      respect to the defense of any Claim against or involving an Indemnified Party
      for which indemnification is provided in Section 5.2
      or
5.3
      above,
      at its option an Indemnifying Party may appoint as lead counsel of such defense
      any nationally recognized and reputable legal counsel selected by the
      Indemnifying Party. The Indemnifying Party shall not be entitled to assume
      control of such defense (unless otherwise agreed to in writing by the
      Indemnified Party), and shall pay the reasonable fees and expenses of counsel
      retained by the Indemnified Party, if the Indemnifying Party has not promptly
      acknowledged and admitted in writing to the Indemnified Party that all damages,
      losses, claims, liabilities, charges, suits, penalties, costs and expenses
      relating to such Claim are Losses for which the Indemnifying Party is solely
      liable pursuant hereto.

     

    (c)  If
      the
      Indemnifying Party is controlling the defense, the Indemnified Party will be
      entitled to participate in the defense of such claim and to employ counsel
      of
      its choice for such purpose at its own expense (other than any fees and expenses
      of such separate counsel that are incurred prior to the date the Indemnifying
      Party effectively assumes control of such defense which, notwithstanding the
      foregoing, shall be borne by the Indemnifying Party); provided,
      however,
      that the
      Indemnifying Party shall pay all of the fees and expenses of such separate
      counsel if: (i) the Indemnified Party has been advised by counsel that a
      reasonable likelihood exists of a conflict of interest between the Indemnifying
      Party and the Indemnified Party; (ii) the Indemnifying Party shall have
      authorized in writing the hiring of such separate counsel by the Indemnified
      Party; or (iii) the Indemnifying Party shall not have employed counsel
      reasonably satisfactory to the Indemnified Party).

     

    (d)  The
      Indemnifying Party must obtain the prior written consent of the Indemnified
      Party (which the Indemnified Party will not unreasonably withhold) prior to
      entering into any settlement of such Claim or ceasing to defend such Claim,
      provided,
      however,
      that any
      such settlement shall provide for the full and final release of all claims
      against each Indemnified Party.

     

    5.5  Payment.
      Upon
      the determination of liability under Article
      V
      or
      otherwise between the Parties or by final judicial proceeding, the appropriate
      Party shall pay to the other, as the case may be, within ten (10) days
      after such determination, the amount of any claim for indemnification made
      hereunder. Any such indemnification payments shall include interest at the
      Applicable Rate calculated on the basis of the actual number of days elapsed
      over 360, from the date any such Loss is suffered or sustained to the date
      of
      payment. In the event that the Indemnified Party is not paid in full for any
      such claim pursuant to the foregoing provisions promptly after the other Party’s
      obligation to indemnify has been determined in accordance herewith, it shall
      have the right, notwithstanding any other rights that it may have against any
      other Person, to setoff the unpaid amount of any such claim against any amounts
      owed by it under any instrument or agreement entered into pursuant to this
      Agreement or otherwise or, if Seller is the Indemnifying Party, by setoff
      against amounts owed pursuant to the Note in accordance with the terms thereof.
      Upon the payment in full of any claim, either by setoff or otherwise, the entity
      making payment shall be subrogated to the rights of the Indemnified Party
      against any Person with respect to the subject matter of such
      claim.

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    5.6  Indemnity
      Calculations.

     

    The
      amount of indemnity payable under Section 5.2
      or
      Section 5.3
      shall be
      treated by Purchaser and Seller as an adjustment to the Purchase Price, and
      shall be calculated giving effect to any proceeds actually received from
      insurance policies covering the Loss that is the subject of the claim for
      indemnity, net of any increase in premium as a result of such
      claim.

     

    ARTICLE
      VI

    MISCELLANEOUS

     

    6.1  Definition.
       Capitalized terms used in this Agreement shall have the meanings set forth
      below:

     

    “Affiliate”
means,
      with respect to any Person, any other Person who directly or indirectly, through
      one or more intermediaries, controls, is controlled by, or is under common
      control with, such Person. The term “control” means the possession, directly or
      indirectly, of the power to direct or cause the direction of the management
      and
      policies of a Person, whether through the ownership of voting securities, by
      Contract or otherwise, and the terms “controlled” and “controlling” have
      meanings correlative thereto.

