EXHIBIT 10.1

STAR BUFFET, INC.

1997 STOCK INCENTIVE PLAN

This 1997 STOCK INCENTIVE PLAN (the "Plan") is hereby established by STAR BUFFET, INC. (the "Company") and adopted by its Board of Directors as of the ____ day of ___________, 1997 (the "Effective Date").

ARTICLE 1.

PURPOSES OF THE PLAN

1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's ability to attract and retain the services of qualified employees, officers, directors (including non-employee officers and directors), consultants and other service providers and persons with important business relationships with the Company upon whose judgment, initiative and efforts the successful conduct and development of the Company's business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.

ARTICLE 2.

DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings indicated:

2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee.

2.2 AFFILIATED COMPANY. "Affiliated Company" means any "parent corporation" or "subsidiary corporation" of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code, respectively.

2.3 BOARD. "Board" means the Board of Directors of the Company.

2.4 CHANGE IN CONTROL. "Change of Control" shall mean (i) the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company; (ii) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change

the state in which the Company is incorporated; (iii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iv) a complete liquidation or dissolution of the Company; or (v) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to or acquired by a person or persons different from the persons holding those securities immediately prior to such merger.

2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended from time to time.

2.6 COMMITTEE. "Committee" means a committee of two or more members of the Board appointed to administer the Plan, as set forth in Section 6.1 hereof.

2.7 COMMON STOCK. "Common Stock" means the Common Stock, $0.001 par value, of the Company, subject to adjustment pursuant to Section 4.2 hereof.

2.8 DISABILITY. "Disability" means permanent and total disability as defined in Section 22(e)(3) of the Code. The Administrator's determination of a Disability or the absence thereof shall be conclusive and binding on all interested parties.

2.9 EFFECTIVE DATE. "Effective Date" means the date on which the Plan is adopted by the Board, as set forth on the first page hereof.

2.10 EXERCISE PRICE. "Exercise Price" means the purchase price per share of Common Stock payable upon exercise of an Option.

2.11 FAIR MARKET VALUE. "Fair Market Value" on any given date means the value of one share of Common Stock, determined as follows:

(a) If the Common Stock is then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on such Nasdaq market system or principal stock exchange on which the Common Stock is then listed or admitted to trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on such Nasdaq market system or such exchange on the next preceding day on which a closing sale price is quoted.

(b) If the Common Stock is not then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Common Stock in the over-the-counter market on the date of valuation.

(c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Administrator in good faith using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties.

2.12 INCENTIVE OPTION. "Incentive Option" means any Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code.

2.13 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an Option Agreement with respect to an Incentive Option.

2.14 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member of the National Association of Securities Dealers, Inc.

2.15 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that is not an Incentive Option. To the extent that any Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a 10% Stockholder or because it exceeds the annual limit provided for in Section 5.6 below, it shall to that extent constitute a Nonqualified Option.

2.16 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement" means an Option Agreement with respect to a Nonqualified Option.

2.17 OPTION. "Option" means any option to purchase Common Stock granted pursuant to the Plan.

2.18 OPTION AGREEMENT. "Option Agreement" means the written agreement entered into between the Company and the Optionee with respect to an Option granted under the Plan.

2.19 OPTIONEE. "Optionee" means a Participant who holds an Option.

2.20 PARTICIPANT. "Participant" means an individual or entity who holds an Option.

2.21 SERVICE PROVIDER. "Service Provider" means a consultant or other person or entity who provides services to the Company or an Affiliated Company and who the Administrator authorizes to become a Participant in the Plan.

2.22 10% STOCKHOLDER. "10% Stockholder" means a person who, as of a relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of an Affiliated Company.

ARTICLE 3.

ELIGIBILITY

3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company or of an Affiliated Company (including members of the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive Incentive Options under the Plan.

3.2 NONQUALIFIED OPTIONS. Officers and other key employees of the Company or of an Affiliated Company, members of the Board (whether or not employed by the Company or an Affiliated Company), Service Providers, and other persons with important business relationships with the Company, are eligible to receive Nonqualified Options under the Plan.

3.3 LIMITATION ON SHARES. In no event shall any Participant be granted Options in any one calendar year pursuant to which the aggregate number of shares of Common Stock that may be acquired thereunder exceeds 300,000 shares.

ARTICLE 4.

PLAN SHARES

4.1 SHARES SUBJECT TO THE PLAN. A total of 750,000 shares of Common Stock may be issued under the Plan, subject to adjustment as to the number and kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation, in the event that (a) all or any portion of any Option granted under the Plan can no longer under any circumstances be exercised, or (b) any shares of Common Stock are reacquired by the Company pursuant to an Incentive Option Agreement or a Nonqualified Option Agreement, the shares of Common Stock allocable to the unexercised portion of such Option, or the shares so reacquired, shall again be available for grant or issuance under the Plan.

4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding shares of Common Stock are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, combination of shares, reclassification, stock dividend, or other change in the capital structure of the Company, then appropriate adjustments shall be made by the Administrator to the aggregate number and kind of shares subject to this Plan, and the number and kind of shares and the price per share subject to outstanding Option Agreements in order to preserve, as nearly as practical, but not to increase, the benefits to Participants.

ARTICLE 5.

OPTIONS

5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be evidenced by an Option Agreement which shall specify the number of shares subject thereto, the Exercise Price per share, and whether the Option is an Incentive Option or Nonqualified Option. As soon as is practical following the grant of an Option, an Option Agreement shall be duly executed and delivered by or on behalf of the Company to the Optionee to whom such Option was granted. Each Option Agreement shall be in such form and contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable, including, without limitation, the imposition of any rights of first refusal and resale obligations upon any shares of Common Stock acquired pursuant to an Option Agreement. A form of the Option Agreement is attached hereto as Exhibit "A;" however, each Option Agreement may be different from each other Option Agreement.

5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered by each Option shall be determined by the Administrator, subject to the following: (a) the Exercise Price of an Incentive Option shall not be less than 100% of Fair Market Value on the date the Incentive Option is granted, (b) the Exercise Price of a Nonqualified Option shall not be less than 85% of Fair Market Value on the date the Nonqualified Option is granted, and (c) if the person to whom an Incentive Option is granted is a 10% Stockholder on the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value on the date the Option is granted.

5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be made upon exercise of an Option and may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Optionee that have been held by the Optionee for at least six (6) months, which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the Optionee's promissory note in a form and on terms acceptable to the Administrator; (e) the cancellation of indebtedness of the Company to the Optionee; (f) the waiver of compensation due or accrued to the Optionee for services rendered; (g) provided that a public market for the Common Stock exists, a "same day sale" commitment from the Optionee and an NASD Dealer whereby the Optionee 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; (h) provided that a public market for the Common Stock exists, a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee 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 (i) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable corporate law.

5.4 TERM AND TERMINATION OF OPTIONS. The term and termination of each Option shall be as fixed by the Administrator, but no Option may be exercisable more than ten (10) years after the date it is granted. An Incentive Option granted to a person who is a 10% Stockholder on the date of grant shall not be exercisable more than five (5) years after the date it is granted.

5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and be exercisable in one or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives, as shall be determined by the Administrator.

5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock shall not, with respect to which Incentive Options granted under this Plan and any other plan of the Company or any Affiliated Company become exercisable for the first time by an Optionee during any calendar year, exceed $100,000.

5.7 NONTRANSFERABILITY OF OPTIONS. No Option shall be assignable or transferable except by will or the laws of descent and distribution, and during the life of the Optionee shall be exercisable only by such Optionee; provided, however, that, in the discretion of the Administrator, any Option may be assigned or transferred in any manner which an "incentive stock option" is permitted to be assigned or transferred under the Code.

5.8 RIGHTS AS STOCKHOLDER. An Optionee or permitted transferee of an Option shall have no rights or privileges as a stockholder with respect to any shares covered by an Option until such Option has been duly exercised and certificates representing shares purchased upon such exercise have been issued to such person.

ARTICLE 6.

ADMINISTRATION OF THE PLAN

6.1 ADMINISTRATOR. Authority to control and manage the operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to a committee consisting of two (2) or more members of the Board (the "Committee"). Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. As used herein, the term "Administrator" means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee.

6.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or authority conferred upon the Administrator elsewhere in the Plan or by law, the Administrator shall have full power and authority: (a) to determine the persons to whom, and the time or times at

which, Incentive Options or Nonqualified Options shall be granted, the number of shares to be represented by each Option and the consideration to be received by the Company upon the exercise thereof; (b) to interpret the Plan; (c) to create, amend or rescind rules and regulations relating to the Plan; (d) to determine the terms, conditions and restrictions contained in, and the form of, Option Agreements; (e) to determine the identity or capacity of any persons who may be entitled to exercise a Participant's rights under any Option under the Plan; (f) to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option Agreement; (g) to accelerate the vesting of any Option; (h) to extend the exercise date of any Option; (i) to provide for rights of first refusal and/or repurchase rights; (j) to amend outstanding Option Agreements to provide for, among other things, any change or modification which the Administrator could have provided for upon the grant of an Option or in furtherance of the powers provided for herein; and (k) to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under the Plan shall be final and binding on the Company and all Participants.

6.3 LIMITATION ON LIABILITY. No employee of the Company or member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any employee of the Company with duties under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person's conduct in the performance of duties under the Plan.

ARTICLE 7.

CHANGE IN CONTROL

7.1 CHANGE IN CONTROL. In order to preserve a Participant's rights in the event of a Change in Control of the Company, (i) the time period relating to the exercise or realization of all outstanding Options shall automatically accelerate immediately prior to the consummation of such Change in Control, and
(ii) with respect to Options, the Administrator in its discretion may, at any time an Option is granted, or at any time thereafter, take one or more of the following actions: (A) provide for the purchase or exchange of each Option for an amount of cash or other property having a value equal to the difference, or spread, between (x) the value of the cash or other property that the Participant would have received pursuant to such Change in Control transaction in exchange for the shares issuable upon exercise of the Option had the Option been exercised immediately prior to such Change in Control transaction and (y) the Exercise Price of such Option, (B) adjust the terms of the Options in a manner determined by the Administrator to reflect the Change in Control, (C) cause the Options to be assumed by another entity, through the continuance of the Plan and the assumption of outstanding Options, or the substitution for such Options of new options of comparable value covering shares of a successor corporation, with appropriate adjustments as to the number and kind of shares and Exercise Prices, in which event the Plan and such Options, or the new options and rights to purchase substituted therefor, shall continue in the manner and under the terms so provided, or (D) make such other provision as the Administrator may consider equitable. If the Administrator does not take any of the foregoing actions, this Option shall terminate upon the consummation of the Change in Control and the Administrator shall cause written notice of the proposed transaction to be given to the Optionee not less than fifteen (15) days prior to the anticipated effective date of the proposed transaction.

ARTICLE 8.

AMENDMENT AND TERMINATION OF THE PLAN

8.1 AMENDMENTS. The Board may from time to time alter, amend, suspend or terminate the Plan in such respects as the Board may deem advisable. No such alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any Participant under an outstanding Option Agreement without such Participant's consent. The Board may alter or amend the Plan to comply with requirements under the Code relating to Incentive Options or other types of options which give Optionees more favorable tax treatment than that applicable to Options granted under this Plan as of the date of its adoption. Upon any such alteration or amendment, any outstanding Option granted hereunder may, if the Administrator so determines and if permitted by applicable law, be subject to the more favorable tax treatment afforded to an Optionee pursuant to such terms and conditions.

8.2 PLAN TERMINATION. Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date and no Options may be granted under the Plan thereafter, but Option Agreements then outstanding shall continue in effect in accordance with their respective terms.

ARTICLE 9.

TAX WITHHOLDING

9.1 WITHHOLDING. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable Federal, state, and local tax withholding requirements with respect to any Options exercised under the Plan. To the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Participant to satisfy his or her obligation to pay any such tax, in whole or in part, up to an amount determined on the basis of the highest marginal tax rate applicable to such Participant, by (a) directing the Company to apply shares of Common Stock to which the Participant is entitled as a result of the exercise of an Option or (b) delivering to the Company shares of Common Stock owned by the Participant. The shares of Common Stock so applied or delivered in satisfaction of the Participant's tax withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding.

ARTICLE 10.

MISCELLANEOUS

10.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits under the Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect.

10.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Participant to be consideration for, or an inducement to, or a condition of, the employment of any Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Affiliated Company or to interfere with the right of the Company or any Affiliated Company to discharge any Participant at any time.

10.3 APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to Option Agreements, except as otherwise provided herein, will be used for general corporate purposes.

EXHIBIT 10.2

STAR BUFFET, INC.

STOCK OPTION AGREEMENT

TYPE OF OPTION (CHECK ONE): [ ] INCENTIVE [ ] NONQUALIFIED

This Stock Option Agreement (the "Agreement") is entered into as of _____________, 19__, by and between Star Buffet, Inc., a Delaware corporation
(the "Company"), and ________________________________________ (the "Optionee")
pursuant to the Company's 1997 Stock Incentive Plan (the "Plan").

1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the "Option") to purchase all or any portion of a total of ___________________ (____) shares (the "Shares") of the Common Stock of the Company at a purchase price of _________________________ ($_____) per share (the "Exercise Price"), subject to the terms and conditions set forth herein and the provisions of the Plan. If the box marked "Incentive" above is checked, then this Option is intended to qualify as an "incentive stock option" as defined in Section 422 of the Internal Revenue Code of l986, as amended (the "Code"). If this Option fails in whole or in part to qualify as an incentive stock option, or if the box marked "Nonqualified" is checked, then this Option shall to that extent constitute a nonqualified stock option.

2. VESTING OF OPTION. The right to exercise this Option shall vest in installments, and this Option shall be exercisable from time to time in whole or in part as to any vested installment, as follows:

                                                This Option shall be
         On or After:                           Exercisable as to:
         ------------                           ------------------

(i)   _________________ , 19___:                ______________ shares

(ii)  _________________ , 19___: an additional  ______________ shares

(iii) _________________ , 19___: an additional ______________ shares

(iv) _________________ , 19___: an additional ______________ shares

No additional shares shall vest after the date of termination of Optionee's "Continuous Service" (as defined in Section 3 below), but this Option shall continue to be exercisable in accordance with Section 3 hereof with respect to that number of shares that have vested as of the date of termination of Optionee's Continuous Service.

3. TERM OF OPTION. Optionee's right to exercise this Option shall terminate upon the first to occur of the following:

(a) the expiration of ____ (____) years from the date of this Agreement;

(b) the expiration of three (3) months from the date of termination of Optionee's Continuous Service if such termination occurs for any reason other than permanent disability, death or voluntary resignation; provided, however, that if Optionee dies during such three-month period the provisions of Section 3(e) below shall apply;

(c) the expiration of one (1) month from the date of termination of Optionee's Continuous Service if such termination occurs due to voluntary resignation; provided, however, that if Optionee dies during such one-month period the provisions of Section 3(e) below shall apply;

(d) the expiration of one (1) year from the date of termination of Optionee's Continuous Service if such termination is due to permanent disability of the Optionee (as defined in Section 22(e)(3) of the Code);

(e) the expiration of one (1) year from the date of termination of Optionee's Continuous Service if such termination is due to Optionee's death or if death occurs during either the three-month or one-month period following termination of Optionee's Continuous Service pursuant to Section 3(b) or 3(c) above, as the case may be; or

(f) upon the consummation of a "Change in Control" (as defined in
Section 2.4 of the Plan), unless otherwise provided pursuant to Section 9 below.

As used herein, the term "Continuous Service" means (i) employment by either the Company or any parent or subsidiary corporation of the Company, or by a corporation or a parent or subsidiary of a corporation issuing or assuming a stock option in a transaction to which Section 424(a) of the Code applies, which is uninterrupted except for vacations, illness (except for permanent disability, as defined in Section 22(e)(3) of the Code), or leaves of absence which are approved in writing by the Company or any of such other employer corporations, if applicable, (ii) service as a member of the Board of Directors of the Company until Optionee resigns, is removed from office, or Optionee's term of office expires and he or she is not reelected, or (iii) so long as Optionee is engaged as a consultant or service provider to the Company or other corporation referred to in clause (i) above.

4. EXERCISE OF OPTION. On or after the vesting of any portion of this Option in accordance with Sections 2 or 9 hereof, and until termination of the right to exercise this Option in accordance with Section 3 above, the portion of this Option which has vested may be exercised in whole or in part by the Optionee (or, after his or her death, by the person designated in Section 5 below) upon delivery of the following to the Company at its principal executive offices:

(a) a written notice of exercise which identifies this Agreement and states the number of Shares then being purchased (but no fractional Shares may be purchased);

(b) a check or cash in the amount of the Exercise Price (or payment of the Exercise Price in such other form of lawful consideration as the Administrator may approve from time to time under the provisions of Section 5.3 of the Plan);

(c) a check or cash in the amount reasonably requested by the Company to satisfy the Company's withholding obligations under federal, state or other applicable tax laws with respect to the taxable income, if any, recognized by the Optionee in connection with the exercise of this Option

(unless the Company and Optionee shall have made other arrangements for deductions or withholding from Optionee's wages, bonus or other compensation payable to Optionee, or by the withholding of Shares issuable upon exercise of this Option or the delivery of Shares owned by the Optionee in accordance with
Section 10.1 of the Plan, provided such arrangements satisfy the requirements of applicable tax laws); and

(d) a letter, if requested by the Company, in such form and substance as the Company may require, setting forth the investment intent of the Optionee, or person designated in Section 5 below, as the case may be.

5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under this Agreement may not be assigned or transferred except by will or by the laws of descent and distribution, and may be exercised during the lifetime of the Optionee only by such Optionee. Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of this Option in contravention of this Agreement or the Plan shall be void and shall have no effect. If the Optionee's Continuous Service terminates as a result of his or her death, and provided Optionee's rights hereunder shall have vested pursuant to Section 2 hereof, Optionee's legal representative, his or her legatee, or the person who acquired the right to exercise this Option by reason of the death of the Optionee (individually, a "Successor") shall succeed to the Optionee's rights and obligations under this Agreement. After the death of the Optionee, only a Successor may exercise this Option.

6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.

(a) Optionee represents and warrants that this Option is being acquired by Optionee for Optionee's personal account, for investment purposes only, and not with a view to the distribution, resale or other disposition thereof.

