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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
This Call Option Agreement (this "Agreement") is made as of August 30,
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
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 33.94%, Xxxxxx
Xxxxxxxxx-Xxxxx, as trustee of the Xxxxxx Xxxxxxxxx-Xxxxx Family
Trust UDT 10/16/97 ("Xxxxxx"), is the holder of 28.94% and the
Xxxxxxxxx Family Trust UDT dated 7/19/95 is the holder of 37.12%
of the outstanding capital stock of Optionor.
B. Optionee is a Delaware corporation having its principal place of
business in Culver City, California.
C. Optionor is the holder of certain 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 as amended by that Amended and Restated LLC
membership Purchase Agreement dated August 21, 2000 between
Optionor as Seller and Optionee as Purchaser (the "Purchase
Agreement"), Optionee has acquired 82% of the Units.
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
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
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written notice of election (a "Notice of Election"). A
Notice of Election shall (a) be given in accordance with
Section 16 hereof, (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
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to either of the Put Option Agreements or otherwise),
exceeds 50% of the Total Retained Units, then Optionor
shall have a right to 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
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principal executive offices of Optionee on such business
day, not later than 90 days after the Option Exercise
has become binding 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 August 29, 2001.
(w) "Year 2" shall mean the period commencing on August 30,
2001 and terminating on August 29, 2002.
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(x) "Year 3" shall mean the period commencing on August 30,
2002 and terminating on August 29, 2003.
(y) "Year 4" shall mean the period commencing on August 30,
2003 and terminating on August 29, 2004.
(z) "Year 5" shall mean the period commencing on August 30,
2004 and terminating on August 29, 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 Los Angeles, California as of the day and year first written.
"OPTIONOR":
FFPE Holding Company, Inc.
By: /s/ XXXX XXXXXXXXX
--------------------------
Its: President
--------------------------
By: /s/ XXXXXX XXXXXXXXX-XXXXX
--------------------------
Its: Vice President
--------------------------
"OPTIONEE":
Sizzler International, Inc.
By: /s/ XXXXXXX X. XXXXXXX
--------------------------
Its: President and CEO
--------------------------
By: /s/ XXXXXX X. XXXXXX
--------------------------
Its: Vice President and CFO
--------------------------
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15
EXHIBIT A
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
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
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
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
shall be conclusively presumed to be the agreement of the Optionor and of the
Shareholders.
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