     

    “Affiliated
      Group”
means
      any affiliated group within the meaning of Code Section 1504 (or any
      similar group defined under a similar provision of state, local or foreign
      law).

     

    “Agreement”
has
      the
      meaning specified in the preamble to this Agreement.

     

    “Applicable
      Rate”
means
      the prime rate of interest reported from time to time in The Wall
      Street Journal.

     

    “Area
      Development Agreements”
has
      the
      meaning specified in Section 2.13(a)
      of this
      Agreement.

     

    “Austin
      Personal Guaranty”
has
      the
      meaning specified in Section 1.1(c) of this Agreement.

     

    “Authority”
means
      any governmental or administrative body, agency, commission, board, arbitrator
      or authority, any court or judicial authority, whether international, national,
      federal, state or local or any third party accreditation
      organization.

     

    “Benefit
      Arrangement”
means
      any employment, consulting, severance or other similar Contract, arrangement
      or
      policy and each plan, arrangement, program, agreement or commitment providing
      for insurance coverage (including any self-insured arrangements), workers’
compensation, disability benefits, retirement benefits, life, health, disability
      or accident benefits (including, without limitation, any “voluntary employees’
beneficiary association” as defined in the Code), compensation, profit-sharing,
      bonuses, stock options, stock appreciation rights, stock purchases or other
      forms of incentive compensation or post-retirement insurance, compensation
      or
      benefits which (A) is not an Employee Welfare Benefit Plan, an Employee
      Pension Benefit Plan or Multiemployer Plan, (B) is maintained or
      contributed to by or required to be maintained or contributed to by the Company,
      or (C) covers any current or former employee of the Company.

    
      
        
        

      

      
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    “Cap”
has
      the
      meaning specified in Section 5.2(b)
      of this
      Agreement.

     

    “Claim”
means
      any action (at law or in equity), claim, charge, audit, lawsuit, demand, suit,
      inquiry, hearing, investigation, Authority review, litigation, proceeding,
      arbitration, appeals or other dispute, whether civil, criminal, administrative
      or otherwise.

     

    “Closing”
has
      the
      meaning specified in Section 1.2
      of this
      Agreement.

     

    “Closing
      Date”
has
      the
      meaning specified in Section 1.2
      of this
      Agreement.

     

    “Co-Branding”
has
      the
      meaning specified in Section 4.5
      of this
      Agreement.

     

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

     

    “Company”
has
      the
      meaning specified in the preamble to this Agreement.

     

    “Confidential
      Information”
means
      all information of a confidential or proprietary nature (whether or not
      specifically labeled or identified as “confidential”), in any form or medium,
      that relates to the business, products, financial condition, services or
      research or development of the Company, or its suppliers, distributors,
      customers, independent contractors or other business relations. Confidential
      Information includes, but is not limited to, the following: (i) internal
      business and financial information (including information relating to strategic
      and staffing plans and practices, business, operational results, finances,
      training, marketing, promotional and sales plans and practices, customer
      proposals, referral sources, cost, rate and pricing structures, and accounting
      and business methods); (ii) identities of, individual requirements of,
      specific contractual arrangements with, and information about, the Company’s
      suppliers, distributors, customers, prospective customers, independent
      contractors or other business relations and their confidential information;
      (iii) trade secrets, know-how, compilations of data and analyses,
      techniques, systems, formulae, recipes, research, records, reports, manuals,
      documentation, models, data and data bases relating thereto;
      (iv) inventions, innovations, improvements, developments, methods, designs,
      analyses, drawings, reports and all similar or related information (whether
      or
      not patentable); and (v) other Intellectual Property Rights of the
      Company.

     

    “Contract”
means
      any agreement, contract, instrument, commitment, lease, guaranty, indenture,
      license, or other arrangement or understanding between parties or by one party
      in favor of another party, whether written or oral.

     

    “Corporate
      Headquarters Lease”
has
      the
      meaning specified in Section 4.2 of this Agreement.

    
      
        
        

      

      
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    “Disclosure
      Schedule”
means
      the disclosure schedule delivered by Seller to Purchaser on the date hereof.
      The
      Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
      and numbered paragraphs contained in this Agreement.

