AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1997

REGISTRATION NO. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

STAR BUFFET, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                            5812                               -
(STATE OR OTHER JURISDICTION OF     (PRIMARY STANDARD INDUSTRIAL            (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)     CLASSIFICATION CODE NUMBER)           IDENTIFICATION NO.)

440 LAWNDALE DRIVE, SALT LAKE CITY, UTAH 84115-2917
(801) 463-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ROBERT E. WHEATON
CHIEF EXECUTIVE OFFICER AND PRESIDENT
STAR BUFFET, INC.
440 LAWNDALE DRIVE
SALT LAKE CITY, UTAH 84115-2917
(801) 463-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

       C. CRAIG CARLSON, ESQ.                              PETER LILLEVAND, ESQ.
       J. MICHAEL VAUGHN, ESQ.                               IAIN MICKLE, ESQ.
  STRADLING YOCCA CARLSON & RAUTH,                  ORRICK, HERRINGTON & SUTCLIFFE LLP
     A PROFESSIONAL CORPORATION                      OLD FEDERAL RESERVE BANK BUILDING
660 NEWPORT CENTER DRIVE, SUITE 1600                        400 SANSOME STREET
   NEWPORT BEACH, CALIFORNIA 92660                    SAN FRANCISCO, CALIFORNIA 94111
           (714) 725-4000                                     (415) 392-1122

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: [ ]

CALCULATION OF REGISTRATION FEE

==============================================================================================================================
                                                                   PROPOSED MAXIMUM       PROPOSED MAXIMUM          AMOUNT OF
             TITLE OF EACH                    AMOUNT TO BE        OFFERING PRICE PER     AGGREGATE OFFERING       REGISTRATION
  CLASS OF SECURITIES TO BE REGISTERED        REGISTERED(1)            SHARE(2)              PRICE(1)(2)               FEE
------------------------------------------------------------------------------------------------------------------------------
Common Stock ($0.001 par value).........    2,875,000 shares            $12.00               $34,500,000             $10,455
==============================================================================================================================

(1) Includes 375,000 shares of Common Stock which may be purchased by the Underwriters to cover over-allotments, if any.

(2) Estimated pursuant to Rule 457(o) solely for the purpose of calculating the registration fee.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.


INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 28, 1997

2,500,000 SHARES

[LOGO] STAR BUFFET, INC.

COMMON STOCK


Of the 2,500,000 shares of Common Stock offered hereby, 1,900,000 shares are being sold by Star Buffet, Inc. ("Star Buffet" or the "Company") and 600,000 shares are being sold by a newly-formed subsidiary of CKE Restaurants, Inc. (the "Selling Stockholder"). See "Principal and Selling Stockholders." The Company will not receive any of the proceeds from the sale of shares of Common Stock by the Selling Stockholder. Following completion of this offering, CKE Restaurants, Inc. ("CKE") will beneficially own approximately 44.4% of the outstanding shares of Common Stock (approximately 41.0% if the Underwriters' over-allotment option is exercised in full).

Prior to this offering, there has been no public market for the Common Stock of the Company. It is currently estimated that the initial public offering price of the Common Stock will be between $10.00 and $12.00 per share. See "Underwriting" for a discussion of factors to be considered in determining the initial public offering price. Application has been made to have the Common Stock approved for quotation on the Nasdaq National Market under the symbol "STRZ," subject to official notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.


THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS

THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.


-------------------------------------------------------------------------------------------------
                                                                                   PROCEEDS TO
                           PRICE TO         UNDERWRITING        PROCEEDS TO          SELLING
                            PUBLIC           DISCOUNT(1)        COMPANY(2)       STOCKHOLDER(2)
-------------------------------------------------------------------------------------------------
Per Share............          $                  $                  $                  $
-------------------------------------------------------------------------------------------------
Total(3).............          $                  $                  $                  $
=================================================================================================

(1) See "Underwriting" for a description of the indemnification arrangements with the Underwriters.

(2) Before deducting expenses estimated at $700,000, of which $532,000 are payable by the Company and $168,000 are payable by the Selling Stockholder.

(3) The Company has granted to the Underwriters a 30-day option to purchase up to an additional 375,000 shares of Common Stock at the Price to Public, less the Underwriting Discount, solely to cover over-allotments, if any. If such option is exercised in full, the total Price to Public, Underwriting Discount and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting."


The Common Stock is offered by the several Underwriters named herein, subject to prior sale, when, as and if delivered to and accepted by them. The Underwriters reserve the right to reject orders in whole or in part and to withdraw, cancel or modify the offer without notice. It is expected that delivery of certificates representing the Common Stock will be made on or about , 1997.

EQUITABLE SECURITIES CORPORATION EVEREN SECURITIES, INC.

, 1997


[MAP DEPICTING LOCATION OF THE COMPANY'S RESTAURANTS
AND PHOTOS OF INTERIOR AND EXTERIOR
OF REPRESENTATIVE RESTAURANTS]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN ACTIVITIES THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF COMMON STOCK FOLLOWING THIS OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK OR MAINTAIN THE PRICE OF THE COMMON STOCK AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and should be read in conjunction with, the more detailed information and financial statements, including notes thereto, included elsewhere in this Prospectus. Unless otherwise indicated, all information contained in this Prospectus assumes
(i) the consummation of the Formation Transactions described below under the heading "The Formation Transactions" and (ii) that the Underwriters' over-allotment option is not exercised. The restaurant holdings of Summit Family Restaurants Inc. ("Summit") include 16 HomeTown Buffet restaurants operated by HTB Restaurants, Inc., a wholly-owned subsidiary of Summit ("HTB"), and two Casa Bonita Mexican-themed restaurants. Summit was acquired by CKE on July 15, 1996. The operations of HTB prior to July 15, 1996 are referred to herein as the Predecessor Company. The two Casa Bonita restaurants were acquired by CKE on October 1, 1996. The combined operations of HTB subsequent to July 15, 1996 and the two Casa Bonita restaurants subsequent to October 1, 1996 are referred to herein as the Successor Company. For purposes hereof and unless the context requires otherwise, the terms "Company" and "Star Buffet" refer to Star Buffet, Inc. and the operations of the Predecessor Company and the Successor Company.

THE COMPANY

The Company, through its subsidiaries, owns and operates 16 franchised HomeTown Buffet restaurants, two Mexican-themed restaurants operated under the Casa Bonita name and, upon the completion of the North Acquisition, seven additional buffet restaurants which operate under the "JJ North's Grand Buffet" name (collectively, the "North's Restaurants"). The Company's restaurants, including the North's Restaurants, are located in nine western states and are focused upon providing customers with a wide variety of fresh, high quality food at modest prices in a warm, friendly atmosphere.

The Company's strategic objective is to become a leading national operator of regional buffet restaurants through (i) acquisitions of existing buffet restaurants which management believes can benefit from the Company's management practices, (ii) new restaurant openings, particularly by acquiring existing restaurant locations which can be converted to buffet restaurants operated or under development by the Company and (iii) minority investments in or strategic alliances with other regional buffet restaurant chains. The Company's growth strategy is designed to capitalize on the opportunities management perceives in the fragmented buffet segment of the restaurant industry.

The Company believes that regional buffet concepts have certain advantages in their market area over national buffet concepts due to their name recognition and ability to meet the specific taste preferences of their customers, but generally lack the management resources, purchasing power and capital to expand and capitalize on their regional market strength. The Company believes that its ability to reduce administrative expenses and achieve other strategic and financial benefits through increased purchasing power, shared product development and marketing efficiencies and its greater access to capital will provide the Company with significant competitive advantages.

The Company plans to actively seek acquisition opportunities which exist due to the fragmentation of the buffet segment of the restaurant industry. Management estimates that, in 1996, the buffet and cafeteria segment of the United States restaurant industry consisted of approximately 8,300 restaurants with aggregate revenues of over $4.3 billion. Management believes that a significant percentage of such revenues was generated by regional buffet chains. The Company believes that most of these regional chains are privately owned and may be available for acquisition because they lack the financial and operational structure to compete with larger regional and national chains. Management believes that the Company will be able to offer these operators an attractive alternative by allowing them, in many cases, the opportunity to continue managing their business after acquisition and to increase their focus on customer service and quality rather than administration and finance.

The Company has benefited from its relationship with CKE through its access to certain operating systems and strategies which CKE successfully implemented in its Carl's Jr. chain. For the fifty-two weeks ended July 14, 1997, HTB's HomeTown Buffet restaurants experienced a 1.7% increase in same-store sales,

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following a 9.2% decline in same-store sales during the fiscal year ended December 18, 1995. In addition, management lowered food costs to 35.3% of total revenues during the sixteen weeks ended May 19, 1997 from 36.9% of total revenues for the sixteen weeks ended May 20, 1996. The Company believes that its ability to accomplish these cost reductions and operational improvements is due to the Company's customer focus and management practices. The Company believes that its ability to deliver high quality food to customers with superior service in clean and friendly environments has been central to its success at improving customer perceptions and sales.

As part of CKE's desire to focus its management efforts and capital resources on quick-service restaurants, CKE has determined that the expansion of the Company will be enhanced through the creation of a separate publicly traded company focused on the buffet segment. After the completion of this offering, CKE will beneficially own approximately 44.4% of the outstanding Common Stock (approximately 41.0% if the Underwriters' over-allotment option is exercised in full). Pursuant to a three-year management service agreement (the "Service Agreement"), CKE will provide the Company with multi-unit infrastructure support, including purchasing, accounting, administrative, financial and real estate services. The Company plans to leverage its relationship with CKE by utilizing CKE's proven operating systems and corporate infrastructure. Management believes that the services provided by CKE will enable the Company to focus its resources on operational improvements, cost control and concept and brand development. See "Business--Relationship with CKE."

The Company's corporate headquarters is located at 440 Lawndale Drive, Salt Lake City, Utah 84115-2917, and its telephone number is (801) 463-5500.

RECENT DEVELOPMENTS

North's Restaurants. On July 24, 1997, CKE entered into an Asset Purchase Agreement (the "Acquisition Agreement") with North's Restaurants, Inc. ("North's") to acquire the North's Restaurants and the trademarks, menus, restaurant designs and other intangible assets used in connection with North's restaurant operations. These seven restaurants are located in Idaho, Oregon, Utah and Washington. For the twelve months ended December 31, 1996, the North's Restaurants generated revenues of $10.8 million and income from operations of $37,000.

Prior to the completion of this offering, CKE will assign to the Company all of CKE's rights and certain of its obligations under the Acquisition Agreement. The Company intends to acquire the North's Restaurants (the "North Acquisition") simultaneously with the completion of this offering. The aggregate consideration to be paid by the Company for the North's Restaurants will be $4.5 million, subject to adjustment. The closing of the North Acquisition is subject to the satisfaction of certain conditions. See "Business--The North Acquisition."

The performance of the North's Restaurants has been adversely affected in recent years by operational difficulties and inadequate capital resources, the effects of which were compounded by increased competition in the industry. The Company believes that it can meaningfully improve the same-store sales and profitability levels at the North's Restaurants and has developed a plan to integrate the North's Restaurants into the Company and improve their operations by implementing certain of the strategies developed by CKE which HTB has used to improve the operations of its HomeTown Buffet restaurants.

Stacey's Buffet. On July 18, 1997, CKE signed a non-binding letter of intent (the "LOI") with Stacey's Buffet, Inc. ("Stacey's") for a strategic alliance between the Company and Stacey's. Stacey's operates 24 buffet restaurants, 19 of which are located in Florida. For the fiscal year ended January 1, 1997, Stacey's reported revenues of $38.8 million and an operating loss of $1.9 million.

The transactions contemplated by the LOI are subject to the negotiation of definitive agreements and approval of Stacey's and the Company's Boards of Directors. The LOI contemplates an arrangement whereby the Company would (i) provide certain purchasing, administrative and management services to a majority of the Stacey's buffet restaurants, (ii) loan Stacey's $2.0 million for remodeling or reconcepting several of Stacey's restaurants and (iii) receive management fees equal to 3.5% of Stacey's revenues and a warrant to purchase 30% of Stacey's fully diluted common stock. The Company would also have the right to designate two members of Stacey's five-member board of directors.

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The Company believes that the transactions contemplated by the LOI provide the Company with an opportunity to leverage its management expertise to improve Stacey's operations. The Company believes that Stacey's operations have suffered in recent years due to operational difficulties and inadequate capital resources. The Company believes that its management practices and purchasing economies could have a significant positive impact on Stacey's operations. The Company intends to work with Stacey's to implement labor and other cost saving programs developed by CKE and to convert certain units to the Company's prototype buffet restaurant.

THE FORMATION TRANSACTIONS

The Company was incorporated as a Delaware corporation on July 28, 1997. Prior to the completion of this offering, JB's Restaurants, Inc., a newly-formed, wholly-owned subsidiary of CKE ("JB's"), will contribute to the Company all of the issued and outstanding shares of capital stock of Summit in exchange for 2,600,000 shares of Common Stock of the Company (the "Summit Exchange"). Summit is the parent corporation of HTB, which operates 16 HomeTown Buffet restaurants as a franchisee of HomeTown Buffet, Inc. (the "HomeTown Franchisor"). Summit was acquired by CKE in July 1996, at which time it was the owner, operator and franchisor of 101 JB's Restaurants and the owner and operator of six Galaxy Diner restaurants. Prior to the Summit Exchange, Summit will transfer to JB's all of the assets of its JB's Restaurant system and Galaxy Diner restaurants, and JB's will continue to operate the JB's Restaurants and related franchise system and the Galaxy Diner restaurants and assume all of Summit's liabilities relating to those restaurant operations. In addition, prior to the Summit Exchange, Taco Bueno, Inc., an indirect wholly-owned subsidiary of CKE, formerly known as Casa Bonita Incorporated ("Taco Bueno"), will sell substantially all of the net assets relating to its two Casa Bonita restaurants to Summit in exchange for a promissory note in the principal amount of $495,000 (the "Casa Bonita Note"). These transactions are collectively referred to herein as the "Formation Transactions."

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THE OFFERING

Common Stock offered by the Company..............  1,900,000 shares
Common Stock offered by the Selling
  Stockholder....................................  600,000 shares
Common Stock to be outstanding after this
  offering.......................................  4,500,000 shares(1)
Use of proceeds..................................  The Company intends to use approximately
                                                   $7.9 million of the net proceeds of this
                                                   offering to pay a declared and unpaid cash
                                                   dividend to the Selling Stockholder,
                                                   approximately $2.0 million for the loan to
                                                   Stacey's contemplated by the LOI,
                                                   approximately $1.7 million to acquire
                                                   equipment under certain operating leases,
                                                   approximately $500,000 to finance the cash
                                                   portion of the consideration to be paid
                                                   for the North Acquisition and $495,000 to
                                                   repay the Casa Bonita Note. The remaining
                                                   net proceeds are expected to be used to
                                                   finance the development or acquisition of
                                                   additional buffet restaurants and for
                                                   working capital and other general
                                                   corporate purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol...........  STRZ
Risk Factors.....................................  See "Risk Factors" for certain factors
                                                   that should be considered by prospective
                                                   purchasers of the Common Stock.


(1) Excludes 602,500 shares of Common Stock reserved for issuance upon to the exercise of stock options to be granted under the Company's 1997 Stock Incentive Plan to certain employees and non-employee directors of the Company upon the closing of this offering. Also excludes the right to purchase warrants to acquire up to 150,000 shares of Common Stock issuable in connection with the North Acquisition. Such options will have an exercise price per share equal to the initial public offering price. See "Management--1997 Stock Incentive Plan" and "Business--The North Acquisition."

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SUMMARY COMBINED HISTORICAL AND UNAUDITED PRO FORMA
FINANCIAL AND RESTAURANT OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table presents summary combined historical financial and restaurant operating data of the Predecessor Company and the Successor Company. The Company adopted a fiscal year ending on the last Monday in January. HTB's HomeTown Buffet and Casa Bonita restaurants historically have operated on different fiscal year end dates. For purposes of presentation and for purposes of comparing the historical fifty-two week fiscal 1994 and 1995 results of the Predecessor Company to the combined results of operations for the Successor Company, the following table includes a 58-week period beginning from the end of the Predecessor Company's fiscal year and ending on the Successor Company's fiscal year end. This 58-week period is comprised of the combined results of HTB from December 19, 1995 to July 15, 1996 (Predecessor Company) and July 16, 1996 to January 27, 1997 and the results of operations of Casa Bonita from October 1, 1996 to January 27, 1997 (Successor Company). Due to the combined nature of this information, the period lengths and end dates are different. The following data is derived from, and should be read in conjunction with, the historical financial statements and unaudited pro forma combined condensed financial statements, and the notes thereto, included elsewhere in this Prospectus.

                                                                                           SUCCESSOR
                                       PREDECESSOR            -------------------------------------------------------------------
                               ----------------------------                                          SIXTEEN WEEKS ENDED
                                                                                            -------------------------------------
                                  FIFTY-TWO WEEKS ENDED         FIFTY-EIGHT WEEKS ENDED                 MAY 19,        MAY 19,
                               ----------------------------        JANUARY 27, 1997                      1997           1997
                               DECEMBER 19,   DECEMBER 18,    ---------------------------   MAY 20,   -----------   -------------
                                   1994           1995        COMBINED(1)   PRO FORMA(2)     1996     COMBINED(1)   PRO FORMA(2)
                               ------------   -------------   -----------   -------------   -------   -----------   -------------
COMBINED STATEMENT OF
  EARNINGS DATA:
Total revenues...............    $ 30,871        $36,741        $46,839        $57,669      $12,909     $16,581        $19,717
Income from operations.......         961            242          1,742          1,117          495       1,710          1,407
Income before income taxes...         758             50          1,491          2,075          411       1,648          1,718
Net income...................         457             28            881          1,245          246         989          1,031
Net income per common
  share(3)...................                                                  $  0.28                                 $  0.23
                                                                               =======                                 =======
Common shares used in
  computing per share amounts
  (in thousands)(3)..........                                                    4,500                                   4,500
                                                                               =======                                 =======
RESTAURANT OPERATING DATA:
Average annual sales per restaurant:
  HomeTown Buffet............    $  2,627        $ 2,455        $ 2,446
  Casa Bonita................          --             --          5,610
Percentage increase
  (decrease) in
  comparable store
  revenues(4):
  HomeTown Buffet............         4.3%          (9.2)%         (0.4)%                      (3.1)%       2.2%
  Casa Bonita................          --             --            6.3                          --         0.4
Number of restaurants open
  (at end of period):
  HomeTown Buffet............          14             16             16             16           16          16             16
  Casa Bonita................          --             --              2              2           --           2              2
  North's Restaurants........          --             --             --              7           --          --              7
                                 --------        -------        -------        -------      -------     -------        -------
    Total....................          14             16             18             25           16          18             25
                                 ========        =======        =======        =======      =======     =======        =======

                                                                                                 MAY 19, 1997
                                                                                           -------------------------
                                                                                             ACTUAL     PRO FORMA(2)
                                                                                           ----------   ------------
                                                                                                  (UNAUDITED)
COMBINED BALANCE SHEET DATA:
  Total assets...........................................................................  $   20,182    $   38,422
  Total long-term debt and capital lease obligations, including current portion..........       2,534         9,534
  Stockholders' equity...................................................................      13,732        24,257


(1) The Company has adopted a 52-week fiscal year ending on the last Monday in January. The combined fiscal 1997 results represent a 58-week period comprised of the combined results of HTB from December 19, 1995 to July 15, 1996 (Predecessor Company) and July 16, 1996 to January 27, 1997 (Successor Company) and the results of Casa Bonita from October 1, 1996 to January 27, 1997.

(2) Adjusted to give pro forma effect to this offering, the application of the estimated net proceeds thereof and the North Acquisition. See "Selected Pro Forma Financial Data."

(3) Share and per share data computations are based on the assumption that 4,500,000 shares of Common Stock were outstanding.

(4) Includes only restaurants open throughout the full periods being compared.

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RISK FACTORS

In addition to the other information in this Prospectus, the following factors should be considered carefully in evaluating the Company and its business before purchasing shares of Common Stock. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business--Growth Strategy" and elsewhere in this Prospectus.

RISKS ASSOCIATED WITH EXPANSION AND ACQUISITIONS

The Company intends to pursue an aggressive growth strategy, the success of which will depend in part on the ability of the Company to acquire or construct additional buffet restaurants or to convert acquired sites into buffet restaurants, within both existing and new markets. The success of the Company's growth strategy is dependent upon numerous factors, many of which are beyond the Company's control, including the availability of suitable acquisition opportunities, the lease or purchase of suitable sites on acceptable terms, the ability of the Company to obtain necessary governmental permits and approvals, the availability of appropriate financing and general economic conditions. The Company must compete with other restaurant operators for acquisition opportunities and with other restaurant operators, retail stores, companies and developers for desirable site locations. Many of these entities have substantially greater financial and other resources than the Company. There can be no assurance that the Company will be able to identify, negotiate and consummate acquisitions of additional buffet restaurants or new restaurant sites or that acquired restaurants or newly constructed or converted restaurants can be operated profitably and successfully integrated into the Company's operations. Many of its acquired and new restaurants will be located in geographic markets in which the Company has limited or no operating experience. In addition, the Company's acquisition strategy includes the identification of companies or properties that are viewed as underperforming by the Company. This element of the Company's strategy increases the risks involved with the Company's acquisitions.

Acquisitions involve a number of special risks that could adversely affect the Company's business, results of operations and financial condition, including the diversion of management's attention, the assimilation of the operations and personnel of the acquired restaurants, the amortization of acquired intangible assets and the potential loss of key employees. In particular, the failure to maintain adequate operating and financial control systems or unexpected difficulties encountered during expansion could have a material adverse effect on the Company's business, financial condition and results of operations. There can be no assurance that any acquisition will not materially and adversely affect the Company or that any such acquisition will enhance the Company's business. The Company is unable to predict the likelihood of any additional acquisitions (other than the North Acquisition) being proposed or completed in the near future. If the Company determines to make any significant acquisition, the Company may be required to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity or convertible debt securities could result in additional dilution to the Company's stockholders. There can be no assurance that adequate equity or debt financing would be available to the Company for any such acquisitions.

LACK OF COMBINED OPERATING HISTORY

The Company has only been in existence since July 1997. Prior to the Formation Transactions, the companies comprising the Successor Company operated independently and were not under common control or management until October 1, 1996. Therefore, the operations of the Company have a limited combined operating history upon which investors may evaluate the Company's performance. In view of its limited combined operating history, the Company remains vulnerable to a variety of business risks generally associated with young, growing companies. There can be no assurance that operating results of existing or future restaurants will be comparable to historical results of operations or that the Company will be profitable on a quarterly or annual basis in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

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CONTROL BY AND DEPENDENCE ON CKE

CKE will beneficially own approximately 44.4% of the Company's outstanding Common Stock following the completion of this offering (approximately 41.0% if the Underwriters' over-allotment option is exercised in full) and will be able to control or significantly influence substantially all matters requiring approval by the stockholders of the Company, including the election of directors and the approval of mergers or other business combination transactions. Such concentration of ownership could discourage or prevent a change in control of the Company. The Company's success is highly dependent on its continued relationship with CKE. Pursuant to the three-year Service Agreement, CKE will provide the Company with multi-unit infrastructure support, including purchasing, accounting, administrative, financial and real estate services. The expiration or termination of the Service Agreement could have a material adverse effect on the Company's business, financial condition and results of operations.

In addition to the Service Agreement, the Company may enter into additional or modified agreements, arrangements and transactions with CKE. While the Company expects that any such future agreements, arrangements and transactions will be determined through negotiation between the two companies, there can be no assurance that conflicts of interest will not occur with respect to such future business dealings and similar corporate matters. Conflicts may arise in connection with recruiting, site selection, and acquisition and expansion opportunities. There can be no assurance that any such conflicts will be resolved in a manner favorable to the Company or its minority stockholders. See "Business--Relationship with CKE," "Certain Transactions" and "Principal and Selling Stockholders."

RISKS ASSOCIATED WITH THE NORTH ACQUISITION

Consummation of the North Acquisition is subject to the satisfaction of certain conditions, such as obtaining lien releases, completion of this offering and other customary closing conditions. Following the North Acquisition, the combined companies will be more complex and diverse than any one of the Successor Companies individually, and the combination and continued operation of their distinct business operations will present difficult challenges for the Company's management due to the increased time and resources required in the management effort. The Company and North's Restaurants have different systems and procedures in many operational areas which must be integrated. There can be no assurance that integration will be successfully accomplished. The difficulties of such integration may be increased by the necessity of coordinating geographically diverse organizations. The integration of certain operations following the North Acquisition will require the dedication of management resources which may temporarily distract attention from the day-to-day business of the combined companies. The North's Restaurants have recently experienced declining same-store sales and significant net losses. One of the objectives of the Company's turnaround strategy for the North's Restaurants will be to stem the recent negative operating trends experienced by these restaurants, but there can be no assurance that this strategy will be successful or that the Company will be able to return the North's Restaurants to profitability. The failure to effectively integrate the operations of the Company and the North's Restaurants or to improve the results of operations of the North's Restaurants could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--The North Acquisition," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Selected Pro Forma Financial Data."

DEPENDENCE UPON AND RESTRICTIONS RESULTING FROM RELATIONSHIP WITH THE HOMETOWN FRANCHISOR

The performance of HTB's HomeTown Buffet restaurant operations is directly related to the success of the HomeTown Franchisor's buffet restaurant system, including the management and financial condition of the HomeTown Franchisor as well as restaurants operated by the HomeTown Franchisor and other franchisees of HomeTown Buffet restaurants. The inability of HTB's HomeTown Buffet restaurants to compete effectively with other buffet restaurants would have a material adverse effect on the Company's business, financial condition and results of operations. The success of HTB's HomeTown Buffet restaurants depends in part on the effectiveness of the HomeTown Franchisor's marketing efforts, new product development programs, quality assurance and other operational systems over which the Company has no control. For example, adverse publicity involving the HomeTown Franchisor or one or more HomeTown

9

Buffet restaurants operated by HTB, the HomeTown Franchisor or its other franchisees could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Relationship with the HomeTown Franchisor," "--Competition" and "--Legal Proceedings."

HTB operates each of its HomeTown Buffet restaurants pursuant to a franchise agreement with the HomeTown Franchisor (each, a "Franchise Agreement"). HTB's HomeTown Buffet operations are subject to certain restrictions imposed by the HomeTown Franchisor's policies and procedures as in effect from time to time, which restrictions include limitations on HTB's ability to modify the menu items and decor of its HomeTown Buffet restaurants. In addition, the Company's HomeTown Buffet operations are subject to certain contractual and other restrictions, including the following:

Noncompetition. Each of the Franchise Agreements includes a provision restricting HTB and certain of its affiliates, during the term of the Franchise Agreement and during the period of two years commencing on the expiration or termination thereof, from engaging in any business similar to the HomeTown Buffet restaurant, including any restaurant business that involves a pure buffet restaurant that does not include waitperson service or the service of separate entree menu items, within 25 miles of the location of any HomeTown Buffet restaurant or hiring any person from, or soliciting or inducing any person to leave his or her employment with, the HomeTown Franchisor or any HomeTown Buffet restaurant.

Change of Control of HTB; Issuance of Securities. Each Franchise Agreement provides that HTB shall not sell, assign, transfer or encumber (collectively, a "transfer") any right, license or franchise granted by the Franchise Agreement, or HTB's interest in the respective HomeTown Buffet restaurant, and shall not cause or permit any such transfer to occur by operation of law or otherwise without the express written consent of the HomeTown Franchisor. The issuance or transfer of 20% or more of the stock in HTB, by operation of law or otherwise, constitutes a transfer of the Franchise Agreement requiring the HomeTown Franchisor's consent. If the HomeTown Franchisor's consent is required but not obtained in connection with any such transfer or issuance, the HomeTown Franchisor could attempt to terminate the Franchise Agreements, which attempt, if successful, would have a material adverse effect on the Company's business, financial condition and results of operations.

Proprietary Information. Each Franchise Agreement includes provisions to the effect that HTB will not use certain proprietary information, such as the HomeTown Franchisor's operating manual, standard recipe manual and standard menu and certain information set forth therein (including trade secrets, know-how methods and techniques), except with respect to the operation of a HomeTown Buffet restaurant, or disclose such proprietary information to any persons not permitted by the Franchise Agreement, and that HTB 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 HomeTown Buffet restaurant system described in the Franchise Agreement.

Right of First Refusal. Each Franchise Agreement includes a provision granting the HomeTown Franchisor a right of first refusal to purchase the HomeTown Buffet restaurant and the franchise granted thereby upon substantially the same terms and conditions of any bona fide offer for such franchise or any interest in the ownership thereof or of a substantial portion of the assets of such restaurant which HTB is ready and willing to accept.

Although management of the Company believes that the foregoing contractual and other restrictions are not binding upon the Company or any of its subsidiaries other than HTB (and, with respect to certain provisions of the Franchise Agreements, Summit), and that there are limitations under applicable law on the enforceability of certain of such restrictions (such as noncompetition provisions and provisions relating to the termination or renewal of a franchise), there can be no assurance that the HomeTown Franchisor will not threaten or pursue claims against the Company or its subsidiaries alleging noncompliance with the Franchise Agreements or other matters. If the Company is forced to defend itself against such claims, whether or not meritorious, the Company may be required to incur substantial expense and diversion of management attention, and there can be no assurance that such claims will not have a material adverse effect on the Company's business, financial condition and results of operations or on its ability to pursue its business plan. The existence of any such litigation could also have a material adverse effect on the trading price of the

10

Company's Common Stock. HTB and the HomeTown Franchisor have recently been, and are currently, involved in arbitration and litigation proceedings with respect to certain matters. See "Business--Litigation."

FLUCTUATIONS IN QUARTERLY RESULTS

The Company has in the past experienced, and expects to continue to experience, significant fluctuations in restaurant revenues and results of operations from quarter to quarter. In particular, the Company's quarterly results can vary as a result of acquisitions and minority investments, costs incurred to integrate newly acquired entities, and seasonal patterns. A large number of the Company's restaurants are located in areas which are susceptible to severe winter weather conditions which may have a negative impact on customer traffic and restaurant revenues. Accordingly, the Company believes that period-to-period comparisons of its operating results are not necessarily meaningful and that such comparisons cannot be relied upon as indicators of future performance. There can be no assurance that future seasonal and quarterly fluctuations will not have a material adverse effect on the Company's business, results of operation and financial condition.

COMPETITION

The restaurant industry is highly competitive. The Company competes on the basis of the quality and value of food products offered, price, service, location and overall dining experience. The Company's primary competitor in the buffet restaurant business is Buffets, Inc., which owns, operates and franchises the HomeTown Buffet and Old Country Buffet restaurant concepts. The Company also competes with a large and diverse group of restaurant chains and individually owned restaurants, including chains and individually owned restaurants that use a buffet format. The number of buffet restaurants with operations generally similar to the Company's has grown considerably in the last several years and the Company believes competition among buffet restaurants is increasing. As the Company and its principal competitors expand operations in various geographic areas, competition, including competition among buffet restaurants, can be expected to intensify. Such intensified competition could increase the Company's operating costs or adversely affect its revenues. A number of competitors have been in existence longer than the Company and have substantially greater financial, marketing and other resources and wider geographical diversity than does the Company. In addition, the restaurant industry has few noneconomic barriers to entry and is affected by changes in consumer tastes, national, regional and local economic conditions and market trends. The Company's significant investment in, and long term commitment to, each of its restaurant sites limits its ability to respond quickly or effectively to changes in local competitive conditions or other changes that could have a material adverse effect on the Company's operations.

RISKS ASSOCIATED WITH MINORITY INVESTMENTS

As part of its growth strategy, the Company intends to seek minority investments in or strategic alliances with other regional buffet restaurant chains, like Stacey's, that the Company believes can be improved through the implementation of the Company's management practices. Such investments and alliances will not be easily liquidated, and the failure of the Company to improve the operating results of such restaurant chains could adversely affect the Company's ability to recoup or realize a return on its investments. There can be no assurance that the Company will be able to improve the operating results of those restaurant chains in which it makes a minority investment or with which it forms a strategic alliance. See "Business--Growth Strategy" and "--The Stacey's Strategic Alliance."

RESTAURANT INDUSTRY

Food service businesses are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends. The performance of individual restaurants may be adversely affected by factors such as traffic patterns, demographic considerations and the type, number and location of competing restaurants. Multi-unit food service businesses such as the Company's can also be materially and adversely affected by publicity resulting from poor food quality, illness, injury or other health concerns or operating issues stemming from one restaurant or a limited number of restaurants. Dependence on frequent deliveries of fresh produce and groceries subjects food service businesses such as the Company's to the risk

11

that shortages or interruptions in supply, caused by adverse weather or other conditions, could adversely affect the availability, quality and cost of ingredients. The Company's profitability is highly sensitive to increases in food, labor and other operating costs that cannot always be passed on to its guests in the form of higher prices or otherwise compensated for. In addition, unfavorable trends or developments concerning factors such as inflation, increased food, labor and employee benefits costs (including increases in hourly wage and unemployment tax rates), increases in the number and locations of competing buffet restaurants, regional weather conditions and the availability of experienced management and hourly employees may also adversely affect the food service industry in general and the Company's business, financial condition and results of operations in particular. Changes in economic conditions affecting the Company's guests could reduce traffic in some or all of the Company's restaurants or impose practical limits on pricing, either of which could have a material adverse effect on the Company's business, financial condition and results of operations. The success of the Company will depend in part on the ability of the Company's management to anticipate, identify and respond to changing conditions. There can be no assurance that management will be successful in this regard.

DEPENDENCE ON KEY PERSONNEL

The Company believes that its success will depend in part on the continuing services of its key executives, including Robert E. Wheaton, the Company's Chief Executive Officer and President. The Company does not maintain any key man life insurance. Mr. Wheaton is also an executive officer of CKE and a portion of his time will continue to be devoted to CKE's business. The loss of the services of Mr. Wheaton could have a material adverse effect on the Company's business, financial condition and results of operations, and there can be no assurance that a qualified replacement would be available in a timely manner, if at all. The Company's continued growth will also depend in part on its ability to attract and retain additional skilled management personnel. See "Management."

GOVERNMENT REGULATION

The restaurant industry is subject to numerous federal, state and local government regulations, including those relating to the preparation and sale of food and building and zoning requirements. In addition, the Company is subject to laws governing its relationship with employees, including minimum wage requirements, overtime, working and safety conditions and citizenship requirements. Many of the Company's employees are paid hourly rates based upon the federal and state minimum wage laws. Recent legislation increasing the minimum wage has resulted in higher labor costs to the Company. An increase in the minimum wage rate, employee benefit costs or other costs associated with employees, could have a material adverse effect on the Company's business, financial condition and results of operations.

NO PRIOR PUBLIC TRADING MARKET

Prior to this offering, there has been no public market for the Common Stock, and there can be no assurance that an active trading market will develop or, if one does develop, that it will be maintained. The initial public offering price, which will be established by negotiations among the Company, the Selling Stockholder and the representatives of the Underwriters, may not be indicative of prices that will prevail in the trading market. See "Underwriting."

LITIGATION

The Company is from time to time the subject of complaints or litigation from customers alleging illness, injury or other food quality, health or operational concerns. Adverse publicity resulting from such allegations may materially adversely affect the Company and its restaurants, regardless of whether such allegations are valid or whether the Company is liable. The Company also is the subject of complaints or allegations from employees from time to time. The Company believes that the lawsuits, claims and other legal matters to which it has become subject in the course of its business are not material to the Company's business, financial condition or results of operations, but an existing or future lawsuit or claim could result in an adverse decision against the Company that could have a material adverse effect on the Company's business, financial condition and results of operations.

12

EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS

Certain provisions of the Company's Certificate of Incorporation and Bylaws may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of the Company. Such provisions could limit the price that certain investors might be willing to pay in the future for shares of the Company's Common Stock. The Company's Certificate of Incorporation allows the Company to issue up to 1,500,000 shares of currently undesignated Preferred Stock, to determine the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed on any unissued series of Preferred Stock, and to fix the number of shares constituting any such series and the designation of such series, without any vote or future action by the stockholders. The Preferred Stock could be issued with voting, liquidation, dividend and other rights superior to the rights of the Common Stock. The Certificate of Incorporation also eliminates the ability of stockholders to call special meetings. The Company's Bylaws require advance notice to nominate a director or take certain other actions. Such provisions may make it more difficult for stockholders to take certain corporate actions and could have the effect of delaying or preventing a change in control of the Company. In addition, the Company is subject to the provisions of Section 203 of the Delaware General Corporation Law, which imposes certain limitations on transactions between a corporation and "interested" stockholders, as defined in such provisions. See "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of shares of Common Stock in the public market after this offering could materially and adversely affect the market price of the Common Stock. Such sales also might make it more difficult for the Company to sell equity securities or equity-related securities in the future at a time and price that the Company deems acceptable, or at all. Upon the completion of this offering, the Company will have 4,500,000 shares of Common Stock outstanding, of which only the 2,500,000 shares sold in this offering will be freely tradable without restriction under the Securities Act of 1933, as amended (the "Securities Act"), unless purchased by "affiliates" of the Company, as that term is defined in Rule 144 under the Securities Act. The remaining shares of Common Stock, all of which are beneficially owned by CKE, are subject to a lock-up agreement and will be eligible for sale, subject to Rule 144, beginning one year after the date of this Prospectus. Equitable Securities Corporation, at any time and without notice, may release all or any part of the shares from these restrictions. See "Shares Eligible for Future Sale."

POSSIBLE VOLATILITY OF STOCK PRICE

The stock market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of the Company's Common Stock. Factors such as fluctuations in the Company's operating results, failure of such operating results to meet the expectations of stock market analysts and investors, changes in stock market analyst recommendations regarding the Company, its competitors and other companies in the restaurant industry, as well as changes in general economic or market conditions and changes in the restaurant industry may have a significant adverse effect on the market price of the Common Stock.

DILUTION

The initial public offering price is substantially higher than the net tangible book value per share of Common Stock. Investors purchasing shares of Common Stock in this offering will incur immediate and substantial net tangible book value dilution of $5.81 per share, assuming an initial public offering price of $11.00 per share. In the event the Company issues additional Common Stock in the future, including shares which may be issued in connection with future acquisitions, purchasers of Common Stock in this offering may experience further dilution. See "Dilution."

13

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,900,000 shares of Common Stock offered by the Company hereby at an assumed initial public offering price of $11.00 per share are estimated to be $18.9 million ($22.7 million if the Underwriters' over-allotment option is exercised in full). The Company will not receive any proceeds from the sale of Common Stock by the Selling Stockholder.

Of the net proceeds received by the Company from this offering, the Company intends to use (i) approximately $7.9 million to pay a cash dividend to the Selling Stockholder (the "Special Dividend"); (ii) approximately $2.0 million for the loan to Stacey's contemplated by the LOI; (iii) approximately $1.7 million to acquire equipment under certain operating leases; (iv) approximately $500,000 to finance the cash portion of the consideration to be paid for the North Acquisition; and (v) approximately $495,000 to repay the Casa Bonita Note. The Casa Bonita Note was incurred by the Company in connection with the Formation Transactions to acquire the net assets of the two Casa Bonita restaurants from Taco Bueno, is payable on demand and does not bear interest. The remaining portion of the net proceeds will be used to finance the acquisition or development of additional restaurants and for working capital and other general corporate purposes. The Company may use a portion of the net proceeds for acquisitions of or investments in complementary businesses. The Company's management has from time to time made tentative proposals to, and entered into discussions with, other buffet restaurant operators with respect to a variety of business combinations, restaurant acquisitions or other investments; however, no agreements with respect to any such acquisition or investment currently exist other than the North Acquisition and the LOI. The amounts actually expended for each purpose and the timing of such expenditures may vary significantly depending upon numerous factors, including the progress of the Company's expansion plans and the results of operations of the Company's restaurants. Pending such uses, the Company intends to invest the net proceeds from this offering in short-term, investment grade money-market instruments.

