EXHIBIT 10.4
THE CALL OPTION EVIDENCED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER THE SECURITIES LAWS OF ANY STATE, AND IS BEING OFFERED AND SOLD IN
RELIANCE ON AN EXEMPTION FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF
SUCH LAWS. THE TRANSFERABILITY OF THE CALL OPTION IS SUBJECT TO RESTRICTIONS
SET FORTH IN THIS INSTRUMENT AND IMPOSED BY SUCH LAWS.
CALL OPTION AGREEMENT
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This Call Option Agreement (this "Agreement") is made as of ______, 2000 by
and between FFPE Holding Company, Inc. ("Optionor") and Sizzler International,
Inc. (the "Optionee"). Unless the context otherwise indicates, capitalized
terms used herein shall have the meanings given them in Section 10 hereof.
RECITALS
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A. Optionor is a Delaware corporation having its principal place of
business in San Diego, California. Xxxx Xxxxxxxxx, an individual
resident of California ("Xxxx"), is the holder of 77.78% and Xxxxxx
Xxxxxxxxx-Xxxxx, as trustee of the Xxxxxx Xxxxxxxxx-Xxxxx Family Trust
UDT 10/16/97 ("Xxxxxx"), is the holder of 22.22% of the outstanding
capital stock of Optionor.
B. Optionee is a Delaware corporation having its principal place of
business in Culver City, California.
C. Before the date hereof, Optionor was the holder of all of the
outstanding units of membership interest in FFPE, LLC, a Delaware
limited liability company (the "Units").
D. Pursuant to an LLC Membership Interest Purchase Agreement dated May
23, 2000 between Optionor as Seller and Optionee as Purchaser (the
"Purchase Agreement"), Optionor has sold 82% of the Units to Optionee.
E. As of the date hereof, Optionor continues to be the holder of 18% of
the outstanding Units (the "Retained Units").
F. Pursuant to the Purchase Agreement, Optionor and Optionee have entered
into this Agreement, under which Optionor agrees to grant to Optionee
an option to purchase all 18 Retained Units (representing 18% of all
issued and outstanding Units of FFPE, LLC) from Optionor on the terms
and conditions set forth in this Agreement.
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AGREEMENT
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1. Grant and Acceptance. On the terms and conditions set forth in this
Agreement, (a) Optionor hereby grants to Optionee an option (the "Call Option")
to purchase from Optionor up to all of the Retained Units at the Option Exercise
Price and (b) Optionee hereby confirms its acceptance of the Call Option.
2. Option Exercise Price. The price per Unit at which Optionee shall be
entitled to purchase any Retained Units (the "Option Exercise Price") shall be
the dollar amount described in (a) or (b) below, whichever is applicable:
(a) With respect to any exercise of the Call Option during Year 1 or
Year 2, the dollar amount equal to the number obtained by
dividing (A) $7,000,000 by (B) Total Retained Units.
(b) With respect to any exercise of the Call Option after the end of
Year 2, the dollar amount equal to the number obtained by
dividing (A) the positive difference, if any, between (1) the
number obtained by multiplying the EBITDA of FFPE, LLC for the
Relevant Trailing 12 Month Period by the Applicable Multiple and
(2) the Current Debt of FFPE, LLC as of the end of such Relevant
Trailing 12 Month Period by (B) all of the then outstanding
Units.
In determining the EBITDA for purposes of this Section, the parties shall make
any adjustments required by the Intercompany Accounting procedures set forth on
the EBITDA Adjustment Guidelines, attached as Exhibit "A."
3. Term. The term of the Call Option shall commence as of the date of
the grant thereof, which shall be the date hereof, and shall expire on the
Expiration Date. Upon the Expiration Date, the Call Option and this Agreement
shall become void and of no force or effect, and the parties shall have no
further rights or obligations under this Agreement, other than any liability for
any breach of the contract arising before the Expiration Date.
4. Exercisability. The Call Option may be exercised by Optionee at any
time during the term hereof (any such exercise, an "Option Exercise"). The Call
Option may be exercised in whole or in part. However, Optionee shall be entitled
to a total of two Option Exercises unless Optionor gives a Notice of Partial
Cancellation (as defined below) with respect to any Option Exercise, in which
case Optionee shall be entitled to a total of three Option Exercises.
Immediately after the final permitted Option Exercise, the Call Option shall
cease to be exercisable.