     

    “Employee
      Benefit Plans”
means
      all Benefit Arrangements (other than Multiemployer Plans), Employee Pension
      Benefit Plans and Employee Welfare Benefit Plans.

     

    “Employee
      Pension Benefit Plan”
means
      any “employee pension benefit plan” as defined in Section 3(2) of ERISA
      (A) which the Company maintains or contributes to or with respect to which
      the Company has any liability, or (B) which covers any current or former
      employee of the Company.

     

    “Employee
      Welfare Benefit Plan”
means
      any “employee welfare benefit plan” as defined in Section 3(1) of ERISA
      (other than a Multiemployer Plan), (A) which the Company maintains or
      contributes to or with respect to which the Company has any liability, or
      (B) which covers any current or former employee of the
      Company.

     

    “Encumbrance”
means
      any mortgage, pledge, Lien, encumbrance, charge, or other security interest,
      other than (a) mechanic’s, materialmen’s, and similar liens, (b) liens
      for Taxes not yet due and payable or for Taxes that the taxpayer is contesting
      in good faith through appropriate proceedings and for which adequate reserves
      have been established on the Most Recent Financial Statements, and
      (c) liens arising from zoning ordinances.

     

    “Environmental,
      Health, and Safety Regulations”
means
      all Regulations, Orders 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, generations, handling, transportation, treatment, storage, disposal,
      distribution, labeling, testing, processing, discharge, release, threatened
      release, control, or cleanup of any hazardous materials, substances or wastes,
      chemical substances or mixtures, pesticides, pollutants, contaminants, noise
      or
      radiation, each as now in effect.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended.

     

    “Financial
      Statements”
has
      the
      meaning specified in Section 2.8
      of this
      Agreement.

     

    “Franchise
      Agreements”
has
      the
      meaning specified in Section 2.13(a)
      of this
      Agreement.

     

    “FTC
      Rule”
has
      the
      meaning specified in Section 2.13
      of this
      Agreement.

     

    “GAAP”
means
      generally accepted accounting principles as in effect in the United States
      on
      the date of this Agreement, applied on a consistent basis.

     

    “Galloway
      Personal Guaranty”
has
      the
      meaning specified in Section 1.1(c) of this Agreement.

    
      
        
        

      

      
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    “Hazardous
      Substances”
means
      any pollutants, contaminants, toxic substances, hazardous waste or hazardous
      substances defined in or regulated by any Environmental, Health and Safety
      Regulation.

     

    “Indebtedness”
means,
      with respect to the Company at any date, without duplication: (i) all
      obligations for borrowed money or in respect of loans or advances, (ii) all
      obligations evidenced by bonds, debentures, notes, interest rate swap agreements
      or other similar instruments or debt securities, (iii) all obligations in
      respect of letters of credit and bankers’ acceptances issued for the account of
      the Company, (iv) all obligations arising from cash/book overdrafts or
      negative cash balances, (v) all obligations arising from deferred
      compensation arrangements, employee bonuses (whether accrued or not),
      (vi) all obligations of the Company secured by a Lien, (vii) all
      accrued but unpaid franchise, income and excise taxes, (viii) all overdue trade
      payables, (ix) all capital lease obligations determined in accordance with
      GAAP, (x) all notes and accounts payable to any Affiliates of Seller or any
      officers or employees of such Persons, (xi) all obligations (fixed or
      contingent) outside the Ordinary Course of Business, (xii) all Guaranties
      of such Person in connection with any of the foregoing, and (xiii) all
      accrued interest, prepayment premiums or penalties related to any of the
      foregoing; provided,
      however,
      that
      Indebtedness shall not include other accrued trade payables or other accrued
      expenses incurred in the Ordinary Course of Business.

     

    “Indemnified
      Party”
has
      the
      meaning specified in Section 5.4
      of this
      Agreement.

     

    “Indemnifying
      Party”
has
      the
      meaning specified in Section 5.4(a)
      of this
      Agreement.