DIVIDEND POLICY

Other than the Special Dividend, the Company has never declared or paid dividends on its Common Stock. The Company expects that future earnings, if any, will be retained to finance the operation and expansion of the Company's business and, accordingly, does not intend to declare or pay any cash dividends on the Common Stock in the foreseeable future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources."

14

CAPITALIZATION

The following table sets forth the capitalization of the Company as of May 19, 1997 and on an unaudited pro forma basis to reflect the Formation Transactions and to give effect to the North Acquisition, the Special Dividend and the sale of 1,900,000 shares of Common Stock offered by the Company hereby at an assumed initial public offering price of $11.00 per share and the application of the estimated net proceeds therefrom. The following table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the combined financial statements and unaudited pro forma combined condensed financial statements of the Company, and the related notes thereto, included elsewhere in this Prospectus.

                                                                           AS OF MAY 19, 1997
                                                                       ---------------------------
                                                                         ACTUAL         PRO FORMA
                                                                       (UNAUDITED)     (UNAUDITED)
                                                                       -----------     -----------
                                                                             (IN THOUSANDS)
Short-term debt, including current portion of long-term debt and
  capital lease obligations..........................................    $   239         $ 1,639
                                                                         =======         =======
Long-term debt and capital lease obligations, less current portion...    $ 2,295         $ 7,895
Stockholders' equity:
  Preferred Stock: $0.001 par value, 1,500,000 shares authorized, no
     shares outstanding, on a pro forma basis........................                         --
  Common Stock: $0.01 par value, 1,000 shares authorized, 10 shares
     outstanding (Successor Company); and $0.001 par value,
     18,500,000 shares authorized, 4,500,000 shares outstanding on a
     pro forma basis(1)..............................................          0               5
  Additional paid-in capital.........................................     12,192          22,712
  Retained earnings..................................................      1,540           1,540
                                                                         -------         -------
  Total stockholders' equity.........................................     13,732          24,257
                                                                         -------         -------
          Total capitalization.......................................    $16,027         $33,152
                                                                         =======         =======


(1) Excludes 602,500 shares of Common Stock reserved for issuance upon the exercise of stock options to be granted under the Company's 1997 Stock Incentive Plan to certain employees and non-employee directors of the Company upon the closing of this offering. Also excludes the right to purchase warrants to acquire up to 150,000 shares of Common Stock issuable in connection with the North Acquisition. Such options will have an exercise price per share equal to the initial public offering price. See "Management--1997 Stock Incentive Plan" and "Business--The North Acquisition."

15

DILUTION

The unaudited pro forma net tangible book value of the Company as of May 19, 1997, after giving effect to the Formation Transactions (and assuming the Special Dividend and the Casa Bonita Note have been paid), was approximately $5.0 million, or approximately $1.94 per share. Such unaudited pro forma net tangible book value per share represents the tangible net worth (tangible assets less total liabilities, assuming the Special Dividend and the Casa Bonita Note have been paid) of the Company. The number of outstanding shares used for the per share calculation was 2,600,000 shares, giving effect to the Formation Transactions but prior to this offering.

Unaudited pro forma net tangible book value dilution per share represents the difference between the amount per share paid by purchasers of shares of Common Stock in this offering and the unaudited pro forma net tangible book value per share of Common Stock immediately after completion of this offering. After giving effect to the sale of the 1,900,000 shares of Common Stock offered by the Company in this offering at an assumed initial public offering price of $11.00 per share, and deducting the underwriting discount and estimated offering expenses payable by the Company, the Company's unaudited pro forma net tangible book value at May 19, 1997, would have been $23.4 million, or $5.19 per share. This represents an immediate increase in unaudited pro forma net tangible book value of $3.25 per share to the existing stockholder and an immediate dilution in unaudited pro forma net tangible book value of $5.81 per share to new investors purchasing Common Stock in this offering, as illustrated in the following table:

Assumed initial public offering price per share.......                   $11.00
  Unaudited pro forma net tangible book value per
     share as of May 19, 1997.........................  $ 5.16
  Increase per share attributable to new investors....    3.25
  Decrease per share attributable to the Special
     Dividend
     and the Casa Bonita Note.........................   (3.22)
                                                        ------
Unaudited pro forma net tangible book value per share
  after this offering.................................                     5.19
                                                                         ------
Dilution per share to new investors...................                   $ 5.81
                                                                         ======

The following table sets forth, on an unaudited pro forma basis as of May 19, 1997, the number of shares of Common Stock purchased from the Company, the total consideration and the average price per share paid to the Company by the existing stockholder and by the new investors purchasing shares of Common Stock in this offering (at an assumed initial public offering price of $11.00 per share and before deducting the estimated underwriting discount and offering expenses):

                                                          TOTAL
                           SHARES PURCHASED         CONSIDERATION(1)
                          -------------------     ---------------------     AVERAGE PRICE
                           NUMBER     PERCENT       AMOUNT      PERCENT       PER SHARE
                          ---------   -------     -----------   -------     -------------
Existing Stockholder....  2,600,000     57.8%     $ 5,352,000     20.4%        $  2.06
New Investors...........  1,900,000     42.2       20,900,000     79.6           11.00
                          ---------    -----      -----------    -----
          Total.........  4,500,000    100.0%     $26,252,000    100.0%
                          =========    =====      ===========    =====


(1) Based upon (a) the capital and net book value of the assets acquired by the Company in connection with the Formation Transactions, assuming payment of the Special Dividend and the Casa Bonita Note, and (b) the assumed initial public offering price of $11.00 per share paid by new investors.

The foregoing tables assume no exercise of the Underwriters' over-allotment option and excludes options to purchase 602,500 shares of Common Stock to be granted to certain employees and non-employee directors of the Company upon the closing of this offering. Also excludes the right to purchase warrants to acquire up to 150,000 shares of Common Stock issuable in connection with the North Acquisition. Such options will have an exercise price equal to the initial public offering price. See "Management--1997 Stock Incentive Plan" and "Business--The North Acquisition."

16

SELECTED COMBINED FINANCIAL DATA

The following table presents selected combined historical financial data of the Predecessor Company and the Successor Company. Prior to the Formation Transactions, the companies comprising the Successor Company operated independently and were not under common control or management until October 1, 1996. Accordingly, the data may not be comparable to or indicative of post-combination results. Management believes that a combined presentation of financial information is most meaningful to investors' understanding of the results of operations, financial condition and cash flows of the Successor Company. The Company has adopted a fiscal year ending on the last Monday in January. The Company's HomeTown Buffet and Casa Bonita restaurants operated on different fiscal year end dates. For purposes of presentation and for purposes of comparing the historical 52-week fiscal 1994 and 1995 results of the Predecessor Company to the combined results of operations for the Company, the following table includes a 58-week period beginning from the Predecessor Company's fiscal year end and ending on the Successor Company's fiscal year end. This 58-week period is comprised of the combined results of HTB from December 19, 1995 to July 15, 1996 (Predecessor Company) and July 16, 1996 to January 27, 1997 and the results of operations of Casa Bonita from October 1, 1996 to January 27, 1997 (Successor Company). Due to the combined nature of this information, the period lengths and end dates are different. The Company's first fiscal quarter consists of 16 weeks, and each of the remaining quarters consists of 12 weeks. The Company has obtained audits for the Predecessor Company as of December 18, 1995 and for the fifty-two weeks ended December 19, 1994 and December 18, 1995 and the thirty weeks ended July 15, 1996 and for the Successor Company as of January 27, 1997 and for the twenty-eight weeks ended January 27, 1997.

The Selected Combined Financial Data for the fifty-two weeks ended December 19, 1994 and December 18, 1995 and the thirty weeks ended July 15, 1996 (Predecessor Company) and the twenty-eight weeks ended January 27, 1997 (Successor Company) (except for pro forma amounts) has been derived from the combined financial statements which have been audited by KPMG Peat Marwick LLP, independent auditors. The Selected Combined Financial Data for the fiscal years ended December 21, 1992 and December 20, 1993 have been derived from unaudited combined financial statements of the Predecessor Company not included elsewhere in this Prospectus. The unaudited combined financial statements have been prepared on the same basis as the audited combined financial statements and, in the opinion of management, contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the combined financial position and combined results of operations for the periods presented. The unaudited pro forma data gives effect to the sale of the shares of Common Stock offered hereby and the application of the estimated net proceeds thereof as described in "Use of Proceeds" and the consummation of the Formation Transactions and the North Acquisition, as if each transaction had occurred at the beginning of the periods presented. In addition, the unaudited pro forma information is based on available information and certain assumptions and adjustments. See "Selected Pro Forma Financial Data." The following data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and unaudited pro forma combined condensed financial statements, and the notes thereto, included elsewhere in this Prospectus.

17

SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS)

                                                PREDECESSOR                                          SUCCESSOR
                            ----------------------------------------------------   ----------------------------------------------
                                                                                                  COMBINED
                                    FIFTY-TWO WEEKS ENDED            PERIOD FROM   PERIOD FROM   FIFTY-EIGHT     SIXTEEN WEEKS
                            --------------------------------------    DEC. 19,      JULY 16,        WEEKS            ENDED
                                        DEC.      DEC.      DEC.       1995 TO       1996 TO        ENDED      ------------------
                            DEC. 21,     20,       19,       18,      JULY 15,      JAN. 27,      JAN. 27,     MAY 20,    MAY 19,
                              1992      1993      1994      1995        1996         1997(1)       1997(2)      1996       1997
                            --------   -------   -------   -------   -----------   -----------   -----------   -------    -------
                               (UNAUDITED)                                                                     (UNAUDITED)
COMBINED STATEMENT OF
  EARNINGS DATA:
Total revenues.............  $ 5,213   $13,167   $30,871   $36,741     $23,207       $23,632       $46,839     $12,909    $16,581
                             -------   -------   -------   -------     -------       -------       -------     -------    -------
Costs and expenses:
  Food costs...............    1,886     4,918    11,469    13,769       8,569         8,285        16,854       4,760      5,369
  Labor costs..............    1,617     3,732     9,089    10,878       6,810         7,514        14,324       3,740      5,169
  Occupancy and other
    expenses...............      824     2,695     6,769     8,954       5,030         5,173        10,203       2,727      3,343
  General and
    administrative.........      467       980     1,762     1,666       1,193           621         1,814         707        367
  Depreciation and
    amortization...........      168       384       821     1,232         914           988         1,902         480        623
                             -------   -------   -------   -------     -------       -------       -------     -------    -------
        Total costs and
          expenses.........    4,962    12,710    29,910    36,499      22,516        22,581        45,097      12,414     14,871
                             -------   -------   -------   -------     -------       -------       -------     -------    -------
Income from operations.....      252       457       961       242         691         1,051         1,742         495      1,710
Interest expense...........       54       110       203       192         145           106           251          84         62
                             -------   -------   -------   -------     -------       -------       -------     -------    -------
Income before income
  taxes....................      198       348       758        50         546           945         1,491         411      1,648
Income taxes...............       80       139       301        22         216           394           610         165        659
                             -------   -------   -------   -------     -------       -------       -------     -------    -------
Net income.................  $   118   $   209   $   457   $    28     $   330       $   551       $   881     $   246    $   989
                             =======   =======   =======   =======     =======       =======       =======     =======    =======

                                        DEC.      DEC.      DEC.
                            DEC. 21,     20,       19,       18,                                  JAN. 27,     MAY 20,    MAY 19,
                              1992      1993      1994      1995                                    1997        1996       1997
                            --------   -------   -------   -------                               -----------   -------    -------
COMBINED BALANCE SHEET
  DATA:
Total assets...............                      $13,003   $16,283                                 $19,784     $15,826    $20,182
Total long-term debt and
  capital lease
  obligations, including
  current portion..........                        6,714    11,150                                   2,609      13,683      2,534
Stockholder's equity.......                        1,801     1,806                                  12,743       2,143     13,732


(1) Represents the operations of HTB since the acquisition of Summit by CKE on July 15, 1996 and the operations of the Casa Bonita restaurants since their acquisition by CKE on October 1, 1996.

(2) The Company has adopted a 52-week fiscal year ending on the last Monday in January. The combined fiscal 1997 results represent a 58-week period comprised of the combined results of HTB from December 19, 1995 to July 15, 1996 (Predecessor Company) and July 16, 1996 to January 27, 1997 (Successor Company) and the results of Casa Bonita from October 1, 1996 to January 27, 1997.

18

SELECTED PRO FORMA FINANCIAL DATA

The following unaudited pro forma combined condensed financial information is based upon the historical combined financial statements of the Predecessor Company and Successor Company and has been prepared to illustrate the effects of this offering and the North Acquisition.

The unaudited pro forma combined condensed balance sheet as of May 19, 1997 gives effect to the North Acquisition and application of the estimated net proceeds from this offering as if such transactions had been completed on May 19, 1997 and was prepared based upon the combined balance sheet of the Successor Company as of May 19, 1997 and the balance sheet of North's Restaurants as of March 31, 1997. The historical combined condensed statement of operations for the period ended January 27, 1997 includes the thirty weeks of operations of the Predecessor Company and the twenty-eight weeks of operations of the Successor Company (the "Combined Results") and gives effect to the transactions described above as if such transactions had been completed on December 19, 1995. The unaudited pro forma combined condensed statement of operations for the period ended January 27, 1997 was prepared based upon the Combined Results and the statement of operations of North's Restaurants for the 52-week period ended December 31, 1996. The unaudited pro forma combined condensed statement of operations for the sixteen weeks ended May 19, 1997 was prepared based upon the combined results of the Successor Company for the sixteen weeks ended May 19, 1997 and the statement of operations of North's Restaurants for the sixteen weeks ended April 7, 1997.

The unaudited pro forma combined condensed financial information has been provided for comparative purposes only and does not purport to be indicative of results which would actually have been obtained had the North Acquisition been effected on the date indicated or of results which may be obtained in the future. These unaudited pro forma combined condensed financial statements should be read in conjunction with the combined financial statements, including the notes thereto, which appear elsewhere in this Prospectus.

The unaudited pro forma adjustments are based upon information set forth in this Prospectus and certain assumptions included in the notes to the unaudited pro forma combined condensed financial statements. The Company is performing an ongoing evaluation regarding the nature and scope of its restaurant operations and various short- and long-term strategic considerations, including whether, and to what extent, integration, consolidation or other modification of its restaurant operations is appropriate following the North Acquisition. The Company believes the pro forma assumptions are reasonable under the circumstances.

The North Acquisition will be accounted for by the purchase method of accounting. Accordingly, the Company's cost to acquire the North's Restaurants (the "Purchase Consideration"), calculated to be $4.5 million (subject to adjustment), will be allocated to the assets acquired and liabilities assumed according to their estimated fair values. The final allocation of the Purchase Consideration is dependent upon certain valuations and other studies that have not progressed to a stage where there is sufficient information to make such an allocation in the accompanying unaudited pro forma combined condensed financial statements.

19

STAR BUFFET, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MAY 19, 1997
(DOLLARS IN THOUSANDS)

                                                            HISTORICAL
                                            -------------------------------------------
                                                                  NORTH'S
                                                                RESTAURANTS
                                            SUCCESSOR COMPANY    MARCH 31,                 PRO FORMA           PRO FORMA
                                              MAY 19, 1997          1997       COMBINED   ADJUSTMENTS           COMBINED
                                            -----------------   ------------   --------   ------------         ----------
Current assets:
  Cash.....................................      $   165          $     36     $    201     $  6,325A,D,L,M     $  6,526
  Short-term investments...................          180                --          180                              180
  Trade receivables........................          206                10          216                              216
  Inventories..............................          384                69          453                              453
  Prepaid expenses.........................          141                 4          145           55E                200
  Deferred taxes, net......................          118                --          118                              118
                                                --------          --------     --------     --------            --------
     Total current assets..................        1,194               119        1,313        6,380               7,693
Notes receivable...........................           --                --           --        5,000A,L            5,000
Intercompany receivable....................        2,863                --        2,863                            2,863
Property and equipment, net................       13,260             4,443       17,703        1,700M             19,403
Capitalized leases, net....................        2,509                --        2,509                            2,509
Deposits and other assets..................           45                18           63                               63
Franchise fees.............................          311                --          311                              311
Costs in excess of net assets of business
  acquired, net............................           --                --           --          580K                580
                                                --------          --------     --------     --------            --------
          Total assets.....................      $20,182          $  4,580     $ 24,762     $ 13,660            $ 38,422
                                                ========          ========     ========     ========            ========
Current liabilities:
  Accounts payable.........................      $ 1,716          $    353     $  2,069     $                   $  2,069
  Accrued liabilities......................        2,200               307        2,507           55E              2,562
  Current portion of notes payable.........           --                --           --        1,400A              1,400
  Current portion of North's debt for which
     North's Restaurants, Inc. is jointly
     and severally liable..................           --            11,646       11,646      (11,646)B                --
  Current maturities of capital lease
     obligations...........................          239                --          239                              239
                                                --------          --------     --------     --------            --------
     Total current liabilities.............        4,155            12,306       16,461      (10,191)              6,270
Notes payable..............................           --                --           --        5,600A              5,600
North's debt for which North's Restaurants,
  Inc. is jointly and severally liable.....           --             1,400        1,400       (1,400)B                --
Capital lease obligations..................        2,295                --        2,295                            2,295
                                                --------          --------     --------     --------            --------
          Total liabilities................        6,450            13,706       20,156       (5,991)             14,165
                                                --------          --------     --------     --------            --------
Total stockholders' equity.................       13,732            (9,126)       4,606       19,651B,C,D         24,257
                                                --------          --------     --------     --------            --------
          Total liabilities and
            stockholders' equity...........      $20,182          $  4,580     $ 24,762     $ 13,660            $ 38,422
                                                ========          ========     ========     ========            ========

See accompanying notes to unaudited pro forma combined condensed financial information.

20

STAR BUFFET, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE 58-WEEK PERIOD ENDED JANUARY 27, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                      HISTORICAL
                                         -------------------------------------
                                          SUCCESSOR      NORTH'S
                                           COMPANY     RESTAURANTS
                                         JANUARY 27,   DECEMBER 31,               PRO FORMA            PRO FORMA
                                            1997           1996       COMBINED   ADJUSTMENTS           COMBINED
                                         -----------   ------------   --------   -----------           ---------
Revenues...............................    $46,839       $ 10,830     $57,669      $                    $57,669
                                           -------       --------     -------      -------              -------
Costs and expenses:
  Food costs...........................     16,854          4,013      20,867                            20,867
  Labor costs..........................     14,324          3,290      17,614                            17,614
  Occupancy and other expenses.........     10,203          1,885      12,088         (746)M             11,342
  General and administrative
    expenses...........................      1,814            970       2,784        1,110J,N             3,894
  Depreciation and amortization........      1,902            635       2,537          298K,M             2,835
                                           -------       --------     -------      -------              -------
         Total costs and expense.......     45,097         10,793      55,890          662               56,552
                                           -------       --------     -------      -------              -------
Income from operations.................      1,742             37       1,779         (662)               1,117
Interest (income) expense, net.........        251            554         805         (433) E,F,G,H,L       372
Other income, net......................         --             --          --       (1,330) N            (1,330)
                                           -------       --------     -------      -------              -------
Income (loss) before income taxes......      1,491           (517)        974        1,101                2,075
Income tax expense (benefit)...........        610           (174)        436          394I                 830
                                           -------       --------     -------      -------              -------
Net income (loss)......................    $   881       $   (343)    $   538      $   707              $ 1,245
                                           =======       ========     =======      =======              =======
Net income per common share............    $  0.34                                                      $  0.28
                                           =======                                                      =======
Common shares used in computing per
  share amounts........................      2,600                                                        4,500
                                           =======                                                      =======

See accompanying notes to unaudited pro forma combined condensed financial information.

21

STAR BUFFET, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE 16-WEEK PERIOD ENDED MAY 19, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        HISTORICAL
                                            ----------------------------------
                                            SUCCESSOR     NORTH'S
                                             COMPANY    RESTAURANTS
                                             MAY 19,     APRIL 7,                 PRO FORMA            PRO FORMA
                                              1997         1997       COMBINED   ADJUSTMENTS           COMBINED
                                            ---------   -----------   --------   -----------           ---------
Revenues..................................   $16,581      $ 3,136     $19,717       $                   $19,717
                                             -------       ------     -------       -----               -------
Costs and expenses:
  Food costs..............................     5,369        1,187       6,556                             6,556
  Labor costs.............................     5,169          944       6,113                             6,113
  Occupancy and other expenses............     3,343          587       3,930        (207)M               3,723
  General and administrative expenses.....       367          346         713         342J,N              1,055
  Depreciation and amortization...........       623          149         772          91K,M                863
                                             -------       ------     -------       -----               -------
         Total costs and expense..........    14,871        3,213      18,084         226                18,310
                                             -------       ------     -------       -----               -------
Income (loss) from operations.............     1,710          (77)      1,633        (226)                1,407
Interest (income) expense, net............        62          184         246        (148)E,F,G,H,L          98
Other income, net.........................        --           --          --        (409)N                (409)
                                             -------       ------     -------       -----               -------
Income (loss) before income taxes.........     1,648         (261)      1,387         331                 1,718
Income tax expense........................       659           --         659          28I                  687
                                             -------       ------     -------       -----               -------
Net income (loss).........................   $   989      $  (261)    $   728       $ 303               $ 1,031
                                             =======       ======     =======       =====               =======
Net income per common share...............   $  0.38                                                    $  0.23
                                             =======                                                    =======
Common shares used in computing per share
  amounts.................................     2,600                                                      4,500
                                             =======                                                    =======

See accompanying notes to unaudited pro forma combined condensed financial information.

22

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
INFORMATION

A To record the acquisition of North's Restaurant for an aggregate purchase price of $4.5 million, subject to adjustment. The purchase price will be paid in the form of $500,000 cash, assumption of $7.0 million of North's debt (the current portion of which is $1.4 million), and the recording of a $3.0 million note receivable from North's.

B To eliminate the North's debt which will not be assumed by the Company, except as noted in Footnote A.

C To eliminate the division equity of North's Restaurants.

D To reflect the estimated net cash proceeds of $18.9 million from the sale of 1,900,000 shares of Common Stock offered by the Company at an assumed initial public offering price of $11.00 per share (less underwriting discount and estimated offering expenses payable by the Company) and the payment of the Special Dividend of $7.885 million and the repayment of the Casa Bonita Note in the amount of $495,000 which represents the net assets sold as described in the Formation Transactions.

E To record debt issuance costs of $55,000 related to the assumption of $7.0 million of North's debt and related amortization of debt issue costs over 5 years of $11,000 for the fiscal year ended January 27, 1997 and $3,000 for the sixteen weeks ended May 19, 1997.

F To record interest income on the $3.0 million note receivable from North's at a variable rate assumed to be 8%. This results in interest income in the amount of $240,000 for the fiscal year ended January 27, 1997 and $74,000 for the sixteen weeks ended May 19, 1997.

G To record interest expense on $7.0 million of North's debt assumed in the acquisition of North's Restaurants at a variable rate assumed to be 8% in the amount of $560,000 for the fiscal year ended January 27, 1997 and $172,000 for the sixteen weeks ended May 19, 1997. A 0.125% increase/decrease in the estimated interest rate incrementally increases/decreases income before taxes by $9,000 and $3,000 for the fiscal year ended January 27, 1997 and the sixteen weeks ended May 19, 1997, respectively.

H To eliminate the historical interest expense recorded by North's Restaurants of $554,000 and $184,000 for the twelve months ended December 31, 1996 and the sixteen weeks ended April 7, 1997, respectively, for related indebtedness which would not have been in existence at the beginning of such periods.

I To record the income tax effects of the pro forma adjustments and combination of the entities at a pro forma tax rate of 40.0%.

J To record the impact of management fees payable pursuant to the Service Agreement with CKE. These fees amount to $350,000 and $108,000 for the year ended January 27, 1997 and for the sixteen weeks ended May 19, 1997, respectively.

K To record $580,000 for the excess of consideration paid over the preliminary estimate of the fair value of net assets acquired, to be amortized over 40 years, and to record goodwill amortization of $15,000 and $4,000 for the fiscal year ended January 27, 1997 and the sixteen weeks ended May 19, 1997, respectively.

L To record the note receivable from Stacey's in the amount of $2.0 million and record interest income at the rate of prime (assumed to be 8.5%) plus 2% in the amount of $210,000 and $65,000 for the fiscal year ended January 27, 1997 and the sixteen weeks ended May 19, 1997, respectively. For purposes of this adjustment, no value has been ascribed to the warrants to be issued by Stacey's to the Company.

M To record the purchase and buyout of certain HTB operating equipment leases in the amount of $1.7 million, the related depreciation expense using an estimated useful life of six years and the reduction in rent expense in the amount of $283,000 and ($746,000), respectively, for the fiscal year ended January 27, 1997, and $87,000 and ($207,000), respectively, for the sixteen weeks ended May 19, 1997.

N To record (i) management fee income in connection with the Stacey's strategic alliance at 3.5% of Stacey's annual revenue (estimated at $38.0 million) of $1.33 million and $409,000 for the year ended January 27, 1997 and the sixteen weeks ended May 19, 1997, respectively and (ii) the related increase in general and administrative expenses (estimated at 2% of Stacey's annual revenue) of $760,000 and $234,000 for the fiscal year ended January 27, 1997 and the sixteen weeks ended May 19, 1997, respectively, estimated to be incurred in connection with such management services.

23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in connection with the information set forth under "Selected Combined Financial Data," "Selected Pro Forma Financial Data" and the financial statements of the Company and the accompanying notes thereto included elsewhere in this Prospectus. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below, in "Risk Factors," "Business--Growth Strategy" and elsewhere in this Prospectus.

OVERVIEW

Prior to the Formation Transactions, the HomeTown Buffet and Casa Bonita restaurants were operated as part of separate subsidiaries of CKE. Prior to their acquisition by CKE, these restaurants were operated as part of other restaurant operating companies. The historical results of operations reflect operations in these ownership forms and may not be indicative of their operations as part of the Company. In particular, general and administrative expenses reflect allocations from prior owners and may not be meaningful as a basis of comparison to the general and administrative expenses the Company will incur. See "Risk Factors--Lack of Combined Operating History."

The results of operations of the Casa Bonita restaurants have been included in the Company's results of operations since the date of CKE's acquisition. The financial statements therefore include results of operations of the Casa Bonita restaurants since October 1, 1996, and the addition of revenues, expenses and other components associated with the Casa Bonita restaurants is one of the principal reasons for the significant differences when comparing results of operations to prior periods, which do not include results of operations of the Casa Bonita restaurants.

The North's Restaurants will be acquired simultaneously with this offering and will be accounted for as a purchase transaction. The historical results of operations of the Company do not include the operations of the North's Restaurants. Due to the inclusion of the North's Restaurants following this offering, the Company's historical results of operations and period-to-period comparisons may not be meaningful or indicative of future results. See "Risk Factors--Risks Associated with the North Acquisition."

The Company expects to continue to acquire restaurants and may construct new restaurants. To the extent that the Company acquires underperforming or unprofitable restaurants or opens new restaurants, the Company's results of operations may be negatively affected due to the initial costs associated with such restaurants.

The Company adopted a fiscal year ending on the last Monday in January. The Company's HomeTown Buffet and Casa Bonita restaurants all operated on different fiscal year end dates. For purposes of presentation and for purposes of comparing the historical 52-week fiscal 1994 and 1995 results of the Predecessor Company to the combined results of operations for the Successor Company, the following discussion includes a 58-week period beginning from the end of the Predecessor Company's last fiscal year and ending on the Successor Company's fiscal year-end. This 58-week period is comprised of the combined results of HTB from December 19, 1995 to July 15, 1996 (Predecessor Company) and July 16, 1996 to January 27, 1997 (Successor Company) and the results of operations of Casa Bonita from October 1, 1996 to January 27, 1997. Due to the combined nature of this information, the period lengths and end dates are different. The Company's first fiscal quarter consists of 16 weeks, and each of the remaining fiscal quarters consists of 12 weeks.

COMPONENTS OF INCOME FROM OPERATIONS

Total revenues include a combination of food and beverage sales and are net of applicable state and city sales taxes.

24

Food costs primarily consist of the costs of food and beverage items. Various factors beyond the Company's control, including adverse weather and natural disasters, may affect food costs. Accordingly, the Company may incur periodic fluctuations in food costs. Generally, these temporary increases are absorbed by the Company and not passed on to customers; however, management may adjust menu prices to compensate for increased costs of a more permanent nature.

Labor costs include restaurant management salaries, bonuses, hourly wages for unit level employees, various health, life and dental insurance programs, vacations and sick pay and payroll taxes.

Occupancy and other expenses are primarily fixed in nature and generally do not vary with restaurant sales volume. Rent, insurance, property taxes, utilities, maintenance and advertising account for the major expenditures in this category.

General and administrative expenses include all corporate and administrative functions that serve to support the existing restaurant base and provide the infrastructure for future growth. Management, supervisory and staff salaries, employee benefits, data processing, training and office supplies are the major items of expense in this category. Following this offering, CKE will provide the Company with certain administrative and other services. See "Business--Relationship with CKE."

The Company records depreciation on its property and equipment on a straight-line basis over their estimated useful lives. In addition, this category also includes amortization of a new restaurant's pre-opening costs, which include costs of hiring and training the initial staff and certain other costs. The pre-opening costs are amortized over a one-year period commencing with a restaurant's opening.

RESULTS OF OPERATIONS

The following table summarizes the Company's results of operations as a percentage of total revenues for the 52 weeks ended December 19, 1994 ("Fiscal 1994") and December 18, 1995 ("Fiscal 1995") and the combined 58 weeks ended January 27, 1997 ("Fiscal 1997") as well as the sixteen week periods ended May 20, 1996 and May 19, 1997. References to "Fiscal 1998" refer to the fiscal year ending January 26, 1998.

                                                  PREDECESSOR                         COMPANY
                                             ---------------------      -----------------------------------
                                                                         COMBINED
                                                FIFTY-TWO WEEKS         FIFTY-EIGHT
                                                     ENDED                 WEEKS        SIXTEEN WEEKS ENDED
                                             ---------------------         ENDED        -------------------
                                             DEC. 19,     DEC. 18,       JAN. 27,       MAY 20,     MAY 19,
                                               1994         1995          1997(1)        1996        1997
                                             --------     --------      -----------     -------     -------
Total revenues.............................    100.0%       100.0%         100.0%        100.0%      100.0%
                                               -----        -----          -----         -----       -----
Costs and expenses:
  Food costs...............................     37.2         37.5           36.0          36.9        32.4
  Labor costs..............................     29.4         29.6           30.6          29.0        31.2
  Occupancy and other expenses.............     21.9         24.4           21.8          21.1        20.2
  General and administrative...............      5.7          4.5            3.9           5.5         2.2
  Depreciation and amortization............      2.7          3.4            4.1           3.7         3.7
                                               -----        -----          -----         -----       -----
          Total costs and expenses.........     96.9         99.4           96.4          96.2        89.7
                                               -----        -----          -----         -----       -----
Income from operations.....................      3.1          0.6            3.6           3.8        10.3
Interest expense...........................      0.6          0.5            0.5           0.6         0.3
                                               -----        -----          -----         -----       -----
Income before income taxes.................      2.5          0.1            3.1           3.2        10.0
Income taxes...............................      1.0          0.0            1.2           1.3         4.0
                                               -----        -----          -----         -----       -----
Net income.................................      1.5%         0.1%           1.9%          1.9%        6.0%
                                               =====        =====          =====         =====       =====


(1) For purposes of presentation and for purposes of comparing the historical 52-week fiscal 1994 and 1995 results of the Predecessor Company to the combined results of operations for the Successor Company, the period ended January 27, 1997, consists of a 58-week period beginning from the end of the Predecessor Company's last fiscal year and ending on the Successor Company's fiscal year-end. This 58-week period is comprised of the combined results of HTB from December 19, 1995 to July 15, 1996 (Predecessor Company) and July 16, 1996 to January 27, 1997 (Successor Company) and the results of operations of Casa Bonita from October 1, 1996 to January 27, 1997.

25

COMPARISON OF SIXTEEN WEEKS ENDED MAY 19, 1997 TO SIXTEEN WEEKS ENDED MAY 20,
1996

Total revenues increased $3.7 million, or 28.4%, from $12.9 million in the sixteen weeks ended May 20, 1996 to $16.6 million in the sixteen weeks ended May 19, 1997. The increase was primarily attributable to the inclusion of the results of Casa Bonita in the first quarter of Fiscal 1998, which results were not included in the first quarter of Fiscal 1997 comparable period.

Food costs increased $609,000, or 12.8%, from $4.8 million in the sixteen weeks ended May 20, 1996 to $5.4 million in the sixteen weeks ended May 19, 1997. Food costs as a percentage of total revenues declined from 36.9% in the sixteen weeks ended May 20, 1996 to 32.4% in the sixteen weeks ended May 19, 1997. The decline as a percentage of total revenues was attributable to an overall improvement in food cost at HTB since the acquisition of Summit by CKE and the inclusion of Casa Bonita since its acquisition by CKE, which operates at a lower level of food cost.

Labor costs increased $1.4 million, or 38.2%, from $3.7 million in the sixteen weeks ended May 20, 1996 to $5.2 million in the sixteen weeks ended May 19, 1997. Labor costs as a percentage of total revenues increased from 29.0% in the sixteen weeks ended May 20, 1996 to 31.2% in the sixteen weeks ended May 19, 1997. The increase as a percentage of total revenues is primarily attributable to the inclusion of Casa Bonita in the first quarter of Fiscal 1998, which operates at a higher level of labor costs than HTB's HomeTown Buffet restaurants.

Occupancy and other expenses increased $616,000, or 22.6%, from $2.7 million in the sixteen weeks ended May 20, 1996 to $3.3 million in the sixteen weeks ended May 19, 1997. Occupancy and other expenses as a percentage of total revenues decreased from 21.1% in the sixteen weeks ended May 20, 1996 to 20.2% in the sixteen weeks ended May 19, 1997. The decrease as a percentage of total revenues is primarily attributable to the inclusion of Casa Bonita in the first quarter of Fiscal 1998 which operates at a lower level of occupancy and other expenses due to the relatively fixed nature of certain of these expenses and the higher average sales volumes of the Casa Bonita restaurants.

General and administrative expenses decreased $340,000, or 48.1%, from $707,000 in the sixteen weeks ended May 20, 1996 to $367,000 in the sixteen weeks ended May 19, 1997. General and administrative expenses as a percentage of total revenues decreased from 5.5% in the sixteen weeks ended May 20, 1996 to 2.2% in the sixteen weeks ended May 19, 1997. The decrease as a percentage of total revenues is a result of the elimination of certain costs following acquisition by CKE and the inclusion of $259,000 of non-recurring severance costs in the sixteen weeks ended May 20, 1996. Pursuant to the Service Agreement, CKE will provide the Company with multi-unit infrastructure support, including accounting and administrative, financial, purchasing and real estate services. See "Business--Relationship with CKE."

Depreciation and amortization increased $143,000, or 29.8%, from $480,000 in the sixteen weeks ended May 20, 1996 to $623,000 in the sixteen weeks ended May 19, 1997, and remained constant as a percentage of total revenues. The increase in absolute dollars was attributable to the inclusion of the Casa Bonita restaurants.

Income from operations increased $1.2 million, or 245.5%, from $495,000 in the sixteen weeks ended May 20, 1996 to $1.7 million in the sixteen weeks ended May 19, 1997. Income from operations as a percentage of total revenues increased from 3.8% in the sixteen weeks ended May 20, 1996 to 10.3% in the sixteen weeks ended May 19, 1997. The increase in dollars and as a percentage of total revenues is attributable to the cost reduction efforts implemented by CKE following its acquisitions of Summit and the Casa Bonita restaurants and inclusion of Casa Bonita in the first quarter of Fiscal 1998.

26

COMPARISON OF FISCAL 1997 TO FISCAL 1995

Due to the change in the Company's fiscal year, the inclusion of Casa Bonita since the date of acquisition on October 1, 1996 by CKE and the comparison of periods of unequal length, the comparison of these periods may not be meaningful or indicative of future results.

Total revenues in Fiscal 1997 increased $10.1 million, or 27.5%, from $36.7 million in Fiscal 1995 to $46.8 million in Fiscal 1997. The increase was partially attributable to the inclusion of the results of the HomeTown Buffet restaurants for six additional weeks in Fiscal 1997 and the inclusion of Casa Bonita since October 1, 1996.

Food costs increased $3.1 million, or 22.4%, from $13.8 million in Fiscal 1995 to $16.9 million in Fiscal 1997. Food costs as a percentage of total revenues declined from 37.5% in Fiscal 1995 to 36.0% in Fiscal 1997. The decline as a percentage of total revenues was attributable to an overall improvement in food cost since the acquisition of Summit by CKE and the inclusion of Casa Bonita, which operates at a lower level of food cost.

Labor costs increased $3.4 million, or 31.7%, from $10.9 million in Fiscal 1995 to $14.3 million in Fiscal 1997. Labor costs as a percentage of total revenues increased from 29.6% in Fiscal 1995 to 30.6% in Fiscal 1997. The increase as a percentage of total revenues was primarily attributable to the inclusion of the two Casa Bonita restaurants since their acquisition on October 1, 1996 which operate at a higher level of labor costs than the Company's HomeTown Buffet restaurants.

Occupancy and other expenses increased $1.2 million, or 13.9%, from $9.0 million in Fiscal 1995 to $10.2 million in Fiscal 1997. Occupancy and other expenses as a percentage of total revenues decreased from 24.4% in Fiscal 1995 to 21.8% in Fiscal 1997. The decrease as a percentage of total revenues was primarily attributable to the inclusion of Casa Bonita since its acquisition which operates at a lower level of occupancy and other expenses due to the relatively fixed nature of certain of these expenses and the high average volumes of the Casa Bonita restaurants.

General and administrative expenses increased $148,000, or 8.9%, from $1.7 million in Fiscal 1995 to $1.8 million in Fiscal 1997. General and administrative expenses as a percentage of total revenues decreased from 4.5% in Fiscal 1995 to 3.9% in Fiscal 1997. The decrease as a percentage of total revenues was a result of the inclusion of Casa Bonita which operated with relatively lower general and administrative costs and the elimination of certain costs following acquisition by CKE.

Depreciation and amortization increased $670,000, or 54.4%, from $1.2 million in Fiscal 1995 to $1.9 million in Fiscal 1997. Depreciation and amortization as a percentage of total revenues increased from 3.4% in Fiscal 1995 to 4.1% in Fiscal 1997. The increase as a percentage of total revenues was attributable to two restaurant openings in late Fiscal 1995 for which restaurant equipment was purchased rather than leased.

Income from operations increased $1.5 million, or 619.8%, from $242,000 in Fiscal 1995 to $1.7 million in Fiscal 1997. Income from operations as a percentage of total revenues increased from 0.6% in Fiscal 1995 to 3.6% in Fiscal 1997. The increase in dollars and as a percentage of total revenues was attributable to the inclusion of six additional weeks in Fiscal 1997 information and certain cost reductions accomplished by CKE following its acquisition of Summit and the inclusion of Casa Bonita in the Fiscal 1997 results.