(b) Optionee acknowledges that the Company may issue Shares upon the exercise of the Option without registering such Shares under the Securities Act of l933, as amended (the "Securities Act"), on the basis of certain exemptions from such registration requirement. Accordingly, Optionee agrees that his or her exercise of the Option may be expressly conditioned upon his or her delivery to the Company of an investment certificate including such representations and undertakings as the Company may reasonably require in order to assure the availability of such exemptions, including a representation that Optionee is acquiring the Shares for investment and not with a present intention of selling or otherwise disposing thereof and an agreement by Optionee that the certificates evidencing the Shares may bear a legend indicating such non-registration under the Securities Act and the resulting restrictions on transfer. Optionee acknowledges that, because Shares received upon exercise of an Option may be unregistered, Optionee may be required to hold the Shares indefinitely unless they are subsequently registered for resale under the Securities Act or an exemption from such registration is available.

(c) Optionee acknowledges receipt of a copy of the Plan and understands that all rights and obligations connected with this Option are set forth in this Agreement and in the Plan.

7. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that federal securities laws and the securities laws of the state in which Optionee resides may require the placement of certain restrictive legends upon the Shares issued upon exercise of this Option, and Optionee

hereby consents to the placing of any such legends upon certificates evidencing the Shares as the Company, or its counsel, may deem necessary or advisable.

8. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding shares of Common Stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, combination of shares, reclassification, stock dividend or other change in the capital structure of the Company, then appropriate adjustment shall be made by the Administrator to the number of Shares subject to the unexercised portion of this Option and to the Exercise Price per share, in order to preserve, as nearly as practical, but not to increase, the benefits of the Optionee under this Option, in accordance with the provisions of Section 4.2 of the Plan.

9. CHANGE IN CONTROL. In the event of a Change in Control (as defined in Section 2.4 of the Plan) of the Company, (i) the vesting of this Option pursuant to Section 2 above shall automatically accelerate immediately prior to the consummation of such Change in Control, and (ii) the Administrator in its discretion may take one or more of the following actions: (A) provide for the purchase or exchange of this Option for an amount of cash or other property having a value equal to the difference, or spread, between (x) the value of the cash or other property that the Optionee would have received pursuant to such Change in Control transaction in exchange for the shares issuable upon exercise of this Option had this Option been exercised immediately prior to such Change in Control transaction and (y) the Exercise Price, (B) adjust the terms of this Option in a manner determined by the Administrator to reflect the Change in Control, (C) cause this Option to be assumed, or new rights substituted therefor, by another entity, through the continuance of the Plan and the assumption of this Option, or the substitution for this Option of a new option of comparable value covering shares of a successor corporation, with appropriate adjustments as to the number and kind of shares and Exercise Price, in which event the Plan and this Option, or the new option substituted therefor, shall continue in the manner and under the terms so provided, or (D) make such other provision as the Administrator may consider equitable. If the Administrator does not take any of the forgoing actions, this Option shall terminate upon the consummation of the Change in Control and the Administrator shall cause written notice of the proposed transaction to be given to the Optionee not less than fifteen (15) days prior to the anticipated effective date of the proposed transaction.

10. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option nor the exercise hereof shall be construed as granting to the Optionee any right with respect to continuance of employment by the Company or any of its subsidiaries. The right of the Company or any of its subsidiaries to terminate at will the Optionee's employment at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved.

11. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option by will or by the laws of descent and distribution) shall have no rights as a shareholder with respect to any Shares covered by this Option until the date of the issuance of a stock certificate or certificates to him or her for such Shares, notwithstanding the exercise of this Option.

12. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by the Company or the managing underwriter of any proposed public offering of the Company's securities, Optionee will not sell or otherwise transfer or dispose of any Shares held by Optionee without the prior written consent of the Company or such underwriter, as the case may be, during such period of time, not to

exceed 180 days following the effective date of the registration statement filed by the Company with respect to such offering, as the Company or the underwriter may specify.

13. INTERPRETATION. This Option is granted pursuant to the terms of the Plan, and shall in all respects be interpreted in accordance therewith. The Administrator shall interpret and construe this Option and the Plan, and any action, decision, interpretation or determination made in good faith by the Administrator shall be final and binding on the Company and the Optionee. As used in this Agreement, the term "Administrator" shall refer to the committee of the Board of Directors of the Company appointed to administer the Plan, and if no such committee has been appointed, the term Administrator shall mean the Board of Directors.

14. NOTICES. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed given when delivered personally or three (3) days after being deposited in the United States mail, as certified or registered mail, with postage prepaid, and addressed, if to the Company, at its principal place of business, Attention: the Chief Financial Officer, and if to the Optionee, at his or her most recent address as shown in the employment or stock records of the Company.

15. ANNUAL AND OTHER PERIODIC REPORTS. During the term of this Agreement, the Company will furnish to the Optionee copies of all annual and other periodic financial and informational reports that the Company distributes generally to its shareholders.

16. GOVERNING LAW. The validity, construction, interpretation, and effect of this Option shall be governed by and determined in accordance with the laws of the State of California.

17. SEVERABILITY. Should any provision or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining provisions and portions of this Agreement shall be unaffected by such holding.

18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed one instrument.

19. SECURITIES LAW COMPLIANCE. The sale of the Shares that are the subject of this Agreement has not been qualified with the administrator of the securities laws of any state and the issuance of such Shares or the payment or receipt of any part of the consideration therefor prior to such qualification may be unlawful, unless the sale of such Shares is exempt from such qualification. The rights of all parties to this Agreement are expressly conditioned upon such qualification being obtained, unless the sale is so exempt.

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

STAR BUFFET, INC.                                   "OPTIONEE"

By: ___________________________                     ___________________________
                                                            (Signature)
Name: _________________________

Title: ________________________                     ___________________________
                                                        (Type or print name)

EXHIBIT 10.3

YATES INDUSTRIAL PARK

405 LAWNDALE DRIVE, 12600 SOUTH SALT LAKE CITY, UTAH 84115

COMMERCIAL AND INDUSTRIAL LEASE
(New Construction)

THIS LEASE made and entered into this 25th day of July, 1979, by and between GORDON H. YATES, hereinafter called "Landlord," and TRACY COLLINS BANK AND TRUST, hereinafter called "Tenant."

W I T N E S S E T H:

In consideration of the covenants and agreements of the respective parties herein contained, the parties hereto do hereby agree as follows:

I. DEMISED PREMISES:

Landlord has demised and let and by these presents does hereby demise and let unto Tenant, and Tenant leases and hires from Landlord all those certain premises hereinafter more fully described, together with the buildings and other improvements now and hereafter erected thereon for the term and upon the rental and the covenants and agreements of the respective parties herein set forth.

Said premises consist of a parcel of ground in what is commonly known as YATES INDUSTRIAL PARK, located in South Salt Lake City, State of Utah, more particularly described on Exhibit "A" annexed hereto as a part hereof.

II. ERECTION OF BUILDING AND OTHER IMPROVEMENTS:

(a) Building: Landlord agrees to erect on the above described premises a building containing approximately 27,120 square feet of floor space with appurtenances and other improvements in accordance with the plans and specifications attached hereto and marked Exhibit "B," signed by the parties to this agreement, and by this reference made a part hereof (such building, appurtenances and improvements being hereinafter, for the sake of brevity, referred to collectively as "building"). Landlord represents and warrants that building will be erected in a good, safe and workmanlike manner with all facilities, installations, and equipment (and sewer, water, and public utility connections, if provided in plans and specifications) installed and completed in good working order and condition and ready for legal occupancy on or before 200 days after execution of lease, subject to delays due to strikes, acts of God, unavailability of materials or other causes beyond Landlord's control. Building so erected by Landlord shall in every respect comply with the laws, ordinances and regulations, municipal or otherwise, that may govern the construction of the same and Landlord shall hold Tenant harmless of and from any loss or damage caused by defective construction

of said new building or by reason of any mechanic's lien or encumbrances of any kind or nature against the property.

(b) Completion: Promptly upon completion of building in accordance with the provisions of this Lease, Landlord will give written notice thereof to Tenant and within ten (10) days after the receipt of such notice, Tenant will give written notice of its acceptance of the property if the property shall have been completed and ready for occupancy in accordance with the provisions of this agreement, or notice of the respects in which the building has not been satisfactorily completed. If no notice is given, then it shall be conclusively presumed that the property is acceptable to Tenant. If notice that the property has not been satisfactorily completed shall be validly given, then Landlord shall immediately proceed to make the necessary corrections and thereafter new notices as provided for in this article shall be given. Upon acceptance of building by Tenant, Exhibit "C" shall be filled in and executed by the parties hereto.

III. TERM:

The term of this Lease shall be for 20 years commencing on the date of Tenant's acceptance of the property as hereinabove provided or upon occupancy of said premises by Tenant, whichever event shall occur first, and ending twenty
(20) years thereafter; provided, that, if the term shall commence on a day other than the 1st day of a calendar month, rental shall be paid for the fraction of the first month in proportion to the monthly rental rate as hereafter provided, and the term provided for in this Lease shall consist of twenty (20) years in addition to that part of the calendar month during which completion occurred.

IV. TERMS AND CONDITIONS OF LEASE:

This Lease is made on the following terms and conditions, which are expressly agreed to by Landlord and Tenant:

1. RENT: Tenant agrees to pay as rental to Landlord, at the address specified in this Lease or at such other place Landlord may from time to time designate in writing, the sum of Two Million Eight Hundred Eighty Thousand and No/100 Dollars ($2,880,000), said sum to be in lawful money of the United States, payable as follows: $24,000.00 upon possession of the building, which is rent for the first and two hundred fortieth month of this lease, then $12,000.00 each and every month thereafter until one month before the completion of the term of this lease.

In the event Tenant shall fail to pay said rental on the due date or within ten (10) days thereafter, a late charge of two (2) percent of the monthly rental shall be added to the rental and paid to Landlord for each such late payment; provided, however, that the total late charges in any year shall not exceed ten percent (10%) of the annual rental due hereunder.

2. AUTHORIZED USE: Tenant shall use the leased premises for the following purpose, and for no other purpose whatsoever, without the written consent of Landlord first had and obtained: office - computer center.

3. TENANT TO INSURE BUILDINGS: Tenant shall insure and keep insured against the perils of fire, lightning, and "extended coverages," the premises of Landlord hereby leased. Such insurance shall be made payable to Landlord and mortgagee as their interests appear and shall be in an amount sufficient to provide recovery, in the event of loss, of not less than ninety percent (90%) of the replacement value of the improvements of the leased premises damaged or destroyed. Such insurance provided for hereunder shall be in a company or companies acceptable to Landlord and shall be procured and paid for by Tenant and said policy or policies will be delivered to Landlord. Such insurance may, at Tenant's election, be carried under any general blanket insurance policy of Tenant; provided, however, that a satisfactory certificate of the insurer evidencing insurance carried with proof of payment of the premium shall be deposited with Landlord.

4. CONDITION OF THE PREMISES: Tenant accepts the leased premises in the same condition they are in at the time of the commencement of the term of this Lease. Tenant agrees if, during said term, Tenant shall change the usual method of conducting Tenant's business on the leased premises, or should Tenant install thereon or therein any new facilities, Tenant will, at the cost and expense of Tenant, make alterations or improvements in or to the demised premises which may be required by reason of any Federal or State law, or by any municipal ordinance, or regulation applicable thereto.

5. REPAIR AND CARE OF BUILDING BY TENANT: Tenant will not commit any waste of the demised premises, nor shall it use or permit the use of the premises in violation of any present or future law of the United States or of the State in which said premises are located, or in violation of any municipal ordinance or regulation applicable thereto. Tenant agrees to keep the interior and the exterior of the building, and the improvements on the premises outside the building and grounds in good condition and repair, including all labor, materials and other repairs to the electrical wiring, plumbing, air conditioning and heating systems (including spring and fall servicing as recommended by the manufacturer, and replacement of filters as necessary); the mowing of grass, care of shrubs, general landscaping, if any, and to clean and paint the interior and exterior of the leased premises as the same may or might be necessary in order to maintain said premises in a clean, attractive and sanitary condition. Tenant shall keep the driveways and sidewalks, if any, reasonably free from ice and snow.

7. ALTERATION OF BUILDINGS AND INSTALLATION OF FIXTURES AND OTHER APPURTENANCES: Tenant may, with consent of Landlord, but at its own cost and expense in a good, workmanlike manner, make such alterations and repairs in the building as Tenant may require for the conduct of its business without, however, materially altering the basic character of the building or improvements, or weakening any structure on the demised premises. Tenant shall have the right, without the permission of Landlord, to erect, at Tenant's sole cost and expense, such temporary partitions, including office partitions, as may be necessary to facilitate the handling of

Tenant's business and to install electrical fixtures, additional lights and wiring and other trade appliances. Any alterations or improvements to the leased premises, including partitions, all electrical fixtures, lights and wiring, shall, at the option of Landlord, become the property of Landlord, at the expiration or sooner termination of this Lease. Should Landlord request Tenant to remove all or any part of the above mentioned items, Tenant shall do so prior to the expiration of this Lease and repair the premises as described below. Temporary shelves, bins and machinery installed by Tenant shall remain the property of Tenant and may be removed by Tenant at any time; provided, however, that all covenants, including rent, due hereunder to Landlord shall have been complied with and paid. At the expiration or sooner termination of this Lease, or any extension thereof, Tenant shall remove said shelves, bins and machinery, and repair, in a good and workmanlike manner, all damage done to the leased premises by such removal. Tenant shall not exercise the right and privilege granted by this Article 7 in such manner as to damage or affect the structural qualities of the building. Removable partitions are not to be included in this paragraph and may be removed by tenant.

8. PAYMENT OF TAXES AND OTHER ASSESSMENTS: Landlord will pay all property taxes when due. Tenant shall pay any and all increases in the taxes and other assessments assessed or levied against the premises over and above amounts assessed for the year 1981, as well as any special assessment imposed upon the demised premises for any purpose whatsoever during the term, whether the increase in taxation results from a higher tax rate or an increase in the assessed valuation of the demised premises or of both. Such payment shall be made by Tenant to Landlord not later than thirty (30) days following the date on which Landlord provides Tenant with written evidence of such increase. If Tenant fails to pay any such taxes or assessments when due, Landlord may pay the same under the provisions of paragraph 20, hereinafter set forth. Anything herein to the contrary notwithstanding, if Tenant deems excessive or illegal any such tax or assessment, Tenant may defer payment thereof so long as the validity or the amount thereof is contested by the Tenant in good faith, in which case Tenant shall furnish to Landlord a bond, in form reasonably satisfactory to Landlord, in an amount equal to the amount of taxes or assessments so contested, which bond shall guarantee the payment thereof with interest and penalties thereon.

9. ERECTION AND REMOVAL OF SIGNS: Tenant may place suitable signs on the leased premises for the purpose of indicating the nature of the business carried on by Tenant in said premises; provided, however, that such signs shall be in keeping with other signs in the district where the leased premises are located; and provided, further, that the location and size of such sings shall be approved by Landlord prior to their erection, and shall not damage the leased premises in any manner.

10. GLASS: Tenant agrees to immediately replace all glass broken or damaged during the term of the Lease with glass of the same quality as that broken or damaged.

11. RIGHT OF ENTRY BY LANDLORD: Tenant at any time during this Lease term shall permit inspection of the demised premises during reasonable business hours by Landlord or Landlord's agents or representatives for the purpose of ascertaining the condition of the demised premises and in order that Landlord may make such repairs as may be required to be made by Landlord under the terms of this Lease. Sixty (60) days prior to the expiration of this Lease, Landlord may post suitable notice on the demised premises that the same are "For Rent" and may show the premises to prospective tenants at reasonable times. Landlord may not, however, thereby unnecessarily interfere with the use of demised premises by Tenant.

12. PAYMENT OF UTILITIES: Tenant shall pay all charges, including but not limited to charges for water, heat, gas, electricity and other public utilities used on the lease premises, including all replacements of light bulbs, tubes, ballasts and starters.

13. ASSIGNMENT AND SUBLETTING: Neither this Lease nor any interest herein may be assigned by Tenant voluntarily or involuntarily, by operation of law, and neither all nor any part of the leased premises shall be sublet by Tenant without the written consent of Landlord first had and obtained; however, Landlord agrees not to withhold its consent unreasonably for Tenant to sublet the demised premises.

14. DAMAGE OR DESTRUCTION: If the demised premises or any part thereof shall be damaged or destroyed by fire or other casualty, Landlord shall promptly repair all such damage and restore the demised premises without expense to Tenant, subject to delays due to adjustment of insurance claims, strikes and other causes beyond Landlord's control. If such damage or destruction shall render the premises untenantable in whole or in party, the rent shall be abated wholly or proportionately as the case may be until the damage shall be repaired and the premises restored. If the damage or destruction shall be so extensive as to require the substantial rebuilding (i.e., expenditure of fifty per cent (50%) or more of replacement cost) of the building or buildings on the demised premises, Landlord or Tenant may elect to terminate this Lease by written notice to the other given within thirty (30) days after the occurrence of such damage or destruction.

Landlord and Tenant hereby release each other from responsibility for loss or damage occurring on or to the leased premises or the premises of which they are a part or to the contents of either thereof, caused by fire or other hazards ordinarily covered by fire and extended coverage insurance policies and each waives all rights of recovery against the other for such loss or damage. Willful misconduct lawfully attributable to either party, whether in whole or in part a contributing cause of the casualty giving rise to the loss or damage, shall not be excused under the foregoing release and waiver.

15. INJURIES AND PROPERTY DAMAGE: Tenant agrees to indemnify and hold harmless Landlord of and from any and all claims of any kind or nature arising from Tenant's use of the demised premises during the term hereof, and Tenant hereby waives all claims against Landlord for damage to goods, wares or merchandise or for injury to persons in and upon the premises from any cause whatsoever, except such as might result from the negligence of Landlord or Landlord's representatives or from failure of Landlord to perform its obligation hereunder within reasonable time after notice in writing by Tenant requiring such performance by Landlord. Tenant shall at all times during the term hereof keep in effect in responsible companies liability insurance in the names of and for the benefit of Tenant and Landlord with limits as follows:

Bodily Injury                $100,000.00 each person
                             $200,000.00 each accident

Property Damage              $50,000.00

Such insurance may, at Tenant's election, be carried under any general blanket coverage of Tenant. A renewal policy shall be procured not less than ten (10) days prior to the expiration of any policy. Each original policy or a certified copy thereof, or a satisfactory certificate of the Insurer evidencing

insurance carried with proof of payment of the premium shall be deposited with Landlord. Tenant shall have the right to settle and adjust all liability claims and all claims against the insurance companies, but without subjecting Landlord to any liability or obligation.