     

    “Intellectual
      Property Rights”
means
      (excluding any such rights relating to the brands Nathan’s Famous, Arthur
      Treacher’s and Kenny Rogers Roasters) all (i) patents, patent applications,
      patent disclosures, registrations and applications for registrations,
      (ii) trademarks, service marks, trade dress, logos, trade names and domain
      names, including common law rights, the goodwill associated therewith and
      registrations and applications for registration thereof, (iii) works of
      authorship, copyrights and registrations and applications for registration
      thereof, (iv) copies and tangible embodiments thereof;
      (v) confidential and proprietary information, including trade secrets and
      know-how, (vi) technology, processes, algorithms, computer software
      programs and applications (in both source code and object code form),
      (vii) rights of publicity and similar rights with respect to use of a
      person’s name or likeness, (viii) moral rights and similar rights of
      attribution and integrity, and (ix) rights to sue and recover any damages,
      profits and other remedies for any past, present or future infringement,
      misappropriation or other violation of any of the foregoing.

     

    “Knowledge
      of Seller”
means
      (i) the actual knowledge of any of Eric Gatoff, Wayne Norbitz, Donald
      Perlyn, Ronald DeVos and Jerry Woda and (ii) that knowledge which could
      have been acquired by any of Eric Gatoff, Wayne Norbitz, Donald Perlyn, Ronald
      DeVos and Jerry Woda after making a reasonable and diligent inquiry concerning
      the subject matter at issue as a prudent businessperson would have made or
      exercised in the management of his business affairs in light of all the
      circumstances applicable thereto, including due inquiry of employees and
      professionals of Seller and the Company who could reasonably be expected to
      have
      actual knowledge of the matters in question and, when reference is made to
      actual knowledge, the actual knowledge of the persons listed in clause (i)
      without such inquiry. 

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    “Leased
      Property”
has
      the
      meaning specified in Section 2.7
      of this
      Agreement.

     

    “Lien”
means
      any claim, lien, pledge, option, charge, security interest, mortgage,
      right-of-way, easement, covenant, Encumbrance or other right of any third
      party.

     

    “Loss
      Threshold”
has
      the
      meaning specified in Section 5.2(b)
      of this
      Agreement.

     

    “Losses”
means
      any Claims, liabilities, losses, damages (including consequential damages),
      fees, deficiencies, assessments, judgments, obligations, demands, commitments,
      actions, imposed tax, penalties, fines, remediations and other costs or expenses
      (any one such item being called a “Loss”
and
      all
      such items collectively called “Losses”),
      including all interest, penalties, reasonable attorneys’ fees and other expenses
      arising from, or in connection with, any Loss by a Party seeking
      indemnification.

     

    “Material
      Adverse Effect”
means
      any circumstance, change in, or effect on a Party that is, or could reasonably
      be expected in the foreseeable future to be, materially adverse to the Party’s
      business, assets, liabilities, financial condition, earnings or results of
      operation, prospects, customer or supplier relations, employee relations, cash
      flow or net worth or its ability to consummate the transactions contemplated
      by
      this Agreement; provided, that the foregoing excludes the effects of changes
      that are generally applicable to (i) the industries and markets in which
      the Party operates, (ii) the United States or world economy or securities
      markets or (iii) result from the outbreak of war, other hostilities or
      terrorist activities.

     

    “Most
      Recent Financial Statements”
has
      the
      meaning specified in Section 2.8.

     

    “Most
      Recent Fiscal Year End”
has
      the
      meaning specified in Section 2.8
      of this
      Agreement.

     

    “Multiemployer
      Plan”
means
      any “multiemployer plan,” as defined in Section 4001(a)(3) of
      ERISA.

     

    “Option”
means
      any subscription, option, warrant, right, security, Contract, commitment, or
      stock appreciation, phantom stock option, or arrangement by which the Company
      is
      bound to issue any additional shares of its capital stock or rights pursuant
      to
      which any Person has a right to acquire shares of the Company’s or a
      Subsidiary’s capital stock (as the case may be).

     

    “Order”
means
      any decree, order, judgment, writ, injunction (temporary or permanent), rule,
      ruling, legal restraint, award, formal or informal directive or notice,
      prohibition or consent of or by or from an Authority.