COMPARISON OF FISCAL 1995 TO FISCAL 1994

Total revenues increased $5.9 million, or 19.0%, from $30.9 million in Fiscal 1994 to $36.7 million in Fiscal 1995. The increase was attributable to the opening of two additional restaurants during Fiscal 1995 and the full-year impact of seven restaurants which were opened during Fiscal 1994.

Food costs increased $2.3 million, or 20.1%, from $11.5 million in Fiscal 1994 to $13.8 million in Fiscal 1995. Food costs as a percentage of total revenues increased from 37.2% in Fiscal 1994 to 37.5% in Fiscal 1995. The increase was attributable to the opening of two new restaurants during Fiscal 1995. New restaurants initially operate at a higher level of food costs than established restaurants.

27

Labor costs increased $1.8 million, or 19.7%, from $9.1 million in Fiscal 1994 to $10.9 million in Fiscal 1995. Labor costs as a percentage of total revenues increased from 29.4% in Fiscal 1994 to 29.6% in Fiscal 1995. The increase was attributable to the opening of new restaurants which initially operate at a higher level of labor costs.

Occupancy and other expenses increased $2.2 million, or 32.3%, from $6.8 million in Fiscal 1994 to $9.0 million in Fiscal 1995. Occupancy and other expenses as a percentage of total revenues increased from 21.9% in Fiscal 1994 to 24.4% in Fiscal 1995. The increase was attributable to the opening of seven additional restaurants during Fiscal 1994 which initially experienced significantly higher sales volumes than the sales generated by the existing restaurants open during Fiscal 1995.

General and administrative expenses decreased $96,000, or 5.4%, from $1.8 million in Fiscal 1994 to $1.7 million in Fiscal 1995. General and administrative expenses as a percentage of total revenues decreased from 5.7% in Fiscal 1994 to 4.5% in Fiscal 1995. The decrease as a percentage of total revenues was attributable to the increase in revenue and the relatively fixed nature of these expenses.

Depreciation and amortization increased $411,000, or 50.1%, from $821,000 in Fiscal 1994 to $1.2 million in Fiscal 1995. Depreciation and amortization expense as a percentage of total revenues increased from 2.7% in Fiscal 1994 to 3.4% in Fiscal 1995. The increase as a percentage of total revenues was due to the opening of seven additional restaurants during Fiscal 1994 which initially experienced significantly higher sales volumes than the sales generated by the existing restaurants open during Fiscal 1995.

Income from operations decreased $719,000, or 74.8%, from $961,000 in Fiscal 1994 to $242,000 in Fiscal 1995. Income from operations as a percentage of total revenues decreased from 3.1% in Fiscal 1994 to 0.7% in Fiscal 1995.

IMPACT OF INFLATION

The impact of inflation on the cost of food, labor, equipment, and construction could affect the Company's operations. A majority of the Company's employees are paid hourly rates related to federal and state minimum wage laws, which rates were recently increased. In addition, most of the Company's leases require the Company to pay taxes, insurance, maintenance, repairs and utility costs, and these costs are subject to inflationary pressures. The Company may attempt to offset the effect of inflation through periodic menu price increases, economies of scale in purchasing and cost controls and efficiencies at existing restaurants. Management believes that inflation has had no significant impact on costs during the last three years, primarily because the largest single item of expense, food costs, has remained relatively stable during this period.

LIQUIDITY AND CAPITAL RESOURCES

The Predecessor and Successor Companies have historically financed their operations primarily through a combination of cash on hand, cash provided from operations and available borrowings under bank lines of credit. As of May 19, 1997, the Company had $165,000 in cash.

Cash provided by operations was approximately $2.7 million, $1.6 million, $2.8 million and $828,000 in Fiscal 1994, Fiscal 1995 and Fiscal 1997 and the sixteen weeks ended May 19, 1997, respectively.

The Company, with the assistance of CKE, is currently in negotiations for a bank credit facility. Management anticipates that the Company will obtain a revolving credit facility of at least $14.0 million which may be used for operations, new restaurant openings and acquisitions. Management anticipates that the credit facility will contain normal affirmative and negative covenants, including maintaining certain minimum working capital, net worth and financial ratios. There can be no assurance that the Company will be able to arrange a credit facility on terms acceptable to the Company.

The Company intends to expand its operations through the opening of new restaurants and acquisitions of regional buffet restaurant chains. In addition, the Company may expand through the purchase of existing restaurant sites which would be converted to one of the Company's restaurant concepts. Management

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estimates the cost of opening its prototype restaurant to be approximately $1.5 million to $1.7 million assuming leased real estate. In many instances, management believes that existing restaurant locations can be acquired and converted to the Company's prototype concept at a lower cost than new unit openings. Management believes that the cost of converting an existing restaurant facility to the Company's prototype concept is approximately $400,000 to $500,000 per unit. These costs consist primarily of exterior and interior appearance modifications and certain kitchen and food service equipment. There can be no assurance that the Company will be able to acquire additional restaurant chains or locations or, if acquired, that these restaurants will have a positive contribution to the Company's results of operations.

The Company believes that the net proceeds from this offering, together with existing cash balances, funds expected to be generated from operations and borrowings under its anticipated bank line of credit will provide the Company with sufficient funds to finance its operations for at least the next 12 months. The Company may require additional funds to support its working capital requirements or for other purposes and may seek to raise such additional funds through public or private equity and/or debt financings or from other sources. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to the Company.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"), effective for fiscal years ending after December 15, 1997. SFAS 128 introduces and requires the presentation of "basic" earnings per share which represents net earnings divided by the weighted average shares outstanding excluding all common stock equivalents. Dual presentation of "diluted" earnings per share, reflecting the dilutive effects of all common stock equivalents, will also be required. The diluted presentation is similar to the current presentation of fully diluted earnings per share. Management has not determined whether the adoption of SFAS 128 will have a material impact on the Company's combined financial position or results of operations.

In June 1997, the FASB issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes standards for the reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general- purpose financial statements. SFAS 130 requires all items that are required to be recognized under accounting standards as components of comprehensive income to be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS 130 does not require a specific format for that financial statement but requires that an enterprise display an amount representing total comprehensive income for the period covered by that financial statement.

SFAS 130 requires an enterprise to (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS 130 is effective for fiscal years beginning after December 15, 1997. Management has not determined whether the adoption of SFAS 130 will have a material impact on the Company's combined financial position or results of operations.

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BUSINESS

GENERAL

The Company, through its subsidiaries, owns and operates 16 franchised HomeTown Buffet restaurants, two Mexican-themed restaurants operated under the Casa Bonita name and, upon the completion of the North Acquisition, seven additional buffet restaurants which operate under the "JJ North's Grand Buffet" name. The Company's restaurants, including the North's Restaurants, are located in nine western states and are focused upon providing customers with a wide variety of fresh, high quality food at modest prices in a warm, friendly atmosphere. The Company's strategic objective is to become a leading national operator of regional buffet restaurants through the acquisition of established regional concepts and the development of additional restaurants within existing or new markets.

The Company was formed on July 28, 1997 as an indirect wholly-owned subsidiary of CKE, an operator, franchisor and licensor of over 4,000 branded restaurants in the United States and abroad. See "Certain Transactions." The Company has benefited from its relationship with CKE through its access to certain operating systems and strategies which CKE successfully implemented in its Carl's Jr. chain. Since acquiring Summit in July 1996, these systems and procedures have been successful at increasing the overall revenues and profitability of HTB's HomeTown Buffet restaurants. As part of CKE's desire to focus its management efforts and capital resources on quick-service restaurants, CKE has determined that the expansion of the Company will be enhanced through the creation of a separate publicly traded company focused on the buffet restaurant segment. After the completion of this offering, CKE will beneficially own approximately 44.4% of the outstanding Common Stock (approximately 41.0% if the Underwriters' over-allotment option is exercised in full).

OPERATING STRATEGY

Since the acquisition of Summit by CKE in July 1996, HTB's HomeTown Buffet restaurants have experienced significant reductions in operating costs and improvements in same-store revenues. The Company believes that its ability to accomplish these cost reductions and operational improvements is due to the Company's customer focus and management practices.

Customer Focus. The Company believes that its ability to deliver high quality food to customers with superior service in clean and friendly environments has been central to its success at improving customer perceptions and sales at its buffet restaurants. The key elements of management's focus include:

- High Quality Food. The Company seeks to differentiate itself by providing higher quality and better tasting food than its competitors. Food items are prepared frequently and in small batches to ensure the correct temperature, texture and flavor. Management limits the number of items prepared each day and frequently rotates selected specialty items to maintain customer interest while ensuring that the Company's signature items are offered at the highest possible quality.

- Superior Service. The Company provides a level of customer service which it believes has helped it establish a higher level of customer satisfaction than its competitors. Customers are greeted by an employee who seats the customers and explains the features of the restaurant and menu offerings. In addition, the restaurants' managers seek to visit each customer table during peak meal periods to ensure guest satisfaction. The Company's restaurants are inspected by independent "mystery shoppers" several times each month, and restaurants not performing up to Company standards receive additional inspection surveys until appropriate standards are restored.

- Clean and Friendly Environment. The Company strives to offer a pleasant, customer friendly environment at its restaurants by providing attractive, updated restaurant decors and by emphasizing cleanliness in all areas of its operations. Further, through regular maintenance, the Company seeks to enhance the customer dining experience by keeping its restaurants clean and pleasant.

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Management Practices. The Company's management team has developed and implemented a series of management practices, many of which were developed by CKE, that have improved the operations of HTB's HomeTown Buffet restaurants. Management believes that many of these practices and policies can be applied to the North's Restaurants as well as other buffet restaurants. The key elements of these management practices are:

- Restaurant Management. The Company has developed food, labor and customer service management practices and reporting mechanisms that allow management to effectively monitor restaurant-level operations, benchmark restaurant performance statistics and communicate best-practices across its restaurant operations. Management supports these practices through the use of its restaurant-level incentive and bonus programs oriented toward motivating employees. The Company believes that these incentive and bonus programs, as well as its traditional recognition programs, foster an environment where employees are encouraged to share their ideas and cost saving suggestions with management.

- Cost Management. The Company's relationship with CKE has enabled it to maintain a lean corporate management structure. The Company believes that it can continue to leverage its corporate infrastructure and Service Agreement with CKE in order to achieve additional synergies in purchasing, information systems, finance and accounting, benefits and human resource management. The Company is committed to controlling costs at all levels of its operations. Through effective management of the Company's product mix, production quantities and staffing, the Company has significantly reduced its food, labor and other operating costs.

- Brand Management. The Company promotes its restaurants and enhances its brand awareness through local promotions and advertising programs which convey a targeted, consistent message and build customer awareness and loyalty. The Company primarily utilizes local marketing representatives to promote the restaurants to local organizations and groups seeking facilities and services offered by buffet restaurants.

The successful implementation of these management practices is best exemplified by the recent increases in same-store sales and operating margins at HTB's HomeTown Buffet restaurants. For the fifty-two weeks ending July 14, 1997, HTB's HomeTown Buffet restaurants experienced a 1.7% increase in same-store sales, following a 9.2% decline in same-store sales during the fiscal year ended December 19, 1995. In addition, management lowered food costs to 35.3% of total revenues during the sixteen weeks ended May 19, 1997 from 36.9% of total revenues for the sixteen weeks ended May 20, 1996.

GROWTH STRATEGY

The Company's strategic objective is to become a leading national operator of regional buffet restaurants through (i) acquisitions of existing buffet restaurants which management believes can benefit from the Company's management practices, (ii) new restaurant openings, particularly by acquiring existing restaurant locations which can be converted to buffet restaurants operated or under development by the Company and (iii) minority investments in or strategic alliances with other regional buffet restaurant chains. The Company's growth strategy is designed to capitalize on the opportunities management perceives in the fragmented buffet segment of the restaurant industry.

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Acquisition Strategy. Management believes that the Company will be able to capitalize on the successful attributes of acquired buffet chains while increasing their focus on customer service and quality. Management believes that a number of acquisition opportunities exist due to the fragmentation of the buffet segment of the restaurant industry. Management estimates that, in 1996, the buffet and cafeteria segment of the industry consisted of approximately 8,300 restaurants with aggregate revenues of more than $4.3 billion. Management believes that a significant percentage of such revenues was generated by regional buffet chains. The Company believes that most of these regional chains are privately owned and may be available for acquisition because they lack the financial and operational structure to compete with larger regional and national chains. Following acquisition, management intends to integrate and improve the operations and profitability of the chain through the implementation of the following key strategies:

- Enhance Food Quality and Service Levels. Management believes that, due to the limited capital and management resources of many regional chains, such restaurants often offer poor food quality and an insufficient level of customer service. Management intends to increase the chains' customer focus and utilize the management practices which have proven successful at other CKE restaurants.

- Implement Operational Cost Controls and Management Incentive Structures. Management believes that the management practices which have successfully lowered food, labor and other operating costs at other CKE restaurants can be implemented in other regional buffet chains. In addition, the Company believes that its management incentive programs can increase the customer service and profitability of acquired restaurants.

- Leverage CKE Relationship to Reduce Overhead Expenses. The Company intends to achieve operating efficiencies by eliminating certain administrative functions and redundant operations. Management believes that significant savings can result through the implementation of CKE's purchasing, financial services, information systems and accounting functions.

New Restaurant Opening Strategy. In order to increase the Company's presence in existing markets, or when acquisition opportunities are not available, the Company intends to expand through new restaurant openings. While the Company may construct new restaurant facilities, management intends to seek opportunities to convert locations currently occupied by other buffet, family dining or budget steakhouse restaurant concepts. The Company has developed its prototype design and menu for new restaurant openings which management believes will offer customers a dining environment and experience superior to existing buffet restaurants. Management believes that this design can be easily implemented at restaurants acquired by the Company.

In recent years, a number of chains in the family dining and budget steakhouse segments of the restaurant industry have experienced operational difficulties and declining performance. Management believes that these difficulties are the result of increasing competition for these concepts from the rapid growth of lower priced casual dining chains and casual steakhouses which offer superior product quality and service at only moderately higher prices. Many of these family dining restaurants and budget steakhouses occupy desirable locations and provide opportunities to acquire desirable restaurant locations at attractive prices. Management believes that these locations can be acquired at lower prices or leased at rates lower than those available from a comparable undeveloped site.

Minority Investments. Management intends to seek minority investments in other restaurant chains, like Stacey's, that the Company believes can be improved through the implementation of the Company's management practices. Management believes that minority investments can provide an attractive investment opportunity for the Company and may lower the acquisition cost of such chain should it ultimately be acquired by the Company.

THE NORTH ACQUISITION

On July 24, 1997, CKE entered into an Asset Purchase Agreement with North's, an operator and franchisor of 24 buffet restaurants in the western United States, to acquire certain of the North's Restaurants

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which are located in Idaho, Oregon, Utah and Washington, as well as the trademarks, menus, restaurant designs and other intangible assets used in connection with North's Restaurants.

The Company believes the North Acquisition is a significant first step in its strategy of growth through acquisitions. The Company believes the increased credibility and visibility resulting from the North Acquisition will position the Company to pursue aggressively its strategy of growth through acquisitions as regional buffet chains are pressured to consolidate. The performance of the North's Restaurants has been adversely affected by operational difficulties and inadequate capital resources, the effects of which were compounded by increased competition in the industry. These difficulties resulted in net losses for the year ended June 30, 1996 and the six months ended December 31, 1996, despite increasing revenues. The Company believes that it can meaningfully improve the same-store sales and profitability levels at the North's Restaurants and has developed a plan to integrate the North's Restaurants into the Company and improve their operations by implementing the strategies which were used to improve the operations of other CKE restaurants. The key elements of these strategies are as follows:

Improve Food Quality. The Company believes that it can improve the quality of the food served at the North's Restaurants by implementing certain management practices utilized by other CKE restaurants. The Company intends to limit the number of items offered each day, frequently rotate selected specialty items and prepare items frequently and in small batches to ensure the correct temperature, texture and flavor.

Enhance Service Quality. The Company believes that the level of service provided at North's Restaurants falls below that provided at the Company's HomeTown Buffet restaurants. To address this situation, the Company will selectively utilize certain policies which were successfully implemented at other CKE restaurants to improve the quality of their service.

Implement Management Practices. The Company believes there is a significant opportunity to improve restaurant-level margins, which are lower than restaurant-level margins at HTB's HomeTown Buffet restaurants, by implementing labor scheduling and other management practices and incentive and bonus programs utilized by other CKE restaurants.

The aggregate consideration to be paid by the Company for the North's Restaurants will be $4.5 million, subject to adjustment, consisting of $4.0 million of assumed liabilities and $500,000 in cash. Pursuant to the Acquisition Agreement, the Company agreed to use reasonable commercial efforts to secure a term loan of up to $3.0 million for North's, the proceeds of which are to be used to repay certain indebtedness of North's, and a credit line of up to $750,000 for North's, the proceeds of which North's may draw upon for working capital requirements. The Company anticipates that it will satisfy its obligation to secure the $3.0 term loan for North's by assuming an additional $3.0 million of North's existing bank debt, in which case North will agree to repay the principal amount thereof to the Company. The $7.0 million aggregate principal amount of indebtedness expected to be assumed by the Company in connection with the North Acquisition will bear interest at a variable rate and will be fully amortized over a five-year term. North's repayment obligations with respect to the $3.0 million portion of such assumed indebtedness will, if incurred, bear interest at a variable rate and will become payable over a five-year period commencing twelve months after the closing of the North Acquisition. In addition, the Company has agreed to offer to North's the right to purchase, upon the completion of this offering, 150,000 warrants at $3.50 per warrant. Each warrant will entitle the holder to purchase one share of the Common Stock of the Company at an exercise price equal to the initial public offering price per share of Common Stock.

Pursuant to the Acquisition Agreement, the Company and CKE have agreed to
(a) license to North's certain intellectual property rights, which are to be acquired by the Company as part of the North Acquisition, for use in remaining restaurants operated by North's and its franchisees, and new restaurants, if any, developed by North's; (b) enter into a business services agreement with North's pursuant to which CKE will provide certain purchasing, marketing, human resources, payroll and accounting services to North's; and (c) negotiate in good faith to enter into a development agreement pursuant to which North's would have the right to develop restaurants based on the buffet concept which the Company has developed. CKE also received an option to purchase the assets of nine additional restaurants operated by North's. There can be no assurance that the

33

HomeTown Franchisor will not assert a claim that the Company's ability to exercise this option conflicts with the noncompetition provision in the Franchise Agreements since a majority of these nine restaurants are located within approximately 25 miles of an existing HomeTown Buffet restaurant. Prior to the completion of this offering, CKE will assign to the Company its rights and certain of its obligations under the Acquisition Agreement to the Company. See "Risk Factors--Dependence Upon and Restrictions Resulting from Relationship with the HomeTown Franchisor." The Company has also agreed to enter into an employment agreement with John F. North, Jr., the President of North's, at such time as the Company shall have acquired a total of 10 restaurants from North's. In addition, CKE has agreed to vote for the election of John F. North, Jr. to the Company's Board of Directors for one full term. Following the completion of this offering, the Company has agreed to grant to John F. North, Jr. fully vested options to purchase a number of shares of the Company's Common Stock, representing one percent of the outstanding shares on a fully diluted basis as of the date of the grant, at an exercise price equal to the initial public offering price. If the Company exercises its option to purchase additional North's restaurants, the Company has agreed to issue to James E. North and John F. North, Jr., collectively, options to purchase between .6667% and 2%, depending on the number of additional restaurants acquired, of the Company's outstanding shares of Common Stock on a fully diluted basis as of the date of grant. The exercise price of any such options will be based on the last reported sales price of the Common Stock on the date of grant.

The Acquisition Agreement contains certain customary representations, warranties, covenants and indemnification provisions. In addition, the consummation of the North Acquisition is subject to certain conditions, including obtaining lien releases from North's creditors, the consummation of this offering and other customary closing conditions.

THE STACEY'S STRATEGIC ALLIANCE

On July 18, 1997, CKE signed a non-binding letter of intent with Stacey's for a strategic alliance between the Company and Stacey's. Stacey's operates 24 buffet restaurants, 19 of which are located in Florida. For the fiscal year ended January 1, 1997, Stacey's reported revenues of $38.8 million and an operating loss of $1.9 million.

The transactions contemplated by the LOI are subject to the negotiation of definitive agreements and approval of Stacey's and the Company's Boards of Directors. The LOI contemplates an arrangement whereby the Company would (i) provide certain purchasing, administrative and management services to a majority of the Stacey's buffet restaurants, (ii) loan Stacey's $2.0 million for remodeling or reconcepting several of Stacey's restaurants and (iii) receive management fees equal to 3.5% of Stacey's revenues and a warrant to purchase 30% of Stacey's fully diluted common stock. The Company would also have the right to designate two members of Stacey's five-member board of directors.

The Company believes that the transactions contemplated by the LOI provide the Company with an opportunity to leverage its management expertise to improve Stacey's operations. The Company believes that Stacey's operations have suffered in recent years due to operational difficulties and inadequate capital resources. The Company believes that its management practices and purchasing economies could have a significant positive impact on Stacey's operations. The Company intends to work with Stacey's to implement labor and other cost saving programs developed by CKE and to convert certain units to the Company's prototype buffet restaurant.

RESTAURANTS

HomeTown Buffet

HTB's HomeTown Buffet restaurants offer fixed price lunch, dinner and weekend breakfast menus that entitle each customer to unlimited servings of all menu items and beverages. Prices are approximately $5.50 for lunch and approximately $7.45 for dinner, and may vary depending on restaurant location. The restaurants offer reduced prices to children under age 12 and to senior citizens.

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At HTB's buffet restaurants, customers pay for the meal upon entering the restaurant and are generally seated by restaurant personnel before proceeding to the food service area. The restaurants generally utilize "scatter bar" formats with approximately eight buffet islands located throughout the food service area. Each buffet island contains different courses or types of menu items. The "scatter bar" format enables guests to avoid waiting in long food lines. The food service areas are designed to be accessible from all dining areas. The large dining areas of the HomeTown Buffet restaurants are often divided into separate rooms which may be used for special functions. In addition to the public areas, each restaurant has a food preparation and storage area, including a fully-equipped kitchen.

HomeTown Buffet restaurants seek to differentiate themselves from other buffet and cafeteria restaurants by the quality and variety of their food offerings. Menus emphasize traditional American "home cooking" and include soups, salads, entrees, vegetables, non-alcoholic beverages and desserts. Customers can choose from multiple entree choices, including fried and baked chicken and fish, roast beef, turkey and ham. Additional entrees, such as lasagna, barbecued ribs and other regional or seasonal dishes, are featured on particular days of the week. In addition to entrees, each meal includes two freshly-prepared soups, assorted vegetable and potato dishes, hot bread and an extensive salad bar. Dessert selections include pudding, assorted cobblers, cakes, cookies and soft-serve frozen dairy desserts and various sundae toppings.

HTB uses high-quality ingredients, including fresh seasonal fruits and vegetables, in its menu offerings, and all menu items are prepared in small batches throughout the day. The items are served promptly in relatively small serving pans in order to ensure that all items are fresh, visually appealing and served at the proper temperature. HTB regularly tests new menu items and upgrades ingredients and cooking methods in order to improve the quality and consistency of its food offerings.

HTB's typical restaurant format is approximately 9,200 square feet with seating for approximately 350 customers. The restaurant design is based upon standardized construction plans, with modifications made for each particular site.

The chart below sets forth certain data with respect to the HTB HomeTown Buffet restaurants:

                                                FIFTY-TWO WEEKS ENDED           FIFTY-EIGHT     SIXTEEN
                                          ---------------------------------        WEEKS         WEEKS
                                           DEC.                                    ENDED         ENDED
                                            20,       DEC. 19,     DEC. 18,      JAN. 27,       MAY 19,
                                           1993         1994         1995          1997          1997
                                          -------     --------     --------     -----------     -------
Number of restaurants open (end of
  period)...............................        7           14           16            16            16
Revenues (in thousands).................  $13,167     $ 30,871     $ 36,741       $43,806       $13,174
Percentage increase (decrease) in
  comparable store revenues(1)..........      N/A         4.3%       (9.2)%          (0.4)%        2.2%
Average weekly customer count per
  restaurant............................    8,201        9,177        8,150         8,117         8,769
Average check(2)........................  $  5.29     $   5.57     $   5.69       $  5.79       $  5.85


(1) Includes only restaurants open throughout the full periods being compared.

(2) Net of discounts and promotions.

Casa Bonita

The Company's two Casa Bonita restaurants are located in Denver, Colorado and Tulsa, Oklahoma and contain 42,000 and 26,000 square feet, respectively. The restaurants are designed to recreate the atmosphere of a Mexican village at night. The restaurants also feature entertainment daily, including strolling mariachis, authentic Mexican dancers, magicians and games. The restaurant's entertainment, combined with high quality, authentic Mexican food, is designed to attract a diverse customer base, including tourists and local customers. In addition to typical Mexican menu offerings, these restaurants feature all-you-can-eat dinners which offer customers unlimited servings of selected menu items.

The Company focuses on three primary target audiences in its advertising and promotional programs for its Casa Bonita restaurants: (i) local customers;
(ii) tourists; and (iii) groups and parties. The Company

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markets aggressively to attract tourists by placing advertisements in local tourist and special event guides and by otherwise promoting each Casa Bonita restaurant as a local attraction. With its large dining areas and private rooms, the Company also promotes Casa Bonita as an ideal setting for banquets, private parties and other group events.

The chart below sets forth certain data with respect to the Company's Casa Bonita restaurants:

                                                                    FIFTY-EIGHT     SIXTEEN
                                          FIFTY-TWO WEEKS ENDED        WEEKS         WEEKS
                                          ---------------------        ENDED         ENDED
                                          DEC. 19,     DEC. 18,      JAN. 27,       MAY 19,
                                            1994         1995          1997           1997
                                          --------     --------     -----------     --------
Number of restaurants (end of period)...         2            2               2            2
Revenues (in thousands).................  $ 10,856     $ 10,823      $   12,024     $  3,407
Percentage increase (decrease) in
  comparable store revenues(1)..........     (1.2%)       (0.3%)           6.3%         0.4%


(1) Includes only restaurants open throughout the full periods being compared.

SITE SELECTION, RESTAURANT LOCATIONS AND PROPERTIES

The Company and CKE entered into a Service Agreement pursuant to which the Company utilizes services of CKE to assist management with respect to site selection and other real estate related activities. In selecting new restaurant locations, management considers target population density, local competition, household income levels and trade area demographics, as well as specific location characteristics, such as visibility, accessibility, parking capacity and traffic volume. An important factor in the site selection process is the convenience of the potential location to both lunch and dinner customers and the occupancy cost of the proposed site. In addition, management considers the success of chain restaurants in the area. Potential site locations are identified by Company personnel, consultants and independent real estate brokers. Executive management visits and approves or disapproves any proposed restaurant site.

Upon consummation of the North Acquisition, the Company will operate 25 restaurants in nine states. The following table reflects the locations of the Company's restaurants.

                                                       NUMBER OF RESTAURANTS
                                            -------------------------------------------
                                            HOMETOWN
                  STATE                      BUFFET    JJ NORTH'S   CASA BONITA   TOTAL
------------------------------------------  --------   ----------   -----------   -----
Arizona...................................      8          --            --          8
Colorado..................................      2          --             1          3
Idaho.....................................     --           3            --          3
New Mexico................................      2          --            --          2
Oklahoma..................................     --          --             1          1
Oregon....................................     --           1            --          1
Utah......................................      3           1            --          4
Washington................................     --           2            --          2
Wyoming...................................      1          --            --          1
                                               --          --            --         --
          Total...........................     16           7             2         25
                                               ==          ==            ==         ==

The Company's restaurants are primarily freestanding locations. The Company prefers to lease its restaurant facilities in order to reduce the initial costs of development. In addition, the Company seeks to obtain construction allowances from the landlord in order to defray the cost of improvements.

The Company currently leases the restaurant sites for all of its restaurants. The leases expire on dates ranging from 2000 to 2014 with the majority of the leases providing for renewal options. All leases provide for specified periodic rental payments, and most call for additional rental based upon revenue volume. Most of the leases require the Company to maintain the property and to pay for the cost of insurance and taxes.

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The Company's headquarters is located in 15,512 square feet of leased office space in Salt Lake City, Utah. The base lease for this property expires in 2000. The Company has the option to lease this property for an additional five-year term upon the expiration of such lease.

HTB RESTAURANT OPERATIONS AND MANAGEMENT

HomeTown Buffet restaurant management is under the direction of Joseph J. Hollencamp, Senior Vice President of HTB, who oversees staffing, training, restaurant operations and local store marketing. The Senior Vice President relies on the support of corporate administrative services and a team of two regional managers who supervise eight restaurants each.

The management staff of a typical restaurant consists of one General Manager, one Service Manager, one Kitchen Manager, one Assistant Service Manager and one Assistant Kitchen Manager. Individual restaurants typically employ between 70 and 110 non-management hourly employees (made up of a mix of part- and full-time workers), depending on restaurant size and traffic.

HTB attempts to attract and train high quality employees at all levels of restaurant operations. Generally, restaurant management has been recruited from outside the Company and has had significant prior restaurant experience. The Company has in place strict operating standards and believes that strong standardized training processes are an important aspect of its operations. All management employees (including Assistant Managers), regardless of former experience, participate in a four- to seven-week formal course of training at one of the Company's training sites. Additional periodic training is provided as required. Non-management employees are trained at the local restaurant site.

The General Manager of a restaurant has responsibility for day-to-day operation of the restaurant and acts independently to maximize restaurant performance, subject to Company-established management policies. The General Manager makes personnel decisions and determines orders for produce and dairy products as well as centrally-contracted food items and other supplies. The Company's management compensation program includes bonuses based on restaurant profit performance.

RELATIONSHIP WITH THE HOMETOWN FRANCHISOR

HTB was the first franchisee of the HomeTown Franchisor and entered into an initial franchise agreement and a Multiple Unit Development Agreement with the HomeTown Franchisor in October 1991.

Each of the Franchise Agreements has a 20-year term (with two five-year renewal options) and provides for a one-time payment to the HomeTown Franchisor of an initial franchise fee and a continuing royalty fee at a variable rate of between 2% and 4% of gross sales. HTB provides weekly sales reports to the HomeTown Franchisor as well as periodic and annual financial statements.

HTB is obligated to operate its Hometown Buffet restaurants in compliance with the HomeTown Franchisor's operating and recipe manuals, but is not required to purchase food products or other supplies through the HomeTown Franchisor's suppliers.

The HomeTown Franchisor may terminate a franchise agreement for a number of reasons, including the failure to pay royalty fees when due, failure to comply with applicable laws or repeated failure to comply with one or more requirements of the Franchise Agreement. Many state franchise laws limit the ability of a franchisor to terminate or refuse to renew a franchise. Generally, a franchisor may terminate a franchise agreement only if franchisee violates a material and substantial provision of the agreement and fails to remedy the violation within a specified period. See "Risk Factors--Dependence Upon and Restrictions Resulting from Relationship with the HomeTown Franchisor" and "--Legal Proceedings."

RELATIONSHIP WITH CKE

In connection with the Formation Transactions, CKE and the Company entered into the Service Agreement pursuant to which CKE will provide the Company with certain multi-unit retail infrastructure support for a period of three years in exchange for an annual fee of $350,000, which fee may be increased up to

37

10% per year based upon increases in CKE's cost of providing such services. Such services will consist of (i) accounting and administrative services, such as maintaining accounting records, performing accounting activities, preparing financial reports, operating and maintaining the information technology system, establishing and administering certain employee benefits and complying with reporting obligations thereunder; (ii) financial services, including the identification and analysis of possible transactions and related financial and strategic advice, assistance in budget and forecast preparation, consultations and advice as to presentations, discussions and disclosures to financial analysts and the financial press and advice concerning crisis management and control; (iii) real estate services, including site analysis and other real estate matters and (iv) purchasing services.

COMPETITION

The restaurant industry is highly competitive. The Company competes on the basis of the quality and value of food products offered, price, service, location and overall dining experience. The Company's primary competitor in the buffet restaurant business is Buffets, Inc., which owns, operates and franchises the HomeTown Buffet and Old Country Buffet restaurant concepts. The Company also competes with a large and diverse group of restaurant chains and individually owned restaurants, including chains and individually owned restaurants that utilize a buffet format. The number of buffet restaurants with operations generally similar to the Company's has grown considerably in the last several years and the Company believes competition among buffet restaurants is increasing. As the Company and its principal competitors expand operations in various geographic areas, competition, including competition among buffet restaurants with concepts similar to the Company's concepts, can be expected to intensify. Such intensified competition could increase the Company's operating costs or adversely affect its revenues. A number of competitors have been in existence longer than the Company and have substantially greater financial, marketing and other resources and wider geographical diversity than the Company. In addition, the restaurant industry has few non-economic barriers to entry and is affected by changes in consumer tastes, national, regional and local economic conditions and market trends. The performance of individual restaurants may be affected by factors such as traffic patterns, demographic considerations and the type, number and location of competing restaurants. The Company's significant investment in and long-term commitment to each of its restaurant sites limits its ability to respond quickly or effectively to changes in local competitive conditions or other changes that could have a material adverse effect on the Company's operations. The Company's continued success is dependent to a substantial extent on its reputation for providing high quality and value and this reputation may be affected not only by the performance of its restaurants but also by the performance of franchisor-owned restaurants and restaurants operated by other franchisees, over which the Company has no control.

GOVERNMENT REGULATION

The restaurant industry is subject to numerous federal, state and local government regulations, including those relating to the preparation and sale of food and building and zoning requirements. In addition, the Company is subject to laws governing its relationship with employees, including minimum wage requirements, overtime, working and safety conditions and citizenship requirements. Many of the Company's employees are paid hourly rates based upon the federal and state minimum wage laws. Recent legislation increasing the minimum wage has resulted in higher labor costs to the Company. An increase in the minimum wage rate, employee benefit costs or other costs associated with employees, could have a material adverse effect on the Company's business, financial condition and results of operations.

EMPLOYEES

As of July 28, 1997, the Company employed approximately 1,640 persons, of whom approximately 1,560 were restaurant employees, and approximately 80 were restaurant management, supervisory and corporate personnel. Restaurant employees include both full-time and part-time workers and all are paid on an hourly basis. No Company employees are covered by collective bargaining agreements. The Company believes that its relations with its employees are generally good.

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LEGAL PROCEEDINGS

On August 9, 1996, HTB, Summit and CKE filed a complaint in the United States District Court for the District of Utah, Central Division against Buffets, Inc. and the HomeTown Franchisor, alleging violations of federal and state antitrust laws, claims for unfair business practices, claims for tortious interference with contract, and claims for breach of contract and breach of the covenant of good faith and fair dealing. The litigation is continuing and is not scheduled for trial until after January 21, 1998.

HTB's HomeTown Buffet restaurants were opened pursuant to the terms of a Multiple Unit Agreement entered into with the HomeTown Franchisor in October 1991, under which HTB was granted exclusive rights to develop and operate up to 27 HomeTown Buffet restaurants as a franchisee in eight western states, subject to HTB's compliance with a development schedule. In July 1996, the HomeTown Franchisor provided written notice to HTB of termination of the Multiple Unit Agreement, based upon HTB's alleged breach of its development obligations. Pursuant to a binding arbitration proceeding, it was determined that HTB has no contractual or other right to develop any additional HomeTown Buffet restaurants. HTB has appealed the arbitrator's award.

The Company is from time to time the subject of complaints or litigation from customers alleging illness, injury or other food quality, health or operational concerns. Adverse publicity resulting from such allegations may materially adversely affect the Company and its restaurants, regardless of whether such allegations are valid or whether the Company is liable. The Company also is the subject of complaints or allegations from employees from time to time. The Company believes that the lawsuits, claims and other legal matters to which it has become subject in the course of its business are not material to the Company's business, financial condition or results of operations, but an existing or future lawsuit or claim could result in an adverse decision against the Company that could have a material adverse effect on the Company's business, financial condition and results of operations.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the Company's directors, director nominees and executive officers:

           NAME              AGE                       POSITION
---------------------------  ---     --------------------------------------------
William P. Foley II(1)(2)    52      Chairman of the Board
Robert E. Wheaton(2)         45      Chief Executive Officer, President and
                                     Director
Theodore Abajian             33      Chief Financial Officer
C. Thomas Thompson(2)        47      Director
Stuart W. Clifton(3)         53      Director Nominee
Jack M. Lloyd(3)             47      Director Nominee
Thomas G. Schadt(1)          56      Director Nominee
Norman N. Habermann(1)(3)    64      Director Nominee
John F. North Jr.            48      Director Nominee


(1) Member of Compensation Committee

(2) Member of Executive Committee

(3) Member of Audit Committee

William P. Foley II has served as the Chairman of the Board of the Company since its formation in July 1997. Mr. Foley has been the Chief Executive Officer of CKE since October 1994, the Chairman of the Board of Directors of CKE since March 1994, and has served as a director of CKE since December 1993. Since 1981, Mr. Foley has been Chairman of the Board, President (until January 1995) and Chief Executive Officer of Fidelity National Financial, Inc., a company engaged in title insurance and related services. Mr. Foley is also the Chairman of the Board of Checkers Drive-In Restaurants, Inc. and a member of the Boards of Directors of Rally's Hamburgers, Inc., Checkers Drive-In Restaurants, Inc., DataWorks Corporation, Micro General Corporation and GB Foods Corporation.

Robert E. Wheaton has served as the Chief Executive Officer and President and as a director of the Company since its formation in July 1997. Mr. Wheaton has served as an Executive Vice President of CKE since January 1996. From April 1995 to January 1996, he served as Vice President and Chief Financial Officer of Denny's Inc., a subsidiary of Flagstar Corporation. From 1991 to 1995, Mr. Wheaton served as President and Chief Executive Officer, and from 1989 to 1991 as Vice President and Chief Financial Officer of The Bekins Company.

Theodore Abajian has served as the Chief Financial Officer of the Company since its formation in July 1997. Mr. Abajian has been the Vice President and Controller of Summit since 1994. From 1983 to 1994, he held several positions with Family Restaurants, Inc., including Director of Finance for the family restaurant division, which included 375 Carrows and Coco's restaurants.

C. Thomas Thompson has been a director of the Company since its formation in July 1997. Mr. Thompson has served as the President and Chief Operating Officer of CKE since October 1994. Mr. Thompson has been a franchisee of CKE since 1984, and currently operates 15 Carl's Jr. Restaurants in the San Francisco Bay Area. Mr. Thompson also currently serves as Vice Chairman of the Board and Chief Executive Officer of Checkers Drive-In Restaurants, Inc. Mr. Thompson has more than 20 years of experience in the restaurant industry. He previously held positions with Jack-in-the-Box and Pacific Fresh Restaurants, a full-service restaurant chain in the Bay Area.

Stuart W. Clifton will serve as a director of the Company following this offering. Since 1987, Mr. Clifton has been the Chief Executive Officer and President and a member of the Board of Directors of DataWorks Corporation, a supplier of information systems to manufacturing companies.

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Thomas G. Schadt will serve as a director of the Company following this offering. Mr. Schadt has been the Chief Executive Officer of a privately-held beverage distribution company, Bear Creek, L.L.C., since 1995. From 1976 to 1994, he held several positions with Pepsico, Inc., most recently, Vice President of Food Service.