16. SURRENDER OF PREMISES: Tenant agrees to surrender the lease premises at the expiration, or sooner termination of this Lease or any extension thereof, broom-clean in the same condition as when said premises were delivered to Tenant, or as altered, pursuant to the provisions of this Lease, ordinary wear, tear and damage by the elements expected and Tenant shall remove all of its property. Tenant agrees to pay a reasonable cleaning charge should it be necessary for Landlord to restore or cause to be restored the premises to the same condition as when said premises were delivered to Tenant.

17. HOLDOVER: Should Tenant hold over the leased premises or any part thereof after the expiration of the term of this Lease unless otherwise agreed in writing, such holding over shall constitute a tenancy from month to month only, and Tenant shall pay as monthly rental the then reasonable value of the use and occupation of the leased premises which shall not be less, however, than the rent to be paid for the lease month under this Lease. Tenant agrees to give Landlord thirty (30) days' prior written notice of intent to vacate premises.

18. QUIET ENJOYMENT: If and so long as Tenant pays the rents reserved by this Lease and performs and observes all the covenants and provisions hereof, Tenant shall quietly enjoy the demised premises, subject, however, to the terms of this Lease, and Landlord will warrant and defend Tenant in the enjoyment and peaceful possession of the demised premises throughout the term of this Lease.

19. WAIVER OF COVENANTS: It is agreed that the waiving of any of the covenants of this Lease agreement by either party shall be limited to the particular instance and shall not be deemed to waive any other breaches of such covenant or any provision herein contained.

20. DEFAULT: If Tenant shall make default in the fulfillment of any of the covenants and conditions hereof except default in payment of rent, Landlord may, at is option, after thirty (30) days prior notice to Tenant, make performance for Tenant and for the purpose advance such amounts as may be necessary. Any amounts so advanced or any expense incurred or sum of monies paid by Landlord by reason of the failure of Tenant to comply with any covenant, agreement, obligation or provision of this Lease or in defending any action to which Landlord may be subjected by reason of any such failure for any reason of this Lease shall be deemed to be additional rent for the leased premises and shall be due and payable to Landlord on demand. The acceptance by Landlord of any installment of fixed rent or of any additional rent hereunder shall not be a waiver of any other rent then due.

If Tenant shall make default in fulfillment of any of the covenants or conditions of this Lease (other than the covenants for the payment of rent or other amounts) and any such default shall continue for a period of thirty (30) days after notice, then Landlord may, at its option, terminate this Lease by giving Tenant notice of such termination and, thereupon, this Lease shall expire as fully and completely as if that day were the date definitely fixed for the expiration of the term of this Lease and Tenant shall then quit and surrender the leased premises.

21. DEFAULT IN RENT, INSOLVENCY OF TENANT: If Tenant shall make default in the payment of the rent reserved hereunder, or any party thereof, or in making any other payment herein provided for, and any such default shall continue for a period of fifteen (15) days, after written notice to Tenant, or if the leased premises or any part thereof shall be abandoned or vacated or if Tenant shall be dismissed therefrom by or under any authority other than Landlord, or if Tenant shall file a voluntary petition in bankruptcy or if Tenant shall file any petition or institute any proceedings under any insolvency or Bankruptcy Act or any amendment thereto hereafter made, seeking to effect its reorganization or a composition with its creditors or if, in any proceedings based on the insolvency of Tenant or the leased premises or if any proceedings shall be commenced for the reorganization of Tenant or if the leasehold estate created hereby shall be taken on execution or by any process of law or if Tenant shall admit in writing its inability to pay its obligations generally as they become due, then Landlord may, at its option, terminate the Lease, without notice, and Landlord or Landlord's agents and servants may immediately, or at any time thereafter, re-enter the leased premises by force, summary proceedings or otherwise, and remove all persons and property therein, without being liable to indictment, prosecution or damage therefor, and Tenant hereby expressly waives the service of any notice in writing or intention to re-enter said premises. Landlord may, in addition to any other remedy provided by law or permitted herein, at its option re-let said premises on behalf of Tenant, applying any moneys collected first to the payment of expenses of resuming or obtaining permission, and second to the payment of costs of placing the leased premises in rentable condition, including leasing commission, and third to use payment of rent due hereunder, and any other charges due to Landlord. Any surplus remaining thereafter shall be paid to Tenant and Tenant shall remain liable for any deficiency in rental which shall be paid upon demand therefor to Landlord.

22. ENFORCEMENT: In the event either party shall enforce the terms of this Lease by suit or otherwise, the party at fault shall pay the costs and expenses incident thereto, including a reasonable attorney's fee.

23. FAILURE TO PERFORM COVENANT: Any failure on the part of either party to this Lease to perform any obligations hereunder, and any delay in doing any act required hereby shall be excused if such failure or delay is caused by any strike, lockout, governmental restriction or any other similar cause beyond the control of the party so failing to perform, to the extent and for the period that such continues, save and except that the provisions of this paragraph shall not excuse a non-payment of rent or other sums due hereunder on its due date.

24. RIGHTS OF SUCCESSORS AND ASSIGNS: The covenants and agreements contained in the within Lease shall apply to insure to the benefit of, and be binding upon the parties hereto, their heirs, distributees, executors, administrators, legal representatives, assigns and upon their respective successors in interest, except as expressly otherwise hereinbefore provided.

25. TIME: Time is of the essence of this Lease and every term, covenant and condition herein contained.

26. LIENS: Tenant agrees not to permit any lien for moneys owing by Tenant to remain against the leased premises for a period of more than thirty
(30) days following discovery of the same by Tenant; provided, however, that nothing herein contained shall prevent Tenant, in good faith and for good cause, from contesting in the courts the claim or claims of any person, firm or corporation growing out of Tenant's operation of the demised premises or costs of improvements by Tenant on the

said premises, and the postponement of payment of such claim or claims, until such contest shall finally be decided by the courts shall not be violation of this agreement or any covenant thereof. Should any such lien be filed and not be released or dishcarged or action not commenced to declare the same invalid within 30 days after discovery of the same by Tenant, Landlord may at Landlord's option (but without any obligation so to do) pay and discharge such lien and may likewise pay and discharge any taxes, assessments or other charges against the leased premises which Tenant is obligated hereunder to pay and which may or might become a lien on said premises. Tenant agrees to repay any sums so paid by Landlord upon demand therefor, together with interest at the rate of ten per center (10%) per annum from the date any such payment is made.

27. CONSTRUCTION OF LEASE: The word "Landlord" as used herein shall refer to the individual, individuals, partnership or corporation called "Landlord" at the commencement of this Lease, and the word "Tenant" shall likewise refer to the individual, individuals, partnership, or corporation called "Tenant." Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural when the sense requires.

28. PARAGRAPH HEADINGS: The paragraph headings as to the contents of particular paragraphs herein, are inserted only for convenience and are in no way to be construed as part of such paragraph or as a limitation on the scope of the particular paragraph to which they refer.

29. COMMISSIONS: Landlord acknowledges the service of None as Real Estate Broker in this transaction and in the consideration of the effort of said broker in obtaining Tenant herein, does hereby agree to pay to said broker for services rendered, commissions on the rental of the demised premises at the rate specified and adopted by the Salt Lake Board of Realtors in accordance with Exhibit "B" annexed to Landlord's copy of this Lease and made a part hereof.

30. NOTICES: It is agreed that the legal address of the parties for all notices required or permitted to be given hereunder or for all purposes of billing, process, correspondence, and any other legal purposes whatsoever, shall be deemed sufficient, if given by a communication in writing by United States mail, postage paid and certified, and addressed as follows:

If to Landlord, at the following address:         405 Lawndale Dr.
                                                  Salt Lake City, Utah

If to Tenant, at the following address:           107 South Main
                                                  Salt Lake City, Utah

31. INDUSTRIAL CENTER RULES: It is understood that the premises to be occupied by Tenant constitute a part of an industrial center being developed by Landlord, and Tenant agrees that it will conform to any reasonable rules and regulations promulgated by Landlord and relating to parking, or the organization, development or operation of the industrial center except as provided. Tenant agrees that it will neither fence nor enclose any portion of the leased premises outside the building. Tenant agrees that it will not store any materials outside the building.

32. LANDSCAPING: Tenant agrees to pay his proportionate share of a landscaping service to be secured by Landlord.

33. RENT REVIEW: At the end of 60 months the rental rate as set forth in Paragraph 1, Page 2, will be increased by the same ratio as the increase, if any, in the Consumer Price Index for all items, as published by the United States Department of Labor, Bureau of Labor Statistics between the date of possession and the end of the 60th month. If no increase occurs in the Consumer Price Index during this first 5 year period rent will remain the same as the base rent. At the end of 120 months the rental rate will be increased or decreased by 50% of the aforementioned Consumer Price Index change, if any, between the beginning of the 61st month and the end of the 120th month. If no increase occurs in the Consumer Price Index during this second 5 year period the rent will remain the same as established between the 61st. and the 121st. month. At the end of 180 months the rental rate will again b e increased or decreased by 50% of the aforementioned Consumer Price Index change, if any, between the beginning of the 121st and the end of the 180th month. If no increase occurs in the Consumer Price Index during this third 5 year period the rent will remain the same as established between the 121st and 181st months. In no event will the rent go below the original $12,000.00 base figure.

IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed the day and year first above written.

TRACY COLLINS BANK AND TRUST                     GORDON H. YATES

By:/s/ Peter K. Raison                    By:/s/ Gordon H. Yates
   ---------------------------------         ---------------------------
   Executive Vice President/Cashier
   ---------------------------------      ------------------------------
            TENANT                                   LANDLORD

EXHIBIT 2

LEGAL DESCRIPTION OF PREMISES

BEGINNING at a point on the West Line of Lawndale Drive at a point which is North 00(degree) 04' 30" West 800.893 feet and due West 842,952 feet from the Salt Lake County Surveyors Monument at 2700 South and 300 West Street, said point is also North 1256.32 feet and West 513.234 feet from the South Quarter Corner of Section 24, Township 1 South, Range 1 West, Salt Lake Base and Meridian, and running thence West 198.50 feet to the East Line of the State Road I-15 Right-of-Way Line; thence South 00(degree) 25' 00" West 350.898 feet along said Right-of-Way line (State bearing South 00(degree) 40' 00" West); thence East 201.052 feet to a point on the West line of Lawndale Drive; thence North 350.889 feet to the point of BEGINNING.

The above described property also known by the street address of:
None Shown

* * *

EXHIBIT 3

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT (this "Sublease") is made and entered into effective the 18th day of May, 1995 by and between WEST ONE BANK, UTAH (successor in interest to TRACY COLLINS BANK AND TRUST), a Utah corporation ("Sublessor"), and SUMMIT FAMILY RESTAURANTS INC., a Delaware corporation ("Sublessee").

W I T N E S S E T H:

WHEREAS, Gordon H. Yates, as Landlord, and Sublessor, as Tenant, entered into that certain Commercial and Industrial Lease dated July 25, 1979 (the "Base Lease"), covering and describing property located at 440-460 Lawndale Drive, South Salt Lake City, Utah, together with the building and other improvements thereon, which building contains approximately twenty-seven thousand one hundred twenty (27,120) square feet, all of which is referred to herein as the Premises (the "Premises") and which is described on Exhibit A to the Base Lease which is attached hereto as Exhibit 1;

WHEREAS, subject to the terms of Section 5 below, a legal description of the Premises is set forth on Exhibit 2 attached hereto and;

WHEREAS, a true and correct copy of the Base Lease is attached hereto as Exhibit 1 and made a part hereof for all purposes;

WHEREAS, THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a New York corporation ("Landlord"), has succeeded to the interest and title of Gordon H. Yates in and to the Base Lease and the Premises;

WHEREAS, West One Bank, Utah, a Utah corporation ("Tenant" and "Sublessor"), has succeeded to the interest and title of Tracy Collins Bank and Trust in and to the Base Lease;

WHEREAS, Sublessee desires to sublease from Sublessor all of the Premises described in the Base Lease upon the terms and conditions hereinafter set forth; and

NOW, THEREFORE, in consideration of the Premises and the mutual covenants contained herein, Sublessor and Sublessee hereby agree as follows:

1. Subleased Premises. Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the Premises.

2. Term. Subject to and upon the terms ad conditions hereinafter set forth, the Sublease shall be in force for a term ("Sublease Term") commencing upon execution of this Sublease and expiring on February 29, 2000. Notwithstanding anything in the prior sentence to the contrary, the parties hereto expressly agree that their intent is to enter a sublease of the Premises and that this Sublease is not intended to be and shall not be interpreted to be an assignment of the Base Lease.

Sublessee will be allowed access to the portion of the Premises not currently being utilized by Sublessor immediately upon execution of this Sublease but shall not begin construction of its tenant improvements until the plans for said improvements have been approved by the Landlord. Sublessor shall vacate the entire Premises and Sublessee shall have full access to the entire Premises not more than seventy-five (75) days after execution of this Sublease. Sublessor shall provide written notice to Sublessee that Sublessor has fully vacated the Premises.

3. Base Sublease Rental. During the Sublease Term, Sublessee agrees to pay as rent ("Base Sublease Rental") for the Premises the sum of Thirteen Thousand Nine Hundred Eight Dollars and Four Cents ($13,908.04) per month. Sublessee shall commence paying the monthly Base Sublease Rental sixty (60) days following receipt of written notice from Sublessor that Sublessor has fully vacated the Premises ("Rent Commencement Date"). If for any reason the Rent Commencement Date shall not commence on the first day of a month, the Base Sublease Rental shall be prorated. Thereafter, the monthly Base Sublease Rental shall be payable in advance on the first day of each calendar month throughout the Sublease Term. Sublessee agrees to pay all Base Sublease Rental and additional sums due under this Sublease to Sublessor at Sublessor's address as provided herein (or such other address as may be designated by Sublessor from time to time) without demand, counterclaim, or offset. All past due installments of Base Sublease Rental and other sums of any kind past due hereunder shall bear interest at the maximum lawful non-usurious rate per annum until paid or if no such rate is set, then at the rate of ten percent (10%), annually.

Any abatement of rent which Sublessor receives from the Landlord as a result of damage, destruction, condemnation, untenantability, or other events shall be passed on to Sublessee and Sublessee's rent shall be likewise abated up to a maximum of the Base Sublease Rental due from Sublessee to Sublessor.

4. Base Lease. This Sublease is subject to all the provisions, terms, covenants, and conditions of the Base Lease. Sublessor agrees to pay all rentals, base, additional or otherwise, as provided in the Base Lease, but the foregoing shall not obligate Sublessor to Sublessee for the payment of, and Sublessee agrees to pay as required by the Base Lease (or reimburse Sublessor, if applicable), all other sums due and payable pursuant to the terms of the Base Lease for the use and occupancy of the Premises during the Sublease Term for indemnity obligations of Sublessor in favor of Landlord, holdover rent, maintenance, repairs, alterations, additions, common area fee or other sums which are deemed additional rental under the Base Lease and are required to be paid by the Tenant under the Base Lease. The sums payable by Sublessee under this paragraph constitute additional rentals under applicable law. Sublessee assumes and agrees to perform and observe all provisions, terms, covenants, and conditions of the Tenant under the Base Lease as the same relate to the Premises and to Sublessee's use and occupancy of the same during the Sublease Term, except as may be expressly provided to the contrary herein. Sublessee shall have no right to exercise (and Sublessor shall have no obligation to exercise) any options available to Sublessor under the Base Lease or to exercise any rights of control or termination under the Base Lease as all the same are retained by Sublessor. Except to the extent assumed by Sublessee in this Sublease, Sublessor agrees to fully and timely perform all of Tenant's duties and obligations under the Base Lease. Sublessor agrees to and shall refrain from entering into any amendment to or modification of the Base Lease that would conflict with the rights granted to Sublessee under this Sublease without the prior written consent of Sublessee. A copy of any amendment to or modification of the Base Lease between Sublessor and Landlord shall be promptly furnished to Sublessee.

5. Memorandum of Sublease. Upon execution of this Sublease, Sublessee and Sublessor shall execute a recordable Memorandum of Sublease in the form of Exhibit 3 attached hereto. For the purposes of recording the Memorandum of Sublease, the parties hereto agree to attach to the Memorandum of Sublease, the legal description set forth on Exhibit 2 hereto which has been provided by a title company. The parties agree and acknowledge that by utilizing the legal description set forth in Exhibit 2, Sublessor is in no way subleasing to Sublessee any premises other than those described in the Base Lease and set forth on Exhibit A to the Base Lease. Therefore, if at any time, the Memorandum of Sublease needs to be amended to set forth a more accurate legal description, the parties hereto agree to do so, and to record such amendment.

6. Condition of Subleased Premises. Upon commencement of the Sublease Term, Sublessee accepts the Premises and any leasehold improvements thereto in their then existing condition, on an "as is" basis as of the date of the joint inspection of the Premises by Sublessee and Sublessor. Upon inspection, the parties hereto shall execute Exhibit 4 attached hereto indicating that the inspection has occurred and any furniture, fixtures and equipment which will remain with the Premises after vacation by the Sublessor. Sublessor shall repair any damage to the Premises caused by Sublessor's vacation of the Premises. Sublessor hereby agrees that there will be no material changes to the Premises from the date of inspection to the date Sublessor fully vacates the entire Premises, except those alterations approved by or at the direction of Sublessee. Sublessor shall not be required to make for the benefit of Sublessee any improvements to or repairs of any kind or character in or to the Premises during the Sublease Term, but this sentence shall not relieve Sublessor of its obligations to Landlord under the Base Lease.

7. Use. Sublessee agrees to use the Premises as office space, a test kitchen, and distribution center for its business and for no other purpose without first obtaining the permission of Sublessor and Landlord.

8. Indemnity. To the extent not prohibited by applicable law, Sublessee shall indemnify and hold harmless Sublessor and Landlord from and against any and all claims, demands, liabilities, losses, costs, expenses and damages for anything whatsoever, arising from or out of the Sublessee's use or occupancy of the Premises or the use and occupancy thereof by Sublessee's agents, employees, servants, customers, or invitees. The foregoing shall not be construed as an agreement by Sublessee to indemnify Sublessor against or from Sublessor's negligent acts.