     

    “Ordinary
      Course of Business”
means
      the ordinary course of normal day-to-day business consistent with past custom
      and practice (including with respect to quantity quality and frequency), other
      than any “like-kind” exchanges whereby an franchisee/operator pays less
      royalties to Company than it is otherwise obligated to pay to
      Company.

    
      
        
        

      

      
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    “Parties”
has
      the
      meaning specified in the preamble to this Agreement.

     

    “Permits”
means
      all permits, licenses, registrations, agreements, certificates, approvals,
      accreditation, orders, and other consents and authorizations from any Authority
      or other Person (including without limitation those relating to the occupancy
      or
      use of Real Property) issued to or held by the Company and necessary or required
      for the Company to be in compliance with all Regulations and Orders as of the
      date hereof.

     

    “Person”
means
      an individual, partnership, corporation, limited liability company, joint stock
      company, unincorporated organization or association, trust, firm, joint venture,
      association, government, body or other organization, whether or not a legal
      entity, or Authority.

     

    “Pre-Closing
      Period”
means
      any taxable period ending on or before the Closing Date.

     

    “Procurement
      Costs”
means
      the amount paid or payable in respect of salaries, bonuses and benefits in
      connection with the employment by the Company of the Procurement Personnel
      and
      the monthly license fee paid in respect of the Procurement
      Software.

     

    “Procurement
      Personnel”
means
      Nancy Murphy and Sandra Lewis (or if either of Ms. Murphy or Ms. Lewis leaves
      the employ of the Company, their successors).

     

    “Procurement
      Software”
means
      Instill or any replacement purchasing management and tracking software licensed
      by Seller upon the mutual agreement of the Parties, acting
      reasonably.

     

    “Purchase
      Price”
has
      the
      meaning specified in Section 1.1(a)
      of this
      Agreement.

     

    “Purchaser”
has
      the
      meaning specified in the preamble to this Agreement.

     

    “Purchaser
      Indemnitees”
has
      the
      meaning specified in Section 5.2(a)
      of this
      Agreement.

     

    “Purchaser’s
      Promissory Note”
has
      the
      meaning specified in Section 1.1(b) of this Agreement.

     

    “Real
      Property”
has
      the
      meaning specified in Section 2.7
      of this
      Agreement.

     

    “Real
      Property Leases”
has
      the
      meaning specified in Section 2.7
      of this
      Agreement.

     

    “Regulation”
means
      any applicable rule, law, code, statute, regulation, ordinance or other binding
      action of or by an Authority.

     

    “Relationship
      Regulations”
has
      the
      meaning specified in Section 2.13(c)(iii)
      of this
      Agreement.

     

    “Restricted
      Period”
has
      the
      meaning specified in Section 4.4
      of this
      Agreement.

    
      
        
        

      

      
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    “Security
      Agreement”
has
      the
      meaning specified in Section 1.1(c) of this Agreement.

     

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

     

    “Seller”
has
      the
      meaning specified in the preamble to this Agreement.

     

    “Seller
      Indemnitees”
has
      the
      meaning specified in Section 5.3(a)
      of this
      Agreement.

     

    “Shares”
has
      the
      meaning specified in Section 1.1(a).

     

    “Standard
      Form Area Development Agreement”
has
      the
      meaning specified in Section 2.13(a)(i)
      of this
      Agreement.

     

    “Standard
      Form Franchise Agreement”
has
      the
      meaning specified in Section 2.13(a)(i)
      of this
      Agreement.

     

    “Straddle
      Period”
means
      a
      taxable period that commences before the Closing Date and ends after the Closing
      Date.

     

    “Subsidiary”
means,
      with respect to any Person, any corporation, partnership, limited liability
      company, association or other business entity of which: (i) if a
      corporation, a majority of the total voting power of shares of stock entitled
      (irrespective of whether, at the time, stock of any other class or classes
      of
      such corporation shall have or might have voting power by reason of the
      happening of any contingency) to vote in the election of directors, managers
      or
      trustees thereof is at the time owned or controlled, directly or indirectly,
      by
      that Person or one or more of the other Subsidiaries of that Person or a
      combination thereof; or (ii) if a partnership, limited liability company,
      association or other business entity, either (A) a majority of the
      partnership or other similar ownership interest thereof is at the time owned
      or
      controlled, directly or indirectly, by that Person or one or more Subsidiaries
      of that Person or a combination thereof, or (B) such Person is a general
      partner, managing member or managing director of such partnership, limited
      liability company, association or other entity.