Norman N. Habermann will serve as a director of the Company following this offering. Mr. Habermann is the President of Scobrett Associates, Inc., which is involved in venture capital and consulting activities. From December 1986 to February 1994, Mr. Habermann was President and Chief Executive Officer of the Restaurant Enterprises Group, Inc. and its predecessors. From November 1994 until its acquisition by CKE in July 1996, Mr. Habermann was a director of Summit. Mr. Habermann also serves as a director of International Food & Beverage, Inc.

Jack M. Lloyd will serve as a director of the Company following this offering. Mr. Lloyd has served as Chairman of the Board of DenAmerica Corp. since July 9, 1996 and as President, Chief Executive Officer and a director of DenAmerica Corp. since March 29, 1996. Mr. Lloyd served as Chairman of the Board and Chief Executive Officer of Denwest Restaurant Corp. ("DRC") from 1987 until the March 1996 merger of DRC and DenAmerica and served as President of DRC from 1987 until November 1994. Mr. Lloyd engaged in commercial and residential real estate development and property management as President of First Federated Investment Corporation during the early and mid-1980's. Mr. Lloyd also currently serves as a director of Action Performance Companies, Inc.

John F. North, Jr. will serve as a director of the Company following this offering. Mr. North is the co-founder of JJ North's Grand Buffet and, since 1978, has served as the President and Chief Executive Officer and a director of North's Restaurants, Inc.

BOARD COMMITTEES AND COMPENSATION

The Audit Committee of the Board of Directors, which will be formed upon completion of this offering, will consist of Messrs. Clifton, Lloyd and Habermann. The Audit Committee will recommend to the Board of Directors the independent public accountants to be selected to audit the Company's annual financial statements and approves any special assignments given to such accountants. The Audit Committee will also review the planned scope of the annual audit and the independent accountants' letter of comments and management's response thereto, any major accounting changes made or contemplated and the effectiveness and efficiency of the Company's internal accounting staff.

The Compensation Committee of the Board of Directors, which will be formed upon completion of this offering, will consist of Messrs. Foley, Habermann and Schadt. The Compensation Committee will establish remuneration levels for executive officers of the Company, review management organization and development and review executive compensation and significant employee benefit programs.

The Executive Committee of the Board of Directors, which consists of Messrs. Foley, Wheaton and Thompson, exercises the powers and authority of the full Board of Directors on all matters, to the maximum extent permitted by law, between meetings of the Board, other than those functions which may from time to time be assigned to specific committees of the Board.

Following consummation of this offering, the Company's non-employee directors will receive $2,000 per meeting of the Board of Directors and $500 per meeting of any committees thereof. In addition, in connection with their joining the Company's Board of Directors, each of Messrs. Clifton, Lloyd, Schadt and Habermann will be granted options to purchase 7,500 shares of Common Stock at an exercise price equal to the initial public offering price under the 1997 Stock Incentive Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Currently, no executive officer of the Company, except for Mr. Foley, who is Chairman of the Board of the Company and a member of the Compensation Committee thereof, serves as a member of the compensation committee or as a director of any other entity, one of whose executive officers serves on the Compensation Committee or is a director of the Company. Mr. Foley is the Chairman of the Board and Chief Executive Officer of CKE.

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EXECUTIVE COMPENSATION

The Company was incorporated on July 25, 1997. The Company expects to pay Robert E. Wheaton, the Chief Executive Officer and President of the Company, an allocated annual base salary of $187,000. In addition the Company expects to pay annual base salaries of $95,000 to Theodore Abajian, the Company's Chief Financial Officer, and $90,000 to Joseph J. Hollencamp, Senior Vice President, Operations, of HTB.

1997 STOCK INCENTIVE PLAN

On , 1997, the Company's 1997 Stock Incentive Plan (the "1997 Plan") was adopted by the Company's stockholders and Board of Directors effective as of , 1997. The 1997 Plan covers an aggregate of 602,500 shares of Common Stock. The 1997 Plan provides for the granting of "incentive stock options," within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), nonstatutory options and restricted stock grants to directors, officers, employees and consultants of the Company, except that incentive stock options may not be granted to non-employee directors or consultants. The purpose of the 1997 Plan is to provide participants with incentives which will encourage them to acquire a proprietary interest in, and continue to provide services to, the Company. The 1997 Plan is administered by the Board of Directors, which has sole discretion and authority, consistent with the provisions of the 1997 Plan, to determine which eligible participants will receive options, the time when options will be granted, the terms of options granted and the number of shares which will be subject to options granted under the 1997 Plan. No options have been issued under the 1997 Plan.

Upon completion of the offering made hereby, the Company intends to grant options to purchase an aggregate of 602,500 shares of Common Stock under the 1997 Plan, at an exercise price equal to the initial public offering price, to the persons and in the amounts set forth below:

                                              NUMBER OF
                    NAME                       OPTIONS
--------------------------------------------  ---------
William P. Foley II.........................   143,543
Robert E. Wheaton...........................   239,237
C. Thomas Thompson..........................    95,695
John F. North, Jr. .........................    54,775
Theodore Abajian............................    15,000
Joseph J. Hollencamp........................    12,500
Charlotte Miller............................     4,250
Stuart W. Clifton...........................     7,500
Jack M. Lloyd...............................     7,500
Thomas G. Schadt............................     7,500
Norman N. Habermann.........................     7,500
Other employees.............................     7,500
                                              --------
          Total.............................   602,500
                                              ========

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

The Company's Bylaws provide that the Company will indemnify its directors and officers and may indemnify its employees and other agents to the fullest extent permitted by law. The Company believes that indemnification under its Bylaws covers at least negligence and gross negligence by indemnified parties, and permits the Company to advance litigation expenses in the case of stockholder derivative actions or other actions, against an undertaking by the indemnified party to repay such advances if it is ultimately determined that the indemnified party is not entitled to indemnification.

In addition, the Company's Certificate of Incorporation provides that, pursuant to Delaware law, its directors shall not be liable for monetary damages for breach of the directors' fiduciary duty as a director to the

42

Company and its stockholders. This provision in the Certificate of Incorporation does not eliminate the directors' fiduciary duty, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to the Company for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director's responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

The Company has entered into separate indemnification agreements with its directors and executive officers. These agreements require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from actions not taken in good faith or in a manner the indemnitee believed to be opposed to the best interests of the Company) to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified and to obtain directors' insurance if available on reasonable terms. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. The Company believes that its Certificate of Incorporation and Bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

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CERTAIN TRANSACTIONS

The Company was incorporated as a Delaware corporation on July 28, 1997. Prior to the completion of this offering, JB's will contribute to the Company all of the issued and outstanding shares of capital stock of Summit in exchange for 2,600,000 shares of Common Stock of the Company. Summit is the parent corporation of HTB, which operates 16 HomeTown Buffet restaurants as a franchisee of the HomeTown Franchisor. Summit was acquired by CKE in July 1996, at which time it was the owner, operator and franchisor of 101 JB's Restaurants and the owner and operator of six Galaxy Diner restaurants. Prior to the Summit Exchange, Summit will transfer to JB's all of the assets of its JB's Restaurant system and Galaxy Diner restaurants, and JB's will continue to operate the JB's Restaurants and related franchise system and the Galaxy Diner restaurants and assume all of Summit's liabilities relating to those restaurant operations. In addition, prior to the Summit Exchange, Taco Bueno will sell substantially all of the net assets relating to its two Casa Bonita restaurants to Summit in exchange for the Casa Bonita Note. As a result of the foregoing Formation Transactions and the North Acquisition, the Company's restaurant holdings will consist of the 16 HomeTown Buffet franchised restaurants operated by HTB, the seven JJ North's Grand Buffet and the two Casa Bonita restaurants.

The Company has entered into a three-year Service Agreement, pursuant to which CKE provides the Company with certain multi-unit infrastructure support, including accounting and administration, purchasing services, financial services and real estate services, in exchange for which CKE will receive an annual management fee in the amount of $350,000, which may be increased up to 10% per year by CKE based upon increases in CKE's cost of providing such services. See "Business--Relationship with CKE."

Prior to this offering, the Company declared the Special Dividend to the Selling Stockholder in an aggregate amount equal to $7.9 million. The Company intends to pay the Special Dividend in September 1997 with a portion of the net proceeds of this offering. See "Use of Proceeds."

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of the Common Stock as of the date of this Prospectus, and as adjusted to give effect to the sale of the shares of Common Stock offered hereby, by (i) each person who is known by the Company to own beneficially more than 5% of the Company's Common Stock, (ii) each director and director nominee of the Company, (iii) each of the Company's executive officers, (iv) the Selling Stockholder, and (v) all directors, director nominees and executive officers of the Company as a group.

                                       BENEFICIAL OWNERSHIP                          BENEFICIAL OWNERSHIP
                                      PRIOR TO THIS OFFERING         NUMBER          AFTER THIS OFFERING
          NAME AND ADDRESS            -----------------------       OF SHARES       ----------------------
        OF BENEFICIAL OWNERS           SHARES      PERCENTAGE     BEING OFFERED      SHARES     PERCENTAGE
------------------------------------  ---------    ----------     -------------     ---------   ----------
CKE Restaurants, Inc.                 2,600,000(1)   100.0%          600,000        2,000,000       44.4%
  1200 North Harbor Boulevard
  Anaheim, CA 92801
William P. Foley II                      47,548(2)     1.8                --           47,548        1.0
Robert E. Wheaton                        79,746(2)     3.0                --           79,746        1.7
Theodore Abajian                          5,000(2)       *                --            5,000          *
C. Thomas Thompson                       31,898(2)     1.2                --           31,898          *
Stuart W. Clifton                         7,500(2)       *                --            7,500          *
Jack M. Lloyd                             7,500(2)       *                --            7,500          *
Thomas G. Schadt                          7,500(2)       *                --            7,500          *
Norman N. Habermann                       7,500(2)       *                --            7,500          *
John F. North, Jr.                       54,775(2)     2.1%                            54,775        1.2%
All directors, director nominees and
  executive officers as a group         229,267        8.1%               --          229,267        4.8%
  (10 persons)


* Less than one percent.

(1) The record owner of these shares is JB's Restaurants, Inc. a wholly-owned subsidiary of CKE.

(2) Represents options to purchase Common Stock to be granted upon the completion of this offering which will become immediately exercisable. See "Management--1997 Stock Incentive Plan."

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DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 18,500,000 shares of Common Stock, par value $0.001 per share, and 1,500,000 shares of Preferred Stock, par value $0.001 per share. As of August 11, 1997, there will be 2,600,000 shares of Common Stock outstanding, all of which were held by the Selling Stockholder, and no shares of Preferred Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders and do not have cumulative voting rights. Subject to preferences that may be applicable to the holders of outstanding shares of Preferred Stock, if any, at the time holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. In the event of a liquidation, dissolution or winding up of the Company, the holders of Common Stock shall be entitled to assets of the Company remaining after payment of the Company's liabilities and the liquidation preference, if any, of any outstanding Preferred Stock. All outstanding shares of Common Stock, are, and the shares of Common Stock deferred by the Company in the Offering will be, when issued and paid for, fully paid and nonassessable. Holders of Common Stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of Preferred Stock which the Company may designate and issue in the future.

PREFERRED STOCK

The Board of Directors has the authority, without further vote or action by the stockholders, to provide for the issuance of up to 1,500,000 shares of Preferred Stock from time to time in one or more series with such designations, rights, preferences and privileges and limitations on the Board of Directors may determine, including the consideration received therefor. The Board of Directors also will have the authority to determine the number of shares comprising each series, dividend rates, redemption provisions, liquidation preferences, sinking fund provisions, conversion rights and voting rights without approval by the holders of Common Stock. Although it is not possible to state the effect that any issuance of Preferred Stock might have on the rights of holders of Common Stock, the issuance of Preferred Stock may have one or more of the following effects: (i) to restrict the payment of dividends on the Common Stock, (ii) to dilute the voting power and equity interests of holders of Common Stock, (iii) to prevent holders of Common Stock from participating in any distribution of the Company's assets upon liquidation until any liquidation preferences granted to holders of Preferred Stock are satisfied, or (iv) to require approval by the holders of Preferred Stock for certain matters such as amendments to the Company's Certificate of Incorporation or any reorganization, consolidation, merger or other similar transaction involving the Company. As a result, the issuance of Preferred Stock may, under certain circumstances, have the effect of delaying, discouraging or preventing bids for the Common Stock at a premium over the market price thereof, or a change in control of the Company, and could have a material adverse effect on the market price for the Common Stock. See "Risk Factors -- Effect of Certain Charter and Bylaw Provisions."

DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

The Company is subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, the statute prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested" stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless either
(i) prior to the date at which the person becomes an interested stockholder, the board of directors approves such transaction or business combination, (ii) the stockholder acquires more than 85% of the outstanding voting stock of the corporation (excluding shares held by directors who are officers or held in certain employee stock plans) upon consummation of such transaction, or (iii) the business combination is approved by the board of directors and by two-thirds of the outstanding voting stock of the corporation (excluding shares held by the interested stockholder) at a meeting of stockholders (and not by written consent). A "business combination" includes a merger, asset sale or other

45

transaction resulting in a financial benefit to such interested stockholder. For purposes of Section 203, an "interested" stockholder is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation's voting stock.

The Certificate of Incorporation also eliminates the ability of stockholders to call special meetings and requires advance notice to nominate a director or take certain other actions. These provisions may be deemed to have a potential anti-takeover effect and may delay or prevent a change of control of the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is ChaseMellon Shareholder Services, L.L.C.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common Stock. Future sales of substantial amounts of Common Stock in the public market could adversely affect prevailing market prices and adversely affect the Company's ability to raise additional capital in the capital markets at a time and price favorable to the Company.

Upon completion of this offering, the Company will have 4,500,000 shares of Common Stock outstanding. Of these shares, the 2,500,000 shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act, unless they are purchased by "affiliates" of the Company as that term is used under the Securities Act. The remaining 2,000,000 shares, all of which are beneficially owned by CKE, will be "restricted securities" as defined in Rule 144 under the Securities Act ("Restricted Shares"). Restricted Shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act, which is summarized below. Sales of Restricted Shares in the public market, or the availability of such shares for sale, could adversely affect the market price of the Common Stock.

All officers and directors of the Company have agreed with the Underwriters that they will not sell any Common Stock owned or subsequently acquired by them for a period of 180 days after the date of this Prospectus, and each of CKE and the Selling Stockholder has agreed with the Underwriters that it will not sell any shares of Common Stock beneficially owned by it, other than in connection with this offering, for one year after the date of this Prospectus, in each case without the prior written consent of Equitable Securities Corporation (the "Lock-up Agreement").

In general, under Rule 144 as currently in effect, any person (or persons whose shares are aggregated) who has beneficially owned Restricted Shares for at least one year is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of 1% of the then outstanding shares of the Company's Common Stock (approximately 45,000 shares immediately after this offering) or the average weekly trading volume during the four calendar weeks preceding such sale. Sales under Rule 144 are also subject to certain requirements as to the manner of sale, notice and availability of current public information about the Company. A person who is not an affiliate, has not been an affiliate within three months prior to the sale and has beneficially owned the Restricted Shares for a least two years is entitled to sell such shares under Rule 144(k) as currently in effect without regard to any of the limitations described above.

The Company intends to file a registration statement on Form S-8 under the Securities Act to register shares of Common Stock reserved for issuance under its 1997 Stock Incentive Plan, thus permitting the resale of shares issued under such plan by non-affiliates in the public market without restriction under the Securities Act. Such registration statement will become effective immediately upon filing, which is expected on or shortly after the closing of this offering. As of the completion of this offering, options to purchase 602,500 shares of Common Stock will be outstanding under the Company's 1997 Stock Incentive Plan, 595,000 of which will be subject to the Lock-up Agreements as described above.

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UNDERWRITING

The Underwriters named below (the "Underwriters"), for whom Equitable Securities Corporation and EVEREN Securities, Inc. are acting as representatives (the "Representatives"), have severally agreed, subject to the terms and conditions of an underwriting agreement (the "Underwriting Agreement"), to purchase from the Company and the Selling Stockholder the numbers of shares of Common Stock set forth below opposite their respective names:

                                                                     NUMBER
                           UNDERWRITER                             OF SHARES
-----------------------------------------------------------------  ----------
Equitable Securities Corporation.................................
EVEREN Securities, Inc...........................................

                                                                   ----------
          Total..................................................   2,500,000
                                                                   ==========

The Underwriting Agreement provides that the obligations of the several Underwriters thereunder are subject to the approval of certain legal matters by counsel and to various other conditions. The nature of the Underwriters' obligations is such that they are committed to purchase all of the shares of Common Stock offered hereby if any are purchased.

The Underwriters propose to offer the shares of Common Stock being purchased directly to the public at the initial offering price set forth on the cover page of this Prospectus, and to certain dealers at such price less a concession not in excess of $ per share. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per share to certain other dealers. After this offering, the offering price and other selling terms may be changed.

The Company has granted the Underwriters a 30-day option to purchase up to an additional 375,000 shares of Common Stock at the public offering price less the underwriting discount set forth on the cover page of this Prospectus to cover over-allotments, if any. If the Underwriters exercise their over-allotment option to purchase any of the 375,000 additional shares of Common Stock from the Company, the Underwriters have severally agreed, subject to certain conditions, to purchase approximately the same percentage thereof that the number of shares of Common Stock to be purchased by each of them as shown in the above table bears to the 2,500,000 shares of Common Stock offered hereby. The Underwriters may exercise this option only to cover over-allotments made to connection with the sale of the Common Stock offered hereby.

Prior to this offering, there has been no market for the Common Stock. The initial public offering price will be determined by negotiations among the Company, the Selling Stockholder and the Representatives. The factors to be considered in determining such initial public offering price include the financial and operational history and trends of the Company, the history of and the prospects for the industry in which the Company competes, an assessment of the Company's management, its past and present operations, its past and present earnings and the trend of such earnings, the general condition of the securities markets at the time of this offering and the price-earnings multiples and market prices of publicly traded securities of comparable companies. The Representatives have informed the Company that the Underwriters do not intend to confirm sales of Common Stock to any accounts over which they exercise discretionary authority. The Representatives intend to make a market in the Common Stock after completion of the offering.

Subject to certain exceptions, CKE and its subsidiaries for a period of one year, and the Company and its directors and executive officers for a period of 180 days, after the date of this Prospectus have agreed not to offer, pledge, issue, sell, contract to sell, grant any option for the sale of or otherwise dispose of any shares of Common Stock or any securities convertible into, or exercisable or exchangeable for, any shares of Common Stock without the prior written consent of Equitable Securities Corporation on behalf of the Representatives,

48

provided, however, the Company may grant stock options under, and issue shares of Common Stock upon the exercise of certain outstanding stock options granted under, the Company's 1997 Stock Incentive Plan.

The Company, CKE and the Selling Stockholder have agreed to indemnify the Underwriters and controlling persons, if any, against, certain liabilities, including liabilities under the Securities Act or to contribute to the payments the Underwriters or any controlling persons may be required to make in respect thereof.

The Underwriters have advised the Company that, pursuant to Regulation M under the Securities Act, certain persons participating in this offering may engage in transactions, including stabilizing bids, syndicate covering transactions or the imposition of penalty bids, which may have the effect of stabilizing or maintaining the market price of the Common Stock at a level above that which might otherwise prevail in the open market. A "stabilizing bid" is a bid for or the purchase of the Common Stock on behalf of the Underwriters for the purpose of fixing or maintaining the price of the Common Stock. A "syndicate covering transaction" is the bid for or the purchase of the Common Stock on behalf of the Underwriters to reduce a short position incurred by the Underwriters in connection with this offering. A "penalty bid" is an arrangement permitting the Underwriters to reclaim the selling concession otherwise accruing to an Underwriter or dealer in connection with this offering if the Common Stock originally sold by such Underwriter or dealer is purchased by the Underwriters in a syndicate covering transaction and has therefore not been effectively placed by such Underwriter or dealer. The Underwriters have advised the Company that such transactions may be affected on the Nasdaq Stock Market or otherwise and, if commenced, may be discontinued at any time.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the Company by Stradling Yocca Carlson & Rauth, a professional corporation, Newport Beach, California. Certain legal matters in connection with this offering will be passed upon for the Underwriters by Orrick, Herrington & Sutcliffe LLP, San Francisco, California.

EXPERTS

The balance sheet of Star Buffet, Inc. as of July 28, 1997 has been included herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The combined balance sheets of HTB Restaurants, Inc. as of December 18, 1995 (Predecessor Company) and January 27, 1997 (Successor Company), and the related combined statements of earnings and retained earnings and cash flows for the 52-week periods ended December 19, 1994 and December 18, 1995 and the 30-week period ended July 15, 1996 (Predecessor Company) and the 28-week period ended January 27, 1997 (Successor Company), have been included herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The statement of earnings of Casa Bonita Restaurants (a division of Casa Bonita Incorporated) for the nine months ended September 30, 1996 has been included herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The balance sheets of North's Restaurants (a division of North's Restaurants, Inc.) as of June 30, 1995 and 1996 and December 31, 1996 and the related statements of operations and division's equity and cash flows for each of the years in the three-year period ended June 30, 1996 and for the six months ended December 31, 1996, have been included herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

49

AVAILABLE INFORMATION

A Registration Statement on Form S-1, including amendments thereto, relating to the Common Stock offered hereby has been filed by the Company with the Securities and Exchange Commission (the "Commission"). This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits thereto. Statements contained in this Prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. For further information with respect to the Company and the Common Stock offered hereby, reference is made to such Registration Statement and exhibits. A copy of the Registration Statement may be inspected by anyone without charge at the public reference facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661. Copies of all or any part of the Registration Statement may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and its public reference facilities in New York, New York and Chicago, Illinois, upon the payment of the prescribed fees. The Registration Statement is also available through the Commission's Website on the World Wide Web at the following address: http://www.sec.gov.

50

INDEX TO FINANCIAL STATEMENTS

                                                                                        PAGE
                                                                                        -----
STAR BUFFET, INC.
  Independent Auditors' Report.........................................................   F-2
  Balance Sheet as of July 28, 1997....................................................   F-3
  Note to Balance Sheet................................................................   F-4

HTB RESTAURANTS, INC.
  Independent Auditors' Report.........................................................   F-5
  Combined Balance Sheets as of December 18, 1995 (Predecessor Company), January 27,
     1997 (Successor Company) and May 19, 1997 (unaudited).............................   F-6
  Combined Statements of Earnings and Retained Earnings for the 52 Weeks Ended December
     19, 1994 and December 18, 1995, the 30 Weeks Ended July 15, 1996 (Predecessor
     Company) and the 28 Weeks Ended January 27, 1997 (Successor Company) and the 16
     Weeks Ended May 20, 1996 and May 19, 1997 (unaudited).............................   F-7
  Combined Statements of Cash Flows for the 52 Weeks Ended December 19, 1994 and
     December 18, 1995, the 30 Weeks Ended July 15, 1996 (Predecessor Company) and the
     28 Weeks Ended January 27, 1997 (Successor Company) and the 16 Weeks Ended May 20,
     1996 and May 19, 1997 (unaudited).................................................   F-8
  Notes to Combined Financial Statements...............................................   F-9

CASA BONITA RESTAURANTS
  Independent Auditors' Report.........................................................  F-16
  Statement of Earnings for the Nine Months Ended September 30, 1996...................  F-17
  Notes to Financial Statement.........................................................  F-18

NORTH'S RESTAURANTS
  Independent Auditors' Report.........................................................  F-21
  Balance Sheets as of June 30, 1995 and 1996, December 31, 1996 and March 31, 1997
     (unaudited).......................................................................  F-22
  Statements of Operations and Division's Equity for Each of the Years in the
     Three-year Period Ended June 30, 1996 and for the Six Months Ended December 31,
     1996 and for the Three Months Ended March 31, 1997 (unaudited)....................  F-23
  Statements of Cash Flows for Each of the Years in the Three-year Period Ended June
     30, 1996 and for the Six Months Ended December 31, 1996 and for the Three Months
     Ended March 31, 1997 (unaudited)..................................................  F-24
  Notes to Financial Statements........................................................  F-25

F-1

INDEPENDENT AUDITORS' REPORT

The Stockholder and Board of Directors
Star Buffet, Inc.:

We have audited the accompanying balance sheet of Star Buffet, Inc. (an indirect wholly-owned subsidiary of CKE Restaurants, Inc.) as of July 28, 1997. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit of a balance sheet includes examining, on a test basis, evidence supporting the amounts and disclosures in that balance sheet. An audit of a balance sheet also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Star Buffet, Inc. at July 28, 1997, in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Orange County, California
July 28, 1997

F-2

STAR BUFFET, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF CKE RESTAURANTS, INC.)

BALANCE SHEET
JULY 28, 1997

ASSETS

Total assets......................................................................  $     --
                                                                                    ========
                            LIABILITIES AND STOCKHOLDER'S EQUITY

Stockholder's Equity
  Preferred Stock; $0.001 par value, 1,500,000 shares authorized; no shares issued
     or outstanding...............................................................        --
  Common Stock, $0.001 par value; authorized 18,500,000 shares; no shares issued
     or outstanding...............................................................        --
  Additional paid-in capital......................................................        --
  Common stock subscribed (2,600,000 shares)......................................  $ 26,000
  Less: stock subscriptions receivable............................................   (26,000)
                                                                                    --------
Total liabilities and stockholder's equity........................................  $     --
                                                                                    ========

See accompanying note to balance sheet.

F-3

STAR BUFFET, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF CKE RESTAURANTS, INC.)

NOTE TO BALANCE SHEET

JULY 28, 1997

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Star Buffet, Inc. (the Company) was incorporated in the State of Delaware on July 28, 1997 as an indirect wholly owned subsidiary of CKE Restaurants, Inc.

The Company intends to acquire all of the outstanding common stock of Summit Family Restaurants Inc., whose subsidiary, HTB Restaurants, Inc., is the franchisee of 16 Hometown Buffet restaurants, and the operations of two Casa Bonita restaurants.

The Company is in the process of filing a Registration Statement with the Securities and Exchange Commission to sell 1,900,000 shares of Common Stock in an initial public offering.

Fiscal Year

The Company will utilize a 52- or 53-week accounting period which ends on the last Monday of January each year.

F-4

INDEPENDENT AUDITORS' REPORT

The Stockholder and Board of Directors
HTB Restaurants, Inc.:

We have audited the accompanying combined balance sheets of HTB Restaurants, Inc. (a wholly owned subsidiary of Summit Family Restaurants Inc.) as of December 18, 1995 (Predecessor Company) and January 27, 1997 (Successor Company) and the related combined statements of earnings and retained earnings and cash flows for the 52-week periods ended December 19, 1994 and December 18, 1995 and the 30-week period ended July 15, 1996 (Predecessor Company) and the 28-week period ended January 27, 1997 (Successor Company). These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of HTB Restaurants, Inc. as of December 18, 1995 (Predecessor Company) and January 27, 1997 (Successor Company) and the results of its operations and its cash flows for the 52-week periods ended December 19, 1994 and December 18, 1995 and the 30-week period ended July 15, 1996 (Predecessor Company) and the 28-week period ended January 27, 1997 (Successor Company) in conformity with generally accepted accounting principles.

As discussed in note 1 to the combined financial statements, effective July 15, 1996, CKE Restaurants, Inc. acquired all of the outstanding common stock of Summit Family Restaurants Inc. in a business combination accounted for as a purchase. As a result of the acquisition, the combined financial information for the period after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable.

KPMG PEAT MARWICK LLP

Orange County, California
July 22, 1997, except as to
note 8, which is as
of July 28, 1997

F-5

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

COMBINED BALANCE SHEETS

ASSETS

                                                        PREDECESSOR     SUCCESSOR
                                                          COMPANY        COMPANY        SUCCESSOR
                                                        ------------   -----------       COMPANY
                                                        DECEMBER 18,   JANUARY 27,     -----------
                                                            1995          1997           MAY 19,
                                                        ------------   -----------        1997
                                                                                       -----------
                                                                                       (UNAUDITED)
Current assets:
  Cash................................................  $    117,000   $   353,000     $   165,000
  Short-term investments..............................            --       180,000         180,000
  Trade receivables...................................        39,000        71,000         206,000
  Inventories.........................................       242,000       383,000         384,000
  Prepaid expenses....................................       139,000        84,000         141,000
  Deferred taxes, net (note 4)........................        78,000       193,000         118,000
                                                        ------------   -----------     -----------
          Total current assets........................       615,000     1,264,000       1,194,000
                                                        ------------   -----------     -----------
Property and equipment, at cost, less accumulated
  depreciation and amortization (note 2)..............    12,617,000    12,430,000      13,260,000
                                                        ------------   -----------     -----------
Real property and equipment under capitalized leases,
  at cost, less accumulated amortization (notes 2 and
  3)..................................................     2,304,000     2,396,000       2,509,000
                                                        ------------   -----------     -----------
Deposits and other assets.............................       280,000       375,000          45,000
                                                        ------------   -----------     -----------
Intangible assets, at cost, less accumulated
  amortization:
  Franchise fees......................................       356,000       318,000         311,000
  Equipment lease acquisition costs...................        93,000            --              --
                                                        ------------   -----------     -----------
          Total intangible assets.....................       449,000       318,000         311,000
Deferred taxes, net (note 4)..........................        18,000            --              --
Intercompany receivable (notes 4 and 6)...............            --     3,001,000       2,863,000
                                                        ------------   -----------     -----------
                                                        $ 16,283,000   $19,784,000     $20,182,000
                                                        ============   ===========     ===========
                       LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable -- trade (note 6)..................  $  2,229,000   $ 2,226,000     $ 1,716,000
  Accrued liabilities (note 6):
     Payroll and related taxes........................       667,000     1,207,000       1,074,000
     Sales and property taxes.........................       371,000       632,000         384,000
     Rent, insurance and other........................        60,000       367,000         742,000
  Current maturities of capital lease obligations
     (note 3).........................................       198,000       239,000         239,000
                                                        ------------   -----------     -----------
          Total current liabilities...................     3,525,000     4,671,000       4,155,000
                                                        ------------   -----------     -----------
Long-term debt, net of current maturities:
  Capital lease obligations (note 3)..................     2,276,000     2,370,000       2,295,000
  Intercompany payable (notes 4 and 6)................     8,676,000            --              --
                                                        ------------   -----------     -----------
          Total long-term debt........................    10,952,000     2,370,000       2,295,000
Stockholder's equity:
  Common stock, $0.01 par value. Authorized 1,000
     shares; issued and outstanding 10 shares.........             0             0               0
  Additional paid-in capital..........................     1,000,000    12,192,000      12,192,000
  Retained earnings...................................       806,000       551,000       1,540,000
                                                        ------------   -----------     -----------
          Total stockholder's equity..................     1,806,000    12,743,000      13,732,000
Commitments and contingencies (notes 3 and 7)
Subsequent event (note 8)
                                                        ------------   -----------     -----------
                                                        $ 16,283,000   $19,784,000     $20,182,000
                                                        ============   ===========     ===========

See accompanying notes to combined financial statements.

F-6

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

COMBINED STATEMENTS OF EARNINGS AND RETAINED EARNINGS

                                                                                  SUCCESSOR
                                           PREDECESSOR COMPANY                     COMPANY
                             ------------------------------------------------   --------------    PREDECESSOR       SUCCESSOR
                             52 WEEKS ENDED   52 WEEKS ENDED   30 WEEKS ENDED   28 WEEKS ENDED      COMPANY          COMPANY
                              DECEMBER 19,     DECEMBER 18,       JULY 15,       JANUARY 27,     --------------   --------------
                                  1994             1995             1996             1997        16 WEEKS ENDED   16 WEEKS ENDED
                             --------------   --------------   --------------   --------------      MAY 20,          MAY 19,
                                                                                                      1996             1997
                                                                                                 --------------   --------------
                                                                                                  (UNAUDITED)     (UNAUDITED)
Total revenues.............   $ 30,871,000     $ 36,741,000     $ 23,207,000     $ 23,632,000     $ 12,909,000     $ 16,581,000
                               -----------      -----------      -----------      -----------      -----------      -----------
Costs and expenses:
  Food costs...............     11,469,000       13,769,000        8,569,000        8,285,000        4,760,000        5,369,000
  Labor costs..............      9,089,000       10,878,000        6,810,000        7,514,000        3,740,000        5,169,000
  Occupancy and other
    expenses...............      6,769,000        8,954,000        5,030,000        5,173,000        2,727,000        3,343,000
  General and
    administrative
    expenses...............      1,762,000        1,666,000        1,193,000          621,000          707,000          367,000
  Depreciation and
    amortization...........        821,000        1,232,000          914,000          988,000          480,000          623,000
                               -----------      -----------      -----------      -----------      -----------      -----------
        Total costs and
          expenses.........     29,910,000       36,499,000       22,516,000       22,581,000       12,414,000       14,871,000
                               -----------      -----------      -----------      -----------      -----------      -----------
Income from operations.....        961,000          242,000          691,000        1,051,000          495,000        1,710,000
Interest expense (notes 2
  and 3)...................        203,000          192,000          145,000          106,000           84,000           62,000
                               -----------      -----------      -----------      -----------      -----------      -----------
Income before income
  taxes....................        758,000           50,000          546,000          945,000          411,000        1,648,000
Income tax expense (note
  4).......................        301,000           22,000          216,000          394,000          165,000          659,000
                               -----------      -----------      -----------      -----------      -----------      -----------
Net income.................        457,000           28,000          330,000          551,000     $    246,000     $    989,000
                                                                                                   ===========      ===========
Retained earnings at
  beginning of period......        321,000          778,000          806,000               --
                               -----------      -----------      -----------      -----------
Retained earnings at end of
  period...................   $    778,000     $    806,000     $  1,136,000     $    551,000
                               ===========      ===========      ===========      ===========

See accompanying notes to combined financial statements.

F-7

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

COMBINED STATEMENTS OF CASH FLOWS

                                                                                   SUCCESSOR       PREDECESSOR       SUCCESSOR
                                            PREDECESSOR COMPANY                     COMPANY          COMPANY          COMPANY
                              ------------------------------------------------   --------------   --------------   --------------
                              52 WEEKS ENDED   52 WEEKS ENDED   30 WEEKS ENDED   28 WEEKS ENDED   16 WEEKS ENDED   16 WEEKS ENDED
                               DECEMBER 19,     DECEMBER 18,       JULY 15,       JANUARY 27,        MAY 20,          MAY 19,
                                   1994             1995             1996             1997             1996             1997
                              --------------   --------------   --------------   --------------   --------------   --------------
                                                                                                   (UNAUDITED)      (UNAUDITED)
Cash flows from operating
  activities:
  Net income.................  $    457,000     $     28,000      $  330,000      $    551,000     $    246,000     $    989,000
  Adjustments to reconcile
    net income to net cash
    provided by operating
    activities:
    Depreciation and
      amortization...........       821,000        1,232,000         914,000           988,000          480,000          623,000
    Loss on disposal of
      assets.................        84,000          100,000              --                --               --               --
    Change in operating
      assets and liabilities:
      Receivables............       238,000          (22,000)         21,000          (114,000)          23,000         (135,000)
      Inventories............       (90,000)         (48,000)         39,000            (5,000)           4,000           (1,000)
      Prepaid expenses and
        other assets.........      (153,000)         138,000        (202,000)           36,000               --          (57,000)
      Deferred tax assets....        63,000         (136,000)        (78,000)               --               --          (75,000)
      Accounts payable.......       896,000          183,000        (280,000)          273,000          459,000         (510,000)
      Accrued liabilities....       400,000          123,000          72,000           231,000          (15,000)          (6,000)
                               ------------     ------------        --------      ------------     ------------     ------------
        Net cash provided by
          operating
          activities.........     2,716,000        1,598,000         816,000         1,960,000        1,197,000          828,000
                               ------------     ------------        --------      ------------     ------------     ------------
Cash flows from investing
  activities:
  Acquisition of intangible
    assets...................      (155,000)        (125,000)             --                --               --               --
  Acquisition of property and
    equipment................    (6,057,000)      (3,527,000)        (68,000)         (103,000)         (28,000)      (1,079,000)
  Purchases of short-term
    investments..............            --               --              --          (180,000)              --               --
                               ------------     ------------        --------      ------------     ------------     ------------
        Net cash used in
          investing
          activities.........    (6,212,000)      (3,652,000)        (68,000)         (283,000)         (28,000)      (1,079,000)
                               ------------     ------------        --------      ------------     ------------     ------------
Cash flows from financing
  activities:
  Net activity with parent
    and affiliates...........     2,512,000        1,998,000        (546,000)       (1,288,000)        (781,000)         138,000
  Proceeds from sales of
    assets...................     1,140,000               --              --                --               --               --
  Principal payments on
    capital leases...........       (24,000)         (46,000)       (110,000)         (245,000)        (381,000)         (75,000)
                               ------------     ------------        --------      ------------     ------------     ------------
        Net cash provided by
          (used in) financing
          activities.........     3,628,000        1,952,000        (656,000)       (1,533,000)      (1,162,000)          63,000
                               ------------     ------------        --------      ------------     ------------     ------------
        Net increase
          (decrease) in
          cash...............       132,000         (102,000)         92,000           144,000            7,000         (188,000)
Cash at beginning of
  period.....................        87,000          219,000         117,000           209,000          117,000          353,000
                               ------------     ------------        --------      ------------     ------------     ------------
Cash at end of period........  $    219,000     $    117,000      $  209,000      $    353,000     $    124,000     $    165,000
                               ============     ============        ========      ============     ============     ============
Supplemental disclosures of
  cash flow
  information -- cash paid
  for interest...............  $    203,000     $    192,000      $  145,000      $    110,000     $     84,000     $     62,000
                               ============     ============        ========      ============     ============     ============

Supplemental disclosure of noncash financing and investing activities: A capital lease obligation of $677,000 was incurred in 1995 when the Company entered into a lease for restaurant equipment.

See accompanying notes to combined financial statements.

F-8

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are followed by HTB Restaurants, Inc. (the Company) in preparing and presenting its combined financial statements.

ORGANIZATION AND NATURE OF OPERATIONS

The Predecessor Company has been a wholly owned subsidiary of Summit Family Restaurants Inc. (Summit) since October 9, 1991. The Predecessor Company operated 16 buffet style restaurants in five western states as a franchisee of HomeTown Buffet, Inc.

On July 15, 1996, CKE Restaurants, Inc. (CKE) acquired the outstanding common stock of Summit in a business combination accounted for as a purchase. On October 1, 1996, CKE acquired the outstanding Common Stock of Casa Bonita Incorporated (CBI). CBI operated approximately 110 restaurants primarily located in Texas and Oklahoma, including two casual dining Mexican-themed restaurants located in Denver, Colorado and Tulsa, Oklahoma (the Casa Bonita Restaurants). This transaction was accounted for as a purchase.

As a result of these acquisitions and the subsequent transaction described in note 8, the financial information of the Company (the Successor Company) combines the results of operations for the Company's 16 buffet restaurants from July 16, 1996 and the results of the Casa Bonita Restaurants from October 1, 1996. Additionally, the financial information for periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition (Predecessor Company) and, therefore, is not comparable.

The Predecessor Company financial statements are based on the historical cost basis of the Company. The Successor Company financial statements reflect push down accounting based on allocations by CKE.

FISCAL YEAR

The Successor Company utilizes a fiscal year which ends on the last Monday in January; the period ended January 27, 1997 contains 28 weeks.