5. Exercise Procedure.
(a) An Option Exercise may be made only by Optionee or a Permitted
Transferee. An Option Exercise shall be commenced by giving a
written notice of election (a "Notice of Election"). A Notice of
Election shall (a) be given in accordance with Section 16 hereof,
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(b) state that Optionee is making an election to exercise the
Call Option under this Agreement, (c) specify the number of
Retained Units proposed to be acquired pursuant to the Option
Exercise (the "Retained Units Proposed to be Acquired"), and (d)
set forth the Applicable Multiple, the Sizzler Multiple, and the
Option Exercise Price with respect to the Option Exercise, and
(e) provide all of the calculations reasonably necessary for the
Optionor to verify the numbers set forth in clause (d) of this
Section 5(b).
(b) Upon the giving of a Notice of Election by the Optionee, the
Optionor shall have the right, within thirty (30) days of the
giving of any Notice of Election, to give a Notice of Dispute
pursuant to Section 5(c) and/or a Notice of Partial Cancellation
pursuant to Section 5(d).
(c) If the Optionor has reasonable grounds to believe in good faith
that any calculation contained in a Notice of Election is
incorrect, then within thirty (30) days of the giving of the
Notice of Election the Optionor may give notice to the Optionee
that it disputes the calculation (a "Notice of Dispute"). The
Notice of Dispute shall set forth in detail the grounds on which
the Optionor believes that the calculation is incorrect. For a
period of thirty (30) days following the giving of the Notice of
Dispute, the parties shall use commercially reasonable best
efforts to resolve the dispute. If the parties fail to resolve
the dispute within such period, then all issues in dispute
relating to the Notice of Election and Notice of Dispute shall be
submitted to a "Big Five" accounting firm (the "Accountants") for
resolution within (ten) 10 days. If issues are submitted to the
Accountants for resolution, (i) each party will furnish to the
Accountants such work papers and other documents and information
relating to the disputed issues as the Accountants may request
and are reasonably available to that party, and will be afforded
the opportunity to present to the Accountants any material
relating to the determination and to discuss the determination
with the Accountants; (ii) the determination by the Accountants,
as set forth in a notice delivered to both parties by the
Accountants (a "Notice of Determination"), will be binding and
conclusive on the parties; and (iii) the Optionee and the
Optionor will each bear 50% of the fees of the Accountants for
such determination.
(d) If a Notice of Election is given before the end of Year 5, and if
the sum of (1) the number of Retained Units Proposed to be
Acquired specified in such Notice of Election and (2) the number
of all Retained Units theretofore acquired by Optionee pursuant
to previous Option Exercises under this Agreement (but not
pursuant to either of the Put Option Agreements or otherwise),
exceeds 50% of the Total Retained Units, then Optionor shall have
a right to
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cancel a portion of such Option Exercise in accordance with
Section 5(e) (such right, a "Cancellation Right").
(e) A Cancellation Right must be exercised, if at all, within thirty
(30) days of the giving of a Notice of Election by the Optionee.
A Cancellation Right shall be exercised by giving notice of
partial cancellation (a "Notice of Partial Cancellation") to the
Optionee. The Notice of Partial Cancellation shall (1) be
exercised in accordance with Section 16 hereof, (2) contain a
statement of the Optionor's intent to exercise its Cancellation
Rights under this Section 5, (3) specify the number of Retained
Units that Optionor is canceling, which number shall not exceed
the difference, if any, between the Retained Units Proposed to be
Acquired and 50% of the Total Retained Units (other than any
Retained Units theretofore acquired by the Optionee pursuant to
any Put Option Agreement or otherwise).
(f) An Option Exercise shall become effective upon (A) the expiration
of thirty (30) days after the giving thereof if no Notice of
Dispute with respect to such Option Exercise has been given in
accordance with Section 5(b), (B) if a Notice of Dispute is given
in accordance with Section 5(b), upon the giving of a Notice
Determination with respect to such Option Exercise.
(g) Upon becoming effective, an Option Exercise shall be binding and
conclusive upon the parties in accordance with its terms, subject
to (A) the resolution of any disputed issues submitted to the
Accountants pursuant to a Notice of Dispute, as such resolution
is set forth in any applicable Notice of Determination and (B)
such reduction in the number of Retained Units Proposed to be
Acquired as may be required by any Notice of Partial Cancellation
given in accordance with the terms hereof in response to such
Option Exercise.