     

    “Tax”
means:
      (i) any federal, state, local, or foreign income, gross receipts, license,
      payroll, employment, excise, severance, stamp, occupation, premium, windfall
      profits, environmental (including taxes under Section 59A of the Code),
      custom duties, capital stock, franchise, profits, withholding, social security
      (or similar), unemployment, disability, real property, personal property, sales,
      use, transfer, registration, value added, alternative or add-on minimum,
      estimated, or other tax of any kind whatsoever, including any interest, penalty,
      or addition thereto, whether disputed or not, and any amounts payable pursuant
      to the determination or settlement of an audit; (ii) liability of the
      Company for the payment of any amounts of the type described in clause (i)
      above arising as a result of being (or ceasing to be) a member of any Affiliated
      Group (or being included (or required to be included) in any Tax Return relating
      thereto); and (iii) liability of the Company for the payment of any amounts
      of the type described in clause (i) above as a result of any express or
      implied obligation to indemnify or otherwise assume or succeed to the liability
      of any other Person.

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “Taxing
      Authority”
means
      the Internal Revenue Service and any other Federal, state, local or foreign
      Authority which has the right to impose Taxes on the Company.

     

    “Transaction
      Documents”
means
      this Agreement, and the Corporate Headquarters Lease.

     

    “UFOC”
has
      the
      meaning specified in Section 2.13(b)
      of this
      Agreement.

     

    “UFOC
      Guidelines”
has
      the
      meaning specified in Section 2.13(b)
      of this
      Agreement.

     

    6.2  Construction.
      As used
      in this Agreement, (i) each term defined in this Agreement has the meaning
      assigned to it, (ii) each accounting term not otherwise defined in this
      Agreement has the meaning assigned to it in accordance with U.S. Treasury
      Regulations, (iii) as the context may require, words in the singular
      include the plural and words in the plural include the singular, (iv) as
      the context may require, words in the masculine or neuter gender include the
      masculine, feminine and neuter genders, (v) except as the context may
      require, all references to Schedules or Exhibits refer to the Disclosure
      Schedules or Exhibits delivered herewith or attached hereto (each of which
      is
      deemed to be a part of this Agreement), (vi) all references to Sections or
      Articles refer to Sections or Articles of this Agreement, (vii) all
      references to “$” or “dollars” refer to U.S. dollars, (viii) all references
      to “including” shall mean “including without limitation”, (ix) any amount
      to be paid in “$” or “dollars” shall be paid in U.S. dollars, and (x) the
      terms “herein”, “hereunder”, “hereby”, “hereto” and terms of similar import
      refer to this Agreement in its entirety, and not to any particular Article,
      Section, paragraph or subparagraph. No provision of this Agreement will be
      construed in favor of, or against, any of the Parties hereto by reason of the
      extent to which such Party or its counsel participated in its drafting or by
      reason of the extent to which this Agreement or any provision hereof is
      inconsistent with any prior draft hereof or thereof.

     

    6.3  Assignment.
       Neither this Agreement nor any of the rights or obligations hereunder may
      be assigned by Seller without the prior written consent of Purchaser, or by
      Purchaser without the prior written consent of Seller. Such consent shall not
      be
      unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
      Purchaser may assign its rights and obligations hereunder, in whole or in part,
      to any of its Affiliates; provided,
      however,
      that in
      connection with such assignment Purchaser shall agree to guarantee such
      assignee’s obligations under the Transaction Documents; provided
      further, however,
      that
      such assignment shall be subject to Seller’s approval of Purchaser’s financial
      condition, such approval not to be unreasonably withheld. In addition, Purchaser
      may assign any or all of its rights pursuant to this Agreement, including its
      rights to indemnification, to a lender as collateral security. Subject to the
      foregoing, this Agreement shall be binding upon and inure to the benefit of
      the
      Parties hereto and their successors and permitted assigns. This Agreement shall
      be for the sole benefit of the Parties hereto and their respective permitted
      assigns and is not intended, nor shall be construed, to give any Person, other
      than the Parties hereto and their respective successors and assigns any legal
      or
      equitable right, remedy or claim hereunder.