The Predecessor Company utilized a 52/53-week fiscal year which ends in December. The fiscal years ended December 19, 1994 and December 18, 1995 contained 52 weeks. The period ended July 15, 1996 contained 30 weeks.

SHORT-TERM INVESTMENTS

Short-term investments in the accompanying combined balance sheet (consisting primarily of certificates of deposits, with original maturities of greater than three months) are held-to-maturity securities and, accordingly, have been stated at cost.

INVENTORIES

Inventories consist of food, beverages and restaurant supplies and are valued at cost, determined by the first-in, first-out method.

F-9

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

PROPERTY AND EQUIPMENT

Property and equipment and real property under capitalized leases are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the following useful lives: buildings and leasehold improvements -- lesser of lease life or 20 years; furniture, fixtures and equipment -- five to eight years; capitalized leases -- lesser of lease life or 20 years. Lease renewal option periods are included in determining leasehold improvement useful lives when, in management's opinion, such renewal options will be exercised.

Repairs and maintenance are charged to operations as incurred. Remodeling costs are generally capitalized.

INTANGIBLE ASSETS

Franchise fees are amortized using the straight-line method over the remaining terms of the franchise agreements, which range from nine to 17 years. Lease acquisition costs are amortized using the straight-line method over the respective lease terms.

Accumulated amortization of these intangible assets totaled $77,000 at December 18, 1995 (Predecessor Company) and $128,000 at January 27, 1997 (Successor Company).

PRE-OPENING COSTS

Pre-opening costs, which represent expenses incurred for hiring and training personnel relating to new restaurants and expenses for promotion of new store openings, are capitalized and amortized over the restaurant's first year of operation.

FRANCHISE EXPENSES

Royalty costs and all other franchise costs are charged to operations as incurred.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses include certain expenses directly related to the Company and other corporate overhead. Allocations of expenses are made by Summit (and subsequent to July 15, 1996 by Summit and CKE) for certain corporate services and overhead incurred on behalf of the Company. Total corporate allocations included in general and administrative expenses in the accompanying combined statements of earnings amounted to approximately $808,000, $951,000, $912,000 and $253,000 for the years ended December 19, 1994 and December 18, 1995 and the period ended July 15, 1996 (Predecessor Company) and the period ended January 27, 1997 (Successor Company), respectively. These allocations were based on, among other things, percentage of revenues, number of stores, number of employees or the amount of capital expenditures in relation to the total of the respective amounts of Summit on a combined basis. Included in the allocation for the period ended January 27, 1997 is $15,000 of general and administrative expenses relating to the two Casa Bonita Restaurants. This allocation was based upon the number of restaurants in the CBI chain. Allocations are made on a basis that management of the Company believes to be reasonable; however, such allocations are not necessarily indicative of the expenses which might have been incurred by the Company had they operated on a stand-alone basis.

F-10

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

INCOME TAXES

The Company accounts for income taxes using the asset and liability method of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under this method, income tax assets and liabilities are recognized using enacted tax rates for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A change in tax rates is recognized in income in the period that includes the enactment date.

The Company files a consolidated income tax return with Summit; accordingly, many of the tax assets or liabilities may be utilized or paid by its parent based upon the consolidated income tax return. In accordance with the tax allocation policy, current income taxes calculated by a subsidiary on an "as if" filing separately basis and subsidiary tax benefits utilized (including certain prior year benefits) by the consolidated group are recorded as amounts due to or from parent.

ADVERTISING EXPENSES

Advertising costs are charged to operations as incurred.

USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these combined financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.

(2) PROPERTY AND EQUIPMENT AND REAL PROPERTY UNDER CAPITALIZED LEASES

The components of property and equipment and real property under capitalized leases are as follows:

                                              PREDECESSOR
                                                COMPANY      SUCCESSOR
                                              -----------     COMPANY
                                               DECEMBER     -----------
                                                  18,       JANUARY 27,
                                                 1995          1997
                                              -----------   -----------
Property and equipment:
  Buildings and leasehold improvements......  $10,444,000   $10,255,000
  Furniture, fixtures and equipment.........    4,446,000     3,012,000
                                              -----------   -----------
                                               14,890,000    13,267,000
  Less accumulated depreciation and
     amortization...........................   (2,273,000)     (837,000)
                                              -----------   -----------
                                              $12,617,000   $12,430,000
                                              ===========   ===========
Real property and equipment under
  capitalized leases........................  $ 2,566,000   $ 2,547,000
Less accumulated amortization...............     (262,000)     (151,000)
                                              -----------   -----------
                                              $ 2,304,000   $ 2,396,000
                                              ===========   ===========

(3) LEASES

The Company occupies certain restaurants under long-term leases expiring at various dates through 2014. Most restaurant leases have renewal options for terms of 5 to 20 years, and substantially all require the

F-11

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

payment of real estate taxes and insurance. Certain leases require for rent to be the greater of a stipulated minimum rent or a specified percentage of sales.

Rent expense for the years ended December 19, 1994, December 18, 1995, the period ended July 15, 1996 (Predecessor Company) and the period ended January 27, 1997 (Successor Company) was approximately $2,477,000, $3,316,000, $1,617,000 and $1,345,000, respectively. Contingent rentals, measured as a percentage of sales, included in rent expense for the years ended December 19, 1994, December 18, 1995, the period ended July 15, 1996 (Predecessor Company) and the period ended January 27, 1997 (Successor Company) was approximately $99,000, $46,000, $28,000 and $55,000, respectively.

Future minimum payments on noncancelable leases as of January 27, 1997 (Successor Company), exclusive of taxes, insurance and percentage rentals are as follows:

                                                                                       FURNITURE,
                                                                                        FIXTURES
                                                                                          AND
                                                              REAL PROPERTY            EQUIPMENT
                                                        --------------------------     ----------
                   TYPE OF PROPERTY                      CAPITAL        OPERATING      OPERATING
------------------------------------------------------  ----------     -----------     ----------
Fiscal year ended January 31:
  1998................................................  $  439,000     $ 2,021,000     $  942,000
  1999................................................     439,000       2,052,000        942,000
  2000................................................     405,000       2,103,000        467,000
  2001................................................     235,000       2,083,000         39,000
  2002................................................     235,000       2,017,000             --
  Thereafter..........................................   2,518,000      18,379,000             --
                                                        ----------     -----------     ----------
          Total minimum lease payments................   4,271,000     $28,655,000     $2,390,000
                                                        ----------     ===========     ==========
  Less amount representing interest...................  (1,662,000)
                                                        ----------
          Present value of minimum lease payments.....   2,609,000
  Less current portion................................    (239,000)
                                                        ----------
          Capital lease obligations, excluding current
            portion...................................  $2,370,000
                                                        ==========

(4) INCOME TAXES

Components of income tax expense are as follows:

                   PREDECESSOR COMPANY                      CURRENT      DEFERRED       TOTAL
----------------------------------------------------------  --------     ---------     --------
Year ended December 19, 1994:
  Federal.................................................  $189,000     $  50,000     $239,000
  State...................................................    49,000        13,000       62,000
                                                            --------        ------      -------
                                                            $238,000     $  63,000     $301,000
                                                            ========        ======      =======
Year ended December 18, 1995:
  Federal.................................................  $132,000     $(115,000)    $ 17,000
  State...................................................    26,000       (21,000)       5,000
                                                            --------     ---------     --------
                                                            $158,000     $(136,000)    $ 22,000
                                                            ========     =========     ========

F-12

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

                                                            CURRENT      DEFERRED       TOTAL
                                                            --------     ---------     --------
Period ended July 15, 1996:
  Federal.................................................  $226,000     $ (55,000)    $171,000
  State...................................................    68,000       (23,000)      45,000
                                                            --------     ---------     --------
                                                            $294,000     $ (78,000)    $216,000
                                                            ========     =========     ========

                    SUCCESSOR COMPANY                       CURRENT      DEFERRED       TOTAL
----------------------------------------------------------  --------     ---------     --------
Period ended January 27, 1997:
  Federal.................................................  $435,000     $(113,000)    $322,000
  State...................................................    56,000        16,000       72,000
                                                            --------     ---------     --------
                                                            $491,000     $ (97,000)    $394,000
                                                            ========     =========     ========

A reconciliation of "expected" income tax expense computed at the U.S. Federal rate of 34% to actual income tax expense follows:

                                                                                              SUCCESSOR
                                                                                               COMPANY
                                                       PREDECESSOR COMPANY                   ------------
                                          ----------------------------------------------        PERIOD
                                           YEAR ENDED       YEAR ENDED      PERIOD ENDED        ENDED
                                          DECEMBER 19,     DECEMBER 18,       JULY 15,       JANUARY 27,
                                              1994             1995             1996             1997
                                          ------------     ------------     ------------     ------------
Computed "expected" income tax
  expense...............................    $258,000         $ 17,000         $186,000         $321,000
State income taxes, net of Federal
  benefit...............................      41,000            3,000           29,000           50,000
Other...................................       2,000            2,000            1,000           23,000
                                            --------          -------         --------         --------
Actual income tax expense...............    $301,000         $ 22,000         $216,000         $394,000
                                            ========          =======         ========         ========

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 18, 1995 (Predecessor Company) and January 27, 1997 (Successor Company) is as follows:

                                              PREDECESSOR       SUCCESSOR
                                                COMPANY          COMPANY
                                              ------------     -----------
                                              DECEMBER 18,     JANUARY 27,
                                                  1995            1997
                                              ------------     -----------
Deferred tax assets:
  Accrued liabilities.......................    $ 78,000        $  65,000
  Building and equipment, depreciation......      20,000          128,000
  Credit carryforwards......................      34,000               --
                                                --------         --------
          Total deferred tax assets.........     132,000          193,000
  Less valuation allowance..................          --               --
                                                --------         --------
          Net deferred tax assets...........     132,000          193,000
Deferred tax liabilities....................      36,000               --
                                                --------         --------
          Net deferred tax assets...........    $ 96,000        $ 193,000
                                                ========         ========

While there can be no assurance that the Company will generate any earnings or any specific level of earnings in future years, management believes it is more likely than not that the Company will realize the majority of the benefit of the existing net deferred tax assets at January 27, 1997, based on the Company's current, historical and future pretax earnings.

F-13

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

(5) EMPLOYEE BENEFIT PLANS

Eligible employees participated in the following Summit employee benefit plans until July 15, 1996 (Predecessor Company). Subsequent to July 15, 1996 (Successor Company), eligible employees of the Company may participate in the employee benefit and retirement plans of CKE.

EMPLOYEE STOCK OWNERSHIP PLAN

Employees participated in Summit's employee stock ownership plan where the Company contributed funds authorized by the Board of Directors of Summit. The plan could purchase shares of Summit's common stock as directed by the Board of Directors. All employees who had one year of service and were over 21 participated in the plan. Participant vesting began after the third year of participation in the plan at 20% per year. Funds contributed to the plan were used to retire debt previously incurred, to pay participants who were entitled to benefits under the plan and to purchase shares of Summit's common stock. Allocated shares within the plan were 92,737 at December 18, 1995 (Predecessor Company). Contributions to the employee stock ownership plan totaled $85,000 for the year ended December 19, 1994 (Predecessor Company). There were no contributions made during the year ended December 18, 1995 (Predecessor Company) and the period ended July 15, 1996 (Predecessor Company). Subsequent to the acquisition of Summit by CKE, Summit commenced actions to terminate this plan.

STOCK OPTION PLANS

Employees and directors participated in Summit's stock option plans to purchase Summit's common stock were granted at the fair market value at the date of grant. Under the plans, options were for a term of not more than ten years. Incentive stock options granted to employees through April 7, 1994, become exercisable over a four-year period. Incentive stock options granted after April 7, 1994 become exercisable over a five-year period.

CKE Restaurants, Inc. assumed the options outstanding under Summit's existing stock option plans. Options under these Summit plans became fully vested on July 15, 1996 (Predecessor Company). No further shares may be granted under these plans.

EXECUTIVE LONG-TERM STOCK AWARD PLAN

Summit had an Executive Stock Award Plan (the Plan) adopted in September 1992 by the Board of Directors and approved in February 1993 by Summit's shareholders. There were 100,000 shares authorized under the Plan to be awarded to key employees of Summit and the Company based on the achievement of certain performance objectives established by the Compensation Committee of the Board of Directors. No shares were awarded under this Plan for the years ended December 19, 1994, December 18, 1995 and the period ended July 15, 1996 (Predecessor Company). This Plan was terminated upon the acquisition of Summit by CKE.

401(K) PLAN

The Company has a 401(k) plan covering all employees who attained age 21 and completed one year of service. The plan allows participants to allocate up to 10% of their annual compensation before taxes for investment in several investment alternatives. The Company provided contributions of $24,000 and $26,000 during the years ended December 19, 1994 and December 18, 1995 (Predecessor Company), respectively. No

F-14

HTB RESTAURANTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF SUMMIT FAMILY RESTAURANTS INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 18, 1995 (PREDECESSOR COMPANY) AND
JANUARY 27, 1997 (SUCCESSOR COMPANY)

contributions were made during the period ended July 15, 1996 (Predecessor Company) or the period ended January 27, 1997 (Successor Company).

(6) RELATED PARTY TRANSACTIONS

The Company participated in the cash management system of Summit through July 15, 1996 (Predecessor Company). The intercompany amounts to and from Summit are non-interest bearing.

Subsequent to July 15, 1996 (Successor Company) the Company participated in the cash management systems of CKE and Summit. Certain amounts relating to the Casa Bonita Restaurants are allocated by CBI. Accounts payable -- trade and accrued liabilities aggregating $337,000 and $839,000, respectively, have been allocated by CBI to the Casa Bonita Restaurants and are included in the accompanying January 27, 1997 combined balance sheet. These allocations are based on a percentage of revenues in the CBI chain.

(7) COMMITMENTS AND CONTINGENCIES

The Company is engaged in ordinary and routine litigation incidental to its business. Management does not anticipate that any resolution will require payments that will have a material effect on the Company's combined statement of operations or financial position or liquidity.

(8) SUBSEQUENT EVENT

On July 28, 1997, CKE formed Star Buffet, Inc. as an indirect wholly-owned subsidiary to acquire the outstanding shares of capital stock of Summit and the Casa Bonita restaurants.

F-15

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Casa Bonita Incorporated:

We have audited the accompanying statement of earnings of Casa Bonita Restaurants (a division of Casa Bonita Incorporated) for the nine months ended September 30, 1996. This financial statement is the responsibility of the Division's management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the results of operations of Casa Bonita Restaurants for the nine months ended September 30, 1996 in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Orange County, California
February 14, 1997

F-16

CASA BONITA RESTAURANTS
(A DIVISION OF CASA BONITA INCORPORATED)

STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1996

Revenues.........................................................................  $8,990,724
                                                                                   ----------
Costs and expenses:
  Food costs.....................................................................   2,144,998
  Labor costs....................................................................   2,913,458
  Occupancy and other expenses...................................................   1,860,411
  General and administrative expenses (notes 2 and 6)............................     335,525
  Depreciation and amortization..................................................     460,411
                                                                                   ----------
          Total costs and expenses...............................................   7,714,803
                                                                                   ----------
          Income from operations.................................................   1,275,921
Other income, net................................................................         779
                                                                                   ----------
          Earnings before pro forma income tax provision.........................   1,276,700
Pro forma income tax provision (note 3)..........................................     511,000
                                                                                   ----------
          Net earnings...........................................................  $  765,700
                                                                                   ==========

See accompanying notes to financial statement.

F-17

CASA BONITA RESTAURANTS
(A DIVISION OF CASA BONITA INCORPORATED)

NOTES TO FINANCIAL STATEMENT
SEPTEMBER 30, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statement includes the accounts of Casa Bonita Restaurants (the Division), a division of Casa Bonita Incorporated (CBI). The Division operates two casual dining Mexican themed restaurants located in Denver, Colorado and Tulsa, Oklahoma. The Division has no separate legal status or existence.

CBI was a subsidiary of Beck Holdings, Inc. (BHI or the Parent -- formerly Casa Bonita Holdings, Inc.), which is wholly owned by Beck Restaurants, Inc. (BRI -- formerly Casa Bonita Restaurants, Inc.). CBI operates approximately 110 restaurants primarily located in Texas and Oklahoma.

CBI maintains a note payable to the Parent. As the Division is not jointly and severally liable for this debt, no debt or related interest expense has been allocated to the Division for the period presented.

On October 1, 1996, CBI was sold to CKE Restaurants, Inc. (see note 7).

FISCAL YEAR

The accompanying financial statement covers the nine months (36 weeks) ended September 30, 1996.

INVENTORIES

Inventories, consisting mainly of food, beverages and supplies, are stated at the lower of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation and amortization is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated useful lives, principally on a straight-line basis for financial reporting purposes, while accelerated methods are used for tax purposes. Leasehold improvements are amortized over the lives of the respective leases or the service lives of the improvements, whichever is shorter. Lease renewal option periods are included in determining leasehold improvement useful lives when, in management's opinion, such renewal options will be exercised.

Leasehold interests are amortized on a straight-line basis over the remaining life of the leases.

Repairs and maintenance are charged to operations as incurred. Remodeling costs are generally capitalized.

PRO FORMA INCOME TAXES

Certain of the assets and liabilities comprising the Division are not stand alone taxable entities. The taxable income from the Division was included in the consolidated Federal tax returns of BRI. For the purposes of the accompanying financial statement, a pro forma income tax provision has been provided at 40% of reported pretax earnings.

ADVERTISING EXPENSES

The Company expenses advertising production costs and media costs as incurred.

F-18

CASA BONITA RESTAURANTS
(A DIVISION OF CASA BONITA INCORPORATED)

NOTES TO FINANCIAL STATEMENT (CONTINUED)
SEPTEMBER 30, 1996

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

(2) EMPLOYEE RETIREMENT PLANS

BHI has a qualified defined contribution retirement plan covering eligible employees of BHI and subsidiaries who have reached the age of 21 and completed one year of service. On April 1, 1990, BHI and subsidiaries adopted a nonqualified defined contribution retirement plan for highly compensated employees as defined. Under these plans, CBI makes discretionary contributions each year. Expense is allocated to the Division in the form of contributions by CBI for these plans. The allocation is based on the level of sales and aggregated approximately $16,000 for the nine months ended September 30, 1996.

(3) PRO FORMA TAXES

The Division reported income before income tax provision for the nine months ended September 30, 1996. For financial reporting purposes, a pro forma tax provision equal to 40% of reported earnings has been provided in the accompanying statement of earnings.

(4) LEASES

The Division leases its restaurant facilities under operating leases covering initial periods of five to ten years with renewal options of five to ten years. In addition to fixed lease obligations, the Division pays a percentage of sales for various restaurants and additional costs for property taxes and certain other expenses. A summary of rental expense for these operating leases for the nine months ended September 30, 1996 follows:

Minimum rentals...................................  $101,000
Contingent rentals................................    51,000
                                                    --------
                                                    $152,000
                                                    ========

(5) CONTINGENCIES

CBI is engaged in various legal proceedings and has certain unresolved claims pending. The ultimate liability, if any, for the aggregate amounts claimed cannot be determined at this time. Management of CBI and the Division, based upon consultation with legal counsel, is of the opinion that there are no matters pending or threatened which are expected to have a material adverse effect on the Division's financial condition, results of operations or liquidity.

(6) TRANSACTIONS WITH AFFILIATES

The Division's corporate administrative functions, including accounting, data processing and other corporate services, were combined with the administrative functions of certain affiliates. The cost of these administrative functions was allocated to divisions or affiliates in proportion to the budgeted net revenues of each division or affiliate, number of units, number of employees or the amount of capital expenditures in relation to the total of the respective amounts on a consolidated basis. Employee retirement plan expense is allocated based on the level of sales. Management believes these allocation methods are reasonable; however,

F-19

CASA BONITA RESTAURANTS
(A DIVISION OF CASA BONITA INCORPORATED)

NOTES TO FINANCIAL STATEMENT (CONTINUED)
SEPTEMBER 30, 1996

such allocated costs may not necessarily be indicative of the cost of obtaining such services if the Division operated on a stand-alone basis. Included in general and administrative expenses for the nine months ended September 30, 1996 is approximately $287,000 of allocated costs.

(7) SALE OF COMPANY

On August 27, 1996, BHI entered into a Stock Purchase Agreement (the Agreement) with CKE Restaurants, Inc., an unrelated third party, to sell BHI's interest in CBI, including the Division. The final closing of the sale occurred on October 1, 1996 at which time CKE Restaurants, Inc. paid $42 million cash for BHI's interest in CBI.

F-20

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Summit Family Restaurants Inc.:

We have audited the accompanying balance sheets of North's Restaurants (a Division of North's Restaurants, Inc.) as of June 30, 1995 and 1996 and December 31, 1996, and the related statements of operations and division's deficit and cash flows for each of the years in the three-year period ended June 30, 1996 and for the six months ended December 31, 1996. These financial statements are the responsibility of North's Restaurants, Inc.'s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of North's Restaurants (a Division of North's Restaurants, Inc.) as of June 30, 1995 and 1996 and December 31, 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 1996 and for the six months ended December 31, 1996 in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Portland, Oregon
May 8, 1997, except as to note 8,
which is as of July 24, 1997

F-21

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

BALANCE SHEETS

ASSETS

                                             JUNE 30,      JUNE 30,     DECEMBER 31,    MARCH 31,
                                               1995          1996           1996           1997
                                            -----------   -----------   ------------   ------------
                                                                                       (UNAUDITED)
Cash and cash equivalents.................  $    36,379   $    40,910   $     38,466   $     35,671
Trade accounts receivable.................       52,728         3,414         11,087          9,793
Inventories...............................       45,431        73,111         68,385         69,473
Preopening costs, net.....................       15,414        33,761             --             --
Other current assets......................           --            --          3,534          3,512
                                            -----------   ------------  ------------   ------------
          Total current assets............      149,952       151,196        121,472        118,449
Property and equipment, net (note 2)......    3,868,699     4,727,210      4,530,228      4,443,228
Other assets..............................       16,146        16,106         16,106         18,051
                                            -----------   ------------  ------------   ------------
                                            $ 4,034,797   $ 4,894,512   $  4,667,806   $  4,579,728
                                            ===========   ============  ============   ============

                                LIABILITIES AND DIVISION'S DEFICIT
Current portion of North's Restaurants,
  Inc. company debt for which Division is
  jointly and severally liable (note 3)...  $   872,016   $ 3,892,082   $ 11,463,301   $ 11,646,084
Accounts payable..........................      433,190       354,557        339,901        353,015
Other accrued expenses....................      231,991       293,205        285,494        306,848
                                            -----------   ------------  ------------   ------------
          Total current liabilities.......    1,537,197     4,539,844     12,088,696     12,305,947
North's Restaurants, Inc. company debt for
  which Division is jointly and severally
  liable, net of debt issuance costs, less
  current portion (note 3)................    7,920,126     8,553,302      1,400,000      1,400,000
                                            -----------   ------------  ------------   ------------
          Total liabilities...............    9,457,323    13,093,146     13,488,696     13,705,947
                                            -----------   ------------  ------------   ------------
Division's deficit:
  Division's equity.......................    3,369,616     4,246,750      4,042,411      3,919,865
  North's Restaurants, Inc. company debt
     for which Division is jointly and
     severally liable, net of debt
     issuance costs (note 3)..............   (8,792,142)  (12,445,384)   (12,863,301)   (13,046,084)
                                            -----------   ------------  ------------   ------------
          Net Division's deficit..........   (5,422,526)   (8,198,634)    (8,820,890)    (9,126,219)
Commitments and contingencies (note 5)
Subsequent event (note 8)
                                            -----------   ------------  ------------   ------------
                                            $ 4,034,797   $ 4,894,512   $  4,667,806   $  4,579,728
                                            ===========   ============  ============   ============

See accompanying notes to financial statements.

F-22

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

STATEMENTS OF OPERATIONS AND DIVISION'S DEFICIT

                                                                               SIX
                                                                              MONTHS         THREE
                                          YEAR ENDED JUNE 30,                 ENDED         MONTHS
                                ----------------------------------------   DECEMBER 31,      ENDED
                                   1994          1995           1996           1996        MARCH 31,
                                -----------   -----------   ------------   ------------      1997
                                                                                          -----------
                                                                                          (UNAUDITED)
Revenues......................  $ 4,676,004   $ 7,762,322   $ 10,533,999   $  4,843,690   $ 2,303,490
                                -----------   -----------   ------------   ------------   -----------
Costs and expenses:
  Food costs..................   (1,646,917)   (2,710,982)    (3,792,056)    (1,797,685)     (869,485)
  Labor costs.................   (1,400,190)   (2,317,741)    (3,203,674)    (1,446,367)     (693,269)
  Occupancy and other
     expenses.................     (811,335)   (1,301,373)    (1,786,573)      (880,150)     (442,249)
  General and administrative
     expenses.................     (408,406)     (810,362)    (1,022,339)      (393,080)     (246,606)
  Depreciation and
     amortization.............     (198,091)     (346,650)      (613,260)      (265,111)     (110,922)
                                -----------   -----------   ------------   ------------   -----------
          Total costs and
            expenses..........   (4,464,939)   (7,487,108)   (10,417,902)    (4,782,393)   (2,362,531)
                                -----------   -----------   ------------   ------------   -----------
Income (loss) from
  operations..................      211,065       275,214        116,097         61,297       (59,041)
Interest expense..............      (80,251)     (212,842)      (459,407)      (273,188)     (132,268)
                                -----------   -----------   ------------   ------------   -----------
Income (loss) before income
  tax expense benefit
  (provision).................      130,814        62,372       (343,310)      (211,891)     (191,309)
Income tax expense benefit
  (provision) (note 4)........      (50,363)      (24,013)       128,558         59,396            --
                                -----------   -----------   ------------   ------------   -----------
Net income (loss).............       80,451        38,359       (214,752)      (152,495)     (191,309)
Division's deficit at
  beginning of period.........   (1,537,726)   (2,434,748)    (5,422,526)    (8,198,634)   (8,820,890)
Contributions
  (distributions).............      (98,026)    2,345,244      1,091,886        (51,844)       68,763
Net additions in North's
  Restaurants, Inc. company
  debt for which Division is
  jointly and severally
  liable......................     (879,447)   (5,371,381)    (3,653,242)      (417,917)     (182,783)
                                -----------   -----------   ------------   ------------   -----------
Division's deficit at end of
  period......................  $(2,434,748)  $(5,422,526)  $ (8,198,634)  $ (8,820,890)  $(9,126,219)
                                ===========   ===========   ============   ============   ===========

See accompanying notes to financial statements.

F-23

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

STATEMENTS OF CASH FLOWS

                                                                                                THREE
                                                                               SIX MONTHS       MONTHS
                                              YEAR ENDED JUNE 30,                 ENDED         ENDED
                                     --------------------------------------   DECEMBER 31,    MARCH 31,
                                       1994         1995           1996           1996           1997
                                     ---------   -----------   ------------   -------------   ----------
                                                                                              (UNAUDITED)
Cash flows from operating
  activities:
  Net income (loss)................  $  80,451   $    38,359   $   (214,752)   $   (152,495)  $ (191,309)
  Adjustments to reconcile net
     income (loss) to net cash
     provided by (used in)
     operating activities:
     Depreciation and
       amortization................    198,091       346,650        613,260         265,111      110,922
     Changes in operating assets
       and liabilities:
       Trade accounts receivable...      1,749       (48,633)        49,314          (7,673)       1,294
       Inventories.................      2,988        (9,265)       (27,680)          4,726       (1,088)
       Preopening costs............    (37,261)      (99,909)      (169,093)         (2,641)          (3)
       Other assets................     42,824        28,379             40          (3,534)      (1,923)
       Accounts payable and accrued
          expenses.................    (65,258)      368,059        (17,419)        (22,367)      34,468
                                     ---------   -----------   ------------     -----------   ----------
          Net cash provided by
            (used in) operations...    223,584       623,640        233,670          81,127      (47,639)
                                     ---------   -----------   ------------     -----------   ----------
Cash flows from investing
  activities:
  Capital expenditures.............   (134,787)   (2,937,638)    (1,321,025)        (31,727)     (23,919)
                                     ---------   -----------   ------------     -----------   ----------
Cash flows from financing
  activities:
  Contributions (distributions)....    (98,026)    2,345,244      1,091,886         (51,844)      68,763
                                     ---------   -----------   ------------     -----------   ----------
          Net increase (decrease)
            in cash and cash
            equivalents............     (9,229)       31,246          4,531          (2,444)      (2,795)
Cash and cash equivalents at
  beginning of period..............     14,362         5,133         36,379          40,910       38,466
                                     ---------   -----------   ------------     -----------   ----------
Cash and cash equivalents at end of
  period...........................  $   5,133   $    36,379   $     40,910    $     38,466   $   35,671
                                     =========   ===========   ============     ===========   ==========
Supplemental disclosure of cash
  flow information:
     Cash paid for:
  Interest.........................  $  45,275   $   184,698   $    242,252    $    136,938   $       --
                                     =========   ===========   ============     ===========   ==========

See accompanying notes to financial statements.

F-24

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1996, DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The financial statements present the financial position and operations of North's Restaurants (the Division), a division of North's Restaurants, Inc. (NRI). The Division consists of seven of NRI's twenty buffet style restaurants located in California, Idaho, Oregon, Utah and Washington. The Division has no separate legal status or existence.

As of June 30, 1995 the Division operated six restaurants and operated seven restaurants at June 30, 1996 and December 31, 1996.

The Division's corporate administrative functions, including accounting, data processing and other corporate services, were combined with the administrative functions of NRI. The cost of these administrative functions was allocated to the Division in proportion to the revenues of the Division in relation to the total revenues of NRI. Management believes this allocation method is reasonable; however, such allocated costs may not necessarily be indicative of the cost of obtaining such services if the Division operated on a stand-alone basis. Included in general and administrative expenses is approximately $403,000, $787,000, $794,000, $371,000 and $235,000 in fiscal years 1994, 1995, 1996, the six months ended December 31, 1996 and the three months ended March 31, 1997 (unaudited), respectively, of allocated costs.

(b) Fiscal Year

The accompanying financial statements cover the fifty-two/fifty-three-week periods ended June 27, 1994, July 3, 1995 and July 1, 1996, the six months
(twenty-four weeks) ended December 16, 1996 and the three months (twelve weeks)
ended March 10, 1997 (unaudited). For clarity of presentation, all periods are presented as if the period ended on the last day of the month-end.

(c) Cash and Cash Equivalents

Cash and cash equivalents include amounts on hand at restaurant locations.

(d) Inventories

Inventories consist of food and beverages and are stated at the lower of cost or market, determined on the first-in, first-out method.

(e) Pre-opening costs

Certain costs associated with hiring, training, and other direct costs as incurred in connection with opening new restaurants are capitalized and amortized over the first year of the restaurants' operations. Accumulated amortization at June 30, 1995 and 1996, December 31, 1996 and March 31, 1997 (unaudited) was approximately $47,000, $42,000, $-0- and $-0-, respectively.

(f) Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization are being accounted for primarily on the straight-line method over the estimated useful lives of the assets for financial reporting purposes. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the term of the related lease. Depreciation begins on construction in progress at the time the related asset is placed in service.

Maintenance and repairs, including replacement of minor items, are expensed as incurred.

F-25

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996, DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)

(g) Advertising Costs

Advertising costs are expensed when incurred. Advertising expense, included in general and administrative expenses, was approximately $79,000, $186,000, $169,000, $72,000 and $34,000 for the years ended June 30, 1994, 1995 and 1996, the six months ended December 31, 1996 and the three months ended March 31, 1997 (unaudited), respectively.

(h) Income Taxes

The Division, or any restaurant individually contained therein, presented in the accompanying financial statements is not a separate legal or taxable entity. The taxable income or loss from the Division is included in the federal and state tax returns of NRI. Income tax expense is calculated on a separate basis as if the Division were a stand alone entity. Any current or deferred assets and liabilities have been recorded through net divisional equity.

(i) Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(j) Financial Instruments

The carrying amounts of cash equivalents, trade accounts receivable, and accounts payable approximate fair value because of the short-term nature of these instruments. The fair value of long-term debt was estimated by discounting the future cash flows using market interest rates and does not differ significantly from the carrying value reflected in the combined balance sheet.

Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

(k) Impairment of Long-Lived Assets

In March 1995, Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", was issued. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During the six months ended December 31, 1996, the Division adopted this statement and determined that no impairment loss need be recognized for property and equipment.

F-26

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996, DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)

(2) PROPERTY AND EQUIPMENT

                                                                             DECEMBER
                                                   JUNE 30,     JUNE 30,       31,       MARCH 31,
                                                     1995         1996         1996         1997
                                                  ----------   ----------   ----------   ----------
                                                                                         (UNAUDITED)
Equipment.......................................  $2,831,595   $3,526,944   $3,553,035   $3,576,954
Leasehold improvements..........................   2,113,275    2,529,255    2,544,379    2,544,379
                                                  ----------   ----------   ----------   ----------
                                                   4,944,870    6,056,199    6,097,414    6,121,333
Less accumulated depreciation...................   1,149,386    1,338,477    1,567,186    1,678,105
                                                  ----------   ----------   ----------   ----------
                                                   3,795,484    4,717,722    4,530,228    4,443,228
Construction in progress........................      73,215        9,488           --           --
                                                  ----------   ----------   ----------   ----------
                                                  $3,868,699   $4,727,210   $4,530,228   $4,443,228
                                                  ==========   ==========   ==========   ==========

(3) LONG-TERM DEBT

NRI and the Division are jointly and severally liable for the outstanding balance of certain debt of NRI. As such, the Division has reported the outstanding balance for this debt in its financial statements, NRI debt for which the Division is jointly and severally liable, as a liability and reduction of the Division's equity. NRI debt for which the Division is jointly and severally liable, net of debt issuance costs, is comprised of the following:

                                                JUNE 30,     JUNE 30,     DECEMBER 31,    MARCH 31,
                                                  1995         1996           1996          1997
                                               ----------   -----------   ------------   -----------
                                                                                         (UNAUDITED)
Note payable, interest due monthly at 2% over
  the bank's prime rate, collateralized by
  all tangible and intangible, real and
  personal property and stock of NRI,
  guaranteed unconditionally by two
  shareholders of NRI, principal payable on
  October 15, 1997...........................  $3,257,507   $ 2,913,757   $  2,863,757   $ 2,863,757
Note payable, interest due monthly at 2% over
  the bank's prime rate, collateralized by
  all tangible and intangible, real and
  personal property and stock of NRI,
  guaranteed unconditionally by two
  shareholders of NRI, principal payable on
  October 15, 1997...........................   1,350,000     5,030,264      5,030,264     5,030,264
Note payable to Pacific Mezzanine Fund,
  interest due quarterly at 13%,
  collateralized by all tangible and
  intangible, real and personal property and
  stock of NRI, principal payable on October
  15, 1997. NRI is in violation of certain
  financial covenants as of December 31,
  1996.......................................   3,281,240     3,403,813      3,665,958     3,688,923
Subordinated debentures, interest due
  quarterly at 10%...........................   1,400,000     1,400,000      1,400,000     1,400,000
Accrued interest.............................      81,395       298,550        434,800       594,618
Debt issuance costs..........................    (578,000)     (601,000)      (531,478)     (531,478)
                                               ----------   -----------    -----------   -----------
          Total long-term debt...............   8,792,142    12,445,384     12,863,301    13,046,084
Less current portion.........................     872,016     3,892,082     11,463,301    11,646,084
                                               ----------   -----------    -----------   -----------
          Total long-term debt, less current
            portion..........................  $7,920,126   $ 8,553,302   $  1,400,000   $ 1,400,000
                                               ==========   ===========    ===========   ===========

F-27

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996, DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)

(4) INCOME TAXES

The (provision) benefit for income taxes consists of the following:

                                                                           SIX MONTHS     THREE MONTHS
                                            YEAR ENDED JUNE 30,              ENDED           ENDED
                                      --------------------------------    DECEMBER 31,      MARCH 31,
                                        1994        1995        1996          1996            1997
                                      --------    --------    --------    ------------    -------------
                                                                                           (UNAUDITED)
Current:
  Federal...........................  $(21,834)   $ 21,834    $     --      $     --         $    --
  State.............................    (3,971)         --          --            --              --
                                      --------    --------    --------      --------         -------
          Total current.............   (25,805)     21,834          --            --              --
                                      --------    --------    --------      --------         -------
Deferred:
  Federal...........................   (20,680)    (43,090)    108,259        50,018              --
  State.............................    (3,878)     (2,757)     20,299         9,378              --
                                      --------    --------    --------      --------         -------
          Total deferred............   (24,558)    (45,847)    128,558        59,396              --
                                      --------    --------    --------      --------         -------
          Total.....................  $(50,363)   $(24,013)   $128,558      $ 59,396         $    --
                                      ========    ========    ========      ========         =======

The (provision) benefit for income taxes vary from the amounts computed by applying the federal statutory rate to income before pro forma taxes as follows:

                                                                            SIX MONTHS
                                                                               ENDED        THREE MONTHS
                                             YEAR ENDED JUNE 30,             DECEMBER           ENDED
                                       --------------------------------         31,           MARCH 31,
                                       1994      1995          1996            1996             1997
                                       -----     -----     ------------     -----------     -------------
                                                                                             (UNAUDITED)
Federal income tax (provision)
  benefit computed at statutory
  rates..............................  (34.0)%   (34.0)%         34.0%           34.0%            34.0%
State taxes, net of federal
  benefit............................   (4.0)     (4.0)           4.0             4.0              4.0
Increase in valuation allowance......     --        --             --            (9.5)           (37.5)
Other................................    (.5)      (.5)           (.5)            (.5)             (.5)
                                       -----     -----           ----            ----            -----
Effective tax rate...................  (38.5)%   (38.5)%         37.5%           28.0%              --%
                                       =====     =====           ====            ====            =====

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

                                                          JUNE 30,          DECEMBER
                                                    ---------------------      31,      MARCH 31,
                                                      1995        1996        1996        1997
                                                    ---------   ---------   ---------   ---------
                                                                                        (UNAUDITED)
Deferred tax assets:
  Net operating loss carryforwards................  $  10,576   $ 214,596   $ 336,950   $ 437,259
                                                    ---------   ---------   ---------   ---------
     Total gross deferred tax assets..............     10,576     214,596     336,950     437,259
  Valuation allowance.............................         --          --     (19,945)    (91,578)
                                                    ---------   ---------   ---------   ---------
     Total deferred tax assets....................     10,576     214,596     317,005     345,681
                                                    ---------   ---------   ---------   ---------
Deferred tax liabilities:
  Property and equipment, principally due to
     differences in depreciation..................   (198,530)   (273,992)   (317,005)   (345,681)
                                                    ---------   ---------   ---------   ---------
     Total gross deferred tax liabilities.........   (198,530)   (273,992)   (317,005)   (345,681)
                                                    ---------   ---------   ---------   ---------
     Net deferred tax liability...................  $(187,954)  $ (59,396)  $      --   $      --
                                                    =========   =========   =========   =========

F-28

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996, DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)

At December 31, 1996, the Division has net operating carryforwards, to be utilized by NRI, for federal and state purposes of approximately $876,000 and $944,000, respectively, which are available to offset future taxable income, through 2011.