To the extent not prohibited by applicable law, Sublessor shall indemnify and hold harmless Sublessee from and against any and all claims, demands, liabilities, losses, costs, expenses and damages for anything whatsoever, arising from or out of the Sublessor's use or occupancy of the Premises or the use and occupancy thereof by Sublessor's agents, employees, servants, customers, or invitees. The foregoing shall not be construed as an agreement by Sublessor to indemnify Sublessee against or from Sublessee's negligent acts.

Nothing contained herein shall be construed to enlarge or expand Sublessor's obligations to Landlord under the Base Lease. Subject to the foregoing, Sublessee shall not assume any liabilities, responsibilities or obligations, and Sublessor shall indemnify, defend, and hold Sublessee harmless from and against any and all claims, demands, liabilities, losses, costs, expenses and damages arising out of the former presence and removal of a 5,000 gallon underground gasoline storage tank ("Storage Tank") from the Premises in August 1990 as identified by the Subsurface Study conducted by Delta

Geotechnical Consultants Inc., Job No. 3039, dated February 10, 1994, or the ongoing monitoring of groundwater by Delta Geotechnical Consultants, Inc., Job No. 3575, or any other consultant authorized by Sublessor to perform tests on the Premises. Without limiting the foregoing, such indemnification by Sublessor shall include (a) the pro rata abatement of rent in the event any portion of the Premises is not useable by Sublessee as a result of any monitoring or other actions that are taken by Sublessor or its agents or representatives with respect to the prior existence of the Storage Tank and (b) responsibility by Sublessor for damages incurred by Sublessee as a result of any portion of the Premises not being useable as a result of any monitoring or other actions that are taken by Sublessor or its agents or representatives with respect to the prior existence of the Storage Tank.

Sublessor agrees that any and all monitoring or other actions related to the Storage Tank and the prior existence or removal of it from the Premises required under any applicable law or any governmental authority shall be the responsibility of Sublessor during the term of the Sublease. Sublessee agrees that it will provide access to the three well monitoring stations located outside of the west side of the building on the Premises to Sublessor or its agents or representatives as reasonably requested by Sublessor.

9. No Warranty. WHEN SUBLESSEE BEGINS OCCUPYING ANY PORTION OF THE PREMISES, SUBLESSEE WILL ACCEPT SUCH OCCUPIED PORTION OF THE PREMISES WITHOUT ANY WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO ITS CONDITION, SUITABILITY, FITNESS FOR PURPOSE OR ITS COMPLIANCE WITH ANY LAWS, REGULATIONS OR ORDINANCES, EXCEPT THAT SUBLESSOR DOES WARRANT THAT IT HAS A LEASEHOLD INTEREST IN THE PREMISES WHICH IT IS SUBLEASING TO SUBLESSEE PURSUANT TO THIS SUBLEASE, AND EXCEPT FOR THE INDEMNITY IN PARAGRAPH 8 HEREOF.

10. Assignment or Sublease. Sublessee shall not assign, mortgage, pledge, hypothecate or otherwise encumber this Sublease or the Premises, or any interest herein or any right or privilege appurtenant thereto, without the express prior written consent of Sublessor, which shall not be unreasonably withheld, and Landlord. Sublessee may not sublet any portion of the Premises without the prior written consent of Sublessor which shall not be unreasonably withheld, and Landlord. Sublessee shall not be relieved of any of its obligations hereunder by reason of any assignment of this Sublease or of any sublease of all or part of the Premises.

11. Sublessor's Acts. It is specifically agreed that Sublessee shall not be responsible for the discharge and performance of the duties and obligations required to be performed and/or discharged by Sublessor in connection with the Base Lease prior to the Commencement of the Sublease Term. In that regard, Sublessor agrees to indemnify, defend and hold Sublessee harmless from and against any and all loss, cost, expense or liability (including, without limitation, attorneys' fees, accountant's fees and court costs) resulting from any claims or causes of action existing in favor of or asserted by any party arising out of or relating to Sublessor's failure to perform any duties or obligations imposed on Sublessor under the Base Lease with respect to periods beginning prior to the commencement of the Sublease Term. However, in no event does Sublessor intend or agree to indemnify Sublessee from the consequences of the acts or omissions of Sublessee, its agents, employees or contractors. Sublessor warrants and represents that the Base Lease represents Sublessor's entire agreement with Landlord of the use and occupancy of the Premises and that

Sublessor has received no notice, and has no actual knowledge, of any default of Sublessor under the Base Lease.

12. Default. If Sublessee fails to pay any Base Sublease Rental within five (5) days after the same is due or fails to pay any other sum payable under this Sublease or the Base Lease when due, or fails to perform or observe any other covenant, term, provision or condition of this Sublease or the Base Lease, which failure continues to ten (10) days after written notice from Sublessor to Sublessee describing such failure, Sublessee shall be in default under this Sublease and, as regards this Sublease only, Sublessor shall be entitled, as between itself and Sublessee, to the same types of rights and remedies that are available under the Base Lease as between the Landlord and Tenant thereunder in the event a default by Tenant had occurred thereunder and to any rights and remedies available to a landlord under applicable law. Upon any default by Sublessee under this Sublease, Sublessor, without being under any obligation to do so and without thereby waiving such default, may make such payment and/or remedy such default for the account of Sublessee, and thereupon Sublessee agrees to and shall pay to Sublessor, immediately upon demand, all costs, expenses and disbursements incurred by Sublessor in taking such remedial action (including, without limitation, attorneys' fees, accountant's fees and court costs).

In the event Sublessor shall fail to pay any sum provided to be paid by Tenant under the Base Lease and not provided to be paid or reimbursed by Sublessee pursuant to this Sublease, or if Sublessor shall be in default of any of the other provisions of the Base Lease, which default is not the result of any default by Sublessee under this Sublease or the Base Lease and Sublessor fails to remedy any such default within the time provided in the Base Lease, Sublessee, in addition to any other rights or remedies that Sublessee may have at law or in equity, may recover any actual damages sustained by Sublessee as a result of Sublessor's default plus Sublessee's reasonable attorney's fees. Sublessee, at Sublessee's option, may cure at Sublessor's sole expense, any such default of which Sublessor shall first have been given notice, and all sums expended by Sublessee in curing such default shall be due and payable by Sublessor upon receipt of Sublessee's demand therefor, or at Sublessor's option, such amounts may be credited against future rentals payable by Sublessee to Sublessor under this Sublease. Upon receipt, Sublessor shall promptly furnish Sublessee with a copy of each notice, demand or correspondence received from Landlord. Sublessor understands and agrees that Sublessee shall have the option to assume at Sublessee's sole cost and risk, the position of Sublessor in any proceeding to enforce any term or condition of the Base Lease which Sublessor has the right to enforce. Sublessor agrees (at the expense of Sublessee) to join with Sublessee in any such proceedings in the event such action is necessary.

13. Quiet Enjoyment. Sublessee shall peacefully have, hold and enjoy the Premises, subject to the terms and conditions of this Sublease and the Base Lease, provided that Sublessee timely and fully performs its covenants, duties and obligations under this Sublease. Sublessor and Sublessee shall share equally in the cost of a leasehold policy of title insurance in the face amount of $800,000.00, to be provided to Sublessee as soon as possible after execution of this Sublease.

14. Insurance. At its expense, Sublessee shall maintain during the Sublease Term all the insurance required by Sections 3 and 15 of the Base Lease. The insurance required by Section 3 of the Base Lease shall name Landlord as the insured and the insurance required by Section 15 of the Base Lease shall name Landlord and Sublessor as additional insureds. Certificates evidencing the insurance required by this Sublease shall be furnished to Sublessor and Landlord upon the Commencement of the

Sublease Term and such certificates shall provide that such insurance overages may not be amended or cancelled without thirty (30) days prior written notice to Sublessor and Landlord. Notwithstanding the foregoing, prior to Sublessor vacating the entire Premises, Sublessor and Sublessee each shall maintain insurance for the Premises and each party shall be responsible for any damage or destruction to the portion of the Premises it possesses.

15. Waiver of Subrogation Rights. Anything contained in this Sublease to the contrary notwithstanding, and to the extent not prohibited by applicable law, Sublessor and Sublessee each waive for themselves and their respective insurers any and all rights of recovery, claim, action or cause of action against the other, its agents, officers, and employees, for any loss or damage that may occur to the Premises, or any improvements thereto, or any personal property, by reason of fire, and elements, or any other cause which could be insured against under the terms of a fire and extended coverage insurance policy, regardless of cause or origin, including without limitation, negligence of either Sublessor or Sublessee or their respective agents, officers, employees or contractors, and covenant that no insurer shall hold any right of subrogation against either Sublessor or Sublessee.

16. Condemnation. Sublessor agrees to assign to Sublessee any of its rights to awards or damages in any condemnation proceedings affecting the Premises.

17. Governing Law. This Sublease shall be governed by and construed in accordance with the laws of the State of Utah, without regard to the conflict of law principles thereof.

18. Notices. Any notice or other communication to any party required or permitted to be given under this Sublease must be in writing and shall be effectively given if hand delivered, if sent by facsimile, or if sent by United States Mail, postage prepaid, certified or registered, return receipt requested, to the following addresses:

If to Sublessor:     West One Bank, Utah
                     Controller/Treasurer #7-9065
                     107 South Main Street
                     Salt Lake City, Utah  84111
                     Fax:  (801) 534-6269

With copy to:        West One Bancorp
                     Corporate Facilities #3-2220
                     P.O. Box 8247
                     Boise, Idaho  83733
                     Attention:  Vice President & Manager, Real Estate
                     Fax:  (208) 387-3332

If to Sublessee:     Summit Family Restaurants Inc.
                     Attn:  Law Department
                     440 Lawndale Drive
                     Salt Lake City, Utah  84119
                     Fax:  (801) 974-4385

With copy to:        Summit Family Restaurants Inc.
                     Attn: Chief Financial Officer
                     440 Lawndale Drive
                     Salt Lake City, Utah  84119
                     Fax:  (801) 974-4385

Any notice mailed shall be deemed to have been given on the second (2nd) business day following the date of deposit of such item in a depository of the United States Postal Service. Notice effected by hand delivery or facsimile shall be deemed to have been given at the time of actual delivery. Any party shall have the right to change its address to which notices shall thereafter be sent by giving the other parties notice thereof.

19. Successors and Assigns. This Sublease shall be binding upon and shall inure to the benefit of Sublessor, Sublessee and their respective heirs, successors and assigns, subject to the limitations set forth in paragraph 10 above.

20. Taxes. Sublessee shall pay when due all taxes as well as any special assessments imposed on the Premises and incurred during the Sublease Term over and above the base amounts as indicated in Section 8 of the Base Lease.

21. Sublessor's Access. Sublessor shall have the right, at all reasonable times during the Sublease Term, after reasonable notice to Sublessee, not to be less than forty-eight (48) hours unless Sublessee is in default under this Sublease (in which event no notice is required), to enter into the Premises and to cure any defaults of Sublessee hereunder that Sublessor elects to cure. No such entry by Sublessor will constitute an assumption of any of Sublessee's obligations hereunder.

22. Security Deposit. No security deposit shall be paid by Sublessee.

23. Fees. Except with respect to the listing agent, Richard H. Nordlund of Commerce Properties, Inc. who represents Sublessor and Steve Condie of Commerce Properties Management Corp. who represents the Sublessee, Sublessor and Sublessee warrant and represent that no broker was involved on either's behalf in negotiating or consummating this Sublease. Sublessor shall pay the applicable commission to Commerce Properties, Inc. and Commerce Properties Management Corp. which total combined commissions shall equal six percent (6%) of the rental income of the Sublease, less the allowance for tenant improvements.

24. Landlord's Consent. The provisions of Landlord's consent which is attached hereto and is incorporated herein and the agreements of Sublessor and Sublessee contained therein are a part of this Sublease and binding on Sublessor and Sublessee, respectively. Likewise, the agreements and consents of Landlord contained in such consent are part of this Sublease and inure to the benefit of and are enforceable by Sublessor and Sublessee, respectively. To the extent such consent modifies or amends the Base Lease, Sublessor and Sublessee consent to the same.

25. Attorney Fees. In the event that at any time during the term of this Sublease either Sublessor or Sublessee shall institute any action or proceedings against the other to enforce the provisions of this Sublease, or resulting from any default thereunder, then in that event, the unsuccessful party in such action or proceeding shall reimburse the prevailing party therein for the reasonable attorneys' fees and costs incurred by the prevailing party.

26. Tenant Improvement Allowance. Sublessor shall pay to Sublessee a total of Five Dollars ($5.00) per square foot or One Hundred Thirty-Five Thousand Six Hundred Dollars ($135,600.00) to be used for tenant improvements of the Premises. Payment of such funds will be made at the completion of tenant improvements. Sublessee will show proof of those improvements to Sublessor in the amount of One Hundred Thirty-Five Thousand Six Hundred Dollars ($135,600.00). To the extent the cost of tenant improvements in the Premises exceeds the allowance provided by Sublessor, Sublessee will pay for the overage amount to those third parties.

27. Lease Contingency. This Sublease is contingent on Silver State Suppliers, Inc. closing on the purchase of Sublessee's land, building and improvements at 1010 West 2610 South, Salt Lake City, Utah on or before May 22, 1995. This Sublease shall be null and void if such sale is not completed by May 22, 1995, and all monies paid by Sublessee to Sublessor will be returned to Sublessee.

IN WITNESS WHEREOF, the parties have entered into this Sublease as of the day and year first above written.

WEST ONE BANK, UTAH SUMMIT FAMILY RESTAURANTS INC.

By:   /s/ Lewis B. Goodwin           By:   /s/ David E. Pertl
      ----------------------               ------------------------------------

Name: Lewis B. Goodwin               Name: David E. Pertl
      ----------------------               ------------------------------------

Title:Sr. Vice President             Title:Sr. Vice President, CFO & Treasurer
      ----------------------               ------------------------------------

      "Sublessor"                                  "Sublessee"

EXHIBIT 10.6

TABLE OF CONTENTS

                                                                                         PAGE
                                                                                         ----
1.      License........................................................................   2

        1.1      Grant.................................................................   2
        1.2      Restrictions..........................................................   2

2.      Location.......................................................................   2

        2.1      Initial Location......................................................   2
        2.2      Relocation............................................................   2

3.      Restaurant Construction and Opening Date.......................................   3

        3.1      Lease, Mortgage or Deed of Trust......................................   3
        3.2      Plans.................................................................   3
        3.3      Opening Date..........................................................   4

4.      Training and Assistance........................................................   4

        4.1      Manager Training......................................................   4
        4.2      Opening Assistance....................................................   5
        4.3      Subsequent Training...................................................   6
        4.4      Operating Manual, Recipe Manual and Menu..............................   6
        4.5      Consultation..........................................................   6
        4.6      Compliance............................................................   7

5.      Restaurant Operation...........................................................   7

        5.1      Business Name.........................................................   7
        5.2      Signs.................................................................   7
        5.3      Insurance.............................................................   7
        5.4      Employees.............................................................   9
        5.5      Managers..............................................................   9
        5.6      Hours.................................................................  10
        5.7      Products for Sale.....................................................  10
        5.8      Approved Suppliers....................................................  10
        5.9      Maintenance and Repairs...............................................  11
        5.10     Alterations...........................................................  12
        5.11     Remodeling and Redecoration...........................................  12
        5.12     Compliance with Laws and Good Business Practices......................  13
        5.13     Notice of Action......................................................  13

6.      Changes........................................................................  13

7.      The Marks; Proprietary Information.............................................  14

        7.1      Ownership of the Marks................................................  14
        7.2      Litigation............................................................  14

                                                                                         PAGE
                                                                                         ----
         7.3      Nonexclusivity of License.............................................  15
         7.4      Registration..........................................................  15
         7.5      Offering of Securities................................................  15
         7.6      Proprietary Information...............................................  15

 8.      Payments.......................................................................  17

         8.1      Franchise Fee.........................................................  17
         8.2      Continuing Payments...................................................  17

                  8.2.4    Application of Payments......................................  18

 9.      Advertising....................................................................  18

         9.1      Advertising Fee.......................................................  18
         9.2      Telephone Directory Listings..........................................  19
         9.3      Approved Advertising..................................................  19

10.      Financial Statements; Maintenance of Books and Records: Inspections............  19

         10.1     Weekly Report.........................................................  19
         10.2     Periodic Reports......................................................  19
         10.3     Annual Reports........................................................  19
         10.4     Form of Reports.......................................................  20
         10.5     Records...............................................................  20
         10.6     Audits................................................................  20
         10.7     Inspections...........................................................  21

11.      Additional Conditions..........................................................  21

         11.1     Other Locations.......................................................  21
         11.2     Other Businesses......................................................  21
         11.3     Independent Contractor................................................  22
         11.4     Indemnity.............................................................  22

                  11.4.1   Franchisee Indemnity.........................................  22
                  11.4.2   Franchisor Indemnity.........................................  22

         11.5     Corporate Franchisees.................................................  23

12.      Assignment.....................................................................  23

         12.1     Transfers.............................................................  23
         12.2     Assignment to Corporation.............................................  25
         12.3     Franchisor's Right of First Refusal...................................  25
         12.4     No Waiver or Release of Existing Claims...............................  26
         12.5     Assignment by Franchisor..............................................  26
         12.6     Rights Upon Death or Incapacity.......................................  26

13.      Term; Renewal; Termination.....................................................  27

         13.1     Term..................................................................  27
         13.2     Renewal...............................................................  27
         13.3     Extension.............................................................  28
         13.4     Termination by Franchisor upon Event of Default.......................  28
         13.5     Termination by Franchisee.............................................  30
         13.6     Effect of Termination.................................................  30

                                                                                        PAGE
                                                                                        ----
14.      Noncompetition.................................................................  33
15.      Arbitration....................................................................  34
16.      General Provisions.............................................................  34

         16.1     Franchisee's Warranty.................................................  34
         16.2     Notices...............................................................  34
         16.3     Integration...........................................................  35
         16.4     Governing Law and Construction........................................  35
         16.5     Waiver................................................................  35
         16.6     Binding Effect........................................................  35
         16.7     Captions..............................................................  35
         16.8     Severability..........................................................  35
         16.9     Equally Favorable Treatment...........................................  35
         16.10    Acknowledgement.......................................................  36
         16.11    Disclaimer............................................................  37

Appendix

    Exhibits

         Exhibit A  Marks
         Exhibit B  Location
         Exhibit C  Shareholder List

     Acknowledgement of Receipt of Completed Agreements

BETWEEN:  HomeTown Buffet, Inc.,                     FRANCHISOR
          a Delaware corporation
          9171 Towne Centre Drive, #260
          San Diego, California 92122

AND:      HTB Restaurants, Inc.,                     FRANCHISEE
          a Delaware corporation
          1010 West 2610 South
          Salt Lake City, Utah 84119-2486

R E C I T A L S

A. Franchisor has developed a distinctive restaurant business known and referred to as HomeTown Buffet that is based on operating restaurants which feature a unique restaurant business system developed by Franchisor characterized by a self-service buffet, with customers serving themselves from scattered buffet service islands and includes special recipes and food preparation methods, distinctive menus and a stylized restaurant appearance, specially designed equipment and a unique system of operation and method of doing business and other distinctive and special elements, all of which may be improved, further developed or otherwise modified from time to time (the "Restaurant System").

