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EXHIBIT 10.1
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (the "Agreement") is made and entered into as
of this _____ day of February 1998, by and between STAR BUFFET, INC., a Delaware
corporation ("Star"), and STACEY'S BUFFET, INC., a Florida corporation
("Stacey's"), with reference to the following facts and circumstances:
R E C I T A L S
A. On October 31, 1997, Star and Stacey's entered into (i) a Credit
Agreement (the "Credit Agreement"), (ii) a promissory note (the "Note")
evidencing a loan made or to be made pursuant to the Credit Agreement, (iii) a
Warrant to Purchase Common Stock of Stacey's (the "Warrant"), (iv) a
Registration Rights Agreement (the "Registration Rights Agreement"), (v) a
Security Agreement (the "Security Agreement"), (vi) an Option Agreement (the
"Option Agreement"), (vii) a Business Services Agreement (the "BSA"), and (viii)
any and all other agreements, documents or instruments relating to the Credit
Agreement or any of the documents set forth in this paragraph A (collectively,
the "Transaction Documents").
B. As of the date hereof and pursuant to the Credit Agreement, Star made
loans (the "Loans") to Stacey's in the aggregate principal amount of $710,000,
which Loans are evidenced by the Note. The Note is secured by Stacey's
Collateral (as defined in the Security Agreement), and Star has perfected a
security interest in the Collateral by the filing of UCC Financing Statements in
the States of Florida, New York, New Jersey and Pennsylvania (the "Financing
Statements").
C. For services rendered by Star pursuant to the BSA, Stacey's has
incurred fees and expenses payable to Star in an aggregate amount of $390,000
(the "BSA Fees and Expenses").
D. The parties hereto have agreed that it is in the best interests of
such parties to enter into this Agreement for the purpose of terminating all of
the Transaction Documents and the Financing Statements in accordance with the
terms and provisions of this Agreement. Stacey's understands and acknowledges
that (1) it is not obligated to enter into this Agreement, but is doing so of
its own free will without interference, influence or coercion by Star; (2) it
has had the opportunity to consult with attorneys, appraisers and accountants of
its choice for advice concerning the terms of this Agreement, the fair value of
the Purchased Restaurants (as defined below) and the tax implications of the
transactions contemplated herein; (3) Star has pursued a course of fair dealing
and that the transactions contemplated herein are fair and equitable; and (4) it
is entering into this Agreement to enjoy the benefits of Star's promises and
covenants contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises of the parties contained herein, the parties agree to terminate
all of the Transaction Documents and the Financing Statements in accordance with
the terms and provisions of this Agreement, which shall include provisions
satisfying all of Stacey's financial obligations to Star through the sale to
Star of all of Stacey's right, title and interest in and to assets that are
related to, or used in the operation of, the Stacey's Buffet restaurants located
in Holiday, Florida, North Fort Xxxxxx, Florida; and Port Charlotte, Florida;
all as more fully described in the Asset Purchase Agreement executed
concurrently herewith (the "Purchase Agreement"); and to otherwise agree as
follows:
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ARTICLE 1
THE TRANSACTIONS
1.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place concurrently with the execution and
delivery of this Agreement and all exhibits, schedules and instruments
contemplated hereby (the "Closing Date").
1.2 Purchase and Sale of Stacey's Buffet Restaurants. On the Closing
Date, Star and Stacey's hereby agree to execute and deliver the Purchase
Agreement pursuant to which Star shall purchase from Stacey's, and Stacey's
shall sell, transfer and assign to Star all of Stacey's right, title and
interest in and to the assets that are related to or used in the operation of
the three (3) Stacey's Buffet Restaurants (the "Purchased Restaurants")
identified on Schedule 1 to the Purchase Agreement, all in accordance with the
terms and conditions of the Purchase Agreement (the "Purchase and Sale
Transaction"). In exchange therefor, Star hereby grants to Stacey's a full and
complete release and satisfaction of any and all financial obligations of
Stacey's to Star existing or accruing through the date hereof.
1.3 Transition Services. For a period of thirty (30) days following the
Closing, Star shall provide store level management services (the "Transition
Services") for nineteen (19) Stacey's Buffet restaurants at a cost to Stacey's
of Ten Thousand and no/100 dollars ($10,000), payable in four equal weekly
installments of Two Thousand and Five Hundred and no/100 dollars ($2,500), plus
reasonable and necessary out of pocket expenses, which amounts shall be paid
weekly in arrears. Either party may terminate the Transition Services to be
provided hereunder by Star effective upon the giving of written notice to the
other party pursuant to Section 4.7 below; provided, however, that other than
pro-rating the fees due and payable by Stacey's for the Transition Services, the
termination of the Transition Services shall have no effect on the other terms
and provisions of this Agreement. Star shall not be liable for any direct,
indirect or consequential damages suffered or incurred by Stacey's or to any
third party, including, without limitation, lost profits arising from or
relating to the performance of Transition Services by Star hereunder absent a
finding in a final judgment of a court of competent jurisdiction that such
damages proximately resulted from the bad faith, gross negligence or willful
misconduct of Star or its agents. Stacey's shall indemnify, hold harmless and
defend Star, and its officers, directors, stockholders and employees
(collectively, the "Star Indemnified Parties"), from and against any and all
liabilities, losses, judgments, damages, demands, claims, causes of action or
any other legal or government proceedings, or any settlement thereof, and any
and all costs and expenses (including reasonable attorneys' fees), whether or
not covered by insurance, caused or asserted to have been caused, directly or
indirectly, by or as a result of the performance of the Transition Services or
any intentional or willful misconduct or negligent acts or omissions by Stacey's
and/or its agents, employees and/or subcontractors (other than Star, its
affiliates and agents) during the provision of the Transition Services.