6. Sale Procedures.
(a) Upon an Option Exercise becoming binding and conclusive pursuant
to Section 5(g) hereof, Optionor shall become obligated to sell
to Optionee the number of the Retained Units subject to such
Option Exercise, subject only to delivery by the Optionee of the
instruments described in Section 6(c) hereof.
(b) The consummation of the sale of any Retained Units pursuant to an
Option Exercise that has become binding and conclusive pursuant
to Section 5(g) hereof (a "Closing") shall take place at the
principal executive offices of Optionee on such business day, not
later than 90 days after the Option Exercise has become binding
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and conclusive pursuant to Section 5(g) hereof, as Optionor and
Optionee may select.
(c) At the Closing, Optionee shall tender the full amount of the
Option Exercise Price of the Retained Units Being Sold, in cash.
Upon such tender, Optionor shall deliver (i) certificates
evidencing the Retained Units Being Sold, duly endorsed in blank
or accompanied by written instruments of transfer in form
satisfactory to Optionee duly executed by Optionor, free and
clear of any Encumbrances, (ii) an Opinion of Counsel, and (iii)
a Seller's Certificate.
7. Non-Transferability of Retained Units.
(a) Except as otherwise provided herein, Optionor shall not Transfer
any of the Retained Units without the express prior written
consent of Optionee, which consent may be withheld in Optionor's
sole and absolute discretion, and the Retained Units shall not be
subject to execution, attachment or similar process. Any attempt
to Transfer any of the Retained Units, or to subject the Retained
Units to execution, attachment or similar process, other than in
accordance with this Agreement shall be void ab initio.
(b) Optionor may Transfer the Retained Units to any Affiliate,
provided that the Optionor gives Optionee at least 30 days prior
written notice of such Transfer and the Transferee acquires the
Retained Units, assumes in writing all of the obligations of
Optionor under this Agreement, and acknowledges acceptance of the
Retained Units subject to all terms, conditions and restrictions
hereof, a copy of which assumption and acknowledgement is
provided to Optionee.
(c) The certificates evidencing the Retained Units shall bear an
appropriate legend regarding restrictions on transferability
thereof under applicable law and this Agreement.
8. Representations and Warranties of Optionor. Optionor represents and
warrants to Optionee, as of the date hereof and as of the date of any exercise
of the Call Option, that:
(a) The Retained Units are duly authorized, validly issued, fully
paid and non-assessable units of membership interest of FFPE,
LLC.
(b) There are no outstanding subscriptions, options, warrants,
rights, puts, calls, pre-emptive rights, commitments, conversion
rights, rights of exchange, plans, or other agreements of any
kind relating to the Retained Units.
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(c) Optionor is the sole beneficial owner and holder of record of all
18 of the Retained Units. The Retained Units are free and clear
of any Encumbrances. The delivery to Optionor of the Unit
certificates evidencing the Retained Units, duly endorsed in
blank or accompanied by appropriate written instruments of
transfer duly executed by Optionor, is sufficient to transfer to
Optionee valid title thereto, free and clear of any Encumbrance.
(d) Optionor has all necessary corporate power and authority to enter
into this Agreement and make any endorsement or execute and
deliver any written instrument of transfer necessary to transfer
the Retained Units to Optionee.
(e) This Agreement has been duly executed and delivered by Optionor
and is a valid and binding obligation of Optionor, enforceable
against Optionor in accordance with its terms.
(f) No consent by any third party or governmental authority is
required in connection with the execution or delivery by Optionor
of this Agreement or the consummation of the sale of the Retained
Units to Optionee contemplated hereunder. The execution and
delivery by Optionor of this Agreement and the sale of the
Retained Units to Optionee will not conflict with or result in
any breach of or constitute a default under any agreement or
instrument to which FFPE, LLC or Optionor is a party or by which
its or such Optionor's assets are bound.
9. Adjustments. If outstanding Retained Units subject to the Call Option
are increased, decreased or exchanged for or converted into cash, property
and/or a different number or kind of securities, or if cash, property and/or
securities are distributed in respect of such outstanding securities, in either
case as a result of a reorganization, merger or consolidation of FFPE, LLC, or
as a result of a recapitalization, reclassification, dividend by or other
distribution, Unit split, reverse Unit split or the like involving FFPE, LLC,
then Optionor shall make appropriate and proportionate adjustment in the number
and type of shares or other securities or cash or other property that may be
acquired upon the exercise in full of the Call Option, provided, however, that
any such adjustment shall be made without changing the aggregate Option Exercise
Price of the unexercised portion of the Call Option.