B. Franchisor has rights to certain service marks, trademarks and related logos used in connection with the Restaurant System and franchise operations and may develop additional such marks in the future (the "Marks") and is the exclusive licensee of the mark "HOMETOWN" pursuant to a license agreement dated as of April 29, 1991, between Franchisor and Hometown Pharmacy Company, Inc. A copy of the current logotype version of Franchisor's "HOMETOWN BUFFET" name and service mark is attached as Exhibit A.

C. Franchisee has examined and fully considered an Offering Circular that Franchisor has presented to Franchisee. Franchisee acknowledges that Franchisor has made no projections of cost or revenue of such business and that Franchisor has advised Franchisee to seek the counsel of independent professionals respecting the terms and conditions of this agreement. Franchisee has independently and carefully assessed the risk of undertaking the business franchised under this agreement and has developed its own projections of the cost and possible revenues of such a business.

D. Franchisee desires Franchisor to train and franchise it to operate a HomeTown Buffet restaurant according to this agreement, using the Marks and Franchisor's standards, methods and techniques. Franchisor is willing to grant such a franchise to Franchisee upon the terms and conditions set forth in this agreement.

NOW, THEREFORE, in consideration of the foregoing and in further consideration of the obligations and undertakings of each party as set forth in this agreement, Franchisor and Franchisee agree as follows:

1. License.

1.1 Grant. Subject to the terms and conditions of this agreement, Franchisor grants Franchisee for the term of this agreement a nonexclusive right to use the Marks and the Proprietary Information (as defined in Section 7.6) exclusively in connection with the operation by Franchisee of the restaurant (the "Restaurant") contemplated by this agreement at the Location (as defined in
Section 2.1).

1.2 Restrictions. Franchisee will operate the Restaurant in conformity in every respect with all provisions of this agreement, the Franchise Operating Manual, Recipe Manual and Menu referred to in Section 4.4 and as otherwise specified or required from time to time in writing by Franchisor and will use its best efforts to achieve the highest practicable level of sales and to make the Restaurant as productive as possible.

2. Location.

2.1 Initial Location. The Restaurant shall be located at the address described on the attached Exhibit B (the "Location"). Franchisor's approval of the Location shall not be construed as a representation of the eventual success of the Restaurant at the Location.

2.2 Relocation. Notwithstanding any provision in this agreement to the contrary, Franchisee may, with the prior written approval of Franchisor, relocate the Restaurant to another location during the term of this agreement. The failure of Franchisee to obtain the written approval of Franchisor prior to the relocation shall be a material breach of this agreement. In the event Location is relocated pursuant to this provision, the "new" location must comply with all applicable provisions of this agreement and with the standards then being required of new franchisees by Franchisor. If, pursuant to the terms of this Section, Franchisee relocates the Location to another location during the term of this agreement,

then Franchisee shall pay Franchisor a relocation fee equal to 50 percent of the then applicable franchise fee.

3. Restaurant Construction and Opening Date.

3.1 Lease, Mortgage or Deed of Trust. Any lease, mortgage or deed of trust for the Location or the Restaurant premises must be approved in advance in writing by Franchisor, which approval shall not be unreasonably withheld. Franchisor shall provide Franchisee with a copy of its standard lease for use in leasing the Location. In the event Franchisee does not use Franchisor's standard lease, Franchisee agrees to deliver a true and correct copy of such lease, mortgage or deed of trust to Franchisor not less than ten (10) days prior to execution thereof by Franchisee. Any such lease must have a remaining term at least as long as the remaining term of this agreement, must require lessor to give Franchisor reasonable written notice of Franchisee's default under the lease and written notice of termination on the same terms set forth with respect to the Franchisee, and must allow Franchisor the opportunity to cure Franchisee's default under the lease without such cure constituting an assumption of the lease or any obligation by Franchisor. Any such mortgage or deed of trust must require reasonable written notice to Franchisor of intent to foreclose and must allow Franchisor the opportunity to cure Franchisee's default under the mortgage or deed of trust without such cure constituting an assumption of the mortgage or deed of trust or any obligation by Franchisor. Any such lease, mortgage or deed of trust shall permit assumption by Franchisor or its designee without consent in the event Franchisor purchases the Restaurant pursuant to Section 12.3, Section 13.6 or otherwise.

3.2 Plans. Franchisee shall develop architectural plans, including building plans and site plans, and specifications for the Restaurant's interior and exterior design, decoration and layout consistent with the standards and specifications established by Franchisor. Franchisor during its regular business hours shall make generally available to Franchisee its personnel for telephone and written consultation regarding design, decoration and layout of the Restaurant. Franchisor shall provide Franchisee with its standardized building plans for the Restaurant. Franchisee may use these building plans or develop its own, provided that if Franchisee uses the standardized plans, Franchisee shall be responsible for all fees charged by the architect for the use of such building plans. If Franchisee uses the standardized plans, Franchisee shall be responsible for preparation of a suitable site plan and for site-specific modifications to the standardized plans. Franchisee shall not commence improvement of the Location until (a) all final plans and specifications have been submitted to and are approved by Franchisor, which approval shall not be unreasonably withheld or delayed; (b) all

necessary financing to fully develop the Restaurant has been secured; and (c) all necessary governmental approvals and permits have been obtained. Franchisee shall construct, complete and fully furnish and equip the Restaurant at its sole expense according to such plans and specifications as are approved by Franchisor.

3.3 Opening Date. Franchisee shall commence substantial improvement of the Location for the Restaurant on or before 120 days after the execution of this agreement and shall complete, fully furnish and equip and open the Restaurant for business on or before 270 days after the execution of this agreement (the "Opening Date"); provided, however, that in any event Franchisee shall open the Restaurant for business as required under any development schedule under the Multiple Unit Agreement between Franchisor and Franchisee dated October 9, 1991, as amended from time to time, relating to the development of multiple franchise units of HomeTown Buffet restaurants (the "Multiple Unit Agreement"). If Franchisee fails to meet the requirements of this Section within the times specified, Franchisor may terminate this agreement upon refunding to Franchisee 50 percent of the franchise fee paid pursuant to Section 8.1. Franchisor may retain the remainder of the franchise fee to defray its costs for training, consultation, site selection review and other services provided and expenses incurred in connection with the sale and development of the franchise for the Restaurant.

4. Training and Assistance.

4.1 Manager Training.

4.1.1 Franchisor will provide a mandatory training program to Franchisee's Designated Manager (as defined in Section 5.5) and one of Franchisee's assistant managers prior to the Opening Date. The manager training program will be conducted at the HomeTown Buffet located in Medford, Oregon or such other location as may be designated by Franchisor and will be offered from time to time as necessary to accommodate new franchisees. The manager training program will consist primarily of on-the-job training in a HomeTown Buffet restaurant, supplemented at the option of Franchisor by classroom instruction, individual study and question and answer sessions. The training program will be for a minimum of four weeks and for such additional period of time as Franchisor shall deem necessary and will include instruction in the basic elements of the Restaurant System and the management, operation and maintenance of the Restaurant and the use of the Operating Manual, Recipe Manual and other Proprietary Information. Except as provided in Section 4.1.3, Franchisee will not be charged tuition for such manager training for the Designated Manager and one of Franchisee's assistant managers, but

Franchisee will be responsible for all compensation of the managers and all associated expenses, including without limitation meals, lodging and transportation.

4.1.2 Before the Restaurant is open for business, Franchisee's Designated Manager and one of Franchisee's assistant managers shall take and complete the manager training program, to Franchisor's satisfaction, such satisfaction to be determined in Franchisor's sole discretion. If Franchisee's Designated Manager and at least one of Franchisee's assistant managers do not successfully take and complete the manager training program to Franchisor's satisfaction before the Opening Date, Franchisor may terminate this agreement upon refunding to Franchisee 50 percent of the franchise fee paid pursuant to
Section 8.1. Franchisor may retain the remainder of such franchise fee to defray its costs for training, consultation, location selection review and other services provided and expenses incurred in the sale and development of the franchise for the Restaurant.

4.1.3 If Franchisee hires a new manager or assistant manager who has not successfully completed Franchisor's manager training program, then any such new manager or assistant manager must successfully complete the training Program within 30 days after the date of hire by Franchisee; provided that if, in Franchisor's judgment, it is not necessary for the new manager or assistant manager to complete the training program, Franchisor may waive this requirement. After opening, Franchisor will offer the manager training program to Franchisee's new managers and assistant managers from time to time as deemed necessary by Franchisor. Franchisee must pay Franchisor the then-current training fee for each such person who attends the Franchisor's training program. As an alternative to providing all or any part of such training itself, Franchisor, in its sole discretion, may certify Franchisee to conduct, or assist in conducting, the manager training program for Franchisee's new managers. To the extent such training is conducted by Franchisor, Franchisor may charge Franchisee tuition of up to $2,000 per manager for the training of managers other than those for whom tuition is not required under Section 4.1.2.

4.2 Opening Assistance. For the opening of the Restaurant, Franchisor during its regular business hours shall make generally available to Franchisee its personnel for telephone and written consultation regarding the opening of the Restaurant. Franchisor will dispatch an opening team of at least three personnel to the Restaurant to consult and assist Franchisee and its managers regarding the opening, the initial marketing and sales effort and the management and operation of the Restaurant, for a period not to exceed two weeks, the exact period to be determined by Franchisor. Such consultation and assistance shall be provided at no additional cost to Franchisee.

4.3 Subsequent Training. From time to time, Franchisor may provide and may require that Franchisee's Designated Manager and/or assistant managers attend, and complete to Franchisor's satisfaction, refresher training programs, seminars or meetings. Such programs will be held at locations designated by Franchisor and will be provided without charge to Franchisee. Franchisee, however, will be responsible for all compensation of such managers and all associated expenses, including without limitation meals, lodging and transportation.

4.4 Operating Manual, Recipe Manual and Menu. In order for Franchisor to maintain uniform standards of operation among its franchisees and to protect and enhance the goodwill and acceptance relating to the Restaurant System and the Marks, Franchisor will furnish to Franchisee one copy and any supplements and modifications to its Operating Manual (the "Operating Manual"), Standard Recipe Manual (the "Recipe Manual") and Standard Menu (the "Menu"). Franchisee will conform to the common image and identity created by the foods, products, premiums, novelty items, recipes, ingredients, cooking techniques and processes and the services associated with the Restaurant System which are portrayed and described by the Operating Manual, Recipe Manual and Menu. Franchisee acknowledges that the Operating Manual, Recipe Manual and Menu shall at all times remain the sole and exclusive property of Franchisor and that Franchisee is merely licensed to use the same as provided in this agreement. It is further understood that the Operating Manual, Recipe Manual and Menu are deemed confidential in all respects and constitute Proprietary Information and are subject to all the restrictions of Section 7.6. Franchisor may from time to time revise and update the Operating Manual, Recipe Manual and Menu in order to include any improvements or changes that Franchisor may adopt in its sole discretion. Franchisee will not use the Operating Manual, Recipe Manual or the Menu or any information contained therein in connection with the operation of any other business or for any purpose other than in conjunction with the operation of Franchisee's franchise.

4.5 Consultation. Franchisor shall make its personnel available to Franchisee during Franchisor's regular business hours for telephone consultation and for written correspondence on problems or questions that Franchisee may desire to discuss regarding operation of the Restaurant. Other assistance, including visits by Franchisor's personnel to Franchisee's Restaurant, also will be provided at Franchisor's sole discretion and within the limits of its staffing. Except as set forth in Section 4.2, if such visits are made at the

request of Franchisee, Franchisee shall pay the associated meals, lodging and transportation expenses incurred by Franchisor or its personnel. Such reimbursement to be paid after billing pursuant to Section 8.2.2.

4.6 Compliance. Franchisee agrees to faithfully and completely follow and observe all standards, specifications, requirements, instructions and procedures (a) as set forth in the Operating Manual, Recipe Manual and Menu and any amendments or supplements thereto and any bulletins or materials provided by Franchisor; (b) as taught in any training course conducted by Franchisor; (c) as otherwise established from time to time by Franchisor pursuant to this agreement. Franchisee shall cause all its Restaurant employees to be trained with respect to all such standards, specifications, requirements, instructions and procedures as are relevant to the performance of their respective duties.

5. Restaurant Operation.

5.1 Business Name. At its own expense, Franchisee shall comply with all applicable federal, state and local laws governing registration and use of assumed business names in connection with operation of the Restaurant. Franchisee shall not use any of the Marks or any similar words as part of its corporate or business name. Franchisee shall not license, register or purchase vehicles, fixtures, products, supplies or equipment or perform any other activity or incur any obligation or indebtedness except in its own corporate or business name.

5.2 Signs. At its own expense, Franchisee will have made and will exhibit and maintain on the inside and outside of the Restaurant a signing package that conforms to specifications established from time to time by Franchisor. Franchisee may not display on the inside or outside of the Restaurant any signs not approved by Franchisor.

5.3 Insurance.

5.3.1 Franchisee shall procure and maintain in full force and effect, at its sole cost and expense, insurance coverage for the Restaurant and Location in an amount and form satisfactory to Franchisor, including, but not limited to:

(a) general liability insurance with coverage of at least one million dollars insuring Franchisee, Franchisor and their respective officers, directors, agents and employees from and against any and all loss, liability, claim or expense of any kind whatsoever, including bodily injury, personal injury, death, property damage, products

liability and all other occurrences resulting from the condition, operation, use, business or occupancy of the Restaurant and the Location, including the surrounding premises or area, the parking area and the sidewalks of the Location;

(b) "all risks" property insurance coverage, which shall include fire and extended coverage, for the inventory, machinery, equipment, fixtures and furnishings owned or leased by Franchisee and used by Franchisee or at the Location with coverage limits of at least "replacement" cost;

(c) all insurance required under any lease, mortgage, deed of trust, contract for deed or any other legal contract in connection with the Location or the Restaurant; and

(d) all other insurance required by state or federal law, including workers' compensation insurance for its employees.

5.3.2 If Franchisee, or any of Franchisee's shareholders or partners, owns, either directly or indirectly, the building or the business premises at the Location, then Franchisee will insure the building or the business premises for and against all risk, loss and damages in an amount equal to at least "replacement" cost. If the Location is either partially or completely destroyed by fire or any other catastrophe, then Franchisee will use the insurance proceeds to repair or reconstruct the Location and recommence business as soon as reasonably possible.

5.3.3 All insurance companies providing coverage to Franchisee must be acceptable to and approved by Franchisor, and must be licensed in the state where coverage is provided. Franchisee will provide Franchisor with certificates of insurance evidencing the insurance coverage required of Franchisee pursuant to this Section 5.3 no later than the date the Franchisee opens for business, and Franchisee will immediately provide, upon expiration, change or cancellation, a new certificate of insurance to the Franchisor.

5.3.4 All liability insurance policies procured and maintained by Franchisee will require the insurance company to provide and pay for attorneys to defend any legal actions, lawsuits or claims brought against Franchisee, Franchisor and their respective officers, directors and employees.

5.3.5 All insurance policies procured and maintained by Franchisee pursuant to this Section 5.3 will name

Franchisor as an additional insured (with the exception of workers' compensation, will contain endorsements by the insurance companies waiving all rights of subrogation against Franchisor, and will stipulate that Franchisor will receive copies of all notices of cancellation, nonrenewal or coverage reduction or elimination at least 30 days prior to the effective date of such cancellation, nonrenewal or coverage change.

5.3.6 Franchisor shall have the right and authority to require additional insurance coverage and higher policy limits than set forth above as may be specified by Franchisor in writing.

5.3.7 In the event Franchisee, for any reason, fails to procure and maintain the insurance coverage required by this Section, Franchisor shall have the right and authority to immediately procure such insurance coverage and charge the cost thereof to Franchisee, which charges shall be paid immediately upon written notice and shall be subject to charges for late payments in the manner set forth in Section 8.2.3.

5.3.8 Franchisee may self-insure for any of the risks described in this Section 5.3, provided that Franchisee reasonably believes the coverage required for any such risk exceeds reasonably necessary coverage or reasonably believes that the premiums necessary to support such coverage are excessive.

5.4 Employees. Franchisee shall employ, train (with the assistance described in Section 4), compensate and maintain at all times during the term of this agreement sufficient personnel to operate the Restaurant in conformance with the standards, procedures and requirements set forth in this agreement, the Operating Manual and as otherwise specified or required from time to time orally or in writing by Franchisor.

5.5 Managers. Franchisee shall at all times have a qualified designated manager of the Restaurant (the "Designated Manager") and at least one full-time qualified assistant manager and may appoint as many additional assistant managers as Franchisee deems appropriate. Franchisee shall notify Franchisor immediately of the designation of the initial manager and any replacement manager. It is of the essence of this agreement that the Designated Manager shall devote his or her full time and energies to achieving the highest practicable level of sales and making the Restaurant as productive as possible and that he or she shall directly supervise, on the premises, the operation of the Restaurant. The Designated Manager or a qualified assistant manager shall be at the Restaurant during all hours of operation. The Designated Manager or an assistant manager shall be deemed to be

"qualified" as that term is used in this Section if the particular manager has completed to Franchisor's satisfaction the manager training described in Section 4.1.