1.4 Obligations to Vendors. On the Closing Date, Stacey's shall pay
Choice Food Service Equipment Co. for all of the smallwares that were purchased
for Stacey's Buffet restaurants, whether such smallwares are currently located
at the Stacey's Buffet restaurants or are in transit to such restaurants, but in
no event shall Stacey's be obligated to pay in excess of $68,894.
1.5 Return of Equipment. Star and Stacey's acknowledge and agree that
the equipment listed on Schedule 1.5 hereto (the "Equipment") shall be invoiced
to Star (and, to the extent invoiced
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to Stacey's, shall be re-invoiced to Star) so that Star shall be obligated to
pay for the Equipment, provided that Star shall have the right to take title to
the Equipment and, to the extent installed in any of the Stacey's Buffet
restaurants, Stacey's shall, within ten (10) days from the date hereof, remove
the Equipment and provide notice to Star that Star may take possession of the
Equipment. Star shall indemnify and hold Stacey's harmless and defend Stacey's
against any and all claims, judgments, damages or liabilities asserted by any
vendor of the Equipment against Stacey's with respect to the Equipment.
1.6 Termination of Transaction Documents. Subject to the terms and
conditions set forth herein, the parties hereby agree to terminate the
Transaction Documents effective on the date hereof, and, except for the duties
and obligations of the parties under this Agreement and the Exhibits hereto,
neither party shall have any further duties and obligations under any of the
Transaction Documents.
1.7 Termination of Financing Statements. Within three (3) business days
from the Closing, Star shall release any and all liens against the Collateral
(as defined in the Security Agreement).
1.8 Waiver and Release of Star. Effective as of the Closing Date,
Stacey's and its successors and assigns hereby knowingly and voluntarily forever
releases, acquits and discharges Star, its directors, officers, employees,
agents, controlling persons and stockholders (collectively, the "Star Released
Parties") (a) from and of any and all claims arising from acts or omissions of
any of the Star Released Parties that may have occurred prior to the date hereof
that any of the Star Released Parties (i) is in any way responsible for the
past, current or future condition or deterioration of the business operations
and/or financial condition of Stacey's, or (ii) breached any agreement to
provide services, to loan money or make other financial accommodations available
to Stacey's or to fund any operations of Stacey's at any time, and (b) from and
of any and all other claims, damages, losses, actions, counterclaims, suits,
judgments, obligations, liabilities, defenses, affirmative defenses, setoffs,
and demands of any kind or nature whatsoever, in law or in equity, whether
presently known or unknown, which Stacey's may have had, now have, or which it
can, shall or may have for, upon, or by reason of any matter, course or thing
whatsoever relating to, arising out of, based upon, or in any manner connected
with, any transaction, event, circumstance, action, failure to act, or
occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken, permitted, begun, or otherwise related or connected to or
with any or all of the Loans, the Credit Agreement, any or all of the
Transaction Documents, and/or any direct or indirect action or omission of any
of the Star Released Parties arising from acts or omissions of the Star Released
Parties; provided, however, this release and waiver shall not apply to (i)
enforcement of any term of this Agreement including any rights of
indemnification or remedies against Star for its breach of this Agreement and
(ii) any intentional act of misrepresentation. by Star or Star Released Parties.
Stacey's further agrees that from and after the date hereof, it will not assert
to any person or entity, other than required under state or federal law, that
any deterioration of the business operations or financial condition of Stacey's
was caused by any breach or wrongful act of any of the released parties
occurring prior to the date hereof.
1.9 Waiver and Release of Stacey's. Effective as of the Closing Date,
Star and its successors and assigns hereby knowingly and voluntarily releases,
acquits and forever discharges Stacey's, its directors, officers, employees,
agents, controlling persons and shareholders (collectively
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the "Stacey's Released Parties") from any and all claims, rights, demands,
actions, suits, causes of actions, damages, counterclaims, defenses, losses,
costs, obligations, liabilities and expenses of every kind or nature, known or
unknown, suspected or unsuspected, fixed or contingent, foreseen or unforeseen
(collectively "Claims"), arising out of or relating directly or indirectly to
any circumstances or state of facts pertaining to the Loan, or the Transaction
Documents, or any nonperformance of any agreement or obligation related thereto,
or any statements, representations, acts or omissions, intentional, willful,
negligent or innocent, by any of the Stacey's Released Parties in any way
connected with, relating to or affecting, directly or indirectly, the Loan or
the Transaction Documents; provided, however, that the foregoing shall in no
event extend to (i) the liabilities and obligations of the Stacey's Released
Parties relating to, arising out of, or in connection with the breach of any
representation, warranty, indemnity, covenant or agreement set forth in this
Agreement or the Purchase Agreement or any documents contemplated hereby or
thereby or (ii) an intentional act of misrepresentation by Stacey's or the
Stacey's Released Parties.