(5) COMMITMENTS AND CONTINGENCIES

The Division leases restaurant facilities and equipment under several operating leases, expiring through 2010. Most leases contain renewal options. Minimum rentals under operating leases are as follows:

Year ending December 31:
     1997..............................................    $  570,811
     1998..............................................       565,193
     1999..............................................       563,669
     2000..............................................       574,015
     2001..............................................       563,076
     Thereafter........................................     3,017,420
                                                           ----------
                                                           $5,854,184
                                                           ==========

Each restaurant facility lease contains a percentage rent clause which requires additional rent based on a percentage of gross sales in excess of specified amounts. Total rent expense for all operating leases is comprised of the following:

                                                                             SIX MONTHS
                                                                               ENDED        THREE MONTHS
                                           YEAR ENDED JUNE 30,                DECEMBER         ENDED
                                  --------------------------------------        31,          MARCH 31,
                                    1994         1995           1996            1996            1997
                                  --------     --------     ------------     ----------     ------------
                                                                                            (UNAUDITED)
Minimum rent....................  $215,700     $326,732       $512,485        $258,228        $129,114
Contingent rent.................    63,359       98,253         81,466          32,523          12,646
                                  --------     --------       --------        --------        --------
                                  $279,059     $424,985       $593,951        $290,751        $141,760
                                  ========     ========       ========        ========        ========

The Division is subject to various legal proceedings and certain unresolved claims pending of NRI. The ultimate liability, if any, for the aggregate amounts claimed against NRI cannot be determined at this time. Management of NRI and the Division, based on consultation with legal counsel, is of the opinion that there are no matters pending or threatened which are expected to have a material adverse effect on the Division's financial condition or results of operations.

(6) PROFIT-SHARING PLAN

NRI had a 401(k) profit-sharing plan (the Plan) which covered substantially all of its employees. NRI's annual contribution to the Plan was fixed by a resolution of its Board of Directors. No contributions were made to the Plan for the years 1996 or 1995. The Plan was terminated as of December 29, 1995. Upon termination, all participants became 100% vested. Net plan assets were distributed to participants, according to Plan provisions.

F-29

NORTH'S RESTAURANTS
(A DIVISION OF NORTH'S RESTAURANTS, INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995 AND 1996, DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)

(7) SELECTED FINANCIAL INFORMATION (UNAUDITED)

The following statements of operations are provided for informational purposes and are unaudited:

                                                                             SIXTEEN WEEKS ENDED
                                                     TWELVE MONTHS       ---------------------------
                                                         ENDED            APRIL 8,        APRIL 7,
                                                   DECEMBER 31, 1996        1996            1997
                                                   -----------------     -----------     -----------
Revenues.........................................    $  10,830,045       $ 3,440,533     $ 3,136,413
                                                      ------------       -----------     -----------
Costs and expenses:
  Food costs.....................................       (4,013,395)       (1,275,686)     (1,186,698)
  Labor costs....................................       (3,289,756)       (1,058,763)       (943,729)
  Occupancy and other expenses...................       (1,885,141)         (560,052)       (587,255)
  General and administrative expenses............         (970,170)         (388,315)       (346,197)
  Depreciation and amortization..................         (634,965)         (166,063)       (149,221)
                                                      ------------       -----------     -----------
          Total costs and expenses...............      (10,793,427)       (3,448,879)     (3,213,100)
                                                      ------------       -----------     -----------
     Income (loss) from operations...............           36,618            (8,346)        (76,687)
Interest expense.................................         (554,299)         (188,953)       (184,258)
                                                      ------------       -----------     -----------
     Loss before income tax benefit..............         (517,681)         (197,299)       (260,945)
Income tax benefit...............................          174,000            73,987              --
                                                      ------------       -----------     -----------
     Net loss....................................    $    (343,681)      $  (123,312)    $  (260,945)
                                                      ============       ===========     ===========

(8) SUBSEQUENT EVENT

On July 24, 1997, NRI signed a definitive agreement to sell certain assets and liabilities of the Division to CKE Restaurants, Inc. for $4,500,000, subject to adjustment. The transaction is subject to normal closing conditions and events.

F-30

[Photos of Interior and Exterior of Representative Restaurants]



NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO SUCH CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.


TABLE OF CONTENTS

                                        PAGE
                                        -----
Prospectus Summary.....................     3
Risk Factors...........................     7
Use of Proceeds........................    13
Dividend Policy........................    13
Capitalization.........................    14
Dilution...............................    15
Selected Combined Financial Data.......    16
Selected Financial Data................    17
Selected Pro Forma Financial Data......    18
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations...........................    23
Business...............................    29
Management.............................    39
Certain Transactions...................    44
Principal and Selling Stockholders.....    45
Description of Capital Stock...........    46
Shares Eligible for Future Sale........    47
Underwriting...........................    48
Legal Matters..........................    49
Experts................................    49
Index to Financial Statements..........   F-1


UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL

DEALERS EFFECTING TRANSACTIONS
IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.



2,500,000 SHARES

STAR BUFFET, INC.

COMMON STOCK


PROSPECTUS


EQUITABLE SECURITIES
CORPORATION

EVEREN SECURITIES, INC.

, 1997



PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the sale of the Common Stock being registered hereunder. All of the amounts shown are estimates except for the SEC registration fee and the NASD filing fee.

SEC registration fee......................................  $ 10,455
NASD filing fee...........................................     3,950
Nasdaq National Market application fee....................    27,500
Printing expenses.........................................   125,000
Legal fees and expenses...................................   200,000
Accounting fees and expenses..............................   200,000
Blue sky fees and expenses................................     5,000
Transfer agent and registrar fees.........................     5,000
Miscellaneous.............................................   123,095
                                                            --------
          Total...........................................  $700,000
                                                            ========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

(a) As permitted by the Delaware General Corporation Law, the Certificate of Incorporation of the Registrant (Exhibit 3.1 hereto) eliminates the liability of directors to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a directors, except to the extent otherwise required by the Delaware General Corporation Law.

(b) The Certificate of Incorporation provides that the Registrant will indemnify each person who was or is made a party to any proceeding by reason of the fact that such person is or was a director or officer of the Registrant against all expense, liability and loss reasonably incurred or suffered by such person in connection therewith to the fullest extent authorized by the Delaware General Corporation Law. The Registrant's Bylaws (Exhibit 3.2 hereto) provide for a similar indemnity to directors and officers of the Registrant to the fullest extent authorized by the Delaware General Corporation Law.

(c) The Certificate of Incorporation also gives the Registrant the ability to enter into indemnification agreements with each of its directors and officers. The Registrant has entered into indemnification agreements with certain of its directors and officers (Exhibit 10.5 hereto), which provide for the indemnification of such persons against any an all expenses, judgments, fines, penalties and amounts paid in settlement, to the fullest extent permitted by law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On August , 1997, the Registrant issued 2,600,000 shares of Common Stock to JB's Restaurants, Inc. in exchange for all the issued and outstanding stock of Summit. The foregoing transaction was completed without registration under the Act in reliance upon Section 4(2) of the Act for transactions not involving a public offering, among others, on the basis that such transaction did not involve any public offering and the purchaser was sophisticated with access to the kind of information registration would provide.

II-1


ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

EXHIBIT
  NO.                                        DESCRIPTION
-------    -------------------------------------------------------------------------------
 1.1       Form of Underwriting Agreement.*
 3.1       Certificate of Incorporation of the Registrant.
 3.2       Bylaws of the Registrant.*
 4.1       Form of Common Stock Certificate.*
 5.1       Opinion of Stradling Yocca Carlson & Rauth, a professional corporation.*
10.1       Star Buffet, Inc. 1997 Stock Incentive Plan (the "1997 Plan").*
10.2       Form of Stock Option Agreement for the 1997 Plan.*
10.3       Form of Restricted Stock Purchase Agreement for the 1997 Plan.*
10.4       Form of Indemnification Agreement.
10.5       Management Services Agreement with CKE.
10.6       Form of Franchise Agreement with HomeTown Buffet, Inc.*
10.7       Asset Purchase Agreement with North's Restaurants, Inc. dated July 24, 1997.
10.8       Letter of Intent with Stacey's Buffet, Inc. dated July 18, 1997.*
10.9       Assignment Agreement between CKE and the Company.*
10.10      Headquarters Lease with             dated          , 199 .*
10.11      Contribution Agreement with CKE.*
10.12      Asset Purchase Agreement with Taco Bueno, Inc. dated July   , 1997.*
10.13      Promissory Note with Taco Bueno, Inc.*
21.1       List of Subsidiaries.*
23.1       Consent of Stradling Yocca Carlson & Rauth, a professional corporation (see
           Exhibit 5.1).*
23.2       Consents of KPMG Peat Marwick LLP.
23.3       Consents of director nominees.*
24.1       Power of Attorney (see page II-4).
27.1       Financial Data Schedules.


* To be filed by amendment.

(B) FINANCIAL STATEMENT SCHEDULES

All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been

II-2


advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the Offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Salt Lake City, Utah, on the 28th day of July, 1997.

STAR BUFFET, INC.

By: /s/ ROBERT E. WHEATON
  ------------------------------------
  Robert E. Wheaton
  Chief Executive Officer and
    President

POWER OF ATTORNEY

We, the undersigned directors and officers of Star Buffet, Inc., do hereby constitute and appoint Robert E. Wheaton and Theodore Abajian or either of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names and in the capacities indicated below, any and all amendments (including post-effective amendments) to this Registration Statement, or any related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; and we do hereby ratify and confirm all that the said attorneys and agents, or either of them, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

                   SIGNATURE                                 TITLE                     DATE
-----------------------------------------------  ------------------------------ -------------------

            /s/ WILLIAM P. FOLEY II                  Chairman of the Board      July 28, 1997
-----------------------------------------------
              William P. Foley II

             /s/ ROBERT E. WHEATON                  Chief Executive Officer     July 28, 1997
-----------------------------------------------      President and Director
               Robert E. Wheaton                 (Principal Executive Officer)

             /s/ THEODORE ABAJIAN                   Chief Financial Officer     July 28, 1997
-----------------------------------------------     (Principal Financial and
               Theodore Abajian                  Principal Accounting Officer)

            /s/ C. THOMAS THOMPSON                          Director            July 28, 1997
-----------------------------------------------
              C. Thomas Thompson

II-4


EXHIBIT INDEX

                                                                                  SEQUENTIALLY
EXHIBIT                                                                             NUMBERED
  NO.                                   DESCRIPTION                                   PAGE
-------     --------------------------------------------------------------------  ------------
 1.1        Form of Underwriting Agreement.*....................................
 3.1        Certificate of Incorporation of the Registrant. ....................
 3.2        Bylaws of the Registrant.*..........................................
 4.1        Form of Common Stock Certificate.*..................................
 5.1        Opinion of Stradling Yocca Carlson & Rauth, a professional
            corporation.*.......................................................
10.1        Star Buffet, Inc. 1997 Stock Incentive Plan (the "1997 Plan").*.....
10.2        Form of Stock Option Agreement for the 1997 Plan.*..................
10.3        Form of Restricted Stock Purchase Agreement for the 1997 Plan.*.....
10.4        Form of Indemnification Agreement. .................................
10.5        Management Services Agreement with CKE..............................
10.6        Form of Franchise Agreement with HomeTown Buffet, Inc.* ............
10.7        Asset Purchase Agreement with North's Restaurants, Inc. dated July
            24, 1997. ..........................................................
10.8        Letter of Intent with Stacey's Buffet, Inc. dated July 18, 1997*....
10.9        Assignment Agreement between CKE and the Company.*..................
10.10       Headquarters Lease with             dated          , 199 .*.........
10.11       Contribution Agreement with CKE.*...................................
10.12       Asset Purchase Agreement with Taco Bueno, Inc. dated July   ,
            1997.*..............................................................
10.13       Promissory Note to Taco Bueno, Inc.*................................
21.1        List of Subsidiaries.*..............................................
23.1        Consent of Stradling Yocca Carlson & Rauth, a professional
            corporation (see Exhibit 5.1).*.....................................
23.2        Consents of KPMG Peat Marwick LLP. .................................
23.3        Consents of director nominees.*.....................................
24.1        Power of Attorney (see page II-4). .................................
27.1        Financial Data Schedules............................................


* To be filed by amendment.


EXHIBIT 3.1

CERTIFICATE OF INCORPORATION
OF
STAR BUFFET, INC.

ARTICLE 1

The name of this Corporation is Star Buffet, Inc.

ARTICLE 2

The address of the registered office of the Corporation in the State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805. The name of the Corporation's registered agent at that address is The Prentice-Hall Corporation System, Inc., New Castle County, 1013 Centre Road, Wilmington, Delaware 19805.

ARTICLE 3

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended from time to time.

ARTICLE 4

The total number of shares of all classes of stock which the Corporation shall have authority to issue is 20,000,000, of which (i) 18,500,000 shares shall be designated "Common Stock" and shall have a par value of $0.001 per share; and (ii) 1,500,000 shares shall be designated "Preferred Stock" and shall have a par value of $0.001 per share. The Board of Directors is authorized, subject to limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

(a) The number of shares constituting that series and the distinctive designation of that series;

(b) The dividend rate on the shares of that series, whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series;

(c) Whether that series shall have voting rights, in addition to the voting rights provided by law and, if so, the terms of such voting rights;


(d) Whether that series shall have conversion privileges and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;

(e) Whether or not the shares of that series shall be redeemable and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

(f) Whether that series shall have a sinking fund for the redemption or purchase of shares of that series and, if so, the terms and amount of such sinking fund; and

(g) The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series.

ARTICLE 5

1. BOARD OF DIRECTORS. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors and elections of directors need not be by written ballot unless otherwise provided in the Bylaws. The number of directors of the Corporation shall be fixed from time to time by the Board of Directors either by a resolution or Bylaw adopted by the affirmative vote of a majority of the entire Board of Directors. Notwithstanding the foregoing, during any period in which the holders of any one or more series of Preferred Stock, voting as a class, shall be entitled to elect a specific number of directors by reason of dividend arrearages or other contingencies giving them the right to do so, then and during such time as such right continues, (a) the then otherwise authorized number of directors shall be increased by such specified number of directors and the holders of shares of such series of Preferred Stock, voting as a class, shall be entitled to elect such specified number of directors in accordance with the procedure set forth in the resolution or resolutions of the Board creating such series and providing for the issuance of such shares and (b) each such additional director shall serve until his or her successor shall be elected and shall qualify, or until his or her right to hold such office terminates pursuant to the resolution or resolutions of the Board creating such series of Preferred Stock and providing for the issuance of shares of such series, whichever occurs earlier. Whenever the holders of shares of such series of Preferred Stock are divested of such right to elect directors pursuant to the resolution or resolutions of the Board creating such series and providing for the issuance of such shares, the terms of office of all directors elected by the holders of such series of Preferred Stock pursuant to such rights, or elected to fill any vacancies resulting from the death, resignation or removal of directors so elected by the holders of such series, shall forthwith terminate and the authorized number of directors shall be reduced accordingly.

2. MEETINGS OF STOCKHOLDERS. Meetings of the stockholders may be held within or without the State of Delaware, as the Bylaws may provide. Special meetings of stockholders of the Corporation for any purpose or purposes may be called at any time by a majority of the members of the Board of Directors or by a committee of the Board of Directors that has been duly designated by the Board of Directors and whose power and authority, as provided in a resolution adopted by the Board of Directors or in the Bylaws of the Corporation, includes the power to call such meetings, but such special meetings of stockholders of the Corporation may not be called by any other person or persons or in any other manner; provided, however, that if and to the extent that any special meeting of

2

stockholders may be called by any other person or persons specified in any certificate of designations filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time), then such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified.

3. STOCKHOLDER ACTION BY WRITTEN CONSENT. Any election of directors or other action by the stockholders of the Corporation may be effected at an annual or special meeting of stockholders and may not be effected by written consent without a meeting.

4. CORPORATE RECORDS. The books of the Corporation may be kept (subject to any provision contained in the Delaware Statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or by the Bylaws of the Corporation.

ARTICLE 6

A director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that this provision shall not eliminate or limit the liability of a director (i) for any breach of his duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or
(iv) for any transaction from which the director derives an improper personal benefit. If the General Corporation Law of the State of Delaware is hereafter amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of the directors of the Corporation shall be limited or eliminated to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended from time to time. Any repeal or modification of this Article 6 by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE 7

This Corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request shall advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this Corporation or while a director or officer is or was serving at the request of this Corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided; however, that the foregoing shall not require this Corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this Article 7 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any repeal or

3

modification of the foregoing provisions of this Article 7 shall not adversely affect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification.

ARTICLE 8

In furtherance and not in limitation of the power conferred upon the Board of Directors by law, the Board of Directors shall have power to make, adopt, alter, amend and repeal from time to time Bylaws of this Corporation, subject to the right of the stockholders entitled to vote with respect thereto to alter and repeal Bylaws made by the Board of Directors.

ARTICLE 9

The name and address of the Incorporator of the Corporation is as follows:

Christopher D. Ivey 660 Newport Center Drive Suite 1600
Newport Beach, California 92660-6441

I, THE UNDERSIGNED, being the Incorporator, for the purpose of forming a corporation under the laws of the State of Delaware, do make, file and record this Certificate of Incorporation, do certify that the facts herein stated are true, and accordingly, have hereunto set my hand this 25th day of July, 1997.


Christopher D. Ivey

4

EXHIBIT 10.4

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT ("Agreement") is made on ________, 1997, between STAR BUFFET, INC., a Delaware corporation (the "Company"), and _________________ ("Indemnitee"), an officer and/or member of the Board of Directors of the Company.

WHEREAS, the Company desires the benefits of having Indemnitee serve as an officer and/or director secure in the knowledge that expenses, liabilities and losses incurred by him in his good faith service to the Company will be borne by the Company or its successors and assigns in accordance with applicable law; and

WHEREAS, the Company desires that Indemnitee resist and defend against what Indemnitee may consider to be unjustified investigations, claims, actions, suits and proceedings which have arisen or may arise in the future as a result of Indemnitee's service to the Company notwithstanding that conditions in the insurance markets may make directors' and officers' liability insurance coverage unavailable or available only at premium levels which the Company may deem inappropriate to pay; and

WHEREAS, the parties believe it appropriate to memorialize and reaffirm the Company's indemnification obligations to Indemnitee and, in addition, set forth the indemnification agreements contained herein;

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties agree as follows:

1. INDEMNIFICATION. Indemnitee shall be indemnified and held harmless by the Company to the fullest extent permitted by its Certificate of Incorporation, Bylaws and applicable law, as the same exists or may hereafter be amended, against all expenses, liabilities and loss (including attorneys' fees, judgments, fines, and amounts paid or to be paid in any settlement approved in advance by the Company, such approval not to be unreasonably withheld) (collectively, "Indemnifiable Expenses") actually reasonably incurred or suffered by Indemnitee in connection with any present or future threatened, pending or contemplated investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (collectively, "Indemnifiable Litigation"), (i) to which Indemnitee is or was a party or is threatened to be made a party by reason of any action or inaction in Indemnitee's capacity as a director or officer of the Company, or (ii) with respect to which Indemnitee is otherwise involved by reason of the fact that Indemnitee is or was serving as a director, officer, employee or agent of the Company, or of any subsidiary or division, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Notwithstanding the foregoing, Indemnitee shall have no right to indemnification for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.


2. INTERIM EXPENSES. The Company agrees to pay Indemnifiable Expenses incurred by Indemnitee in connection with any Indemnifiable Litigation in advance of the final disposition thereof, provided that the Company has received an undertaking by or on behalf of Indemnitee, substantially in the form attached hereto as Exhibit A, to repay the amount so advanced to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company under this Agreement or otherwise. The advances to be made hereunder shall be paid by the Company to Indemnitee within twenty (20) days following delivery of a written request therefor by Indemnitee to the Company.

3. PROCEDURE FOR MAKING DEMAND. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address set forth in Section 10 hereof (or such other address as the Company shall designate in writing to Indemnitee). Notice shall be deemed received three business days after the date postmarked and sent by certified or registered mail, properly addressed; otherwise notice shall be deemed received when such notice shall actually be received by the Company. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. Any indemnification provided for in Section 1 shall be made no later than forty-five
(45) days after receipt of the written request of Indemnitee.

4. FAILURE TO INDEMNIFY.

(a) If a claim under this Agreement, or any statute, or under any provision of the Company's Certificate of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company, within forty-five (45) days after a written request for payment thereof has been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 11 of this Agreement, if successful in whole or in part, Indemnitee shall also be entitled to be paid for the expense (including attorneys' fees) of bringing such action.

(b) It shall be a defense to such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standard of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company and Indemnitee shall be entitled to receive interim payments of interim expenses pursuant to Section 2 hereof unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties' intention that if the Company contests Indemnitee's right to indemnification, the question of Indemnitee's right to indemnification shall be for the court to decide, and neither the failure of the Company (including its board of directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its board of directors, any committee or subgroup of the board of directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that


Indemnitee has or has not met the applicable standard of conduct.

5. NOTICE TO INSURERS. If, at the time of the receipt of a notice of a claim pursuant to Section 3 thereof, the Company has director and/or officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

6. RETENTION OF COUNSEL. In the event that the Company shall be obligated to pay Indemnifiable Expenses as a result of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by that Indemnitee with respect to that same proceeding, provided that (i) Indemnitee shall have the right to employ his or her counsel in any such proceeding at Indemnitee's expense, and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel to assume defense of such proceeding, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company.

7. SUCCESSORS. This Agreement establishes contract rights which shall be binding upon, and shall inure to the benefit of, the successors, assigns, heirs and legal representatives of the parties hereto.

8. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company may be required in the future to undertake to the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee, and, in that event, the Indemnitee's rights and the Company's obligations hereunder shall be subject to that determination.

9. CONTRACT RIGHTS NOT EXCLUSIVE. The contract rights conferred by this Agreement shall be in addition to, but not exclusive of, any other right which Indemnitee may have or may hereafter acquire under any statute, provision of the Company's Certificate of Incorporation or Bylaws, agreement, vote of shareholders or disinterested directors, or otherwise.

10. INDEMNITEE'S OBLIGATIONS. The Indemnitee shall promptly advise the Company in writing of the institution of any investigation, claim, action, suit or proceeding which is or may be subject to this Agreement and keep the Company generally informed of, and consult with the Company with respect to, the status of any such investigation, claim, action, suit or proceeding.


Notices to the Company shall be directed to Star Buffet, Inc., 440 Lawndale Drive, Salt Lake City, Utah, 84115-2917, Attn: Chief Executive Officer (or other such address as the Company shall designate in writing to Indemnitee). Notice shall be deemed received three days after the date postmarked if sent by certified or registered mail, properly addressed. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power.

11. ATTORNEYS' FEES. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee with respect to such action, unless as a part of such action, a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement, or to enforce or interpret any other terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee's counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous.

12. SEVERABILITY. Should any provision of this Agreement, or any clause hereof, be held to be invalid, illegal or unenforceable, in whole or in part, the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

13. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether of not similar) nor shall such waiver constitute a continuing waiver.

14. CHOICE OF LAW. The validity, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware.


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

STAR BUFFET, INC.:

By:

Its:

INDEMNITEE:


Name:

EXHIBIT A

UNDERTAKING AGREEMENT

This UNDERTAKING AGREEMENT is made on _______________, 19__, between STAR BUFFET, INC., a Delaware corporation (the "Company") and __________________, an officer and/or member of the board of directors of the Company ("Indemnitee").

WHEREAS, Indemnitee may become involved in investigations, claims, actions, suits or proceedings which have arisen or may arise in the future as a result of Indemnitee's service to the Company; and

WHEREAS, Indemnitee desires that the Company pay any and all expenses (including, but not limited to, attorneys' fees and court costs) actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in defending or investigating any such suits or claims and that such payment be made in advance of the final disposition of such investigations, claims, actions, suits or proceedings to the extent that Indemnitee has not been previously reimbursed by insurance; and

WHEREAS, the Company is willing to make such payments but, in accordance with Section 145 of the General Corporation Law of the State of Delaware, the Company may make such payments only if it receives an undertaking to repay from Indemnitee; and

WHEREAS, Indemnitee is willing to give such an undertaking;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows:

1. In regard to any payments made by the Company to Indemnitee pursuant to the terms of the Indemnification Agreement dated __________, 19__, between the Company and Indemnitee, Indemnitee hereby undertakes and agrees to repay to the Company any and all amounts so paid promptly and in any event within thirty (30) days after the disposition, including any appeals, of any litigation or threatened litigation on account of which payments were made, but only to the extent that Indemnitee is ultimately found not entitled to be indemnified by the Company under the Bylaws of the Company and Section 145 of the General Corporation Law of the State of Delaware, or other applicable law.

2. This Agreement shall not affect in any manner rights which Indemnitee may have against the Company, any insurer or any other person to seek indemnification for or reimbursement of any expenses referred to herein or any judgment which may be rendered in any litigation or proceeding.


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written.

STAR BUFFET, INC.:

By:

Its:

INDEMNITEE:


(Print Name)

EXHIBIT 10.5

MANAGEMENT SERVICES AGREEMENT

THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement") is made and entered into as of this _____ day of ____________, 1997, by and between CKE RESTAURANTS, INC., a Delaware corporation ("Manager"), and STAR BUFFET, INC., a Delaware corporation ("STAR").

RECITALS:

A. Each of the companies listed on Exhibit A attached hereto (individually, an "Operating Company" and collectively the "Operating Companies") is a wholly-owned, direct or indirect subsidiary of STAR. Manager and its subsidiaries employ a staff of administrative and professional personnel that provide for certain administrative support services for certain administrative functions, including, without limitation, management, financial, real estate, purchasing, information technology, employee benefits, human resources and record keeping services (collectively, the "Services"), and Manager incurs expenses incident thereto for the benefit of the Operating Companies and the businesses conducted by them; and

B. STAR desires to engage Manager to perform such Services for the benefit of STAR and the Operating Companies, and Manager desires to perform such Services, on the terms and provisions hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, and for good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Engagement. STAR hereby engages Manager to provide those Services requested from time to time by STAR or any Operating Company, and Manager shall endeavor to render to STAR or such Operating Company those Services requested that Manager determines to be of a nature and extent generally performed by Manager and which can be performed by Manager within its authority from its Board of Directors.

2. Standard of Conduct; Limitation of Liability/Damages. Manager covenants that the Services shall be furnished to STAR and each Operating Company in a professional and diligent manner and in accordance with reasonable requests made by STAR or the Operating Company.

Notwithstanding the foregoing, Manager shall not be liable for any direct, indirect or consequential damages suffered or incurred by STAR or the Operating Company or to any third party, including, without limitation, lost profits arising from or relating to any breach by Manager of its obligations 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 Manager or its agents. In addition, Manager shall not be liable to STAR or any Operating Company or to any third party on account of any action or omission by Manager relating to its performance of the Services based upon incorrect information supplied by STAR or any Operating Company reasonably relied upon by Manager. Nothing herein contained shall


authorize or empower Manager to supervise or manage STAR's personnel or any Operating Company's personnel or to become involved in STAR's or any Operating Company's day-to-day business decisions in the ordinary course of business.

3. Term. The initial term of this Agreement shall commence on September 15, 1997 and shall continue until midnight on September 15, 2002 (the "Initial Term"). Upon the expiration of the Initial Term and of each succeeding term hereunder, this Agreement shall automatically be renewed for an additional term of one (1) year each unless terminated as herein provided, or unless either party shall provide not less than ninety (90) days written notice prior to the expiration of the Initial Term or any renewal term that such party does not intend to renew this Agreement. Notwithstanding the foregoing, either party may terminate this Agreement at any time (i) if the other party breaches the terms and conditions and does not cure any such breach within thirty (30) days after written notice, or (ii) upon ninety (90) days prior written notice to the other party. The termination of this Agreement by or with respect to one or more Operating Companies shall not terminate this Agreement with respect to any other Operating Company.

4. Fees for Services.

(a) In consideration for the Services provided hereunder, STAR agrees to pay to Manager an annual general management fee of $350,000 payable in equal installments ten days following the close of each regular accounting period (each, an "Accounting Period") during the term of this Agreement. Any changes to STAR's current information system or an increase/decrease of 10 units will represent a "significant" change in STAR's operation and upon such significant change, the general management fee will be increased/decreased $25,000. Such management fee may be increased cumulatively not more than 10% per fiscal year at the sole discretion of Manager, effective upon written notice to STAR.

(b) In addition to the payment of management fees as specified in paragraph 4(a) above, STAR shall reimburse Manager for all non-ordinary, out-of-product expenses incurred by or on behalf of Manager or its affiliates in connection with the Services rendered hereunder, including, without limitation, costs of replacement equipment, travel expenses, year-end employee/accounting reporting matters (for example, Form 1099's, W-2's, etc.), and legal and accounting and other professional fees and expenses. All such expenses which exceed $50,000 must be approved by STAR prior to incurring such expense.

(c) Manager shall calculate all management fees and expense reimbursements due to Manager for each Accounting Period hereunder, all of which shall be paid by STAR within [30] days after receipt of Manager's invoice.

5. Representations, Warranties and Covenants of Manager. Manager hereby represents, warrants and covenants to STAR as follows:

(a) Manager is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite power and authority to own and operate its business as presently conducted.

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(b) Manager has full power and authority to execute, deliver and perform this Agreement. he execution, delivery and performance of this Agreement have been duly authorized by Manager and no other action or proceeding in the part of Manager is necessary to authorize this Agreement or the performance thereof. This Agreement has been duly and validly executed and delivered by Manager and constitutes a legal, valid and binding obligation of Manager, enforceable in accordance with its terms.

(c) The execution, delivery and performance of this Agreement by Manager will not (with or without the giving of notice or the lapse of time or both) (i) violate or require any consent or approval under any applicable provision of any order, injunction, rule, regulation or law; (ii) require any consent under, conflict with, constitute a default under, or otherwise violate the terms of any agreements, instruments or other obligations to which Manager is a party or by which it or any of its property may be bound or affected; or
(iii) require any consent or approval by, notice to or registration with any governmental authority. In the event at any time during the term of this Agreement any consents, approvals, notices or registrations are required in connection with the performance of this Agreement, Manager shall take all necessary and appropriate steps to obtain or file such consents, approvals, notices or registrations.

6. Representations, Warranties and Covenants of STAR. STAR hereby represents, warrants and covenants to Manager as follows:

(a) STAR and each Operating Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all requisite power and authority to own and operate the business which it intends to operate.

(b) STAR has full power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement have been duly authorized by STAR and no other action or proceeding on the part of STAR is necessary to authorize this Agreement or the performance thereof. This Agreement has been duly and validly executed and delivered by STAR and constitutes a legal, valid and binding obligation of STAR, enforceable in accordance with its terms.

(c) The execution, delivery and performance of this Agreement by STAR will not (with or without the giving of notice or the lapse of time or both) (i) violate or require any consent or approval under any applicable provision of any order, injunction, rule, regulation or law; (ii) require any consent under, conflict with, constitute default under, or otherwise violate the terms of any agreements, instruments or other obligations to which STAR is a party or by which it or any of its property may be bound or affected; or (iii) require any consent or approval by, notice to or registration with any governmental author it. In the event at any time during the term of this Agreement any consents, approvals, notices or registrations are required in connection with the performance of this Agreement, STAR shall take all necessary and appropriate steps to obtain or file such consents, approvals, notices or registrations.

7. No Right to Participate in Management; Independent Contractors. This Agreement shall not be construed to grant Manager any right to control or participate in the management or financial decisions of STAR or the Operating Companies in the ordinary course of

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business. In the rendition of the Services, Manager shall provide the Services based upon compliance with policies and procedures established by the Board of Directors and officers of STAR or the Operating Companies. STAR and Manager agree that, with respect to the subject matter of this Agreement, neither party is an agent, employee or representative of the other and that nothing contained herein shall be construed to create an agency, employment or representative relationship or a relationship of partners or joint venturers.

8. Indemnification. Subject to the other terms and conditions hereof, STAR agrees to indemnify and hold harmless Manager, and Manager agrees to indemnify and hold harmless STAR (as the context requires, the "Indemnifying Party" and the "Indemnified Party") of and from any and all claims, demands, causes of action, liabilities, judgments, losses, deficiencies and expenses, including court costs and reasonable attorneys' fees) incurred by the Indemnified Party and arising out of or in any manner, directly or indirectly, relating to the performance by the Indemnified Party of its obligations hereunder (other than and excluding the respective indemnification obligations under this Section) or relating to any act or omission of the Indemnifying Party's employees or agents. Anything herein to the contrary notwithstanding, no party shall be obligated to indemnify any other party hereto with respect to any expenses, loss or damages incurred by the Indemnified Party to the extent that the Indemnified Party has insurance coverage with respect to such expenses, loss or damages.

9. General Terms.

(a) This Agreement shall not be assignable by any party, in whole or in part, without the prior written consent of any other affected party.

(b) This Agreement sets forth the entire understanding and agreement of the parties with respect to the subject matter hereof. except as otherwise expressly provided herein, this Agreement may not be changed, modified or amended except in a writing signed by the affected parties. All previous negotiations and understandings among the parties are merged into this Agreement, and there are no warranties, agreements or understandings, express or implied, except such as are expressly set forth herein.

(c) Any notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if hand-delivered, delivered by facsimile or overnight courier, or if mailed by certified or registered mail, postage prepaid and return receipt requested, addressed as set forth hereinafter (or at such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof):

To Manager:                 CKE RESTAURANTS, INC.
                            1200 North Harbor Boulevard
                            Anaheim, California 92803
                            Attention:  General Counsel

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To STAR or any
Operating Company:          STAR BUFFET, INC.
                            440 Lawndale Drive
                            Salt Lake City, Utah 84115-2197
                            Attention: Ted Abajian

(d) This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective successors and permitted assigns, wherever the context admits or requires.

(e) This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.

(f) Any waiver of any provision of this Agreement by either party may be made only by written notice to the other. No waiver of any breach or default hereunder shall be deemed to constitute a waiver of any other breach or default not of the same breach or default on a future occasion.

(g) This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of California.

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

CKE RESTAURANTS, INC.

By:

Name:
Title:

STAR BUFFET, INC.

By:

Name:
Title:

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EXHIBIT A

OPERATING COMPANIES

Summit Family Restaurants, Inc.

HTB Restaurants, Inc.


EXHIBIT 10.7

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

NORTH'S RESTAURANTS, INC.,

AS SELLER,

AND

CKE RESTAURANTS, INC.,

AS BUYER

DATED JULY 24, 1997


ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of July 24, 1997, by and between NORTH'S RESTAURANTS, INC., an Oregon corporation (the "Seller"), and CKE RESTAURANTS, INC., a Delaware corporation ("CKE" or the "Buyer").

R E C I T A L S

A. Seller is engaged in the business of owning and operating JJ North's Grand Buffet restaurants at the locations set forth on Exhibit A hereto (the "Restaurants") and franchising JJ North's Grand Buffet and North's Chuck Wagon restaurants at the locations set forth in Exhibit A-1 hereto (collectively, the "Business").

B. Buyer desires to purchase from Seller, and Seller desires to sell and transfer to Buyer, the assets used in the operation of the seven Restaurants identified on Exhibit B hereto (the "Purchased Restaurants"), including, without limitation, all right, title and interest of Seller in and to substantially all of the assets related to the ownership and operation of such Purchased Restaurants, and, in connection therewith, Buyer is willing to assume certain liabilities of Seller relating to such Purchased Restaurants.

C. Concurrently herewith, and as a condition to this Agreement, Buyer and Seller are executing: (1) an Option Agreement, pursuant to which Buyer shall have the option to purchase nine additional restaurants; (2) a Stock Purchase Warrant, pursuant to which Seller is entitled to purchase Common Stock of Star Buffet, Inc.; (3) a Business Services Agreement, pursuant to which Buyer will provide certain services to Seller; and (4) a License Agreement, pursuant to which Buyer grants Seller a license to use the Intangible Property Rights (as defined below). Copies of the Option Agreement, Stock Purchase Warrant, Business Services Agreement and License Agreement are attached hereto as Exhibits D, F, G and H, respectively, and are incorporated by reference herein.

NOW, THEREFORE, in consideration of the terms, covenants, and conditions hereinafter set forth, the parties hereto agree as follows:

A G R E E M E N T

1. PURCHASED ASSETS. Subject to the terms and conditions of this Agreement, Buyer hereby agrees to purchase from Seller, and Seller hereby agrees to sell, transfer and assign to Buyer, free and clear of any and all Liens and Encumbrances (as hereinafter defined), all of Seller's right, title and interest in and to assets that are related to, used in the operation of or have been generated by the Purchased Restaurants (collectively, the "Purchased Assets") including, but not limited to, the following:

1.1 All of the equipment, furniture, fixtures, trade fixtures, signs, sign poles, machinery, kitchen equipment, computers, cash registers, menus, uniforms, small equipment, small wares and other tangible personal property used in connection with the operation of the Purchased Restaurants, wherever located and owned by Seller on the Closing Date, including, without limitation, those assets identified on Schedule 1.1 attached hereto (the "Fixed Assets");

1.2 All inventory of Seller purchased for use in connection with the Purchased Restaurants, wherever located and owned by Seller on the Closing Date (the "Inventory"), including, without limitation, the Inventory identified on Schedule 1.2 hereto;

1.3 All of the agreements relating to the Purchased Restaurants under which Seller owns or holds any leasehold interest in real property (each, a "Real Property Lease"), including any buildings and improvements thereon, or leases in personal property, whether tangible or intangible (each a "Personal Property Lease") (collectively, the "Leases"), a true and complete list of which is set forth in Schedule 1.3 hereto;

1.4 All of the agreements, contracts, licenses, instruments, commitments and understandings, written or oral, that (in addition to the Leases) are related to the Purchased Restaurants and listed (or, in the case of oral agreements or understandings, that are described) under the caption "Assigned Contracts" in Schedule 1.4 attached hereto (collectively, the "Assigned Contracts");

1.5 All rights in and to any governmental and private permits, licenses, certificates of occupancy, franchises and authorizations, to the extent assignable, used in or relating to the Purchased Restaurants;

1.6 All rights in and to any processes, recipes, menus, formulations, methods, software (including documentation), technology, know-how, formulae, trade secrets, trade dress, inventions, patents, copyrights, copyright registrations, trade names, trademarks and service marks (and federal and state registrations thereof), and all applications therefor, owned or held by Seller and used in connection with the operation of or relating to the Restaurants (collectively, the "Intangible Property Rights"), which are more fully described in Schedule 1.6 and which shall include, without limitation, all goodwill associated therewith;

1.7 (intentionally omitted);

1.8 All financial books and accounting records, and all files, lists, publications, and other records and data used in or relating to the Purchased Restaurants, including, without limitation, lists of suppliers and distributors and related files, environmental records, price lists, marketing plans, sales records, labor relations and employee compensation records, and maintenance records, regardless of the medium on which such information is stored or maintained;

1.9 All cash on hand at the Purchased Restaurants as of the Closing Date;

1.10 All prepaid fees and deposits associated with the Leases and the utilities used in connection with the Purchased Restaurants, which are set forth in Schedule 1.10 attached hereto;

1.11 Any cause of action, claim, suit, proceeding, judgment or demand, of whatsoever nature, of or held by Seller against any third parties arising out of the Purchased Assets or the Purchased Restaurants;

1.12 (intentionally omitted); and

1.13 All goodwill associated with the Purchased Restaurants and the Purchased Assets, including any of the Intangible Property Rights.