    
      
        
        

      

      
        41

        
          

        

      

       

    

                   
      6.4  Notices. 
       Any notice, request, demand, waiver, consent, approval or other
      communication which is required or permitted hereunder shall be in writing.
      All
      such notices shall be delivered: personally; by telecopier receipt confirmed;
      by
      certified mail, return receipt requested; or by reputable overnight courier
      (costs prepaid). All such notices are to be given or made to the Parties at
      the
      following addresses (or to such other address as any Party may designate by
      a
      notice given in accordance with the provisions of this Section):

     

    If
      to
      Purchaser (or the Company after the Closing):

     

    Lawrence
      Austin

    6300N.W.31stAvenue

    Fort
      Lauderdale, Florida 33309

    

    Copy
      to
      (which shall not constitute notice to):

     

    Perlman,
      Yevoli & Albright, P.L.

    1500
      N.
      Federal Hwy. Suite 250

    Ft.
      Lauderdale, FL 33304

    Attn:
      Jason E. Perlman

    

    Copy
      to
      (which shall not constitute notice to): 

     

    Bernard
      H. Vogel

    Seavey
      Vogel & Associates, LLP

    500
      North
      Broadway, Suite128

    Jericho,
      New York 11753

    

    If
      to
      Seller (or Company prior to the Closing):

     

    Nathan’s
      Famous, Inc.

    1400
      Old
      Country Road

    Westbury,
      New York 11501

    Attn: Wayne
      Norbitz, President & COO

    Facsimile
      No.: 516-338-8500

    

    Copy
      to
      (which shall not constitute notice):

     

    Farrell
      Fritz, P.C.

    1320
      Reckson Plaza

    Uniondale,
      New York 11556

    Attn: Nancy
      Lieberman, Esq.

    Facsimile
      No.: 516-336-2778

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    Any
      of
      the above addresses may be changed at any time by notice given as provided
      above; provided,
      however,
      that any
      such notice of change of address will be effective only upon receipt. All
      notices, requests or instructions given in accordance herewith will be deemed
      given (a) on the date of delivery, if hand delivered, (b) on the date
      of receipt, if sent by facsimile or other electronic means (including PDF
      format), (c) three business days after the date of mailing, if mailed by
      registered or certified mail, return receipt requested, and (d) one
      business day after the date of sending, if sent by Federal Express or other
      recognized overnight courier.

     

    6.5  Choice
      of Law.
       This Agreement shall be governed by, and construed in accordance with, the
      internal laws of the State of New York, without reference to the choice of
      law or conflicts of law principles thereof.

     

    6.6  Entire
      Agreement; Amendments and Waivers.
       This Agreement, together with all exhibits and schedules hereto,
      constitute the entire agreement among the Parties pertaining to the subject
      matter hereof and supersedes all prior agreements, understandings, negotiations
      and discussions, whether oral or written, of the Parties. This Agreement may
      not
      be amended or modified except by an instrument in writing signed on behalf
      of
      all of the Parties. No waiver of any of the provisions of this Agreement shall
      be deemed or shall constitute a waiver of any other provision hereof (whether
      or
      not similar), nor shall such waiver constitute a continuing waiver unless
      otherwise expressly provided.

     

    6.7  Counterparts. 
      This Agreement may be executed in one or more counterparts, each of which shall
      be deemed an original, but all of which together shall constitute one and the
      same instrument. This Agreement may be executed and delivered by facsimile
      or
      other electronic means (including PDF format) with the same force and effect
      as
      if the same were a fully executed and delivered manual counterpart.

     
      

    6.8  Invalidity. 
      In the event that any one or more of the provisions contained in this Agreement
      or in any other instrument referred to herein, shall, for any reason, be held
      to
      be invalid, illegal or unenforceable in any respect, such invalidity, illegality
      or unenforceability shall not affect any other provision of this Agreement
      or
      any other such instrument.

     

    6.9  Headings. 
      The headings of the Articles and Sections herein are inserted for convenience
      of
      reference only and are not intended to be a part of or to affect the meaning
      or
      interpretation of this Agreement.

