SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("Agreement") is entered
into by Xxxxx X. Xxxxxxx, Xx. ("Xxxxxxx"), Restaurant Management Services,
Inc., now known as Restaurant Management Group, Inc. ("RMG"), The WesterN
SizzliN Corporation, a Delaware corporation ("WSC-Del") and successor by
merger to The WesterN SizzliN Corporation, a Tennessee corporation
("WSC-Tenn"), and Austins Steaks & Saloon, Inc., a Delaware corporation
("Austins"), this day of August, 1999.
WHEREAS, Xxxxxxx has filed two actions against WSC-Tenn and certain of
its officers and directors in the Chancery Court for Davidson County,
Tennessee, both of which cases are styled XXXXX X. XXXXXXX, XX. V. THE
WESTERN SIZZLIN CORPORATION F/K/A FRANCHISEE ACQUISITION CORPORATION, Case
Nos. 95-781-I and 95-2074-III (I), which cases have been consolidated, and
WSC-Tenn has counterclaimed against Xxxxxxx and RMG in Case No. 95-781-I
(which consolidated actions are hereinafter referred to as the "Lawsuit"); and
WHEREAS, the dispute between the parties in said Lawsuit and the
counterclaim therein arises out of an Employment Agreement entered into on
November 11, 1993, between Xxxxxxx and WSC-Tenn and concerns an alleged
breach of contract by WSC-Tenn; and
WHEREAS, WSC-Del is a wholly-owned subsidiary of Austins;
WHEREAS, WSC-Tenn merged into WSC-Del effective July 1, 1999 pursuant to
an Agreement and Plan of Merger dated as of April 30, 1999 by and among
WSC-Tenn, WSC-Del (formerly named Austins Acquisition Corp.), and Austins and
pursuant to a Plan of Merger dated as of April 30, 1999 by and among
WSC-Tenn, WSC-Del and Austins, in accordance with which WSC-Tenn merged into
WSC-Del (with WSC-Del as the surviving corporation) and each share of
WSC-Tenn Common Stock, $1.00 par value (WSC-Tenn Common Stock), and of
WSC-Tenn Series B Convertible Preferred Stock ("WSC-Tenn Preferred Stock")
were automatically converted (subject to statutory dissenters' rights) into
two shares of Austins Common Stock (the transaction is referenced as the
"Merger");
WHEREAS, according to the stock records of WSC-Tenn, Xxxxxxx, as of
immediately prior to the effective time of the Merger, was the record owner
of 100,000 shares of WSC-Tenn Common Stock and 150,000 shares of WSC-Tenn
Series B Convertible Preferred Stock, and, RMG, as of immediately prior to
the effective time of the Merger, was the record owner of 434,000 shares of
WSC-Tenn Common Stock; and
WHEREAS, RMG has duly transferred, conveyed and assigned all its right,
title and interest in the 434,000 shares of WSC-Tenn Common Stock to Xxxxxxx
(collectively the 534,000 shares of WSC-Tenn Common Stock and the 150,000
shares of WSC-Tenn Series B Convertible Preferred Stock are the "Xxxxxxx WSC
Shares");
WHEREAS, Xxxxxxx has taken all necessary steps required under the
Dissenters' Rights Chapter of the Tennessee Business Corporation Act (T.C.A.
Section 00-00-000 through 00-00-000 (the "Tennessee Dissenters Right
Chapter") to maintain his dissenter's rights claims with respect to the
Xxxxxxx WSC Shares ("Xxxxxxx Dissenter's Claims");
WHEREAS, all matters and things in controversy between the parties which
are the subject of the Lawsuit and the counterclaims therein have been
compromised and settled as set forth herein;
WHEREAS, WSC-Del and Xxxxxxx have reached agreement on all matters
related to Xxxxxxx Dissenter's Claims as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. SETTLEMENT PAYMENT OF $1 MILLION - At the Closing on the Closing
Date, WSC-Del will pay One Million Dollars ($1,000,000) in cash via wire
transfer to Xxxxxxx (the "Settlement Payment").
2. DISSENTER'S RIGHTS WITHDRAWAL, CONVERSION OF XXXXXXX WSC SHARES;
PURCHASE OF AUSTINS STOCK - At the Closing on the Closing Date:
(a) Xxxxxxx will withdraw his Dissenter's Rights Claims against WSC-Del;
and
(b) Immediately thereafter at the Closing, in accordance with the terms of
the Merger, as evidence of the conversion of the Xxxxxxx WSC Shares
into 1,368,000 shares of Austins Common Stock, Austins shall deliver
to Xxxxxxx one or more stock certificates representing and evidencing
1,368,000 shares of the Austins Common Stock (the "Xxxxxxx Austins
Shares")
(c) Immediately thereafter at the Closing, Austins and/or its designees
(collectively, the "Purchasers"), shall purchase, and Xxxxxxx shall
sell, all the Xxxxxxx Austins Shares for the purchase price of Two
Dollars and Fifty Cents ($2.50) per share (an aggregate purchase price
of Three Million Four Hundred Twenty Thousand Dollars) ($3,420,000)
(the "Stock Purchase Payment"). The entire Stock Purchase Payment will
be paid in cash.