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2. EXCLUDED ASSETS. Seller is not selling, and the Purchased Assets do not include, the following assets (the "Excluded Assets"):

2.1 Any corporate and financial records of Seller; other than with respect to the Purchased Restaurants, provided, however, that Buyer shall be entitled to receive copies of the same to the extent reasonably necessary for any purpose;

2.2 Any rights under operating contracts, other than the Assigned Contracts;

2.3 Any prepaid expenses, preopening costs or loan acquisition fees except as set forth on Schedule 1.10;

2.4 Any assets (other than Intangible Property Rights) used in connection with Restaurants other than Purchased Restaurants, which are specifically set forth on Schedule 2.4 hereto; and

2.5 Any contracts or agreements pursuant to which Seller has granted any person or entity any franchise, license or other right to operate a Restaurant.

3. OBLIGATIONS BEING ASSUMED; LIABILITIES NOT BEING ASSUMED.

3.1 ASSUMED OBLIGATIONS. Buyer hereby agrees to assume only: (i) those liabilities and obligations specifically set forth in Schedule 3.1 including, but not limited to, accrued vacation and all disclosed, liquidated trade payables relating to the Purchased Restaurants; (ii) those executory obligations arising after the Closing Date under the Assigned Contracts; and
(iii) the obligations arising after the Closing Date under the Leases (collectively, the "Assumed Obligations"). Except as set forth in Schedule 3.1, Seller represents and warrants that Seller is not in default of any Assumed Obligation, and Buyer shall not be obligated to assume any Assumed Obligation which is in default as of the date hereof.

3.2 LIABILITIES NOT BEING ASSUMED. Except for the Assumed Obligations, Seller agrees that Buyer shall not be obligated to assume or perform and is not assuming or performing any, and Seller shall remain responsible for and shall indemnify, defend (with counsel reasonably acceptable to Buyer and paid for by Seller) and hold harmless Buyer from and against all, liabilities and obligations of Seller, whether known or unknown, and regardless of when such liabilities or obligations may arise or may have arisen or when they are or were asserted (the "Retained Liabilities"), which shall include, without limitation, any and all of the following obligations or liabilities of Seller:

(a) Any compensation or benefits payable to employees of Seller, other than payroll expenses expressly assumed and listed on Schedule 3.1, including without limitation, any liabilities arising under any employee pension or profit sharing plan or other employee benefit plan or retirement plan and any of Seller's obligations for insurance, sick pay or any non-cash employee compensation arrangement;

(b) Subject to the proration of real and personal property taxes at Closing relating to the Purchased Restaurants, all federal, state, local, foreign or other taxes that have arisen out of the Restaurants or may arise hereafter out of Seller's other operations;

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(c) Any intercompany obligations between Seller and any of its subsidiaries or affiliates;

(d) Any Liens or Encumbrances on any of the Purchased Assets and all obligations and liabilities secured thereby that are not set forth on Schedule 3.1 hereto;

(e) All obligations of Seller, either for borrowed money or incurred in connection with the purchase, lease or acquisition of any assets, that are not set forth on Schedule 3.1 hereto (collectively, the "Retained Debt");

(f) Any accounts or notes payable of Seller that are not set forth on Schedule 3.1 hereto (the "Retained Payables");

(g) Any claims, demands, actions, suits or legal proceedings that have arisen or may arise hereafter from or in connection with Seller's operation of the Restaurants, including, but not limited to, those arising out of any act or omission or default of Seller under any Assigned Contracts, regardless of when such liability was incurred or when the obligation is asserted, those set forth in Schedule 6.15, or arising from any business or business activities engaged in by Seller other than in connection with the Purchased Restaurants, whether engaged in prior to or after the date hereof, and whether such claims, demands, actions, suits or legal proceedings are presently pending or threatened or are threatened or asserted at any time after the date hereof;

(h) Any obligations under any employment or consulting agreement, or any union or other organized labor obligation, whether written or oral, that is not listed on Schedule 3.1 and any liabilities or obligations arising out of the termination by Seller of any of its employees in anticipation or as a consequence of, or following, consummation of the transactions contemplated hereby; and

(i) Any obligations or liabilities arising out of or relating to the Excluded Assets.

4. PURCHASE PRICE AND PURCHASE PRICE ADJUSTMENT;TERMS OF PAYMENT.

4.1 PURCHASE PRICE. In addition to the assumption by Buyer of the Assumed Obligations, the aggregate purchase price for the Purchased Assets shall be Four Million Five Hundred Thousand Dollars ($4,500,000) plus the Purchased Restaurants' cash on hand as of the Closing (as defined below), lease deposits identified in Schedule 1.10 and Inventory valued at Seller's cost acquired by Buyer at the Closing minus the aggregate amount of all trade payables and payroll obligations assumed by Buyer at the Closing, as set forth on Schedule 3.1 hereto (the "Purchase Price").

4.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by Buyer to Seller as follows:

(a) At the Closing (as defined below) Buyer shall, at Buyer's discretion, either (i) assume the principal amount of $4,000,000 under that certain Promissory Note (the "Note") executed by Seller in favor of U.S. Bank of Oregon ("U.S. Bank"), pursuant to that certain Loan Agreement dated as of February 27, 1995, as modified by that certain Modification Agreement dated as of December 7, 1995, between Seller and U.S. Bank (the "Seller Credit Agreement") or (ii) make a cash payment in the amount of $4,000,000 to U.S. Bank to reduce the outstanding principal under the Seller Credit Agreement. In the event that Buyer assumes the principal amount of $4,000,000 pursuant to clause
(i) above, concurrently

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with the Closing, Seller and Buyer shall execute and deliver an Assignment and Assumption Agreement (the "Assumption Agreement") in a form mutually agreeable to the parties. The parties agree and acknowledge that the Buyer's assumption of an additional $3,000,000 of outstanding principal under the Note issued pursuant to the Seller Credit Agreement, as described in Section 9.8 below, shall not constitute a part of the Purchase Price payable to Seller for the Purchased Assets.

(b) At the Closing, Buyer shall pay to Seller by wire transfer of immediately available funds to an account designated by Seller the sum of $500,000, as adjusted in accordance with Section 4.1 above, which amount shall be used by Seller to pay trade payables and payroll obligations not otherwise assumed by Buyer at the Closing.

4.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among the Purchased Assets as set forth in Exhibit C attached hereto, subject to adjustment by mutual agreement of the parties. Each of the parties, when reporting the transactions consummated hereunder in their respective Tax Returns (as hereinafter defined), shall allocate the Purchase Price paid or received, as the case may be, in a manner that is consistent with the Purchase Price allocation set forth in Exhibit C hereto, as adjusted. Additionally, each of the parties will comply with, and furnish the information required by,
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and any regulations thereunder.

5. CLOSING.

Provided that all conditions precedent set forth in this Agreement have been satisfied or waived, the closing of the transactions contemplated hereby (the "Closing") shall occur at 10:00 a.m. Pacific Daylight Savings Time within three (3) business days following the satisfaction or waiver of all conditions to closing set forth herein (the "Closing Date") at the offices of Stradling, Yocca, Carlson & Rauth, a Professional Corporation, located 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660, unless another time or place is mutually agreed upon by the parties; provided, however, that in no event shall the Closing Date be a date after December 31, 1997.

6. REPRESENTATIONS AND WARRANTIES OF SELLER.

Except as set forth in disclosure schedules (the "Seller's Disclosure Schedules") to be prepared by Seller and delivered to Buyer no later than fourteen calendar days from the execution and delivery of this Agreement, Seller hereby represents and warrants to Buyer as follows:

6.1 AUTHORITY AND BINDING EFFECT.

(a) Seller has the full power and authority to execute and deliver this Agreement and the ancillary agreements to which it will be a party. This Agreement and the ancillary agreements, and the consummation by Seller of its respective obligations contained herein and therein, have been duly authorized by all necessary actions of Seller and such Agreements have been duly executed and delivered by Seller.

(b) This Agreement is, and the ancillary agreements, when executed and delivered by Seller, will be, binding agreements of Seller enforceable against it in accordance with their respective terms, except as enforceability may be limited by (i) bankruptcy, insolvency, moratorium or

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other similar laws affecting creditors' rights generally, and (ii) general principles of equity relating to the availability of equitable remedies.

(c) Except as set forth in Schedule 6.1(c), it is not necessary for Seller to take any action or to obtain any approval, consent or release by or from any third persons, governmental or other, to enable Seller to enter into or perform his obligations under this Agreement and the ancillary agreements.

6.2 ORGANIZATION AND STANDING.

(a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon. Seller is duly licensed or qualified to transact business as a foreign corporation in each of the jurisdictions in which a Purchased Restaurant is located, and neither the scope of Seller's business, nor the location of any of its assets, properties or employees, requires that Seller be licensed or qualified to transact business in any other jurisdiction. Seller has the requisite corporate power and authority to operate the Purchased Restaurants as now conducted and to own or lease (as the case may be) the Purchased Assets, and to use such Purchased Assets in the operation of the Purchased Restaurants;

(b) No actions or proceedings have been commenced or threatened against Seller that, if adversely determined, and no agreements or transactions have been entered into by any of Seller that, if consummated, would give rights to any person, other than Buyer, in or to acquire any of the Purchased Assets or otherwise interfere with the consummation of the transactions contemplated by this Agreement.

6.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer true and correct copies of the audited financial statements of Seller consisting of balance sheets and related statements of income and cash flows as of and for each of the years in the three-year period ended June 30, 1996 (the "Financial Statements"). True and correct copies of the Financial Statements, are attached as Schedule 6.3 hereto. The Financial Statements were prepared in accordance with GAAP, consistently applied, and fairly present the financial condition of Seller and the results of its operations as at the relevant dates thereof and for the respective periods covered thereby. Seller has also delivered true and correct copies of its internal financial statements and records relating to the results of operations of each of the Purchased Restaurants as of and for the periods covered by the Financial Statements and for any subsequent periods, which fairly present the results of operations of such Purchased Restaurants for such periods.

6.4 UNDISCLOSED LIABILITIES. Except as set forth in Schedule 6.4, Seller does not have any debts, obligations, liabilities or commitments of any nature arising out of or relating to the Restaurants, whether due or to become due, absolute, contingent or otherwise, that, in accordance with GAAP, should be disclosed in a balance sheet or the footnotes thereto, and are not shown on the 1996 Balance Sheet (the "Undisclosed Liabilities"), other than liabilities incurred after March 31, 1997 in the ordinary course of the business of the Restaurants and consistent with past practice which, in any event, are not material in amount and have not had and are not expected to have, individually or in the aggregate, a Material Adverse Effect on the Restaurants. As to each Undisclosed Liability set forth on Schedule 6.4, Seller has provided the following information in or as an attachment to such Schedule 6.4: (i) a summary description of such Undisclosed Liability, together with copies of all relevant documentation relating thereto, the amounts claimed and any other action or relief sought and, the identity of the claimant and of any other parties involved party and, if the Undisclosed Liability is one

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that may arise from a suit, action or other proceeding, the court or agency in which such suit, action or other proceeding is being prosecuted, and (ii) the best estimate of Seller of the maximum amount, if any, which is likely to become payable with respect to any such contingent Undisclosed Liability. For purposes hereof, if no written estimate is provided, such best estimate shall be deemed to be zero.

6.5 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 6.5, since December 31, 1996, there has not been:

(a) The execution of or commencement of performance by Seller under any default or breach, or anticipated default or breach, or any amendment, termination or revocation or, to the knowledge of Seller, any threatened amendment, termination, or revocation of, any of the Assigned Contracts or the Leases to which Seller now is, or at any time since January 1, 1994 was, a party;

(b) Any actual or threatened amendment, termination or revocation of any license, permit or franchise required for the continued operation by Seller of any of the Purchased Restaurants;

(c) Any sale, transfer, or other disposition of, or the incurrence or imposition of any Lien or Encumbrance of any kind on or affecting, any of the Purchased Assets except (i) sales or utilization of inventory and obsolete equipment in the ordinary course of business and consistent with past practices of the Seller and (ii) Liens for current taxes not yet due and payable;

(d) Any disputes with, or any action of or notice from the suppliers of the Restaurants which has led or could lead to a reduction in or termination of the supplies to the Restaurants by any such suppliers, or to a decrease in contracted rates of payment under any sales contract, rental agreement or service contract under which Seller purchases goods or services;

(e) Any damage, destruction or loss, whether or not covered by insurance, of any of the Purchased Assets in an amount that exceeds $10,000 or which adversely affects Seller's ability to continue to conduct the Purchased Restaurants in any material respect as the Purchased Restaurants were conducted during the year ended December 31, 1996;

(f) The incurrence by Seller of any indebtedness of more than $5,000 individually or $10,000 in the aggregate, either for borrowed money or in connection with any purchase or other acquisition of assets, or otherwise for the operation of the Purchased Restaurants, that is not reflected in the 1996 Balance Sheet;

(g) Any purchase or lease, or commitment for the purchase or lease, of equipment, machinery leasehold improvements or other capital items not disclosed in the Financial Statements which involves amounts exceeding $5,000 individually or $10,000 in the aggregate, or which is in excess of or represents a departure from the normal, ordinary and usual requirements of the Restaurants;

(h) Any increase in salaries or wages other than in the ordinary course of business and there has been no increase in benefits of or the awarding or payment of any bonuses to any employees, the adoption of any new or amendment of any existing employee benefit plan, or the execution of any new, or the renewal, extension, or amendment of any existing, employment or consulting agreements relating to the Purchased Restaurants;

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(i) The entry or violation of any judgment, order, writ or decree that has had or could reasonably be expected to have a Material Adverse Effect on Seller or on the Purchased Restaurants;

(j) The threat, assertion or commencement of any legal action or other proceeding or investigation against Seller or the Restaurants which, if adversely determined, could reasonably be expected to have a Material Adverse Effect on Seller or the Restaurants or the occurrence of any event that could reasonably be expected to result in the commencement of any such legal action or other proceeding or investigation; or

(k) The occurrence of any other event or circumstance which has had or could reasonably be expected to have a Material Adverse Effect on Seller or on the Restaurants.

6.6 THE PURCHASED ASSETS.

(a) Fixed Assets. There is contained in Schedule 1.1 a list of all of the Fixed Assets used in the Purchased Restaurants. To the best of Seller's knowledge, the Fixed Assets are in good working order and condition, ordinary wear and tear excepted, have been properly maintained, are suitable for the uses for which they are being utilized in the Purchased Restaurants, do not require more than regularly scheduled maintenance to keep them in good operating condition and comply with all requirements under applicable laws, regulations and licenses which govern the use and operation thereof.

(b) The Leases.

(i) Schedule 1.3 contains a complete and accurate list, and Seller has furnished to Buyer accurate and complete copies, of all of the Real Property Leases and Personal Property Leases related to the Purchased Restaurants, as amended to date, together with a brief description of (A) each of the real properties that are leased by Seller under the Real Property Leases (the "Leased Properties"), including the respective addresses and the names and addresses of the landlords thereof, (B) any improvements made by Seller to any of the Leased Properties that will not revert to any of the landlords upon termination of the Real Property Leases and (C) the costs or expenses, if any, necessary for the assignment by Seller to Buyer of the Leases. Seller has delivered to Buyer accurate and complete copies of all environmental studies and reports with respect to any of the Leased Properties that are in the possession of or are readily available to Seller. The zoning of each of the Leased Properties permits the presently existing improvements thereon and continuation of the business presently conducted thereon and no changes therein are pending or are threatened. No condemnation or similar proceedings are pending or, to the best knowledge of Seller, threatened against any of the Leased Properties. Seller does not own any fee interest in any real property relating to or used for the Purchased Restaurants.

(ii) Seller is not in default, and no facts or circumstances have occurred which, with the passage of time or the giving of notice, or both, would constitute a default, under any of the Leases and the assignment by Seller to Buyer of the Leases included in the list of Assigned Contracts on Schedule 1.4 will not adversely affect Buyer's quiet enjoyment and use, without disturbance, of the Leased Properties or of the personal properties or assets that are the subject of the Personal Property Leases (the "Leased Personal Property"). None of the Leases contains any provisions which, after the date hereof, would (A) hinder or prevent Buyer from continuing to use any

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of the Leased Properties or Leased Personal Property in the manner in which they are currently used, or (B) impose any additional costs (other than scheduled rental increases or except as set forth on Schedule 1.3 hereto) or burdensome requirements as a condition to their continued use which are not currently in effect. Except as otherwise set forth in Schedule 1.3 hereto, none of the Purchased Assets are held under, or used by Seller pursuant to, any lease or conditional sales contract.

(c) Intangible Property Rights. Except as set forth in Schedule 6.6(c), to the best of Seller's knowledge, Seller has not infringed, and Seller is not now infringing, on any patent, trade name, trade dress, trademark, service mark, copyright, trade secret, technology, know-how or process belonging to any other person, firm or corporation. Seller has not received any written notice or other indication of any such claim of infringement. Seller owns, or holds adequate licenses or other rights to use, all Intangible Property Rights used in or necessary for the operation of the Restaurants as now conducted and, to the best of Seller's knowledge, such use does not and will not conflict with, infringe on or otherwise violate any rights of others. Except as disclosed in Schedule 6.6(c), all of such licenses and rights are transferable to Buyer without cost or liability to Buyer and will be included in the Purchased Assets being sold to Buyer hereunder.

(d) Title to and Adequacy of Purchased Assets. Except as disclosed on Schedule 6.6(d) hereto, Seller has, and on the Closing Date will convey and transfer to Buyer, good, complete and marketable title to all of the Purchased Assets, free and clear of all mortgages, security interests, liens, options, pledges, equities, claims, charges, restrictions, conditions, conditional sale contracts and any other encumbrances or adverse interests of any kind or nature whatsoever (collectively "Liens or Encumbrances"). Except as set forth on Schedule 6.6(d), all of the Purchased Assets are in the exclusive possession and control of Seller and Seller has the unencumbered right to use, and to sell to Buyer in accordance with the terms and provisions of this Agreement, all of the Purchased Assets without interference from and free of the rights and claims of others. The Purchased Assets constitute all the assets, properties, rights, privileges and interests necessary for Buyer to own and operate the Purchased Restaurants.

6.7 LABOR AND EMPLOYMENT AGREEMENTS.

(a) Schedule 6.7 sets forth the name of each employee of the Purchased Restaurants, together with a description of all compensation and benefits that are payable to such individuals as a result of their employment by or association with Seller. Seller also has furnished to Buyer a true and complete copy of its employee handbook. Buyer shall not have any obligation to continue, nor shall Buyer have or incur any liability or obligation whatsoever arising out of, any personnel policies or practices, either written or oral, promulgated or followed by Seller.

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(b) Seller is not a party or subject to any collective bargaining or other labor, employment, deferred compensation, bonus, retainer, consulting, or incentive agreement, plan or contract related to the Purchased Restaurants. Except to the extent set forth in Schedule 6.7, (i) there has been no strike or other work stoppage by, nor has there been any union organizing activity among, any of the employees of Seller during the past five (5) years;
(ii) to the best of Seller's knowledge, Seller is in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practice; and (iii) there is no unfair labor practice complaint pending or, to the best knowledge of Seller, threatened against Seller, nor, to the best knowledge of Seller, is there any factual basis for any such complaint.

6.8 THE ASSIGNED CONTRACTS AND OTHER AGREEMENTS. Schedule 1.4 contains accurate and complete list of the Assigned Contracts and Schedule 6.8 hereto contains accurate and complete list of, each contract, agreement, indenture, note, lease, or other instrument or commitment, written or oral, to which Seller is a party or is bound or which relates to or affects or could affect any of the Purchased Assets, the Assumed Obligations or the Purchased Restaurants or the consummation of the transactions contemplated by this Agreement and is not already listed on Schedule 1.3, Schedule 1.4 or Schedule
6.7 (collectively the "Other Contracts"). Accurate and complete copies of all of Assigned Contracts and the Other Contracts (collectively, the "Material Contracts") have been furnished by Seller to Buyer. The Material Contracts include, without limitation, each contract, agreement, license, instrument commitment or understanding, written or oral (other than the Leases), which:

(a) Provides for the sale, lease or rental of any products goods, or equipment or other assets or properties to or by Seller related to the Purchased Restaurants (other than purchase orders issued or received by Seller in the ordinary course of business and consistent with past practices);

(b) Provides for the payment of monies to or by Seller which arise out of or relate to the Purchased Restaurants;

(c) Provides for the licensing by or to Seller, or the use or possession by Seller, of any software, trademarks, trade names, service marks, copyrights, know-how, patents or other intellectual property rights used in connection with the operation of the Restaurants;

(d) Grants a security interest or permit or provide for the imposition of any other Lien or Encumbrance on, or provide for the disposition of, any of the Purchased Assets;

(e) Requires the consent of any third party to or would terminate as a result of the consummation by Seller of the transactions contemplated by this Agreement;

(f) Restricts or would restrict the conduct of any aspects of the Purchased Restaurants or the use or disposition by Buyer after the date hereof of any of the Purchased Assets;

(g) Governs or relates to any of the Assumed Obligations or which evidences any other liability or obligation, whether for borrowed money or otherwise, that would be accelerated by reason of the consummation of the transactions contemplated hereby; or

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(h) If terminated or breached would have a Material Adverse Effect on the Purchased Restaurants.

Except for the Assigned Contracts, the Leases, the Agreements listed on Schedule 6.7 and the Other Contracts, there is no contract, lease, license or other agreement, commitment or understanding that is material to the Purchased Restaurants or the breach, termination or loss of which would have a Material Adverse Effect on Seller or the Purchased Restaurants. Each of the Material Contracts is a valid and binding obligation of Seller and the other parties thereto, enforceable in accordance with its terms, except as may be affected by bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights generally and general principles of equity relating to the availability of equitable remedies. Except as otherwise set forth in Schedule 6.8 hereto, there have not been any defaults by Seller or defaults or any claims of default or claims of nonenforceability by the other party or parties under or with respect or any of Material Contracts which, individually or in the aggregate, would have a Material Adverse Effect on the Purchased Restaurants, and there are no facts or conditions that have occurred or that are anticipated to occur which, with the passage of time or the giving of notice, or both, would constitute a default by Seller or by the other party or parties under any of the Material Contracts or would cause a creation or imposition of any Lien or Encumbrance upon any of the Purchased Assets or otherwise would have a Material Adverse Effect on Seller or on the Purchased Restaurants.

6.9 CONFLICTS. Except as described on Schedule 6.9 hereto, neither the execution and delivery of, nor the consummation of the transactions contemplated by, this Agreement will or could result in any of the following:

(a) A default or an event that, with notice or lapse of time, or both, would be a default, breach or violation of the respective charter, bylaws or other governing instruments of Seller, or any Material Contract;

(b) The termination of any Material Contract, or the acceleration of the maturity of any indebtedness or other obligation of Seller which would have a Material Adverse Effect on the Purchased Restaurants, Seller or Buyer;

(c) The creation or imposition of any Lien or Encumbrance on any of the Purchased Assets;

(d) The creation or imposition of any new, or a violation or breach of any existing, writ, injunction or decree that would become or is now applicable to or binding on Seller or any of the Purchased Assets or the Purchased Restaurants;

(e) A loss or adverse modification of any license, franchise, permit or other authorization or right (contractual or other) to operate the Purchased Restaurants, granted to or otherwise held by Seller or used in the operation of the Purchased Restaurants, which would have a Material Adverse Effect on the Purchased Restaurants, Seller or Buyer;

(f) The cessation or termination of any other business relationship or arrangement between Seller and any third party that would have a Material Adverse Effect on the Purchased Restaurants, Seller or Buyer; or

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(g) Any other consequence that would have or reasonably could be expected to have a Material Adverse Effect on the Purchased Restaurants, Seller or Buyer.

6.10 VENDORS AND SUPPLIERS. Schedule 6.10 attached hereto contains correct and current list of the five (5) largest vendors and suppliers of the Purchased Restaurants in terms of purchases or sales made by Seller during the fiscal year ended December 31, 1996, showing the approximate aggregate dollar amounts of purchases by Seller from each such vendor and supplier during that fiscal period. Except as set forth on Schedule 6.10, since December 31, 1996 there has been no change in the business relationship of Seller with any vendor or supplier named in Schedule 6.10 and Seller is not aware of any intention of any of the vendors or suppliers listed in Schedule 6.10 to cease, or of any event or circumstance that has occurred during the past twelve (12) months which might reasonably be expected to cause any such vendor or supplier to cease, doing business with Seller, or alter materially the amount of the business that any of them is presently doing with Seller, or will require, as a condition to the continuation of its business relationship with Seller, a change in the prices or rents at or any other material terms under which any of such vendors and suppliers have been doing business with Seller.

6.11 LIABILITIES. Except as otherwise set forth in Schedule 6.11, Seller does not have any knowledge of any fact or of the occurrence of any event forming the basis of any present or future claim against Seller, whether or not fully covered by insurance, for liability on account of negligence which would have, individually or in the aggregate, a Material Adverse Effect on Seller or the Purchased Restaurants.

6.12 INSURANCE. Schedule 6.12 contains an accurate description (including liability limits, deductibles and coverage exclusions) of all policies of fire, general liability, worker's compensation, errors and omissions, malpractice and other forms of insurance maintained by or on behalf of Seller in connection with the Purchased Restaurants as protection for the Purchased Assets and the Purchased Restaurants. Except as set forth in Schedule 6.12 hereto, all of such policies are now in full force and effect and policies covering the same risks and in substantially the same amounts have been in full force and effect continuously for the past five (5) years. Seller has not received any notice of cancellation or material amendment of any such policies; no coverage thereunder is being disputed; and all material claims thereunder have been filed in a timely fashion. Seller has furnished to Buyer a schedule of all insurance claims filed by Seller within the past three (3) years that were related to the Purchased Restaurants and the disposition thereof. No such claims have been denied by any of Seller's insurers and Seller has not failed to comply with the requirements of any insurance policies which would provide any insurers the right to deny any claim related to the Purchased Restaurants.

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6.13 COMPLIANCE WITH LAW/PERMITS.

(a) Except as set forth in Schedule 6.13(a) hereto, Seller is in compliance with all, and is not in violation of any, law, ordinance, order, decree, rule or regulation of any governmental agency or authority. Except as disclosed in Schedule 6.13(a) hereto, no unresolved (i) charges of violations of laws or regulations have been made or threatened, (ii) proceedings or investigations are pending or, to the best knowledge of Seller, have been threatened, and (iii) citations or notices of deficiency have been issued or have been threatened, against Seller or the Restaurants by any governmental agencies or authorities; and, to the best knowledge of Seller, there are no facts or circumstances upon which any such charges, proceedings, investigations, or citations or deficiency notices, may be instituted, issued or brought hereafter.

(b) Schedule 6.13(b) contains a true, correct and complete list of all governmental licenses, permits, authorizations, franchises, or certificates or rights (contractual or other) to operate the Purchased Restaurants that are held by Seller (collectively, "Licenses and Permits"). Such Licenses and Permits are the only licenses, permits, authorizations, franchises, certificates and rights to operate required for operation of the Purchased Restaurants and all of such Licenses and Permits are in full force and effect at the date hereof. Seller has provided Buyer with true, correct and complete copies of each License and Permit listed in Schedule 6.13(b). Except as otherwise set forth in Schedule 6.13(b), the Purchased Restaurants are in compliance with the conditions and requirements imposed by or in connection with such Licenses and Permits. Seller has not received any notice, nor does Seller have any knowledge or reason to believe, that any governmental agency or authority intends to cancel, terminate or modify any of such Licenses or Permits or that there are valid grounds for any such cancellation, termination or modification. Seller has delivered or made available to Buyer a true, correct and complete copy of the most recent safety inspection and quality assurance reports, prepared by any employees or consultants of Seller or by any governmental agencies or authorities relating to the Purchased Restaurants.

6.14 TAXES AND TAX RETURNS. Seller has duly filed all Tax Returns (as hereinafter defined) which are required by law to be filed by it and has duly and properly paid, or withheld for payment and paid, when due, all foreign, federal, state and local Taxes (as hereinafter defined) due or claimed to be due from it, and there are no assessments or claims for payment of Taxes (as hereinafter defined) now pending or, to the best knowledge of Seller, threatened, nor any audit of Seller's records presently being made by any taxing authority. For purposes of this Agreement, (i) the term "Tax" or "Taxes" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not; and (ii) the term "Tax Return" means any return, declaration, report, claim for refund, or information return or statement (including, but not limited to, information returns or reports related to back-up withholding and any payments to third parties) relating to any Taxes, including any schedule or attachment thereto, and including any amendment thereof. Buyer shall have no liability or obligation whatsoever, and shall not incur any loss, expense or cost, and none of the Purchased Assets, or any assets of Buyer, shall be subjected to any Lien or Encumbrance, by reason of any Taxes arising out of any operations or activities of Seller whether conducted prior to the date hereof or hereafter.

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6.15 LITIGATION AND PROCEEDINGS. Except as set forth in Schedule 6.15 hereto, there is no action, suit, proceeding or investigation, or any counter or cross-claim in an action brought by or on behalf of any of Seller, whether at law or in equity, or before or by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or before any arbitrator of any kind, that is pending or, to the best knowledge of Seller, threatened, against Seller, which (i) could reasonably be expected to affect adversely Seller's ability to perform his obligations under this Agreement or complete any of the transactions contemplated hereby or thereby, or
(ii) involves the possibility of any judgment or liability, or which may become a claim, against Buyer, the Purchased Restaurants or the Purchased Assets. Except as set forth in Schedule 6.15, Seller is not subject to any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental department, commission, board, bureau, agency or instrumentality having jurisdiction over Seller or any of the Purchased Assets or the Purchased Restaurants. All of the legal actions or other proceedings that are pending or threatened against Seller, the Purchased Restaurants or the Purchased Assets involve only routine claims for monetary damages that are incidental to and have arisen out of the ordinary course of the business of the Purchased Restaurants and any liability, damage, cost or expense that may be incurred in any of such actions or proceedings will be fully covered by insurance, except as expressly stated to the contrary on Schedule 6.15.

6.16 CERTAIN TRANSACTIONS. Except as set forth in Schedule 6.16, there are no existing or pending transactions, nor are there any agreements or understandings, with any employees of Seller, or any person that is related to, or any person or entity that is affiliated with, any of them (collectively, "Affiliates"), relating to, arising from or affecting the Purchased Restaurants, or any of the Purchased Assets, including, without limitation, any transactions, arrangements or understandings relating to the purchase of services, the lending of monies, or the sale, lease or use of any of the Purchased Assets, with or without adequate compensation, in any amount whatsoever. No existing or former employee of Seller has any claims against or disputes with Seller which could result in the imposition of any liability, judgment, lien or encumbrance against the Purchased Restaurants or any of the Purchased Assets.

6.17 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in Schedule 6.17, Seller has complied with, and the operation of the Purchased Restaurants and the use of the Purchased Assets are in compliance with, in all material respects, all federal, state, regional and local statutes, laws, ordinances, rules, regulations and orders relating to the protection of human health and safety, natural resources or the environment, including, but not limited to, air pollution, water pollution, noise control, on-site or off-site hazardous substance discharge, disposal or recovery, toxic or hazardous substances, training, information and warning provisions relating to toxic or hazardous substances, and employee safety relating to the Purchased Restaurants or the Purchased Assets (collectively the "Environmental Laws"); and no notice of violation of any Environmental Laws or of any permit, license or other authorization relating thereto has been received or threatened against Seller, and to the best knowledge of Seller, is there any factual basis for the giving of any such notice. Except as set forth in Schedule 6.17, no underground or above-ground storage tanks or surface impoundments are located on any of the real properties that are or have been used, operated, leased or owned by Seller in connection with or for the Purchased Restaurants and (i) except in compliance with applicable Environmental Laws and any licenses or permits relating thereto, there has been no generation, use,

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treatment, storage, transfer, disposal, release or threatened release in, at, under, from, to or into, or on such properties of toxic or hazardous substances during the ownership or occupancy thereof by Seller or, to the best knowledge of Seller, prior to such ownership or occupancy, and (ii) in no event has there been any generation, use, treatment, storage, transfer, disposal, release or threatened release in, at, under, from, to or into, or on such properties of toxic or hazardous substances that has resulted in or is reasonably likely to result in a Material Adverse Effect on the Purchased Restaurants or on Seller. Seller has not received any notice or claim to the effect that Seller or the Purchased Restaurants is or may be liable to any governmental authority or private party as a result of the release or threatened release of any toxic or hazardous substances in connection with the conduct or operation of the Purchased Restaurants, and none of the operations of the Purchased Restaurants and none of the Purchased Assets is the subject of any federal, state or local investigation evaluating whether any remedial action is needed to respond to a release or a threatened release of any toxic or hazardous substances at any of the Leased Properties or any other real properties leased, used, operated or owned by Seller in connection with the Purchased Restaurants. Seller has not disposed, or had disposed of on its behalf, toxic or hazardous substances at any site other than a federal and state licensed hazardous waste treatment, storage and disposal facility and, to the best knowledge of Seller, each such facility is not currently listed, or threatened to be listed, on any state or federal "superfund" list. For the purposes of this Section 6.17, "toxic or hazardous substances" shall include any material, substance or waste that, because of its quantity, concentration or physical or chemical characteristics, is deemed under any federal, state, local or regional statute, law, ordinance, regulation or order, or by any governmental agency pursuant thereto, to pose a present or potential hazard to human health or safety or the environment, including, but not limited to, (i) any material, waste or substance which is defined as a "hazardous substance" pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. Section 9601, et seq.), as amended, and its related state and local counterparts, (ii) asbestos and asbestos containing materials and polychlorinated biphenyls, and (iii) any petroleum hydrocarbon including oil, gasoline (refined and unrefined) and their respective constituents and any wastes associated with the exploration, development or production of crude oil, natural gas or geothermal energy.

6.18 BROKERS. Seller has not retained or used the services of an agent, finder or broker other than Vrolyk & Company in connection with the transactions contemplated by this Agreement. Seller shall pay, and shall indemnify, hold harmless and defend Buyer from and against, all commissions, finder's and other fees and expenses charged or asserted by any agent, finder or broker, by reason of any such retention or use of the services of any such agent, finder or broker by Seller.

6.19 REPRESENTATIONS AND WARRANTIES OF SELLER. The representations and warranties of Seller contained herein, and the disclosures contained in Seller's Disclosure Schedules, do not contain any statement of a material fact that was untrue when made or omits any information necessary to make any such statement contained therein, in light of the circumstances under which such statement was made, not misleading.

7. REPRESENTATIONS AND WARRANTIES OF BUYER.

Buyer makes the following representations and warranties to Seller as of the date of this Agreement:

7.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

7.2 CORPORATE POWER. Buyer possesses the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the ancillary agreements.

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7.3 NECESSARY ACTIONS; BINDING EFFECT. Buyer has taken all corporate action necessary to authorize the execution and delivery of, and the performance of its obligations under, this Agreement and the ancillary agreements. This Agreement constitutes, and upon its execution and delivery the ancillary agreements will constitute, valid obligations of Buyer that are legally binding on and enforceable against Buyer in accordance with their respective terms, except (in each case) as such enforceability may be limited by
(i) bankruptcy, insolvency, moratorium or other similar laws affecting creditors' rights, and (ii) general principles of equity relating to the availability of equitable remedies (regardless of whether such agreements are sought to be enforced in a proceeding at law or in equity).

7.4 BROKER. Buyer has not retained or used the services of an agent, finder or broker in connection with the transactions contemplated by this Agreement. Buyer shall pay, and shall indemnify, hold harmless and defend Seller from and against all commissions, finder's and other fees and expenses charged or asserted by any agent, finder or broker, by reason of any such retention or use of the services of any agent, finder or broker by Buyer.

8. COVENANTS AND AGREEMENTS OF SELLER.

8.1 CONDUCT OF THE BUSINESS BEFORE THE CLOSING.

(a) Diligent Conduct. Between the date hereof and the Closing Date, Seller will operate the Purchased Restaurants diligently in the ordinary course and consistent with past practices, will not change in any material respect its methods of business operations or its accounting practices, and will preserve intact its organization, use its best efforts to retain in its employ all of its employees related to the Purchased Restaurants and to preserve its relationships with the suppliers of the Purchased Restaurants.

(b) Properties and Assets. Between the date hereof and the Closing Date, Seller (i) will not, without the prior written consent of Buyer, sell or otherwise dispose of (except in the ordinary course of business consistent with past practices), and will not mortgage, pledge or subject to lien, charge or encumbrance of any kind, except liens for taxes not due, any of the Purchased Assets, and (ii) will keep all of its fixtures, equipment and other tangible personal property related to the Purchased Restaurants in good working order and repair and continue to perform all normal repairs and maintenance in the ordinary course of business.

(c) Contracts. Between the date hereof and the Closing Date, Seller will not, without the prior written consent of Buyer, amend or terminate any Lease, Assigned Contract or other contract or agreement to which it is a party and that relates to the Purchased Restaurants, except as contemplated by this Agreement. Seller shall not enter into or become a party to any contract, commitment, lease or agreement related to the Purchased Restaurants.

(d) Insurance. Between the date hereof and the Closing Date, Seller will continue in force its existing insurance policies covering the Purchased Assets and the Purchased Restaurants, subject only to variations in amounts required by the ordinary operations of its business.

(e) Compensation of Employees. Between the date hereof and the Closing Date, Seller will not, without the prior written consent of Buyer, increase the compensation payable or to become payable to any of its managing persons, employees or agents, nor will Seller make any bonus

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payment or similar arrangement to or with any of its managing persons, employees or agents employed by the Purchased Restaurants, or adopt any new or amend any existing employee benefit plan.

(f) Payment of Liabilities and Waiver of Claims. Between the date hereof and the Closing Date, Seller will not do, or agree to do, any of the following acts relating to the Purchased Restaurants: (i) pay any obligation or liability, fixed or contingent, other than current liabilities as and when the same become due; and (ii) except in the ordinary course of business, waive or compromise any right or claim, or cancel, without full payment, any note, loan, or other obligation owing to Seller.

8.2 CERTAIN CHANGES. Without the prior written consent of Buyer, Seller will not (in relation to the Purchased Restaurants):

(a) Incur any liability for borrowed funds, and will not incur any such borrowings except in the ordinary course and for the benefit of the Purchased Restaurants and consistent with past borrowing practices of Seller during the corresponding periods of prior years;

(b) Incur, assume or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability (absolute or contingent), except borrowings permitted under Subsection 8.2(a) above and obligations and liabilities (other than for borrowed money) incurred in the ordinary course of business which are not material in amount and are consistent with past practice;

(c) Write-down the value of any inventory or write-off as uncollectible any notes or accounts receivable;

(d) Make any capital expenditures or commitments for additions to property, plant or equipment, except for those set forth in Schedule 8.2(d) hereto;

(e) Pay, loan or advance any amount to, or sell, transfer or lease any properties or assets to, or enter into any agreement or arrangement with, any of its employees, independent contractors or any affiliates thereof; or

(f) Agree, whether in writing or otherwise, to do any of the foregoing.

8.3 CONSENTS. As soon as reasonably practicable after the date hereof, Seller shall use its best efforts, and Buyer will cooperate with Seller, to obtain all consents, approvals and authorizations required to be obtained from other parties in order to consummate the transactions contemplated hereby.