5.6 Hours. Franchisee shall cause the Restaurant to be open for business for the number of hours per day and the number of days each year consistent with the most common operating schedule of the HomeTown Buffet restaurants operated by Franchisor. In the first year the Restaurant is open, the number of days the Restaurant is required to be open for business shall be prorated from the opening date to the end of that calendar year. Franchisee may close the Restaurant for such periods as may be reasonably required to accomplish remodeling, repairs and alterations. Failure of Franchisee to cause the Restaurant to be open for business as described herein shall be excused for a period, not exceeding 180 days, where such failure is caused by acts beyond its reasonable control including but not limited to acts of God, or public enemy, acts of other parties, governmental laws, regulations or requirements, the acts or failure to act of any governmental authority, acts of civil or military authority, labor disputes, fires, riots, wars, embargoes, epidemics, floods, unusually severe weather, or shortage or absence of power or fuel. If the failure to cause the Restaurant to be open for business extends for a period beyond 180 days, Franchisee's obligation to open the Restaurant shall be excused and Franchisee's and Franchisor's obligations hereunder relating to the Restaurant shall terminate.

5.7 Products for Sale. Franchisee must offer for sale all, and will sell only, those foods, beverages, products, goods, premiums, novelty items, clothing, souvenirs, merchandise, sundries and services (the "Items") set forth in the Operating Manual, Recipe Manual and Menu or otherwise specified from time to time orally or in writing by Franchisor, and Franchisee will conform to all customer service standards prescribed by Franchisor orally or in writing. Franchisee shall prepare foods, food items and beverages only in conformity with the Recipe Manual and Menu or as otherwise required by Franchisor. Franchisee may not sell or offer for sale any other Items without prior written consent of Franchisor. Franchisee will have the absolute right to sell all Items at whatever prices and upon whatever terms it deems appropriate.

5.8 Approved Suppliers. Franchisee will purchase from suppliers approved in writing by the Franchisor those Items and those recipe ingredients, supplies, uniforms, machinery, signs, furniture, fixtures and equipment (the "Supplies") which are to be used or sold by Franchisee and which Franchisor determines meet the specifications or standards of quality and uniformity required to protect the

valuable goodwill and uniformity symbolized by and associated with the Marks and the Restaurant System. Franchisor maintains and shall make available to Franchisee the names and addresses of approved suppliers for all Items and Supplies for which Franchisor has established specifications or standards. Franchisee will have the right and option to purchase these Items and supplies from other or outside suppliers provided that such Items and Supplies conform in quality to Franchisor's specifications or standards, as determined by Franchisor. If Franchisee desires to purchase any Items or Supplies from such other suppliers, then Franchisee must petition Franchisor for approval of such Items, Supplies and other suppliers and submit samples and specifications and/or standards to Franchisor for review and testing to determine whether the Items and Supplies comply with Franchisor's specifications or standards. Written approval of Franchisor must be obtained by Franchisee before Franchisee uses or sells any such Items or Supplies obtained from such previously unapproved supplier, which approval shall not be unreasonably withheld or delayed.

With respect to any proposed new supplier, Franchisor reserves the right to require execution of a confidentiality agreement with Franchisor as a condition of approval. As a further condition of approval, Franchisor and its designees shall have the right to inspect the supplier's facilities. Franchisor shall notify Franchisee concerning approval or disapproval within a reasonable period of time, depending on the circumstances, after its receipt of the approval petition, required information, including samples and specifications or standards, and inspection of facilities. As a condition of continued approval, the supplier must permit Franchisor and its designees to reinspect the supplier's facilities as deemed necessary by Franchisor.

Franchisor reserves the right to terminate approval of any supplier based on the supplier's breach of any agreement with Franchisor, including without limitation any confidentiality agreement, or the supplier's failure to consistently produce a product within the specifications or standards set forth in the Operating Manual, Recipe Manual and Menu.

Franchisor will provide Franchisee at least 20 days' prior written notice of its intent to revoke approval of any approved supplier.

5.9 Maintenance and Repairs. Franchisee shall maintain, at its expense, the condition of the Restaurant, including without limitation all furnishings, equipment, fixtures, signs, buildings and improvements, in good repair, attractive appearance and sound operating condition in compliance with the standards specified in the Operating Manual or otherwise specified from time to time orally or in writing by Franchisor Such maintenance shall include, without limitation:

(a) regular and thorough cleaning and sanitation of the interior and exterior of the Restaurant;

(b) prompt repair of any broken or damaged equipment, furnishings, signs, buildings or improvements;

(c) replacement and/or refurbishing of worn out or outdated equipment, furnishings, signs, buildings or improvements; and

(d) periodic painting and redecorating.

If Franchisee does not maintain the condition and appearance of the Restaurant as required by this Section and does not cure such deficiency within 30 days of its receipt of Franchisor's notice of the deficiency, Franchisor may, but shall not be required to, cause such deficiency to be corrected and Franchisee shall reimburse Franchisor for all associated costs and expenses. Franchisor's rights under this Section shall be in addition to and not in lieu of any other rights it may have under this agreement or applicable law.

5.10 Alterations. Franchisee shall not make any material alterations to the Location or Restaurant nor shall the Franchisee make any material replacements of or alterations to the layout, leasehold improvements, fixtures, signs, equipment, accounting systems or appearance of the Restaurant without prior written approval by Franchisor, which approval shall not be unreasonably withheld or delayed. Franchisor shall have the right, in its sole discretion, and at the sole expense of the Franchisee, to rectify any material alterations to the Location or Restaurant not previously approved by Franchisor.

5.11 Remodeling and Redecoration. Franchisee shall, from time to time as reasonably required by Franchisee (taking into consideration the cost and then remaining term of this agreement), make the reasonable capital expenditures necessary to extensively modernize the Restaurant and Location and to replace the furniture, fixtures, supplies and equipment. All such modernization or replacement must conform to Franchisor's then-current standards and specifications, and must be approved by Franchisor in writing. Franchisee shall commence and complete such remodeling, modernizing, redecorating and renovating within three months from the date that Franchisee receives written notice from Franchisor specifying the required remodeling, modernization, redecoration and renovation, and

will diligently complete such remodeling, modernization, redecoration and renovation within a reasonable time after its commencement. Except as provided for in Section 5.9 of this agreement, Franchisee shall not be required to extensively modernize the Restaurant or Location or to replace or modernize the furniture, fixtures, supplies and equipment more than once, every five years during the term of this agreement.

5.12 Compliance with Laws and Good Business Practices. Franchisee shall secure and maintain in force all required licenses, permits and certificates relating to the operation of the Restaurant and shall operate the Restaurant in full compliance with all applicable federal, state and local laws, ordinances and regulations. Franchisee shall pay promptly when due any and all taxes and assessments relating to the Restaurant. Franchisee agrees to use good business and advertising practices in the operation of the Restaurant.

5.13 Notice of Action. Franchisee shall notify Franchisor in writing within five days of the commencement of any action, suit or proceeding, or of the issuance of any order, writ, injunction, award or decree of any court, agency or other governmental instrumentality, that might materially adversely affect the operation or financial condition of Franchisee or the Restaurant.

6. Changes.

6.1 Franchisee agrees and understands that Franchisor shall have the right to change or modify the Restaurant System, Marks, Operating Manual, Recipe Manual and Menu, the training programs, and the standards, procedures or requirements set forth in the Operating Manual, Recipe Manual and Menu or otherwise specified from time to time orally or in writing by Franchisor, and shall have the right to adopt new marks, standards, procedures or requirements or new product" or equipment to be sold or used by the Franchisee in the Restaurant System. Franchisee shall accept and use all such changes as if they were set forth in this agreement or the Operating Manual, Recipe Manual and Menu as of the execution of this agreement. Franchisee will make such expenditures as are reasonably required by such changes and shall do so within the time specified by Franchisor. Any changes or modifications to the Marks and any new marks shall be deemed Marks for all purposes of this agreement.

6.2 Franchisee acknowledges and agrees that some of the required changes may be material and may involve the addition or substitution of new products, product lines, services or an alteration of the product and service mix of Franchisor's Restaurant System. Franchisor will give

Franchisee as much notice as is reasonably practicable in the circumstances in respect of any and all such material changes.

6.3 Upon receipt of any such notice, Franchisee hereby agrees to comply with and carry out all such changes, modifications or additions at its own expense, promptly as required by and within the time specified by such notice.

7. The Marks; Proprietary Information.

7.1 Ownership of the Marks. The Marks are, and at all times shall remain, both during the term of this agreement and at all times thereafter, the sole and exclusive property of Franchisor, or in the case of the mark "HOMETOWN," Franchisor and its licenser. Subject to Section 5.1, Franchisee agrees to use the Marks in conjunction with its operation of the Restaurant as provided in this agreement, in the Operating Manual and as otherwise specified from time to time orally or in writing by Franchisor. Franchisee shall in no event use or authorize the use of the Marks in any other connection or for any purpose whatsoever. During the term of this agreement and after its expiration or termination, Franchisee shall not directly or indirectly contest, register or attempt to register with state or federal authorities as a trade name, trademark or service mark, or aid in contesting the validity or ownership of, the Marks or any copyrights of Franchisor. All goodwill associated with the Marks and Franchisor's copyrights, including any goodwill arising through Franchisee's activities, shall inure directly and exclusively to Franchisor, except as otherwise specifically provided by law.

7.2 Litigation. Franchisee shall give Franchisor prompt notice of any observed or suspected infringement, challenge or claim or the commencement of any litigation or United States Patent and Trademark Office or other proceeding of which Franchisee has knowledge involving any of the Marks or Franchisee's right to use the Marks in operating the Restaurant. Franchisee shall not communicate with any person other than Franchisor and its counsel in connection with any such infringement, challenge or claim; provided, however, that Franchisee may communicate with such other persons as may be required to comply with a subpoena, court order or other order or requirement of a judicial proceeding or to make reasonable and prudent initial efforts to resolve any alleged infringement, challenge or claim. Franchisor shall have sole discretion to take such action as it deems appropriate and may, but shall not be required to, defend or prosecute any litigation or proceeding relating to the Marks or their use by Franchisee, in the name of either Franchisor or Franchisee, as Franchisor may elect. As to any litigation or proceeding that Franchisor shall defend or prosecute in connection with the Restaurant or the Marks, Franchisee shall extend such cooperation and execute such documents as Franchisor shall request.

7.3 Nonexclusivity of License. Franchisee's rights to use of the Marks are nonexclusive, and Franchisor in its sole discretion has the right to use the Marks in the operation of its own business and to grant other licenses to use the Marks on any terms and conditions Franchisor deems fit.

7.4 Registration. Franchisee acknowledges that the Marks are not now registered and may not qualify for registration with appropriate state authorities or with the United States Patent and Trademark Office, that third parties may have superior rights to use some or all the Marks, and that Franchisee may be prevented by law from using some or all of the Marks in operating the Restaurant. In such event, this agreement shall remain valid and binding, and Franchisor and Franchisee shall work together in good faith to determine such alternative marks as may be mutually agreeable to Franchisee and Franchisor under which to operate the Restaurant; provided, however, that if the parties fail to agree on alternative marks within 60 days of being prevented by law form using some or all of the marks, Franchisor shall designate appropriate marks that shall impart a similar connotation to that of the mark "HOMETOWN." Franchisor shall make best efforts to cause any currently pending application for registration of any of the Marks to be prosecuted diligently and in good faith.

7.5 Offering of Securities. Franchisee shall not use any Mark in any private or public offering of its securities, except to reflect its franchise relationship with Franchisor, nor shall the Franchisee misrepresent, by any statement or omission of an essential statement, its relationship with Franchisor. Any offering memorandum, prospectus or registration statement proposed to be used in any such offering shall be submitted to Franchisor in substantially final form not less than five days prior to the circulation thereof for the limited purpose of permitting Franchisor to verify the Franchisee's compliance herewith.

7.6 Proprietary Information.

7.6.1 The term "Proprietary Information" refers to the Operating Manual, Recipe Manual and Menu (including trade secrets, know-how, methods, techniques, recipes and other information set forth in the Operating Manual, Recipe Manual and Menu), the curriculum of the training programs and all information or documents designated or treated as confidential by Franchisor. Franchisee acknowledges that it will have access to certain of the Proprietary Information in connection with its operation of the Restaurant and its performance of this agreement. All of the Proprietary Information shall remain

the exclusive property of Franchisor or its affiliated entities. Franchisee shall not duplicate Proprietary Information without the express consent of Franchisor and shall not use the Proprietary Information except with respect to operation of the Restaurant.

7.6.2 Franchisee shall not disclose the Proprietary Information to any other person except as provided below:

(a) Franchisee shall not disclose Proprietary Information to its employees without informing such employees of the confidential nature of the information and without taking all steps necessary to safeguard confidentiality, and any such disclosure shall be made only to such employees having a need for the Proprietary Information in order to perform their duties; and

(b) Franchisee shall not disclose the Proprietary Information to any person other than its employees, including without limitation affiliates, subcontractors, customers, licensees, consultants or prospective purchasers of Franchisee's business, without prior written consent of Franchisor.

7.6.3 Franchisee agrees to maintain adequate security measures to control the use and handling of the Proprietary Information in order to minimize the risk of inadvertent disclosure. Such security measures shall include numbering of all Franchisee's copies of the Operating Manual, Recipe Manual and Menu and keeping track at all times of the location of, and person responsible for, each copy. All copies of the Operating Manual, Recipe Manual and Menu shall remain at the Restaurant at all times. At Franchisor's request, Franchisee shall require its stockholders, directors, officers, partners or employees to sign written confidentiality agreements pertaining to the Proprietary Information in such form as may be prescribed by Franchisor. With respect to any forms or other materials furnished by Franchisor to Franchisee for duplication, any copies Franchisee makes shall retain Franchisor's name, the Marks or any copyright notice or trademark designation found on the original of the form or other materials. At Franchisor's request, Franchisee will insert in any materials used by Franchisee that contain the Marks or are derived from written materials prepared by Franchisor a proprietary rights legend, copyright notice or trademark designation as specified by Franchisor.

7.6.4 Franchisee acknowledges that any disclosure of any Proprietary Information will cause irreparable harm to Franchisor. If Franchisee violates any of

the provisions of this agreement regarding Proprietary Information, Franchisor will be entitled to specific performance, including immediate issuance of a temporary restraining order or a preliminary or permanent injunction enforcing this agreement, and to any other remedies provided by applicable law.

8. Payments.

8.1 Franchise Fee. Franchisee shall pay Franchisor an initial franchise fee of $25,000 upon execution of this agreement. No part of the franchise fee shall be refundable, except as expressly provided in Sections 3.3 and 4.1.2 or as required by applicable law. The franchise fee and the time for payment of the franchise fee set forth herein are subject to adjustment as provided in the Multiple Unit Agreement.

8.2 Continuing Payments. In addition to the initial franchise fee, Franchisee will make continuing payments to Franchisor as follows:

8.2.1 For any partial Accounting Year (as defined below) and for each Accounting Year during the term of this agreement Franchisee shall pay Franchisor, commencing with the opening of the Restaurant, a weekly royalty based on the royalty rate set forth below on all the Gross Sales (as defined below) of Franchisee in connection with the Restaurant as set forth below:

Annual Gross Sale                           Royalty Rate
-----------------                           ------------
$0 to $1,000,000                                 4%
$1,000,001 to $2,000,000                         3%
$2,000,001 and Over                              2%

The above rate is subject to adjustment as provided in the Multiple Unit Agreement. As used herein, Accounting Year shall mean the 52- or 53-week period, ending on the Wednesday nearest December 31, and divided into four periods of 16, 12, 12 and 12 or 13 weeks, as the case may be, or Franchisee's regular fiscal period.

As used herein, Gross Sales shall mean the total of all amounts received in connection with the Restaurant, whether in cash, merchandise or services and all other income of any kind related to the Restaurant, including but not limited to (i) all products prepared and services performed at the Restaurant, (ii) sales and orders made, solicited or received at the Restaurant, and (iii) all other business whatsoever conducted or transacted at or from the Restaurant, including sales outside the Restaurant, whether evidenced by cash, check, credit, gift certificates, services, property or other means of

exchange; provided, however, that Gross Sales do not include any sales taxes collected from customers by Franchisee for transmittal to the appropriate taxing authority. Gross Sales shall be deemed to be realized by Franchisee at the time of the sale or delivery of the products, merchandise or services by Franchisee, irrespective of when Franchisee actually receives payment therefor. Franchisor shall pay the royalty on a weekly basis on or before the close of business on Monday of each week for the week preceding the prior week. The royalty will be paid and submitted with the Franchisee's report of weekly Gross Sales in the form described in Section 10.1.

8.2.2 Franchisor will bill Franchisee for all other amounts due under this agreement. Such amounts billed to Franchisee shall be due 30 days from the billing date, unless otherwise specified in this agreement.

8.2.3 Without limiting any of Franchisor's other rights or remedies under this agreement or otherwise, if Franchisee shall fail to make any payment when due, Franchisee agrees to pay a late charge equal to the amount due times two percent per month from the date due until paid, or the highest charge allowed by law, whichever is less. Such late charges shall accrue notwithstanding the expiration or termination by either party of this agreement.

8.2.4 Application of Payments. Franchisor shall have sole discretion to apply any payments by Franchisee to any past due indebtedness of Franchisee for royalty and continuing fees, advertising contributions if any), purchases from Franchisor or its affiliates, interest or any other indebtedness.

9. Advertising.

9.1 Advertising Fee. Franchisor reserves the right in the future to establish weekly advertising fees for Franchisor administered advertising and/or Franchisee administered cooperative advertising on a local, regional, national or international basis. If an advertising cooperative is not established, Franchisee shall pay a maximum of one-half of one percent of Franchisee's Gross Sales made during the period for which the advertising fee contribution is made. Such one-half of one percent shall be applied to the cost of production for menus, point of purchase materials and other advertising materials. If a media advertising cooperative is established in the ADIs in which Franchisee is operating, Franchisee shall pay a maximum of one-half of the royalties payable by Franchisee to Franchisor pursuant to Section 8.2.1 of this agreement (inclusive of the one-half of one percent for production). Franchisee will abide by the reasonable requirements (not in violation of the fee limitations described above) established by Franchisor and any cooperative for any advertising. Franchisor will be obligated to provide 90 days' written notice prior to establishing any advertising cooperatives.

9.2 Telephone Directory Listings. Franchisee shall be required to continually advertise in the Yellow Pages under the listing of "restaurants." The format, size, and content of the listing will conform in all respects to the standards established by the Franchisor from time to time. Expenditures made by Franchisee for Yellow Pages advertising shall be in addition to all other advertising requirements of the Franchisee that may be imposed pursuant to
Section 9.1.