     

    6.10  Expenses. 
      Except as otherwise provided herein, each Party will each be liable for their
      respective costs and expenses incurred in connection with the negotiation,
      preparation, execution and performance of this Agreement and the consummation
      of
      the transactions contemplated hereby (including fees, costs and expenses of
      legal counsel, investment advisors, brokers and other representatives and
      consultants).

     

    6.11  Confidentiality
      Agreement.  Neither Party will utilize or disclose any Confidential
      Information of the other Party and that it will continue to abide by the
      Confidentiality Agreements between the Seller and each of Lawrence Austin and
      Galloway Capital Management.

     

    6.12  WAIVER
      OF JURY TRIAL. 
      EACH OF THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
      ANY
      RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
      OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY SCHEDULE
      OR EXHIBIT HERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS
      (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS PROVISION IS A
      MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS
      AGREEMENT.

     

    6.13  Consent
      To Jurisdiction; Service Of Process. Seller and Purchaser hereby
      irrevocably submit to the jurisdiction of the United States District Court
      for
      the Southern District of New York located in New York County,
      New York, or if subject matter jurisdiction is lacking in such Court, to
      the jurisdiction of the Supreme Court of the State of New York for the
      County of New York or any other court in New York County, in
      connection with any suit, action or other proceeding arising out of or relating
      to this agreement and the transactions contemplated hereby (including any claim
      for injunctive relief), and hereby agree not to assert, by way of motion, as
      a
      defense, or otherwise in any such suit, action or proceeding that the suit,
      action or proceeding is brought in an inconvenient forum, that the venue of
      the
      suit, action or proceeding is improper or that this agreement or the subject
      matter hereof may not be enforced by such courts 
       

    

    6.14  Attorneys’
      Fees. If any Party hereto brings an action against another Party hereto
      to enforce its rights under this Agreement, the prevailing Party shall be
      entitled to recover its reasonable costs and expenses, including reasonable
      attorneys’ fees and costs and including, but not limited to, expert witness fees
      and expenses, incurred in connection with such action and any appeal thereof.
      
       

    

     6.15  Incorporation
      of Exhibits and Schedules. The exhibits and schedules identified in
      this Agreement are incorporated herein by reference and made a part hereof.
      No
      exceptions to any representations or warranties disclosed on one Disclosure
      Schedule shall constitute an exception to any other representations or
      warranties made in this Agreement unless the exception is disclosed as provided
      herein on each such other applicable Disclosure Schedule or cross-referenced
      in
      such other applicable section or Disclosure Schedule or is otherwise readily
      apparent on its face.

     

    6.16  No
      Third-Party Beneficiaries. Nothing herein expressed or implied is
      intended or shall be construed to confer upon or give to any Person other than
      the Parties hereto and their respective permitted successors and assigns, any
      rights or remedies under or by reason of this Agreement, such third parties
      specifically including employees and creditors of the Company. 

     

     6.17  Business
      Days. Whenever
      the last day for the exercise of any privilege or the discharge of any duty
      hereunder shall fall upon any day which is not a business day, the Party having
      such privilege or duty may exercise such privilege or discharge such duty on
      the
      next succeeding business day.

                                        

    
      
        * * * * *

         

        
          
            
            

          

          
            43

            
              

            

          

          
            
            

          

        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      Parties have executed and delivered this Agreement on the date hereof effective
      as of the opening of business on May 31, 2007.

     

    

    
      	 	 	 
	 	NATHAN’S
              FAMOUS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Eric
              Gatoff
	 	
              

              Name:  Eric
                Gatoff

              Title:   
                Chief Executive Officer

            
	 	 

    
      	 	 	 
	 	MIAMI
              SUBS
              CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ Wayne
              Norbitz
	 	
              

              Name: 
                Wayne Norbitz

              Title:   
                Executive Vice President

            
	 	 

    

    

      	 	 	 
	 	MIAMI
              SUBS CAPITAL PARTNERS I, INC.
	 
 	 
 	 
 
	 	By:  	/s/ George
              Herman
	 	
              

              Name: 
                George Herman

              Title:   
                President

            
	 	 

    

    

     

    
      
        
        

      

      
        44

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