10. Definitions. Capitalized terms used in this Agreement without
definition shall have the following meanings:
(a) "Affiliate" shall mean, with respect to a specified person, any
person that controls, is controlled by or is under common control
with the specified person and with respect to Optionor shall
include Xxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx-Xxxxx or a trust of
which either is a beneficiary.
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(b) "Applicable Multiple" shall mean, with respect to any
determination of the Option Exercise Price applicable to any
particular exercise, the average of (A) the Sizzler Multiple at
the time of such exercise and (B) either (i) ten (10) if such
exercise is during Year 3, (ii) eight (8) if such exercise is
during Year 4, and (iii) seven (7) if such exercise is during
Year 5 or Thereafter; provided, however, in no event shall the
Applicable Multiple exceed eleven (11) if such exercise is during
Year 3, or nine (9) if such exercise is during Year 4, or eight
(8) if such exercise is during Year 5 or Thereafter.
(c) "Current Debt" of a company or a division shall refer to the
total debt (current and non-current) of such company or division,
determined from the financial statements thereof prepared in
accordance with GAAP.
(d) "EBITDA" of a company or division for any period shall mean the
earnings of the company or division for such period before
interest, income taxes, depreciation and amortization of the
company or division, other than any non-recurring items,
determined from financial statements of such company or division
in accordance with GAAP.
(e) "Encumbrances" shall mean any security interest, pledge,
mortgage, hypothecation, lien, charge encumbrances, adverse
claim, preferential arrangement or restriction of any kind,
including, without limitation, any pre-emptive rights, options,
warrants, puts, calls, or restrictions on use, voting, transfer
(other than restrictions under applicable securities laws),
receipt of income or other exercise of any attributes of
ownership.
(f) "Expiration Date" shall be the first to occur of (a) the tenth
(10th) anniversary of the date of this Agreement or (b) the date
of purchase of all of the remaining Retained Units subject to
this Agreement.
(g) "Fair Market Value" of a security on any day shall be equal to
the last sale price, regular way, per unit of such security on
such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such security is
not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which such security is listed or
admitted to trading or, if securities
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are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use or, if on any such date such security is
not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in such security selected by the Board of
Directors of the corporation issuing such security. In all other
cases, Fair Market Value shall be the value determined in good
faith by such Board.
(h) "GAAP" shall mean generally accepted accounting principles,
consistently applied.
(i) "Net Sale Transaction Proceeds" includes the total consideration
paid or given in respect of a Sale Transaction, net of legal
expenses, investment banker and other professional fees and
costs, printing costs, and other transaction costs.
(j) "Net Sale Transaction Proceeds Per Unit" with respect to a Sale
Transaction is the Net Sale Transaction Proceeds of such
transaction divided by the number of Units outstanding
immediately before the exercise for which the adjustment is being
determined.
(k) "Opinion of Counsel" shall mean an opinion of Optionor's legal
counsel, in form satisfactory to Optionor and dated as of the
date of the purchase of any Retained Units hereunder, to the
effect that: (a) the Retained Units are validly issued, fully
paid and non-assessable units of membership interest in FFPE,
LLC; (b) Optionor is the sole holder of record and beneficial
owner of the Retained Units; (c) the execution and delivery of
the assignment instruments do not contravene any applicable
provision of law; and (d) the Retained Units have been validly
assigned by Optionor to Optionee, free and clear of any
Encumbrance.
(l) "Permitted Transferee" shall mean any person to whom the Call
Option has been transferred in accordance with Section 7(b)
hereof. A Permitted Transferee shall be treated as Optionee for
all purposes under this Agreement.
(m) "Put Option Agreements" shall refer to the Put Option Agreement
(Xxxx Xxxxxxxxx) and the Put Option Agreement (Xxxxxx Xxxxxxxxx-
Xxxxx), each as of even date herewith between the Optionor and
the Optionee.
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(n) "Relevant Trailing 12 Month Period" shall mean, with respect to
the determination of the Option Exercise Price applicable to any
exercise of the Call Option, the Optionee's thirteen (13)
completed four-week accounting periods immediately preceding the
exercise.
(o) "Retained Units Being Sold" shall mean the Retained Units
Proposed to be Acquired, after giving effect to any reduction in
the number of such Retained Units pursuant to the exercise of a
Cancellation Right in accordance with this Agreement.