8.4 EXCLUSIVITY.

(a) From the date hereof until the expiration of the Option Agreement, Seller will not, nor will it permit its officers, directors, affiliates, representatives or agents, directly or indirectly, to do any of the following:

(i) discuss, negotiate, undertake, authorize, recommend, propose or enter into, either as the proposed surviving, merged, acquiring or acquired corporation, any transaction involving any disposition or other change of ownership of Seller's stock or assets (an "Acquisition Transaction");

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(ii) facilitate, encourage, solicit or initiate or in any way engaged in any discussion, negotiation or submission of a proposal or offer in respect of an Acquisition Transaction;

(iii) furnish or cause to be furnished to any person or entity any information concerning the business, operations, properties or assets of Seller's in connection with an Acquisition Transaction; or

(iv) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person or entity to do or seek any of the foregoing.

Seller will inform Buyer by telephone within 24 hours of its receipt of any proposal or bid (including the terms thereof and the person or entity making such proposal or bid) in respect of any Acquisition Transaction.

9. ADDITIONAL COVENANTS.

9.1 SELLER'S DISCLOSURE SCHEDULES; ACCESS AND INFORMATION. No later than fourteen calendar days from the date hereof, Seller shall deliver to Buyer Seller's Disclosure Schedules. In addition, between the date hereof and the Closing Date, Seller shall afford to Buyer and its counsel, accountants and other representatives, reasonable access to all of the properties, books, contracts and records, of Seller, and will furnish Buyer and such other parties with all information, including updated financial statements referenced in
Section 6.3 above, and copies of books, contracts and records, concerning Seller's affairs which they may reasonably request.

9.2 COOPERATION. Seller will use its best efforts to cause all the representations and warranties of Seller contained in this Agreement to be true and correct on and as of the Closing Date and to cause all of the conditions precedent disclosed in Section 12 to be satisfied on or prior to the Closing Date.

9.3 RETAINED EMPLOYEES. Buyer and Seller shall jointly notify all Retained Employees (as hereinafter defined) that their employment by Seller will be terminated as of the Closing Date by reason of the transactions contemplated by this Agreement and that Buyer will hire only those employees of Seller engaged in the operation of the Purchased Restaurants designated on Schedule 9.3 hereto (the "Retained Employees"). On the Closing Date, Seller shall (i) terminate all Retained Employees, and (ii) waive any rights it may have to prohibit the Retained Employees from being employed by the Buyer.

9.4 ADVERSE CHANGES. Seller shall promptly notify Buyer in writing of any material adverse facts or developments affecting or which may affect the Purchased Restaurants including, without limitation, (i) any damage, destruction or loss (whether or not covered by insurance) affecting any of the Purchased Assets or the Purchased Restaurants, or (ii) anything which, if not corrected prior to Closing, could prevent Seller from fulfilling any condition precedent described in Section 12 below.

9.5 PUBLICITY. Buyer, Seller 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, after reasonable notice, be entitled to make any disclosure required by applicable law, rule or regulation of any

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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.

9.6 PURCHASE OPTION OF BUYER. Buyer shall have the option (the "Option") to purchase from Seller the assets used in the operation of the nine additional Restaurants listed on Schedule 9.6 hereto (the "Additional Restaurants"), on the terms and conditions set forth in the Option Agreement (the "Option Agreement") attached as Exhibit D hereto, which shall be executed and delivered by Seller and Buyer at the Closing. Buyer shall have a minimum of eighteen (18) months from the Closing Date from time to time to exercise such Option to purchase any or all the Additional Restaurants; provided, however, that, if this Agreement and contemplated transactions hereunder are impacted in any way by litigation, Buyer shall have a maximum of twenty-four (24) months from the Closing Date to exercise its Option to purchase any or all of the Additional Restaurants. The closing of the purchase of an Additional Restaurant may occur after expiration of the option period so long as Buyer has given notice of exercise prior to the expiration of the option, and Buyer uses its best efforts to close a transaction relating to such purchase within ninety days after providing notice to Seller; provided, however, that in no event shall such notice cause the option period to be extended beyond the 24 month period following the Closing Date of this Agreement. Seller agrees to use the proceeds received from any sale of Additional Restaurants to pay accrued and unpaid interest and to prepay the principal balance of the new indebtedness described in Section 9.8(a) and 9.8(b) below.

9.7 STAR BUFFET. Buyer has advised Seller that Buyer intends to assign its rights hereunder to Star Buffet, Inc., a Delaware corporation in formation ("Star Buffet"), which Buyer intends to form as a successor to Buyer's buffet-style restaurant division, and that Buyer intends to cause Star Buffet to complete an underwritten initial public offering of securities registered under the Securities Act of 1933, as amended (the "IPO"). Seller agrees to cooperate with Buyer in connection with the organization of Star Buffet and the IPO and to provide Buyer and Star Buffet all information and audited financial statements (including consents of Seller's independent public accountants) concerning the Restaurants which Buyer or Star Buffet, or their attorneys and accountants, may reasonably require in connection therewith. Buyer shall cause Star Buffet to offer to Seller, upon consummation of the IPO, the right to purchase 150,000 Warrants at a purchase price of $3.50 per warrant, which right must be exercised by Seller no later than 5 days after consummation of the IPO by Seller's delivery of an Investment Representation Letter in the form of Exhibit E attached hereto and incorporated herein by this reference. Each warrant will entitle the holder to purchase one share of the Common Stock of Star Buffet at an exercise price equal to the initial public offering price per share of Common Stock, all on the terms and conditions set forth in the Warrant to Purchase Common Stock (the "Stock Purchase Warrant") in substantially the form attached hereto as Exhibit F.

9.8 SELLER'S FINANCING.

(a) Buyer shall use reasonable commercial efforts to secure financing for Seller from a third party lender of up to Three Million Dollars ($3,000,000) (the "Term Loan"), the proceeds of which shall be used to repay Seller's indebtedness to U.S. Bank. In the event that the Term Loan is obtained by Buyer for the benefit of Seller through Buyer's assumption of an additional $3,000,000 of outstanding principal under the Note issued pursuant to the Seller Credit Agreement, Buyer and Seller shall enter into an Assumption Agreement for such additional amount of principal and Buyer shall use its commercially reasonable efforts to release Jim North and John North and their respective spouses

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from any personal guarantees related to the Seller Credit Agreement, which are set forth on Schedule 9.8. Buyer shall indemnify Jim North and John North and their respective spouses from any liabilities that arise from claims made pursuant to the personal guarantees set forth on Schedule 9.8. Subject to any intercreditor arrangements between the lenders of the Term Loan and the Credit Line (as defined below), the Term Loan shall be secured by a first priority security interest in all of Seller's assets and shall rank senior to all other indebtedness of Seller for money borrowed (the holders of which shall execute and deliver to the party providing such new financing reasonable subordination agreements). The Term Loan, which shall bear interest at a rate equal to the most favorable rate at which Buyer can secure for such Term Loan, shall be payable over a six year period in the following manner: (i) interest shall be deferred for the first six months of the term thereof, which interest shall be added to the principal amount of the Term Loan, (ii) monthly payments of interest only for the second six months of the term of the Term Loan, and (iii) monthly installments of principal and interest amortized over a five-year period commencing on the first anniversary of the date of the Term Loan and continuing to and including the sixth anniversary of the date of the Term Loan, on which date all outstanding principal and accrued and unpaid interest shall be due and payable.

(b) Buyer shall use reasonable commercial efforts to secure financing for Seller from a third party lender of up to Seven Hundred Fifty Thousand Dollars ($750,000) (the "Credit Line"), the proceeds of which Seller may draw upon on an as needed basis to be used for store closure and lease termination costs and severance costs. Subject to any intercreditor arrangements between the lenders of the Term Loan and the Credit Line, the Credit Line shall be secured by a first priority security interest in all of Seller's assets. The Credit Line shall require (i) monthly payments of interest only commencing on the first day of the month following the date on which Seller draws upon the Credit Line, and (ii) quarterly payments in amounts equal to the lesser of (x) $250,000 or (y) the principal amount then outstanding under the Credit Line, such payments commencing on the seventh quarter following the date on which Seller draws upon the Credit Line and continuing until such time as all outstanding principal and interest is paid in full. The Credit Line shall bear interest at the same rate as the Term Loan.

9.9 SELLER'S DEVELOPMENT RIGHTS. Concurrently with the execution hereof, Buyer and Seller shall enter into a license agreement (the "License Agreement"), in the form of Exhibit G attached hereto, pursuant to which Buyer shall grant to Seller a license to use the Intangible Property Rights for the operation of all of the Restaurants (other than the Purchased Restaurants), the four restaurants operated by franchisees of Seller which are listed on Exhibit A-1 hereto (the "Franchised Restaurants") and for the development of new restaurants, all on the terms and conditions set forth in the License Agreement.

9.10 BUSINESS SERVICES AGREEMENT; RELATED AGREEMENTS. Upon Closing, Buyer (or Buyer's assignee) and Seller shall enter into a business services agreement (the "Business Services Agreement") in the form of Exhibit H hereto. The Business Services Agreement, the License Agreement, the Stock Purchase Warrant and the Option Agreement hereinafter may be referred to collectively as the "Related Agreements."

9.11 EMPLOYMENT AGREEMENT. Concurrently with the closing of the tenth Restaurant (which would include the seven Purchased Restaurants pursuant to the terms of this Agreement and three of the Additional Restaurants pursuant to the Option Agreement), Buyer shall cause Star Buffet

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to enter into an employment agreement (the "Employment Agreement") with John North in substantially the form attached hereto as Exhibit I.

9.12 DEVELOPMENT OF WESTERN BUFFET. Upon the successful development of the Western Buffet or comparable concept, Buyer and Seller will negotiate in good faith to enter into a development agreement pursuant to which Seller would have the right to develop restaurants based upon such concept in selected areas of the following eleven states: Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.

9.13 BOARD OF DIRECTORS; OPTIONS. Upon the formation of Star Buffet, Buyer, as the sole stockholder of Star Buffet, shall elect John North to serve on the Board of Directors of Star Buffet for one full term. As soon as practicable following the consummation of the IPO, and in no event later than the first meeting of the Board of Directors of Star Buffet following the consummation of the IPO, Buyer shall cause Star Buffet to issue to John North fully vested options to purchase an aggregate of 1% of the shares of Common Stock of Star Buffet outstanding on a fully diluted basis as of the date of grant at an exercise price equal to the price per share at which shares of Common Stock of Star Buffet initially are sold in the IPO. In addition, in consideration of the cooperation and services to be rendered by Jim North and John North in connection with the IPO and the transfer of the Purchased Assets, Buyer shall cause Star Buffet to issue to Jim North and John North, collectively, options to purchase the Common Stock of Star Buffet in the following amounts and upon the following conditions: (i) upon the purchase of the second Additional Restaurant pursuant to the Option Agreement, .6667% of the Common Stock of Star Buffet outstanding on a fully diluted basis as of the date of grant at an exercise price equal to the Market Price Per Share (as hereinafter defined); (ii) upon the purchase of the fourth Additional Restaurant pursuant to the Option Agreement, .6667% of the Common Stock of Star Buffet outstanding on a fully diluted basis as of the date of grant at an exercise price equal to the Market Price Per Share; and (iii) upon the purchase of the sixth Additional Restaurant, .6667% of the Common Stock of Star Buffet outstanding on a fully diluted basis as of the date of grant at an exercise price equal to the Market Price Per Share; provided, however, that, notwithstanding anything herein to the contrary, (i) the foregoing option shall not be granted unless and until Star Buffet has consummated the IPO, and (ii) such options shall not vest until such time as any and all monetary obligations owing to Buyer pursuant to Section 9.8 shall have been paid in full in accordance with the terms of Section 9.8. Buyer shall cause the foregoing options to be granted to Jim North and John North, collectively, as soon as practicable following the satisfaction of the foregoing conditions and in no event later than the first meeting of the Board of Directors of Star Buffet following the satisfaction of such conditions. As used herein, "Market Price Per Share" shall be the last reported sale price of the Common Stock on a national securities exchange or on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), as the case may be, on the last business day prior to the date of grant, or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange or NASDAQ, as the case may be. For purposes of Section 9.13, the number of shares of Common Stock of Star Buffet outstanding on a fully diluted basis shall exclude any options granted or issued to Seller, Jim North or John North pursuant to this
Section 9.13.

9.14 BULK TRANSFERS. Seller shall provide Buyer with such data and information and take such actions (including giving and publishing or recording appropriate notices) as Buyer may reasonably require in order to comply with all bulk transfer laws of the respective jurisdictions in which the Purchased Assets are located.

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10. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.

All of the representations and warranties set forth in this Agreement shall remain in full force and effect regardless of any investigation, verification or approval by any party hereto or by anyone on behalf of any party hereto, and shall survive for a period of two years following the Closing, regardless of any investigation, verification or approval by any party hereto. The covenants and agreements of the parties contained in this Agreement shall survive the Closing.

11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.

The obligations of Seller to consummate this Agreement are subject to the satisfaction of the following conditions on or prior to the Closing Date, each of which shall be deemed independent, severable and waivable in whole or in part at the option of Seller.

11.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. All representations and warranties of Buyer contained herein shall be true and accurate in all material respects at and as of the Closing Date, as though said representations and warranties were made at and as of that time, and Buyer shall have performed all covenants and agreements on its part required to be performed prior to the Closing, and Seller shall have received a certificate dated as of the Closing Date and executed by an officer of Buyer, to the effect of the foregoing matters.

11.2 APPROVALS, ETC. All required regulatory approvals shall have been received with respect to the transactions contemplated by this Agreement. No action or proceeding shall be completed or pending against Buyer that has resulted or is likely to result in a judgment, decree or order that would prevent or make unlawful the consummation of the transactions under this Agreement, and there shall be in effect no order restraining or prohibiting the consummation of the transactions contemplated by this Agreement, nor any proceedings pending with respect thereto.

11.3 RELATED AGREEMENTS. Buyer shall have executed and delivered each of the Related Agreements.

11.4 SELLER'S FINANCING. Buyer shall have obtained for the benefit of Seller the Term Loan and the Credit Line as described in Sections 9.8(a) and 9.8(b) above.

12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.

The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or prior to the Closing Date, each of which shall be deemed independent, severable and waivable in whole or in part at the option of Buyer.

12.1 NO ADVERSE CHANGE. There shall not have occurred since the date hereof (a) any material adverse change in the financial condition, properties or assets, business, prospects or operations concerning any of the Purchased Restaurants, (b) any material breach or default by any party thereto of any of the Assigned Contracts, or (c) any other event or condition or state of facts of any character affecting Seller which could have a Material Adverse Effect on the Purchased Restaurants.

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12.2 COMPLIANCE WITH LAW. At the Closing Date, there shall exist no violations of federal, state or local law or regulation materially or adversely affecting the value of the Purchased Assets to be sold under this Agreement or Buyer's ability to operate the Purchased Restaurants after the Closing in substantially the same manner as they were operated by Seller prior hereto.

12.3 LITIGATION. As of the Closing Date, no material litigation, governmental action or other proceeding shall be threatened or commenced against Seller with respect to any matter or against any person with respect to any transactions contemplated herein which would adversely affect any of the Purchased Assets or the Purchased Restaurants.

12.4 DELIVERY OF DOCUMENTS. Buyer shall have received from Seller all instruments, consents, approvals, deeds, assignments, policies and other documents called for in this Agreement including, without limitation, a good and sufficient bill of sale, assignments of the Assigned Contracts, assignments of the Intangible Property Rights and such other assignments of title, certificates of title properly executed and acknowledged for transfer, and where applicable, in duly recordable form, and all other instruments and legal opinions necessary to effectuate the transfer of the Purchased Assets as provided for herein, all in form and substance satisfactory to Buyer.

12.5 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. All of the representations and warranties of Seller contained in this Agreement shall be true and accurate in all material respects at the Closing Date, as though made at and as of the Closing Date, and all of the covenants and agreements of Seller contained in this Agreement and required to be performed before the Closing shall have been performed, and Buyer shall have received a certificate, dated the Closing Date and executed by the President and Secretary of Seller to the effect of the foregoing.

12.6 DUE DILIGENCE REVIEW. Except for the environmental reports described in Section 12.12 below, within fourteen calendar days following Buyer's receipt of Seller's Disclosure Schedules, Buyer shall be reasonably satisfied with the results of its due diligence review, and, in Buyer's sole discretion, Buyer shall have approved Seller's Disclosure Schedules.

12.7 CONSENTS AND APPROVALS, ETC. All required third party consents and regulatory approvals shall have been received with respect to the transactions contemplated by this Agreement. No action or proceeding shall be completed or pending against Seller that has resulted or is likely to result in a judgment, decree or order that would prevent or make unlawful the consummation of the transactions under this Agreement, and there shall be in effect no order restraining or prohibiting the consummation of the transactions contemplated by this Agreement, nor any proceedings pending with respect thereto. 12.8 OPINION OF SELLER'S COUNSEL. Buyer shall have received an opinion, dated the Closing Date, of Sussman, Shank, Wapnick, Caplan & Stiles, counsel for Seller, substantially in the form of Exhibit J hereto.

12.9 RELATED AGREEMENTS. Seller shall have executed and delivered each of the Related Agreements.

12.10 STAR BUFFET. Buyer and Star Buffet shall have completed the IPO as described in Section 9.7 above.

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12.11 BOARD APPROVAL. Buyer's Board of Directors shall have approved the transactions contemplated by this Agreement.

12.12 ENVIRONMENTAL REPORT. Buyer shall have received and approved the Phase I environmental site assessment of its environmental consultant in form and substance reasonably satisfactory to Buyer with respect to any real property used for or in connection with the Purchased Restaurants which Seller owns or holds any leasehold interest. To the extent a Phase II environmental report is recommended by a consultant, Buyer, in its sole discretion, may order, review and accept the findings of such report given prior to the Closing. The costs of the environmental reports shall be borne by the Buyer.

13. CLOSING DELIVERIES.

13.1 SELLER'S DELIVERIES. In connection with and at the time of the Closing, Seller shall deliver to Buyer the following:

(a) Bill of Sale. A bill of sale in the form attached hereto as Exhibit K and all other instruments and documents of transfer necessary to transfer and vest in Buyer good title to the Purchased Assets, free and clear of any liabilities, liens, encumbrances or restrictions whatsoever except as set forth herein, in the form and substance satisfactory to Buyer's counsel.

(b) Other Documents. Each of the certificates and other documents and instruments required to be delivered by Seller to Buyer pursuant to Section 12 above.

13.2 BUYER'S DELIVERIES. In connection with and at the time of the Closing, Buyer shall deliver to Seller the following:

(a) Purchase Price. The Purchase Price, in the manner set forth in Section 4 above.

(b) Other Documents. Each of the certificates and other documents and instruments required to be delivered by Buyer pursuant to Section 11 above.

14. OBLIGATIONS SURVIVING THE DATE OF THIS AGREEMENT AND THE CLOSING.

14.1 TERMINATION OF LIENS AND ENCUMBRANCES. Seller hereby covenants that it shall have arranged for and shall have caused all Liens and Encumbrances on any of the Purchased Assets to be terminated, released or otherwise removed as of the Closing Date in exchange for the payment to the holders of such Liens or Encumbrances of the indebtedness or other obligations secured thereby, a list of which is attached hereto as Schedule 14.1 (the "Secured Obligations"). If it is determined at any time hereafter that Seller failed to remove or cause to be removed, without liability or cost or expense to Buyer and without the disposition of any of the Purchased Assets, any Lien or Encumbrance on any of the Purchased Assets that was in existence on or prior to the date hereof, or if any Lien or Encumbrance is imposed or placed on any of the Purchased Assets (or any replacements thereof) after the date hereof as a result of any act or omission of Seller, occurring on, prior to or after the date hereof, then, without limiting any other right or remedy that Buyer may have, Seller shall cause such Lien or Encumbrance to be removed at no expense or liability to Buyer, and without any reduction or disposition of any of the Purchased Assets.

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14.2 FURTHER ASSURANCES. Each party hereto shall execute and deliver after the date hereof such instruments and take such other actions as the other party may reasonably request in order to carry out the intent of this Agreement or to better evidence or effectuate the transactions contemplated herein.

14.3 COSTS AND EXPENSES. Each party shall pay all costs and expenses incurred or to be incurred by it in negotiating and preparing this Agreement and Related Agreements and in carrying out and closing the transactions contemplated by this Agreement. Buyer agrees to pay the reasonable costs and expenses necessary for the assignment by Seller to Buyer of the Leases included in the list of Assigned Contracts on Schedule 1.4, which costs and expenses shall be set forth in Schedule 1.3; provided, however, that Buyer shall not be obligated to pay any costs and expenses in excess of an aggregate of $5,000.

14.4 TAXES. Seller shall pay all Taxes of any kind or nature arising from (i) the conduct or operation of the Purchased Restaurants up to the Closing Date and the conduct or operation by Seller, prior to or after the date hereof, of any other business or business activities operations; and (ii) consummation of the transactions contemplated hereby, including, without limitation, all sales, use or similar Taxes, if any, that may arise from or be assessed by reason of the sale of the Purchased Assets by Seller to Buyer. If any taxes required under this Section 14.4 to be borne by Seller are assessed against Buyer or any of the Purchased Assets, Buyer shall notify Seller in writing promptly thereafter and Seller shall be entitled to contest, in good faith, such assessment or charge so long as such assessment does not adversely affect Buyer or the Purchased Assets or the Purchased Restaurants. Notwithstanding the foregoing, Buyer may (but shall not be obligated to) pay any such Taxes assessed against it, the Purchased Restaurants or any of the Purchased Assets, but which are payable by Seller pursuant hereto, if Buyer's failure to do so, in the judgment of Buyer, could result in the imposition of a Lien or Encumbrance on any of the Purchased Assets or any other assets of Buyer or would constitute a violation of any agreement to which Buyer is subject, or if Seller fails to contest such assessment or charge diligently and in good faith. If Buyer pays any Taxes which pursuant hereto are required to be borne by Seller, Buyer shall be entitled to reimbursement thereof from Seller on demand.

14.5 FINANCIAL BOOKS AND RECORDS. For a period of five (5) years hereafter, Buyer shall provide Seller with access during normal business hours to any books or records relating to the Purchased Restaurants or the Purchased Assets, which Seller may need solely to file tax returns or other filings or to defend litigation, filed prior or subsequent to the date hereof, which relate to periods prior to the date hereof.

15. INDEMNIFICATION PROVISIONS.

15.1 OBLIGATIONS OF SELLER. Seller hereby agrees that it will indemnify, hold harmless and defend Buyer and each of its directors, officers, stockholders, employees and agents and their respective successors and assigns, from and against any and all demands, claims, actions, suits, judgments liabilities, damages, losses, Taxes, costs and expenses, including, without limitation, reasonable attorneys' fees, and whether or not they have arisen from or were incurred in or as a result of any demand, claim, action, suit, assessment or other proceeding or any settlement or judgment (collectively, the "Liabilities") that arise from or are in connection with:

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(a) Any facts, circumstances or events, the existence or happening of which constitutes a breach of or material inaccuracy in any of the representations or warranties of Seller contained in this Agreement or in Seller's Disclosure Schedules or Closing Deliveries;

(b) Any breach or default by Seller of any of his respective covenants or agreements contained in this Agreement, including, without limitation, any of the covenants of Seller set forth in Section 3.2 with respect to the Retained Liabilities;

(c) Any claim, lawsuit, action or other proceeding that
(i) is pending against Seller or to which the Purchased Restaurants or any of the Purchased Assets is subject on the date hereof, or (ii) is brought against Buyer or to which any of the Purchased Restaurants or any of the Purchased Assets may become subject hereafter as a result of or arising from any acts or omissions of Seller that have occurred on or before the date hereof or any acts or omissions of Seller that may occur after the date hereof, and whether or not the bringing or assertion of any such claim, lawsuit, action or other proceeding constitutes a breach of Seller representations or warranties contained in the Agreement;

(d) Any breach of or inaccuracy in any of the representations or warranties contained in Section 6.13 hereof or any violation of or non-compliance with any applicable laws or regulations applicable to Seller or the Purchased Restaurants prior to the Closing, whether or not such violation or non-compliance constitutes a breach of the representations or warranties contained in Section 6.13 hereof;

(e) The presence on or in or the discharge from any real properties owned or leased now or in the past by Seller of any toxic or hazardous substances (as defined in Section 6.17 above) that originated or took place prior to the date hereof, whether or not disclosed in this Agreement or Seller's Disclosure Schedules hereto; and

(f) The failure to have paid or to pay, when due, any Taxes that arose out of the operations of the Seller or the consummation of the transactions contemplated by this Agreement or the failure to have filed, when due, any Tax Returns related to any such Taxes or any period up to the Closing Date.

15.2 OBLIGATIONS OF BUYER. Buyer agrees that it will indemnify, hold harmless and defend Seller and each of its directors, officers, stockholders, employees and agents from and against any and all Liabilities that arise from or are in connection with:

(a) a breach or default by Buyer of any of his respective covenants or agreements contained in this Agreement;

(b) the operation of the Purchased Restaurants from and after the Closing, other than any act or omission of Seller;

(c) the Assumed Obligations and any amounts of outstanding principal under the Note issued pursuant to the Seller Credit Agreement that Buyer agrees to assume pursuant to Sections 4.2(a) and 9.8 hereof; and

(d) any litigation arising from this transaction which is brought by or on behalf of Buyer's franchisor, Hometown Buffet, Inc.

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15.3 CLAIMS. If any party (the "Indemnitee) receives notice of circumstances that would give rise to a claim by such party or notice of any claim or the commencement of any action or proceeding with respect to which any other party (or parties) is obligated to provide indemnification (the "Indemnifying Party") pursuant to Sections 15.1 or 15.2 (a "Claim"), the Indemnitee shall promptly give the Indemnifying party notice thereof; provided, however, that failure to so notify shall not affect the right of indemnification hereunder unless such failure has prejudiced the rights of the Indemnifying Party. Within 30 days after such notice, the Indemnifying Party will notify the Indemnitee whether it irrevocably elects to make payment of the amount claimed or, with respect to third party claims, to contest such claim by appropriate legal proceedings. The failure of the Indemnifying Party to notify the Indemnitee of its intention within such 30 days shall constitute an irrevocable election by them that it will pay the amount claimed. Any defense of a claim shall be conducted by counsel of good standing chosen by Indemnitee and satisfactory to Indemnifying Party. Such defense shall be conducted at the expense of Indemnifying Party, except that if any proceeding involves both claims against which indemnity is granted hereunder and other claims for which indemnification is not granted hereunder, the expenses of defending against such claims shall be borne by the Indemnifying Party and the Indemnitee in respective proportions to the dollar amount of the claims for which they may be liable based on he aggregate dollar amount of the claims.

16. MISCELLANEOUS.

16.1 NOTICES. All notices, requests, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given, (i) on the date of delivery if delivered in person; (ii) on the second business day after being sent by fax, provided that the successful transmission of the fax has been confirmed through a confirmation function sheet provided by the fax machine used for such transmission and a true and correct copy thereof is sent by first class mail to the party to which the fax was sent within one (1) business day thereafter; or (iii) on the third business day following the deposit thereof in the United States Mails, provided it is mailed by certified mail, return-receipt requested and postage prepaid and properly addressed as follows:

If to Seller:    North's Restaurants, Inc.
                 1005 N. Riverside, Suite 100
                 Medford, Oregon 97501
                 Fax No.: (541) 734-7151
                 Attn: John North, President

With a copy to:  Sussman, Shank, Wapnick, Caplan & Stiles
                 1000 Southwest Broadway, Suite 1400
                 Portland, Oregon 97205-3089
                 Fax No.: (503) 248-0130
                 Attn:  Barry Caplan

If to Buyer, addressed to: CKE Restaurants, Inc. 1200 North Harbor Boulevard Anaheim, California 92801 Fax No.: (714) 490-3695 Attn: Robert Wilson

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With a copy to: Stradling, Yocca, Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660-6441 Fax No. (714) 725-4100 Attn: C. Craig Carlson, Esq.

Any party hereto may from time to time, by written notice to the other parties, designate a different address, which shall be substituted for the one specified above.

16.2 MATERIAL ADVERSE EFFECT. When used in this Agreement, the phrase "Material Adverse Effect" shall mean a circumstance, state of facts, event, consequence or result that, individually or in the aggregate, materially and adversely affects, or could reasonably be expected to materially and adversely affect the Purchased Assets or the Purchased Restaurants or the condition (financial or other), operating results or future prospects of Buyer or Seller, as the case may be, or the ability of Buyer or Seller to consummate the transactions which it is required to consummate hereunder.

16.3 ASSIGNMENT. Seller may not assign this Agreement, or assign its rights or delegate its duties hereunder, without the prior written consent of Buyer. Buyer shall have the right, without Seller's consent, to assign its rights and delegate its duties hereunder to any corporation which, in the sole discretion of Buyer, is adequately capitalized to consummate the transactions contemplated by this Agreement, from and after which Buyer shall be relieved of its duties and obligations hereunder; provided, however, in no event shall Buyer be relieved from its duties and obligations set forth in Section 15.2.

16.4 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.

16.5 GOVERNING LAW. This Agreement is deemed to have been entered into and is to be performed in the State of California and its interpretation, its construction and the remedies for its enforcement or breach are to be applied pursuant to, and in accordance with, the laws of the State of California for contracts made and to be performed in that state.

16.6 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the Exhibits and Schedules hereto, and each additional agreement and document to be executed and delivered pursuant hereto, constitute all of the agreements of the parties with respect to, and supersede all prior agreements and understandings relating to the subject matter of, this Agreement or the transactions contemplated by this Agreement. This Agreement may not be modified or amended except by a written instrument specifically referring to this Agreement signed by the parties hereto.

16.7 WAIVER. No waiver by one party of the other party's obligations, or of any breach or default hereunder by any other party, shall be valid or effective, unless such waiver is set forth in writing and is signed by the party giving such waiver; and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature or any other breach or default by such other party.

16.8 INTERPRETATION; HEADINGS. This Agreement is the result of arms'-length negotiations between the parties hereto and no provision hereof, because of any ambiguity found to be contained

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therein or otherwise, shall be construed against a party by reason of the fact that such party or its legal counsel was the draftsman of that provision. The section, subsection and any paragraph headings contained herein are for the purpose of convenience only and are not intended to define or limit or affect, and shall not be considered in connection with, the interpretation of any of the terms or provisions of this Agreement.

16.9 COUNTERPARTS. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

16.10 ARBITRATION All claims, controversies, differences or disputes between or among any of the parties hereto arising from or relating to this Agreement, or any of the agreements entered into pursuant to any of the express provisions hereof, shall be determined solely and exclusively by arbitration in accordance with the rules of commercial arbitration then in effect of the American Arbitration Association, or any successors thereto. Each of the parties consent to venue for such arbitrations in the County of Orange, California, and to service of process by certified or registered mail to their respective addresses where notices may be sent pursuant to Subsection 16.1. Either party may initiate any such arbitration and, if initiated, the parties shall jointly select a mutually acceptable arbitrator therefor. In the event the parties fail to agree upon such an arbitrator within twenty (20) days after written notification of the initiation of the arbitration has been given to all of the parties, then each party shall select an arbitrator and such arbitrators shall then select a third arbitrator to serve as the sole arbitrator, provided that if, in such event, either party fails to select such an arbitrator within seven
(7) days, such party's arbitrator shall be selected by the American Arbitration Association, or any successor thereto, upon application of either party. Judgment upon the award of the agreed upon arbitrator or the so chosen third arbitrator, as the case may be, shall be binding and may be entered in any court of competent jurisdiction. The parties agree to abide by any decision rendered in any such arbitration as final and binding and waive the right to submit the dispute to a public tribunal for jury or non-jury trial. Notwithstanding the foregoing, any party may bring an action in any court of competent jurisdiction when the remedy sought is limited to injunctive relief of a breach or threatened breach of this Agreement by another party hereto or specific performance of any of the obligations of any of the other parties thereto. The prevailing party in any such arbitration or other proceeding brought in accordance with this Subsection 16.10, shall be reimbursed for its reasonable attorneys' fees and disbursements and costs incurred in connection therewith by the non-prevailing party as determined by the arbitrator.

-29-

IN WITNESS WHEREOF, the undersigned have caused this Asset Purchase Agreement to be executed by officers thereunto duly authorized as of the date first above stated.

BUYER:    CKE RESTAURANTS, INC.,
          a Delaware corporation


          By:
             -------------------------------

Its:

SELLER: NORTH'S RESTAURANTS, INC.,
an Oregon corporation


John North, President

-30-

EXHIBITS
--------
         Exhibit A                  Lists of Restaurants

         Exhibit A-1                Franchised Restaurants

         Exhibit B                  The Purchased Restaurants

         Exhibit C                  Allocation of Purchase Price

         Exhibit D                  Form of Option Agreement

         Exhibit E                  Form of Investment Representation Letter

         Exhibit F                  Form of Stock Purchase Warrant

         Exhibit G                  Form of License Agreement

         Exhibit H                  Form of Business Services Agreement

         Exhibit I                  Form of Employment Agreement

         Exhibit J                  Form of Opinion of Seller's Counsel

         Exhibit K                  Bill of Sale


SCHEDULES

         Schedule 1.1               Tangible Personal Property and Fixtures

         Schedule 1.2               Inventory

         Schedule 1.3               Real Property and Personal Property Leases

         Schedule 1.4               Assigned Contracts

         Schedule 1.6               Intangible Property Rights

         Schedule 1.10              Prepaid Fees and Deposits

         Schedule 2.4               Excluded Assets

         Schedule 3.1               Assumed Obligations

         Schedule 6.1(c)            Consents, Releases, etc.

         Schedule 6.3               Financial Statements

         Schedule 6.4               Undisclosed Liabilities

         Schedule 6.5               Certain Changes

         Schedule 6.6(c)            Intangible Property Right Infringements

         Schedule 6.6(d)            Exceptions to Title

         Schedule 6.7               Labor and Employment Matters

         Schedule 6.8               Material Contracts

         Schedule 6.9               Conflicts


Schedule 6.10              Vendors and Suppliers

Schedule 6.11              Liabilities

Schedule 6.12              Insurance

Schedule 6.13(a)           Compliance With Laws

Schedule 6.13(b)           Licenses and Permits

Schedule 6.15              Litigation

Schedule 6.16              Certain Transactions

Schedule 6.17              Environmental and Safety Matters

Schedule 8.2(d)            Permitted Expenditures and Commitments

Schedule 9.3               Retained Employees

Schedule 9.8               Personal Guarantees

Schedule 14.1              The Secured Obligations


EXHIBIT A
LISTING OF LOCATIONS OF RESTAURANTS

1. JJ North's Grand Buffet 2050 Diamond Avenue Concord, California 94520

2. JJ North's Grand Buffet 1315 Gateway Blvd. #D2 Fairfield, California 94533

3. JJ North's Grand Buffet 5999 Florin Road
(Florin Mall) Sacramento, California 95823

4. JJ North's Grand Buffet 704 Southland Mall Hayward, California 94545

5. JJ North's Grand Buffet 3647 Wall Ave.
(Newgate Mall) Ogden, Utah 84405

6. JJ North's Grand Buffet 1030 Howe Avenue Sacramento, California 95825

7. JJ North's Grand Buffet
10520 N.E. Halsey
Portland, Oregon 97220

8. JJ North's Grand Buffet 1150 N.E. "E" Street
(Grants Pass Shopping Center) Grants Pass, Oregon 97526

9. JJ North's Grand Buffet 4575 Sonoma Hwy. Santa Rosa, California 95409

10. JJ North's Grand Buffet 2342 Sunrise Blvd. #35 Rancho Cordova, California 95670

Exhibit A


11. JJ North's Grand Buffet 3650 Kietzke Lane Reno, Nevada 89502

12. JJ North's Grand Buffet 188 W. 7200 S. Midvale, Utah 84047

13. JJ North's Grand Buffet 1016 N. Riverside Medford, Oregon 97501

14. JJ North's Grand Buffet Boise, Idaho

15. JJ North's Grand Buffet Olympia, Washington

16. JJ North's Grand Buffet Kelso, Washington

17. JJ North's Grand Buffet Logan, Utah

18. JJ North's Grand Buffet Pocatello, Idaho

19. JJ North's Grand Buffet Idaho Falls, Idaho

20. JJ North's Grand Buffet Bend, Oregon

Exhibit A


EXHIBIT A-1
LISTING OF FRANCHISED RESTAURANTS

1. North's Chuck Wagon 1720 N.W. 9th Street Corvallis, Oregon 97330

2. North's Chuck Wagon 2864 S. Williamette St. Eugene, Oregon 97405

3. JJ North's Grand Buffet 1050 W. Baseline, #C1 Hillsboro, Oregon 97123

4. North's Chuck Wagon 1839 Kimberly Road Twin Falls, Idaho 83301

Exhibit A-1


EXHIBIT B

NORTH'S RESTAURANTS INC.

                                                    VALUATION
                                                   ($ IN 000S)
                                                   -----------

JJ North's Grand Buffet                     $1,476
Boise, Idaho



JJ North's Grand Buffet                      1,036
Olympia, Washington



JJ North's Grand Buffet                        501
Kelso, Washington



JJ North's Grand Buffet                        617
Logan, Utah



JJ North's Grand Buffet                        412
Pocatello, Idaho



JJ North's Grand Buffet                         55
Idaho Falls, Idaho



JJ North's' Grand Buffet                       403
Bend, Oregon                                ------

         Total                             $ 4,500


EXHIBIT 23.2

The Board of Directors
CKE Restaurants, Inc.:

We consent to the use of our report for Casa Bonita Restaurants included herein and to the reference to our firm under the headings "Selected Combined Financial Data" and "Experts" in the prospectus.

                                          /s/     KPMG PEAT MARWICK LLP

Orange County, California
July 28, 1997


EXHIBIT 23.2

The Board of Directors
CKE Restaurants, Inc.:

We consent to the use of our report for North's Restaurants included herein and to the reference to our firm under the headings "Selected Combined Financial Data" and "Experts" in the prospectus.

                                          /s/     KPMG PEAT MARWICK LLP

Portland, Oregon
July 28, 1997


EXHIBIT 23.2

The Board of Directors
CKE Restaurants, Inc.:

We consent to the use of our report for Star Buffet, Inc. included herein and to the reference to our firm under the headings "Selected Combined Financial Data" and "Experts" in the prospectus.

                                          /s/     KPMG PEAT MARWICK LLP

Orange County, California
July 28, 1997


EXHIBIT 23.2

The Board of Directors
CKE Restaurants, Inc.:

We consent to the use of our report for HTB Restaurants, Inc. included herein and to the reference to our firm under the headings "Selected Combined Financial Data" and "Experts" in the prospectus.

                                          /s/     KPMG PEAT MARWICK LLP

Orange County, California

July 28, 1997


ARTICLE 5
MULTIPLIER: 1,000


PERIOD TYPE OTHER
FISCAL YEAR END JAN 26 1998
PERIOD START JUL 28 1997
PERIOD END JUL 28 1997
CASH 0
SECURITIES 0
RECEIVABLES 0
ALLOWANCES 0
INVENTORY 0
CURRENT ASSETS 0
PP&E 0
DEPRECIATION 0
TOTAL ASSETS 0
CURRENT LIABILITIES 0
BONDS 0
PREFERRED MANDATORY 0
PREFERRED 0
COMMON 0
OTHER SE (26)
TOTAL LIABILITY AND EQUITY 0
SALES 0
TOTAL REVENUES 0
CGS 0
TOTAL COSTS 0
OTHER EXPENSES 0
LOSS PROVISION 0
INTEREST EXPENSE 0
INCOME PRETAX 0
INCOME TAX 0
INCOME CONTINUING 0
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET INCOME 0
EPS PRIMARY 0
EPS DILUTED 0