1.10 Disclosures. To the best of Star's knowledge, Star has delivered to
Stacey's all agreements, contracts, arrangements, documents, or other
instruments (together, the "Instruments") purporting to bind Stacey's that were
entered into, executed by, or executed at the direction of, personnel employed
or retained by Star to provide services to Stacey's during the pendency of the
Business Services Agreement, or who otherwise executed Instruments which may be
purported to bind Stacey's.
1.11 Publicity. Star, Stacey's and their respective affiliates agree
that (i) any public disclosure of the transactions contemplated hereby shall be
by mutual agreement of the parties and in a form and manner agreed to by the
parties; provided, however, that either party shall be entitled to make any
disclosure required by applicable law, rule or regulation of any governmental
authority or securities exchange, and (ii) except as provided in clause (i)
above, each party and its respective affiliates shall maintain the
confidentiality of any and all information relating to this Agreement and the
transactions contemplated hereby and any and all confidential information of the
other party received in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF STACEY'S
Stacey's represents and warrants to Star as follows:
2.1 Organization, Existence and Good Standing. Stacey's is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida.
2.2 Authority. Stacey's has full corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Stacey's and constitutes the legal, valid
and binding agreement of Stacey's enforceable against Stacey's in accordance
with its terms.
2.3 Consents and Approvals; No Violation. Except as otherwise provided
in this Agreement or the Purchase Agreement, no filing or registration with, no
notice to and no governmental authorization, consent or approval of any
governmental authority or other person is
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necessary in connection with Stacey's execution and delivery of this Agreement,
the performance of its obligations hereunder or the consummation by Stacey's of
the transactions contemplated hereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STAR
Star represents and warrants to Stacey's as follows:
3.1 Organization, Existence and Good Standing. Star is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
3.2 Authority. Star has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Star and constitutes the legal, valid and
binding agreement of Star enforceable against Star in accordance with its terms.
3.3 Consents and Approvals; No Violation. Except as otherwise provided
in this Agreement or the Purchase Agreement, no filing or registration with, no
notice to and no governmental authorization, consent or approval of any
governmental authority or other person is necessary in connection with Star's
execution and delivery of this Agreement, the performance of its obligations
hereunder or the consummation by Star of the transactions contemplated hereby.
ARTICLE IV
MISCELLANEOUS
4.1 Relief From Stay. As additional consideration for Star's execution
of this Agreement, Stacey's agrees that, so long as Star is not in default
hereunder: (a) in the event of a bankruptcy filing by or against Stacey's,
Stacey's shall not reject or contest any claim or assertion by Star that the
Agreement is binding between the parties and that valuable consideration has
been received by Stacey's for same; (b) Star shall receive immediate relief from
the automatic stay provisions of the United States Bankruptcy Code following any
bankruptcy petition which Stacey's may file or which may be filed against
Stacey's, and Stacey's shall in no event contest a motion to lift the automatic
stay filed by Star.
4.2 Expenses. Each party shall pay the expenses that it has incurred in
connection with the negotiation, preparation and execution of this Agreement and
the Purchase Agreement, and any other matters related thereto.
4.3 Further Assurances. From and after the date hereof, and upon the
reasonable request of any party hereto, the other parties shall execute and
deliver such further instruments or documents and take such further actions as
may be reasonably necessary or desirable to better evidence or more completely
effectuate the agreements contained herein.
4.4 Severability. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
4.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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4.6 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of Florida.
4.7 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including bank wire, telecopier or similar
writing) and shall be given to such party at the address or telecopier number
set forth below or such other address or telecopier number as such party may
hereafter specify for the purpose by notice to each other party. Each such
notice, request or other communication shall be effective (i) if given by mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (ii) if given by any other means,
when delivered at the address or telecopier number set forth below.
If to Stacey's Buffet Inc.: Stacey's Buffet, Inc.
00000 00xx Xxxxxx Xxxxx, Xxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Hannah LLP
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Star Buffet, Inc. 000 Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxxx, Esq.
Stradling, Yocca, Xxxxxxx & Xxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
4.8 Headings. The Section headings in this Agreement are for
convenience of reference only and shall be disregarded in interpreting or
construing any of the provisions of this Agreement.
4.9 Counterparts. This Agreement may be executed by any of the parties
in separate counterpart and each party must sign and deliver at least one such
counterpart, but it shall not be necessary for all of the parties to have signed
and delivered the same counterpart, for this Agreement to be effective. All of
the counterparts of this Agreement signed and delivered by any of the parties
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
STACEY'S BUFFET, INC
By:
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Name:
Title:
STAR BUFFET, INC.,
By:
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Name:
Title:
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