3. CLOSING. The payments and effectiveness of releases (the "Closing")
provided for in this Agreement will take place at the offices of Xxxxxx,
Xxxxxxxx & Xxxxxxx, PLC in Nashville, Tennessee at 10:00 a.m. (local time) on
Friday, September 10, 1999, unless another date is agreed upon in writing by
all the parties hereto.
At the Closing:
(a) Austins and/or WSC-Del and/or the Purchasers (as applicable) will
deliver to Xxxxxxx:
(i) certificates representing the Xxxxxxx Austins Shares;
(ii) the Settlement Payment;
(iii) the Stock Purchase Payment;
(iv) the releases provided in Section 4(b); and
(v) a certificate executed by WSC-Del and Austins
representing and warranting to Xxxxxxx and RMG that each
of their representations and warranties in this Agreement
is accurate in all respects as of the Closing.
(b) Xxxxxxx and RMG, as applicable, shall deliver:
(i) if delivered by Austins in accordance with Section 3(a),
the certificates representing the Xxxxxxx Austins Shares, duly
endorsed, with signatures guaranteed by a commercial bank or by a
member firm of the New York Stock Exchange, and executed stock powers,
for transfer to the Purchasers;
(ii) the releases provided in Section 4(a); and
(iii) a certificate executed by Xxxxxxx and RMG representing
and warranting to WSC-Del, Austins and any other Purchasers that each
of their representations and warranties in this Agreement is accurate
in all respects as of the Closing.
The parties agree to execute and/or deliver such documentation and to
undertake such other actions as are reasonably appropriate and necessary to
consummate the conversion of the Xxxxxxx WSC Shares into Xxxxxxx Xxxxxx
Shares, the purchase of the Xxxxxxx Xxxxxx Shares hereunder and the other
provisions of this Agreement. Xxxxxxx acknowledges that Austins may designate
persons and entities, most likely existing shareholders of Austins, to become
Purchasers and that in such event Xxxxxxx shall receive delivery of all (or a
portion, if Austins remains as a co-Purchaser) of the Stock Purchase Payment
from, and make delivery of the certificates of Xxxxxxx Xxxxxx Shares to, such
additional Purchasers.
4. FULL MUTUAL RELEASES
(a) Effective at and upon the Closing and the payment of the sums
required under Sections 1 and 2 above, Xxxxxxx and RMG, on behalf of
themselves, as well as their respective successors and assigns and their past
and present directors, officers, agents, servants and employees, do hereby
release and forever discharge WSC-Del and Austins, and their successors and
assigns, as well as their (and their predecessors') past, present and future
officers, directors, agents, accountants, attorneys, investment bankers,
servants and employees, from all claims and demands, actions and causes of
action, which have arisen or may arise from or by reason of any and all known
and unknown, foreseen and unforeseen, damages and injuries and all
consequential losses
and damages, which Xxxxxxx and/or RMG now have or ever had against them and
their predecessors, including but not limited to: (a) all claims and
counterclaims that are, have been or could have been asserted in the Lawsuit,
as well as any claims that otherwise relate in any way to an Employment
Agreement dated November 11, 1993, between Xxxxxxx and WSC-Tenn, any alleged
breach thereof, and any other act or omission of whatsoever nature allegedly
committed by WSC-Tenn, its officers, directors, agents or employees; and (b)
all claims and rights as a dissenting shareholder with respect to the Xxxxxxx
WSC Shares and the Merger.