(p) "Sale Transaction" includes the sale of substantially all of the
assets of FFPE, LLC, a transfer of more than 50% of the
outstanding Units, or a merger to which FFPE, LLC is a party
other than as the surviving entity, other than a sale, transfer
or merger to or with an Affiliate of Optionee.
(q) "Sellers' Certificate" shall mean a written certificate signed by
Optionor, in form satisfactory to Optionee and dated as of the
date of any sale of Retained Units hereunder, to the effect that
the representations and warranties of Optionor set forth in
Section 8 (a), (b), (c), (d) and (f) of this Agreement are true
and correct in all respects as of the date of the sale of any
Retained Units hereunder.
(r) "Sizzler Multiple" shall mean the number obtained by dividing (A)
the sum of (1) the number obtained by multiplying (x) the Fair
Market Value of a share of Optionee's common stock as of the end
of the Relevant Trailing 12-Month Period and (y) the number of
shares of Optionee's common stock outstanding as of such date and
(2) the Current Debt of Optionee as of such date by (B) EBITDA of
Optionee for the Relevant Trailing 12-Month Period.
(s) "Subsidiary" of a specified person shall mean any corporation or
other entity, more than 50% of the stock or ownership interest of
which is owned by the specified person.
(t) "Total Retained Units" shall mean all of the Retained Units
(representing 18% of FFPE, LLC) subject to the Call Option,
before any exercise thereof.
(u) "Transfer" shall mean sell, transfer, assign, convey, gift,
pledge, hypothecate or dispose of in any way, whether by
operation of law or otherwise.
(v) "Year 1" shall mean the period commencing on the date of this
Agreement and terminating _____________, 2001.
(w) "Year 2" shall mean the period commencing on _____________, 2001
and terminating on ____________, 2002.
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(x) "Year 3" shall mean the period commencing on _____________, 2002
and terminating on ____________, 2003.
(y) "Year 4" shall mean the period commencing on _____________, 2003
and terminating on ____________, 2004.
(z) "Year 5" shall mean the period commencing on _____________, 2004
and terminating on ________________, 2005.
(aa) "Year 5 and Thereafter" shall mean the period commencing at the
beginning of Year 5 and terminating on the Expiration Date.
11. Stockholder Rights. Optionee shall not be entitled to vote, receive
dividends, or be deemed for any purpose the holder of any Retained Units until
the Call Option shall have been exercised and the Retained Units shall have been
purchase by Optionee in accordance with the provisions of this Agreement.
12. Expenses. Except as otherwise express set forth herein, all fees and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such costs or expenses.
13. Waiver of Compliance; Consents. Any failure by Optionor or Optionee
to comply with any obligation, covenant, agreement or condition herein may be
waived by Optionee or Optionor, as applicable, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
14. Governing Law. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
California applicable to contracts made and to be performed entirely within the
State of California by California residents without regard to California choice
of law principles.
15. Captions. The Section captions used herein are for reference purposes
only, and shall not in any way affect the meaning or interpretation of this
Agreement.
16. Notices. Any notice or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by telecopy
or by registered or certified mail, postage prepaid, addressed as follows:
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if to Optionee at:
Sizzler International, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to its counsel at:
Xxxxxxxxx, Stang, Ziehl, Young & Xxxxx PC
00000 Xxxxx Xxxxxx Xxxxxxxxx Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to Optionor at:
FFPE Holding Company, Inc.
0000 Xxxxxxx Xxxxxxx Xxxx., Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
and with a copy to each of the
following counsel at:
Sheppard, Mullin, Xxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given as of
the date so delivered, sent by telecopy or mailed. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly delivered to and
received by the party to whom it is directed three (3) business days after it is
sent by registered or certified mail, return receipt requested, postage prepaid,
or upon delivery via overnight courier service, in each case addressed to the
intended recipient as described above. Any notice, request, claim, demand or
other
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communication given in any other manner shall only be deemed received by the
intended recipient thereof upon such recipient's actual receipt thereof.
17. Parties in Interest. This Agreement may not be transferred, assigned,
sold, conveyed, pledged or hypothecated by any party hereto, other than by
operation of law. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
18. Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
19. Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes the Letter of Intent between the parties
dated February 28, 2000 and all other prior agreements and understandings
(written or oral) between the parties with respect to such subject matter.