9.3 Approved Advertising. Franchisee will not conduct any advertising, promotion, marketing, public relations or telemarketing program or campaign for its Restaurant unless and until Franchisor has given Franchisee prior written approval for all concepts, materials or media proposed for any such advertising, promotion, marketing, public relations or telemarketing program or campaign. Franchisee will not permit any third party to advertise its business, services or products on the premises of the Location without obtaining the prior written approval of Franchisor.

10. Financial Statements; Maintenance of Books and Records: Inspections.

10.1 Weekly Report. Franchisee will maintain an accurate written record of the daily Gross Sales of Franchisee in connection with the Restaurant and will remit a signed and verified statement of the Gross Sales generated by, at, as a result of or from the Restaurant using such forms as Franchisor may from time to time prescribe in writing. The statement of Gross Sales will be provided to Franchisor on Monday of each week for the week preceding the prior week and will accompany the Franchisee's payment of the weekly royalty fee pursuant to Section 8.2.1.

10.2 Periodic Reports. Within 15 days after the end of each four or five week accounting period or Franchisee's regular four week accounting period, Franchisee will, at its expense, provide Franchisor with a balance sheet and statement of profit and loss for such accounting period, which will consist of a balance sheet, statement of profit and loss, statement of cash flows and explanatory footnotes.

10.3 Annual Reports. Not later than 60 days after the end of each Accounting Year of Franchisee, Franchisee shall furnish to Franchisor a balance sheet profit and loss statement, statement of cash flows and explanatory footnotes with respect to the particular Accounting Year.

10.4 Form of Reports. All financial statements provided to Franchisor by Franchisee will be presented in the form reasonably prescribed by Franchisor in writing, and will be categorized according to the standard chart of accounts developed and approved by Franchisor. These financial statements will be prepared in accordance with generally accepted accounting principles applied on a consistent basis. If Franchisee's annual financial statements are not certified by an independent certified public accountant, then, Franchisee's annual financial statements must be verified by Franchisee's President and Chief Financial Officer, or if Franchisee is not a corporation, then by Franchisee's Managing Partner or Chief Operating Partner and Franchisee's Chief Financial Partner.

10.5 Records. Franchisee will maintain at its business address readily available for inspection by Franchisor (a) true, accurate and complete books of account and records, in conformity with generally accepted accounting principles, reflecting all sales made and other business activities of the Restaurant; (b) Franchisee's federal and state income tax returns and any state or local sales tax or equivalent returns; and (c) cash register tapes and daily sales reports. Franchisee shall retain all such books, records, reports and tax returns for at least three years from the closing dates of the periods to which they apply. Franchisee shall, at its expense, furnish copies of such reports and other information as Franchisor may require. Franchisee's in-store accounting system shall comply at all times with any standards, specifications and procedures from time to time established by Franchisor.

10.6 Audits. Franchisor, by any representative designated by it, shall have the right, with or without prior notice to Franchisee, from time to time to inspect, examine, audit and copy such books, records, reports and tax returns at Franchisee's address. If any such examination or audit discloses that Franchisee, in any statement or payment furnished to Franchisor, has under-reported its Gross Sales in any period or failed to pay in full amounts due Franchisor, Franchisee shall pay Franchisor, upon five days' notice, the additional amount due to Franchisor as disclosed by such examination or audit plus a late charge equal to the amount due times two percent per month from the date on which such additional amounts should have been paid to the date of payment, or the highest charge allowed by law, whichever is less. In addition, if any such examination or audit discloses that Franchisee, in any statement or payment furnished to Franchisor, has under-reported its gross revenues by more than five percent, then, without affecting any rights or remedies Franchisor may have as a result of such violation, Franchisee shall pay to Franchisor the cost of the examination or audit.

Any payments due under this Section shall be in addition to and not in lieu of other remedies or rights to which Franchisor may be entitled under this agreement or applicable law.

10.7 Inspections. Franchisor, by any representative designated by it, shall have the right, with or without prior notice to Franchisee, to visit periodically the Restaurant to examine and check Franchisee's compliance with the provisions of this agreement and the Operating Manual, Recipe Manual and Menu. This right shall include without limitation the right to (i) test and evaluate all equipment, food products, food ingredients, beverages and supplies and (ii) evaluate and interview any and all employees and agents of the Franchisee. If the Franchisor finds that any food, ingredients or supplies do not meet current Franchisor standards and requirements, the Franchisee shall immediately remove the same from the Restaurant, even if such removal results in the disposal of food products or ingredients held in its inventory.

11. Additional Conditions.

11.1 Other Locations. Franchisee shall conduct the business franchised by this agreement only at the Location or such substitute location as Franchisor may subsequently approve. Franchisee may not conduct the franchised business at any remote location through temporary stands or booths or any other means without the prior approval of Franchisor in writing; provided that Franchisee may conduct the franchised business through catering without such prior approval. Subject to the Multiple Unit Agreement, if Franchisee is in full compliance with this agreement and desires to operate a HomeTown Buffet restaurant at a location in addition to the Location, Franchisee may apply to Franchisor for a franchise for such location. If Franchisor determines in its sole discretion to grant the additional franchise, Franchisee will be required to pay the then-current initial franchise fee and enter into a separate franchise agreement (in the form then in use by Franchisor) for the additional franchise.

11.2 Other Businesses. Franchisee may not own or operate any other franchises, or sell or offer to sell any goods or services, from the Restaurant or Location except those described in Sections 5.7 and 5.8. Franchisee will not permit any jukebox, video and electronic games, vending machines, coin or token operated machines (including pinball) or gambling devices to be used on premises of the Location other than pay telephones or those approved by the Franchisor in writing. Franchisee will not keep or offer for sale or allow employees to offer for sale at or near the Location any tickets, subscriptions, pools, chances, raffles, lottery tickets or pull tabs, except with the prior written approval of Franchisor.

11.3 Independent Contractor. Nothing in this agreement shall be deemed to make Franchisee an agent of Franchisor for any purpose. Franchisee shall not hold itself out as an agent, legal representative, joint venturer, partner, employee, division or representative of Franchisor, and Franchisor shall not incur any liability by reason of any representation, act or omission of Franchisee. Franchisee in the operation of the Restaurant is an independent contractor operating its own business and is not authorized to make any contract, agreement, warranty or representation on behalf of Franchisor or to create any obligation express or implied on behalf of Franchisor.

11.4 Indemnity.

11.4.1 Franchisee Indemnity. Franchisee shall defend, indemnify and hold Franchisor and its officers, directors, employees, agents, affiliates, successors and assigns harmless against any claims, losses or damages (including attorneys' fees at trial or on appeal or petition for review), fines, suits, proceedings, claims or losses of any nature arising out of or relating to, directly or indirectly, (a) the acts or omissions of Franchisee or its principals, agents or employees or the operation or condition of the Restaurant, Location or Restaurant Assets (as defined in Section 13.6.5) and (b) the breach of any provision of this agreement.

11.4.2 Franchisor Indemnity. Franchisor shall defend, indemnify and hold Franchisee and its officers, directors, employees, agents, affiliates, successors and assigns harmless against any claims, losses or damages (including attorneys' fees at trial or on appeal or petition for review), fines, suits, proceedings, claims or losses of any nature arising out of or relating to, or directly or indirectly, (a) the acts or omissions of Franchisor or its principals, agents or employees in connection with Franchisor's obligations under this agreement; (b) the breach of any provision of this agreement; (c) the acts or omissions of Franchisor or its principals, agents (excluding Franchisee) or employees in connection with Franchisor's obligations under any provisions of the Trademark License Agreement between Hometown Pharmacy Company, Inc. and S.W. Restaurants, Inc. dated effective April 29, 1991, the Stock Purchase Agreement between Buffets, Inc. and C. Dennis Scott dated November 9, 1990, the Assignment, Consent and Release Agreement between C. Dennis Scott and Joel C. Brown dated November 9, 1990, the Waiver and Termination Agreement between Evergreen Buffets Inc., Buffets, Inc., C. Dennis Scott and Joel C. Brown dated November 9, 1990, the Shareholders' Agreement between Buffets, Inc., C. Dennis Scott and Joel C. Brown dated January 17, 1989, and the Employment Agreement between Buffets, Inc. and C. Dennis Scott

dated January 26, 1989; and (d) the acts, omissions or negligence of Franchisor or its principals, agents (excluding Franchisee) or employees related to any infringement actions with regard to any of the Marks.

11.5 Corporate Franchisees. If Franchisee is, or becomes, a corporation, the following provisions apply:

(a) Franchisee represents and warrants that the persons listed on the attached Exhibit C are the holders of all the outstanding stock of Franchisee; and

(b) all stock certificates representing stock in Franchisee shall have conspicuously endorsed upon them a statement that the transfer of the certificate is subject to the restrictions of this agreement;

Franchisor in its discretion may waive some or all of the requirements of this
Section 11.5.

12. Assignment.

12.1 Transfers.

12.1.1 Franchisee shall not sell, assign, transfer or encumber (collectively referred to as "transfer") any right, license or franchise granted by this agreement, or its interest in the Restaurant, and shall not cause or permit any such transfer to occur by operation of law or otherwise without the express written consent of Franchisor, which consent shall not be unreasonably withheld. If Franchisee is a partnership, the admission of any new partner to the partnership, the withdrawal of a partner or the transfer of any partnership interest shall constitute a transfer of this agreement requiring Franchisor's consent. If Franchisee is a corporation, the issuance of 20 percent or more of the stock in the corporation or the transfer, by operation of law or otherwise, or redemption of 20 percent or more of the outstanding stock of the corporation shall constitute a transfer of this agreement requiring Franchisor's consent. Any attempted or purported transfer without Franchisor's prior written consent shall be void and shall constitute a material breach of this agreement. Except as set forth in Section 12.2, Franchisor shall not consent to such transfer unless the following conditions are met:

(a) Franchisor determines in its sole discretion that the transferee meets Franchisor's then-current standards for new franchisees, which may include subjective standards, as determined by Franchisor in its sole discretion;

(b) the transferee's cost of acquiring the transferred rights, license, franchise or assets will not impair its ability to continue operation of the Restaurant; and

(c) Franchisee shall not be in default under this agreement.

12.1.2 No such transfer shall become effective unless and until each of the following conditions are satisfied:

(a) the transferee shall have executed Franchisor's then-current form of franchise agreement for the same royalty, continuing fees and advertising fees (if any) required hereunder and for a term equal to the remaining term of this agreement and the transferee shall be required to pay additional fees not specified or provided for in this agreement but which are required to be paid to Franchisor pursuant to the terms of the Franchisor's then-current franchise agreement. As a condition of such transfer, the transferee shall have paid to Franchisor a transfer fee to defray Franchisor's costs for supervision, administrative, overhead, legal, accounting and other expenses associated with the transfer. The transfer fee shall equal 50 percent of the initial franchisee fee payable under Franchisor's then-current franchise agreement and shall be paid in lieu of any payment of a franchise fee;

(b) a Designated Manager and assistant manager of the transferee shall have attended and completed, to Franchisor's satisfaction, the training program described by Section 4.1 and shall have paid Franchisor the then-current manager training tuition for each manager attending the course;

(c) Franchisee shall execute an agreement in form satisfactory to Franchisor by which Franchisee shall release Franchisor from all claims and liabilities (except to the extent such a release is limited by applicable law) and shall agree to indemnify and hold Franchisor harmless from all claims by the transferee arising from or relating to the transfer, including without limitation, claims arising from or relating to any misrepresentations made by Franchisee to the transferee;

(d) Franchisee shall have continued to be in compliance with the requirements of this agreement through the date of transfer and shall have paid all amounts to Franchisor that have accrued under this agreement or otherwise as of the date of transfer;

(e) if the transferee is a corporation, the transferee and its shareholders shall have satisfied the requirements of
Section 11.5; and

(f) if required by the terms of the lease, mortgage or deed of trust, the lessor, mortgagee or trustee, as the case may be, shall have consented to the Franchisee's assignment, sublease or transfer of said premises to the transferee.

12.1.3 If Franchisee is a corporation or partnership, Franchisor in its discretion may waive some or all the requirements of Sections 12.1.1 and 12.1.2 if (a) the transfer will not involve a change in ownership or control of 50 percent or more of the corporation or partnership; (b) the transferor is not the Designated Manager and the transfer will not otherwise cause a change in the Designated Manager; and (c) the remaining partners or shareholders as a group satisfy Franchisor's-then-current requirements for new franchisees, notwithstanding the inability of the transferee to satisfy individually such requirements.

12.2 Assignment to Corporation. Notwithstanding any provision of
Section 12.1, if Franchisee is an individual or a partnership, Franchisee may assign this agreement to a corporation upon giving notice to Franchisor, provided that Franchisee, if an individual, or the partners in Franchisee, if a partnership, are the legal and beneficial owners of all the stock of the transferee corporation and provided also that the transferee corporation and each of its shareholders comply with all the requirements of Section 11.5.

12.3 Franchisor's Right of First Refusal. Franchisor shall have a right of first refusal to purchase the Restaurant and the franchise granted by this agreement, which may be exercised as follows: If Franchisee shall receive any bona fide offer for the franchise or any interest in the ownership thereof or of a substantial portion of the assets of the Restaurant, which offer Franchisee is ready and willing to accept, Franchisee shall promptly give Franchisor written notice of the terms and conditions of such offer in the form of a written and signed offer to Franchisee from the prospective purchaser. Franchisor shall have a right of first refusal to

purchase the rights and assets subject to the bona fide offer from Franchisee upon substantially the same terms and conditions stated in the notice and may exercise such right of first refusal by giving notice to Franchisee within 30 days after receipt by Franchisor of such notice. If Franchisor does not exercise its right of first refusal within the prescribed time, Franchisee may sell the rights and assets subject to the bona fide offer to any transferee approved by Franchisor pursuant to Section 12.1, provided that such sale may not be on terms and conditions more favorable to the transferee than those offered to Franchisor and provided that such sale is closed within 60 days of the notice to Franchisor of the bona fide offer.

12.4 No Waiver or Release of Existing Claims. Franchisor's consent to an assignment of any interest subject to the restrictions of this Section 12 shall not constitute a waiver of any claims it may have against the assignor, nor shall it be deemed a waiver of Franchisor's right to demand exact compliance by the assignee with any of the terms or conditions of this agreement or the franchise.

12.5 Assignment by Franchisor. This agreement may be assigned and transferred by Franchisor and shall inure to the benefit of Franchisor's successors and assigns. Franchisor will provide Franchisee with written notice of any assignment or transfer, and the assignee will be required to fully perform Franchisor's obligations under this agreement.

12.6 Rights Upon Death or Incapacity. The foregoing notwithstanding and except as provided below or as otherwise required by law, the heirs, successors, executor, administrator, guardian, personal representative or trustee of Franchisee, or of any partner or shareholder of a Franchisee, shall succeed to the same rights, obligations and liabilities under the Franchise Agreement as Franchisee.

If a deceased or mentally incapacitated Franchisee or any partner or shareholder of Franchisee is not the Designated Manager and the remaining shareholders or partners and the deceased or incapacitated Franchisee's heirs or successors as a group meet the then-current standards for new Franchisees, which may include subjective standards applied in Franchisor's sole discretion, then no transfer fee shall be charged to Franchisee or its heirs or successors.

If Franchisee or any partner or shareholder of Franchisee is the Designated Manager, immediately following the death or mental incapacity of such Franchisee, or of any Designated Manager with a 50% or a majority interest in a corporate or partnership Franchisee, or during any period in which the Restaurant is owned by an executor, administrator,

guardian, personal representative or trustee of that person, the day-to-day operation of the Restaurant may be conducted under the supervision of an interim manager satisfactory to Franchisor, pending transfer of the interest in the Restaurant to the deceased or incapacitated individual's lawful heirs or successors. The successor Designated Manager shall be designated by the executor, administrator, guardian, personal representative or trustee, or by any other responsible person within 30 days of the death or incapacity, and shall satisfactorily complete training within 90 days of the death or incapacity, and pay for such training at the same cost as transferee Designated Managers. Prior to the satisfactory completion of training of the successor Designated Manager, Franchisor may, in its sole discretion, provide a manager for the franchised business, for which Franchisor shall be reimbursed by Franchisee, within 15 days of the end of any calendar month, for all compensation, training and maintenance costs incurred by Franchisor in providing the manager.

Within 30 days after the franchise is transferred by law to Franchisee's or Franchisee's partner's or shareholder's heirs or successors, the heirs or successors must notify Franchisor in writing and make application for approval for assignment of the franchise. The application for assignment shall be subject to the same conditions, procedures and costs as assignment of any franchise, except that there shall be no transfer fee or new franchise fee payable.

13. Term; Renewal; Termination.

13.1 Term. The term of this agreement shall commence on the date first written above and shall continue for 20 years thereafter unless sooner terminated pursuant to Section 13.4 or 13.5.

13.2 Renewal. Franchisee may request renewal of the franchise granted by this agreement for two successive terms of five years each, by giving Franchisor written notice at least 270 days before the expiration of this agreement. Upon such request, Franchisor shall renew Franchisee's franchise unless:

(a) Franchisor is entitled to terminate this agreement pursuant to Section 13.4;

(b) Franchisor is withdrawing from distributing its products and services through franchises in the geographic market served by Franchisee; or

(c) Franchisee fails to satisfy Franchisor's then-current standards for new franchisees.

If Franchisor intends not to renew the franchise for any of the above reasons, Franchisor will so notify Franchisee not later than 180 days (or earlier if required by applicable law) before the expiration of this agreement of its intent not to renew and its reasons.

If Franchisor grants Franchisee's request for renewal, renewal shall be for such period, on such terms and conditions and with such fees and royalties as set forth in Franchisor's then-current standard form of franchise agreement, which may specify terms and conditions different from those stated in this agreement with respect to such matters as training, management, standards of quality, continuing payments by Franchisee, reporting, assignment, term, renewal, termination and other material matters. Upon renewal, Franchisee shall execute and be bound by Franchisor's then-current standard form of franchise agreement. Franchisee, however, shall not be required to pay Franchisor a renewal fee or the initial franchise fee as a condition of renewal. Before a renewal term begins, Franchisee shall remodel and upgrade the Restaurant, including without limitation inventory, supplies, furnishings, equipment, fixtures, signs, buildings and improvements, as reasonably requested by Franchisor to meet the standards then being required of new franchisees by Franchisor, and Franchisee's Designated Manager and at least one assistant manager shall attend and complete, to Franchisor's satisfaction, a manager training refresher course.