(b) Likewise, effective at and upon the Closing and the payment of the
sums required under Sections 1 and 2 above, WSC-Del and Austins, on behalf of
themselves, as well as their successors, predecessors, assigns, and their and
their predecessors' past and present directors, officers, agents, servants
and employees, do hereby release and forever discharge Xxxxxxx and RMG, their
respective heirs, successors and assigns, as well as their past, present and
future officers, directors, agents, accountants, attorneys, investment
bankers, servants and employees, from all claims and demands, actions and
causes of action, which have arisen or may arise from or by reason of any and
all known and unknown, foreseen and unforeseen, damages and injuries and all
consequential losses and damages which WSC-Del and/or Austins now has or ever
had against either of them, including but not limited to: (a) all claims and
counterclaims that are, have been or could have been asserted in the Lawsuit,
as well as any claims that otherwise relate in any way to an Employment
Agreement dated November 11, 1993, between Xxxxxxx and WSC-Tenn, any alleged
conflict of interest, any alleged breach of fiduciary duty, any alleged
interference with existing business relations, any alleged interference with
prospective advantage, any alleged defamation, and any other act or omission
allegedly committed by Xxxxxxx and/or RMG; and (b) all claims and rights, if
any, with respect to the Merger.
Without in any way limiting the above, these mutual releases include a
complete and final discharge of all pending claims and counterclaims in the
Lawsuit, as well as any claims previously dismissed therefrom. In addition,
these mutual releases include as of the date of this Agreement any and all
claims in reference to the WesterN SizzliN Tullahoma restaurant.
These mutual releases shall apply to all claims, whether known or
unknown, on the part of all parties to this Agreement to the effect that this
Agreement shall be a full, binding and complete settlement between the
parties to this Agreement with respect to any act or omission allegedly
committed by any of the parties, save only and except any executory
provisions of this Agreement as set forth herein.
At the Closing, the parties shall execute four original counterparts of
a Mutual Release in the form of this Section 4.
5. DISMISSAL WITH PREJUDICE - All claims and counterclaims in the
Lawsuit shall be dismissed with prejudice. The parties hereto hereby instruct
their counsel that upon the Closing described in Section 3, and the payment
of the Stock Purchase Payment and the Settlement Payment, counsel shall
submit to the Chancery
Court for Davidson County, Tennessee, an Agreed order of Dismissal in the
form attached hereto as Exhibit A.
6. COURT COSTS - The court costs incurred with the Davidson County
Clerk & Master in connection with the Lawsuit will be paid by WSC-Del. Each
party will bear his/its own discretionary costs and attorneys' fees.
7. REQUIREMENT OF APPROVAL BY WSC BOARD OF DIRECTORS - This Agreement
is subject to the approval of the WSC-Del and Austins Board of Directors at a
meeting scheduled for August 11, 1999. WSC-Del and Austins hereby represent
to Xxxxxxx and RMG that a majority of the members of the WSC Board of
Directors have informed Austins and WSC-Del that they will vote in favor of
the settlement on the terms set forth herein. Immediately following the
August 11, 1999 WSC-Del and Austins Board meetings, WSC-Del and Austins will
deliver to Xxx X. Xxxx at Xxxx & Xxxxxxx, 2000 First Union Tower, 000 Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, facsimile (000) 000-0000, a
certification that the Boards have, in fact, duly approved this Agreement,
and that WSC-Del and Austins otherwise have all necessary authority to enter
into and consummate this settlement upon the terms set forth herein.
8. REQUIREMENT OF WIRE TRANSFER - All sums to be paid to Xxxxxxx under
Sections 1 and 2 above shall be delivered by means of a wire transfer to such
account(s) as are designated for such purpose in writing by Xxxxxxx. The
written designation of such account (s) shall be delivered by Xxx X. Xxxx of
Xxxx & Xxxxxxx to Xxxxxxx X. Xxxxxx, and Xxxxxxx Xxxxxxxx, III, Xxxxxx,
Xxxxxxxx & Xxxxxxx, SunTrust Financial Center, 000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, promptly after Xxx X. Xxxx'x receipt of the
certification required under Section 7 above, but in no event later than noon
Nashville time on Wednesday, September 8, 1999.
9. EXERCISE OF DISSENTERS' RIGHTS - WSC-Del and Austins acknowledge
that Xxxxxxx and/or RMG have taken all necessary actions and procedures under
the Tennessee Dissenters' Rights Chapter to properly and fully preserve
Xxxxxxx Dissenter's Claims. Prior to September 10, 1999, in the absence of a
default by WSC-Del or Austins hereunder: (a) neither Xxxxxxx nor RMG shall
make demand upon WSC-Del for payment; (b) WSC-Del shall not make the payment
or other deliveries otherwise provided in Tenn. Code Xxx. Section 00-00-000;
and (c) neither Xxxxxxx nor RMG shall submit a notice to WSC-Del otherwise
provided in Tenn. Code Xxx. Section 00-00-000. Upon the Closing and the
payment of the sums required under Sections 1 and 2 above, any such demand
for payment under the Tennessee Dissenters' Rights Chapter will be deemed
withdrawn and, pursuant to the mutual releases above, any claims by Xxxxxxx
and RMG under the Tennessee Dissenters' Rights Chapter shall be released and
fully discharged. In the event the transactions contemplated by this
Agreement do not close or upon the occurrence of a default hereunder by
Austins or WSC-Del, Xxxxxxx and RMG will be entitled to proceed without
prejudice with their rights and remedies available under the Tennessee
Dissenters' Rights Chapter and neither Austins nor WSC-Del shall raise any
objection to such proceeding based on the failure of Xxxxxxx or RMG to have
made or delivered any notice or taken any other action prior to
September 16, 1999.
10. REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND RMG. Xxxxxxx and RMG
represent and warrant to WSC-Del, Austins and to any other Purchasers as
follows:
(a) This Agreement constitutes the legal, valid, and binding
obligation of Xxxxxxx and RMG enforceable against them in accordance with
its terms. Xxxxxxx and RMG have, as applicable, the absolute and
unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and to perform their respective obligations under this
Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the actions contemplated hereunder
will, directly or indirectly (with or without notice or lapse of time)
contravene, conflict with, or result in a violation of any agreement to
which Xxxxxxx or RMG is a party.
(c) Xxxxxxx was, as of June 30, 1999, the sole beneficial owner and
holder of all of the Xxxxxxx WSC Shares, free and clear of all liens,
options to purchase or other encumbrances. WSC Common Stock certificate
number(s) ______________ represent all the stock certificates comprising
the WSC-Tenn Common Stock portion of the Xxxxxxx WCS Shares and WSC-Tenn
Preferred Stock certificate numbers ______________ represent all the stock
certificates comprising the WSC Preferred Stock portion of the Xxxxxxx WCS
Shares. Since June 30, 1999, Xxxxxxx has not, other than as provided in
this Agreement, granted to any person or entity any rights with respect to
the Xxxxxxx WSC Shares, including any rights to receive any cash proceeds
arising from the Xxxxxxx Dissenter's Claims. Other than the Xxxxxxx WCS
Shares, as of June 30, 1999, neither Xxxxxxx nor RMG, directly or through
affiliates, owned any shares of the capital stock of WCS-Tenn or any right
to acquire any such shares.
(d) Neither Xxxxxxx, RMG nor any affiliate of Xxxxxxx or RMG own, or
have any agreement (written or unwritten) to acquire in the future, any
shares of the capital stock of WSC-Del or Austins.
(e) These representations and warranties shall survive the Closing.
11. REPRESENTATIONS AND WARRANTIES OF WSC-DEL AND AUSTINS. WSC-Del and
Austins represent and warrant to Xxxxxxx and RMG as follows:
(a) This Agreement constitutes the legal, valid, and binding
obligation of WSC-Del and Austins enforceable against them in accordance
with its terms. WSC-Del and Austins have, as applicable, the absolute and
unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and to perform their respective obligations under this
Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the actions contemplated hereunder
will, directly or indirectly (with or without notice or lapse of time)
contravene, conflict with, or result in a violation of any agreement to
which WCS-Del (or its predecessor) or Austins is a party.
(c) These representations and warranties shall survive the Closing.
12. AGREEMENT NOT TO PURCHASE - Neither Xxxxxxx nor RMG shall, directly
or indirectly, prior to September 10, 2014, without the prior written consent
of Austins, acquire, directly or indirectly, of record or beneficially, any
shares of the capital stock of Austins or any rights convertible or
exercisable into shares of the capital stock of Austins.
13. GOVERNING LAW - This Agreement shall be construed and interpreted
in accordance with the laws of the State of Tennessee.
14. ADDITIONAL DOCUMENTS AND ACTIONS - All parties agree to cooperate
fully and execute any and all supplementary documents and to take all
additional actions which may be necessary and appropriate to give full force
and effect to the terms and intent to this Agreement.
15. ENTIRE AGREEMENT AND SUCCESSORS-IN-INTEREST - This Agreement
contains the entire agreement between the parties with regard to the matters
set forth herein, and it shall be binding upon and inure to the benefit of
the executors, administrators, personal representatives, heirs, successors
and assigns of each.
THE WESTERN SIZZLIN CORPORATION,
a Delaware corporation
By: s/s Xxxxxx X. Xxxx
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Title: President and CEO
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AUSTINS STEAKS & SALOON, INC.
By: s/s Xxxxxx X. Xxxx
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Title: President and CEO
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s/s Xxxxx X. Xxxxxxx, Xx.
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XXXXX X. XXXXXXX, XX.
RESTAURANT MANAGEMENT GROUP, INC.
By: s/s Xxxxx X. Xxxxxxx, Xx.
--------------------------------------------
Title: President
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