20. Amendments. This Agreement may not be changed orally, but only by an
agreement in writing signed by the parties hereto. Any provision of this
Agreement can be waived, amended, supplemented or modified by written agreement
of the parties hereto.
21. Third Party Beneficiaries. Nothing contained in this Agreement shall
create any rights in, or be deemed to have been executed for the benefit of, any
person or entity that is not a party hereto or thereto or a successor or
permitted assign of such a party.
22. Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable in a jurisdiction, such provision shall be
modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
23. Specific Performance. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, each party
shall be entitled to an injunction or restraining order to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, in addition to
any other right or remedy to which such party may be entitled under this
Agreement, at law or in equity.
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24. Principles of Construction.
(a) All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless
otherwise specified.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
(c) The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation", unless already
expressly followed by such phrase or the phrase "but not limited
to".
(d) All references to "U.S. dollars" or "$" shall be deemed
references to lawful money of the United States of America.
(e) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting
principles in the United States of America.
(f) All words importing any gender shall be deemed to include the
other genders.
(g) All references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to.
(h) Unless otherwise specified, references to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments, modifications and supplements thereto.
(i) Each party has reviewed and commented upon this Agreement and,
therefore, the rule of construction requiring that any ambiguity
be resolved against the drafting party shall not be employed in
the interpretation of this Agreement.
25. Additional Consideration. In the event of the consummation of any Sale
Transaction within the six-month period following any exercise of the Call
Option, the Option Exercise Price paid or payable in connection with the
purchase of Units pursuant to such exercise shall be subject to adjustment. If
the Net Sale Transaction Proceeds per Unit exceeds the Option Exercise Price per
Unit purchased or purchasable by Optionee pursuant to such exercise, then the
Option Exercise Price paid or payable to Optionee shall be increased by the
amount of the difference multiplied by the number of Units purchased by Optionee
pursuant to such exercise. Optionor and Optionee agree to
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promptly pay or refund the amount of any increase or decrease upon demand by the
other.
26. Further Assurances. Each party agrees to promptly provide the other
party with such information as is necessary to make the computations required
hereunder and to effectuate the purposes of this Agreement.
IN WITNESS WHEREOF, Optionor and Optionee have entered into this Option
Agreement in ____________, California as of the day and year first written.
"OPTIONOR":
FFPE Holding Company, Inc.
By: _________________________
Its: _________________________
By: _________________________
Its: _________________________
"OPTIONEE":
Sizzler International, Inc.
By: _________________________
Its: _________________________
By: _________________________
Its: _________________________
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EXHIBIT A
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EBITDA ADJUSTMENT GUIDELINES
The parties acknowledge that a substantial portion of the value of the Call
Option may be related to future value of the Units of the Membership Interests
of FFPE, LLC (the "Company"). Therefore, Optionor and Optionee have agreed upon
the following EBITDA Adjustment Guidelines:
1. Intercompany Accounting. During the term of the Call Option, for purposes of
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determining the Option Exercise Price, the EBITDA of the Company shall be
adjusted to eliminate any impact adverse to Optionor of any of the following
items, unless such item is agreed to by Optionor:
(a) Any charge or allocation of any corporate overhead services or similar
items (collectively, "Overhead Charges");
(b) Any charge to the Company for any costs related to the Optionee's
acquisition of the Company, including, but not limited to: acquisition
expenses, legal expenses, investment banking and similar expense;
(c) Any non-recurring or extraordinary charges other than attributable to
the Company during the term of the Put Option from any source;
(d) Any subsequent change to the reserves of the Company established at
the Closing (as defined in the Agreement); and
(e) The 2% management fee, if any, paid or payable to Optionee permitted
in Section 6.5 of the limited liability company agreement of the
Company.
2. Corporate Services. During the term of the Call Option, in the event that
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Optionee can provide needed goods and services at a price and terms equal to or
less than the price and terms offered by and at a quality level equal to that of
unaffiliated third parties, then such goods and services shall be acquired from
Optionee.
3. Volume Discounts. During the term of the Call Option, Optionee shall not
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charge the Company for any volume purchasing discounts that the Company is able
to recognize as a result of the joint purchasing power of Optionee and the
Company.
4. Consent. For purposes of these Guidelines, the agreement of Xxxx Xxxxxxxxx
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shall be conclusively presumed to be the agreement of the Optionor and of the
Shareholders.
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