13.3 Extension. If Franchisee fails to give notice of its election to renew the franchise as required by Section 13.2 and Franchisor nonetheless permits Franchisee to continue to operate the Restaurant using the Marks or the Proprietary Information, all the terms and conditions of this agreement shall be deemed to be extended on a month-to-month basis. In such event, Franchisor or Franchisee may terminate this agreement, effective the last day of any calendar month, upon giving the other party 30 days' written notice. If Franchisor fails to give notice of intent not to renew as required by Section 13.2 or applicable law, Franchisor may extend the term of this agreement for a limited period sufficient to satisfy the required time for notice of intent not to renew.

13.4 Termination by Franchisor upon Event of Default. Franchisor may terminate this agreement upon any material occurrence of any of the following events of default if Franchisee has failed to cure any such default within 30 days of notice of default (or such other specified period) or if such default cannot reasonably be cured within 30 days (or other specified period), has failed to initiate within 30 days (or other specified period) substantial and continuing action to cure such default:

(a) failure of Franchisee to cure its failure to pay any payment required under this agreement within 10 days after receipt of notice from Franchisor that payment is overdue;

(b) dissolution, termination of existence, insolvency on a balance sheet basis or business failure of Franchisee; the commencement by Franchisee of a voluntary case under the federal bankruptcy laws or under any other federal or state law relating to insolvency or debtor's relief; the entry of a decree or order for relief against Franchisee in an involuntary case under the federal bankruptcy laws or under any other applicable federal or state law relating to insolvency or debtor's relief; the appointment or the consent-by Franchisee to the appointment of a receiver, trustee or custodian of Franchisee or of any of Franchisee's properties associated with the Restaurant; an assignment for the benefit of creditors by Franchisee, the making or suffering by Franchisee of a fraudulent transfer under applicable federal or state law; concealment by Franchisee of any of its property in fraud of creditors; or Franchisee's failure, generally, to pay its debts as such debts become due (the events of default stated in this subsection (b) refer to the occurrence of such event with respect to Franchisee, any partners in Franchisee or any shareholder of Franchisee);

(c) cessation by Franchisee of business operations at the Restaurant:

(d) except as provided in Section 5.6 concerning closure due to force majeure or remodeling, repair or alteration, closing of the Restaurant for a period of 30 or more consecutive days;

(e) except as provided in Section 2.2 of this agreement, loss by Franchisee of the right to occupy the Restaurant premises by termination of its lease of the premises, by the sale or foreclosure of the premises or by any other means;

(f) failure by Franchisee to comply in all respects material to the ownership or operation of the Restaurant with any federal, state or local law or regulation applicable to the operation of the

Restaurant, unless after 30 days' notice of noncompliance from Franchisor or from any federal, state or local governmental authority Franchisee has resolved such noncompliance, or if such noncompliance cannot reasonably be cured within 30 days, has initiated within 30 days substantial and continuing action to cure such noncompliance;

(g) the conviction of Franchisee, any partner in Franchisee or any shareholder of Franchisee of any felony or of other criminal misconduct relevant to the operation of the Restaurant;

(h) failure of Franchisee to meet the requirements of Section 3.3 or 4.1.2 of this agreement;

(i) violation by Franchisee of any other provision of this agreement;

(j) repeated material occurrences of one or more events of default under this agreement, whether or not corrected after notice;

(k) Franchisee has made a material misrepresentation relating to the acquisition of the franchise granted by this agreement;

(l) Any breach of Franchisee of any franchise agreement entered into between Franchisor and Franchisee or other event, occurrence or circumstance, which breach, event, occurrence or circumstance constitutes grounds under such franchise agreement for the Franchisor to terminate such franchise agreement; and

(m) any other event or reason specified by applicable law as a basis for terminating a franchise by a franchiser.

13.5 Termination by Franchisee. Franchisee shall have the right to terminate this agreement only if Franchisor violates any of the material provisions of this agreement in a manner that justifies such termination under applicable law and Franchisor has failed to remedy such violation within 30 days after receiving written notice from Franchisee specifically describing such violation.

13.6 Effect of Termination. Either party's right to terminate this agreement shall be in addition to and not in lieu of any other rights or remedies that the parties may have under this agreement or applicable law. The obligations and status of Franchisee after the expiration or termination of this agreement are as follows:

13.6.1 Within 10 days following the effective date of expiration or termination of this agreement, Franchisee shall pay all amounts due to Franchisor, including royalty fees and advertising fees with respect to operation of the Restaurant up to and including the effective date of expiration or termination and all other amounts due Franchisor under this agreement or otherwise. Franchisee shall provide Franchisor with the reports required by Sections 10.1 and 10.2 as if the effective date of termination were the last day of Franchisee's fiscal year.

13.6.2 After the effective date of termination, Franchisee shall continue to be bound by the provisions of this Section 13.6 and Sections
7.l, 7.6, 8.2.3, 10.5, 10.6, 10.7, 11.4, 14 and 16.

13.6.3 Franchisee shall no longer hold itself out as a franchisee of Franchisor and shall discontinue all use of the Marks (or any names, words or symbols similar to the Marks or colorable imitations of the Marks), the Proprietary Information or any other materials provided by Franchisor. Franchisee shall take all steps necessary to disassociate itself from Franchisor and the Restaurant System, including the removal and destruction of any items bearing any of the Marks, including without limitation interior and exterior signs, menus, paper products, novelty items, clothing, souvenir and merchandise, unless such items are returned to or purchased by Franchisor pursuant to Section 13.6.4 or 13.6.5. Franchisee shall make reasonable alterations to the exterior and interior of the Restaurant as Franchisor deems necessary to prevent the appearance that the Restaurant is or was a HomeTown Buffet restaurant. If Franchisee fails to make such alterations, Franchisor may enter upon the premises and make such alterations at Franchisee's expense without incurring any liability to Franchisee. Franchisee shall cease to use any telephone number listed under any name incorporating any of the Marks or similar words and shall instruct the telephone company to forward any calls to a number specified by Franchisor.

13.6.4 Franchisee shall return promptly to Franchisor all copies of the Operating Manual, Recipe Manual and Menu, together with all other materials, forms, training and promotional materials and aids and other written materials furnished by Franchisor and all copies of any of the foregoing. Franchisor shall have the right to enter upon Franchisee's premises to remove such materials.

13.6.5 Upon expiration or termination of this agreement for any reason, Franchisor shall have the option to purchase at fair market value from Franchisee the Restaurant, including all inventory, supplies, furnishings, equipment, fixtures, land, buildings and improvements (collectively the "Restaurant Assets"), and to require assignment by Franchisee to Franchisor of any and all leases, mortgages or deeds of trust for any of the Restaurant Assets. Franchisor may exclude from the Restaurant Assets any property that does not meet the specifications or standards set forth in the then-current operating manual, or for which no standards or specifications are set forth in the then-current operating manual. Franchisor may exercise its option under this subsection by giving written notice of intent to purchase to Franchisee before, or within 30 days after, termination or expiration of this agreement. Fair market value shall be determined by the parties within 30 days of Franchisee's receipt of Franchisor's notice or of the effective date of termination or expiration, whichever is later. Subject to the requirements of applicable law, fair market value shall be based upon the value of the Restaurant Assets, but shall not include the value of the HomeTown Buffet franchise, the Proprietary Information or any element of good-will associated with the Marks or the franchise. If the parties are unable to agree upon the fair market value, it shall be determined by an independent appraiser chosen by the parties. If the parties are unable to agree upon a single appraiser within 40 days of Franchisee's receipt of Franchisor's notice or within 40 days of termination or expiration, whichever is later, the parties shall each choose an appraiser and the two appraisers shall choose a third. If all three appraisers have not been chosen within the 40-day period, the unappointed appraiser shall be appointed, upon petition by either party, by any court of record in the county in which the Restaurant is located. Each appraiser shall submit an appraisal of the Restaurant Assets within 30 days of appointment of all the last appraiser. The highest and lowest of the three appraisals shall be disregarded and the third appraisal shall control. Franchisor and Franchisee shall share equally the cost of the single or third appraiser, but shall each separately bear the cost of their respectively selected appraisers. The closing of the purchase shall occur within 30 days of the determination of fair market value, and the purchase price shall be paid in cash. Franchisor may offset the purchase price for the Restaurant Assets against amounts due it from Franchisee under this agreement.

13.6.6 Franchisee shall not be entitled to any refund of the franchise fee or other amounts paid under this agreement unless expressly required by this agreement or applicable law.

13.7 Applicable Law. The applicable laws of some states require notice periods greater than those set forth in this agreement for termination or nonrenewal, limit the reasons for termination or nonrenewal or impose other requirements pertaining to this agreement. If any provisions of this agreement are inconsistent with applicable law, and if such, applicable law cannot be superseded by agreement of the parties, they shall not be effective and Franchisor and Franchisee shall comply with applicable law regarding such matters.

14. Noncompetition.

Franchisee for itself (and, if a corporation, for its shareholders and, if a partnership, for its partners), for its officers and for any affiliate under the control of, or controlled by or under common control with Franchisee, covenants and agrees that during the term of this agreement and during the period of two years commencing on the date of expiration or termination for any reason of this agreement, it will not, either directly or indirectly, (a) engage in any business similar to the Restaurant, including any restaurant business that involves a pure buffet style restaurant that does not include waitperson service or the service of separate entree menu items, as officer, director, manager, owner, investor, consultant, employee or in any other capacity within 25 miles of the Location of the Restaurant or the location of any HomeTown Buffet restaurant, or (b) hire any person from, or solicit or induce any person to leave his employment with Franchisor or any HomeTown Buffet restaurant. If Franchisee shall become associated with any business similar to the business franchised under this agreement in violation of this Section or shall hire any person from or solicit or induce any person to leave his employment with Franchisor or any HomeTown Buffet restaurant, the parties agree that Franchisor's remedy at law would be inadequate and that Franchisor shall be entitled to injunctive relief. The restrictions contained in this Section shall not apply in cases where Franchisee's sole relationship with or activity with a competing business is ownership of less than five percent of any class of the outstanding equity securities of any corporation whose stock is publicly traded. Franchisee acknowledges and understands that Franchisor's rights to develop the Restaurant System are limited by the terms of certain agreements concerning Old Country Buffet restaurants. Franchisee acknowledges and understands that, until November 9, 1992, these agreements limit the location of the Restaurant and require that no HomeTown Buffet restaurant be located in Washington, in the State of Oregon at any latitude north of the City of Cottage Grove, Oregon, or within twenty-five (25) miles of any Old Country Buffet restaurant located in any state in the United States, except for Arizona, Colorado and California.

15. Arbitration.

Except as specifically otherwise provided in this agreement, the parties agree that any and all disputes between them, and any claim by either party that cannot be amicably settled, shall be determined solely and exclusively by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect, the award rendered by the arbitrator shall be binding between the parties, and judgment on such award may be entered in any court having jurisdiction. Absent other agreement by the parties, all arbitration proceedings shall be conducted in Boise, Idaho and the arbitration award shall be rendered within 30 days of the conclusion of the arbitration hearing. This agreement to arbitrate shall not prevent either party from applying to a court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other equitable relief to preserve the status quo or prevent irreparable harm pending the selection and confirmation of the arbitrators.

16. General Provisions.

16.1 Franchisee's Warranty. Franchisee and Franchisor each warrant and represent for itself and not for the other that it has the authority and ability to enter into and perform this agreement and that it has not made any prior inconsistent commitments or agreements.

16.2 Notices. Any and all notices required or permitted under this Agreement shall be in writing and shall be personally delivered or mailed by certified or registered mail return receipt requested, or Express Mail, or sent via recognized national or international courier, postage or fees prepaid to the respective parties at the following addresses unless and until a different address has been designated by written notice to the other party pursuant to this Section:

Notices to Franchisor:             HomeTown Buffet, Inc.
                                   9171 Towne Centre Dr.  #260
                                   San Diego, California 92122

Notices to Franchisee:             HTB Restaurants, Inc.
                                   1010 West 2610 South
                                   Salt Lake City, Utah 84119

With copies to:                    Attn:  General Counsel
                                   Attn:  Chief Financial Officer

All Notices shall be effective upon receipt or refusal.

16.3 Integration. This agreement and any referenced attachments) exhibits or schedules (which are incorporated herein by this reference) are the entire agreement between the parties and supersede all previous agreements or understandings between them. This agreement may be modified only in writing signed by both parties. The parties acknowledge that they are also parties to the Multiple Unit Agreement, and may become parties to other franchise agreements and other agreements on related matters in the future.

16.4 Governing Law and Construction. This agreement shall be governed and construed under the laws of the state in which the Restaurant is to be located. The parties intend that this agreement comply with the requirements of all applicable laws. If in any judicial or arbitration proceeding a court or arbitrator shall refuse to enforce all the provisions of this agreement, any unenforceable provisions shall be deemed eliminated from this agreement for the purpose of that proceeding as is necessary to permit the remainder of the agreement to be enforced in that proceeding.

16.5 Waiver. Any waiver with respect to the provisions of this agreement shall not be effective unless in writing and signed by the party against whom it is asserted. No such driver shall constitute a waiver of any subsequent breach or default.

16.6 Binding Effect. Except as provided in Section 12, this agreement shall inure to the benefit of and bind the heirs, executors, administrators, successors and assigns of the respective parties.

16.7 Captions. The captions of the sections of this agreement have been inserted for descriptive purposes only and shall not be considered part of the provisions of this agreement.

16.8 Severability. If any provision of this agreement is held invalid or unenforceable, the scope of such provision shall be deemed modified and diminished to the extent necessary to render it valid and enforceable. In any event, invalidity or enforceability of any such provision shall not affect any other provision of this agreement, and this agreement shall be construed and enforced as if such invalid or unenforceable provision had not been included.

16.9 Equally Favorable Treatment. In the event that more favorable provisions, terms and conditions are afforded any other HomeTown Buffet franchisee (other than a current or former officer, director, key employee or affiliate of Franchisor or any corporation or partnership whose principals involve any of the foregoing) whether prior to or subsequent to

the execution of this agreement, Franchisee shall receive the benefits of such provisions, terms and conditions from the later of execution of this agreement or execution of a franchise agreement with such other franchisee until the termination of this agreement.

16.10 Acknowledgement. Franchisee hereby acknowledges and warrants that the following dates are true and correct with respect to its investigation and purchase of a HomeTown Buffet franchise:

1. The date of my first face-to-face meeting with Franchisor to discuss the possible purchase of a franchise was:

   8/28/91                               (illegible) -- Vice President
--------------                           -----------------------------
Month/day/year                               Signature and title

2. The date on which I received a Disclosure Statement (or Uniform Franchise Offering Circular), about the Franchisor:

   8/26/91                               (illegible) -- Vice President
--------------                           -----------------------------
Month/day/year                               Signature and title

3. The date I received a completed copy (other than signatures) of the Franchise Agreement was:

   6/1/92                                (illegible) -- Vice President
--------------                           -----------------------------
Month/day/year                               Signature and title

4. The date on which I delivered cash, check or other consideration in the amount of $15,000.00, to the Franchisor was:

   8/24/93                               (illegible) -- Vice President
--------------                           -----------------------------
Month/day/year                               Signature and title

5. No oral, written or visual claim or representation, which contradicted the Disclosure Statement (or Uniform Franchise Offering Circular) was made to me except:

6. No oral, written or visual claim or representation, which stated or suggested any sales, income or profit levels, was made to me except:

16.11 Disclaimer. NO PERSON HAS ANY AUTHORITY TO MAKE ANY REPRESENTATION OR PROMISE ON BEHALF OF EITHER PARTY NOT SPECIFICALLY STATED IN THIS AGREEMENT, AND THIS AGREEMENT HAS NOT BEEN EXECUTED BY EITHER PARTY BASED UPON ANY REPRESENTATION OR PROMISE NOT SPECIFICALLY STATED IN THIS AGREEMENT. WITHOUT LIMITATION, NO REPRESENTATION OR GUARANTEE HAS BEEN OR IS MADE TO FRANCHISEE THAT THE RESTAURANT WILL BE SUCCESSFUL OR THAT FRANCHISEE WILL EARN ANY SPECIFIED AMOUNT IN CONNECTION WITH IT. IT IS SPECIFICALLY UNDERSTOOD AND RECOGNIZED THAT THE SUCCESS OF THE RESTAURANT, AS OF MANY OTHER BUSINESSES, IS SPECULATIVE IN NATURE AND DEPENDS TO A SUBSTANTIAL DEGREE UPON FRANCHISEE'S ABILITIES AS WELL AS UPON ECONOMIC CONDITIONS AND MANY OTHER FACTORS.

                  By:     (illegible)
                      --------------------
                  Title:  President
                        ------------------
                  Date:   8/25/93
                       -------------------


                  By:     (illegible)
                     ---------------------
                  Title:  CFO
                        ------------------
                  Date:   8/25/93
                       -------------------


FRANCHISEE:       HTB RESTAURANTS, INC.,
                  a Delaware corporation

                  By:     (illegible)
                      --------------------
                  Title:  Vice President
                        ------------------
                  Date:   8/23/93
                       -------------------


                  By:     (illegible)
                     ---------------------
                  Title:  Chairman
                        ------------------
                  Date:   8/23/93
                       -------------------

EXHIBIT A

HomeTown Buffet (stylized)

EXHIBIT B

LOCATION

EXHIBIT C

SHAREHOLDER LIST

JB' s Restaurants, Inc.

ACKNOWLEDGEMENT OF RECEIPT OF COMPLETED AGREEMENTS

The undersigned, personally and as an officer of or partner in the proposed franchisee if applicable), does hereby acknowledge receipt of the following agreements:

Franchise Agreement

with all blanks completely filled in an any and all exhibits or addendums in the completed form in which they are intended to be executed by the undersigned. (Note: This receipt must be signed and dated at least five business days before the undersigned executes the Franchise Agreement. Do not sign and return documents until five business days have elapsed from the date of this receipt.)

HTB Restaurants, Inc., a Delaware corporation

(Attach additional signatures if necessary. If franchise is to be owned jointly or as community property by husband and wife, both must review all documents and sign. All partners of a partnership franchisee and the shareholders of a corporate franchise must review all documents and sign individually and on behalf of the entity).