Document:

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                                                                    EXHIBIT 10.3

                      MEMBERSHIP INTEREST PLEDGE AGREEMENT

        This MEMBERSHIP INTEREST PLEDGE AGREEMENT (this "Agreement") is made and
entered into as of this 30th day of August 2000, by and among Sizzler
International, Inc., a Delaware corporation (the "Company"), and FFPE Holding
Company, Inc., a Delaware corporation (the "Pledgor").

                                 R E C I T A L S

        A. The Company, Pledgor, S & C Company, Inc., a California corporation
(the "Old Company"), the shareholders and certain principals of the Old Company,
FFPE, LLC, a Delaware limited liability company (the "New Company"), and the
members of the New Company are parties to the Amended and Restated LLC
Membership Interest Purchase Agreement dated August 21, 2000 (the "Purchase
Agreement"), pursuant to which the Company is purchasing and acquiring from
Pledgor 82 units of the New Company, which units represent 82% of the
outstanding membership interests in the New Company. All capitalized terms used
herein but which are not otherwise defined shall have the meanings given to them
in the Purchase Agreement.

        B. Immediately after the consummation of the transactions contemplated
by the Purchase Agreement, Pledgor shall continue to hold 18 units of the New
Company, which units represent 18% of the outstanding membership interests in
the New Company (the "Retained Units").

        C. As security for Pledgor's performance of all of its indemnification
obligations, whether joint or several, under Article VII of the Purchase
Agreement (the "Secured Obligations"), Pledgor has agreed to grant the Company a
first priority security interest in all of the Retained Units, all on the terms
and subject to the conditions of this Agreement.

                                A G R E E M E N T

        In consideration of the foregoing recitals and the respective covenants,
agreements, representations and warranties contained herein, the parties,
intending to be legally bound, agree as follows:

        1.     GRANT OF SECURITY INTEREST.

               1.1 PLEDGE OF RETAINED UNITS. Pledgor hereby grants in favor of
the Company a security interest in, and does hereby pledge and hypothecate to
the Company, and deposit with the Company, as security for the Secured
Obligations, the Retained Units. The certificate evidencing the Retained Units
is accompanied by instruments of assignment in the form attached as Attachment 1
hereto, duly executed in blank by Pledgor and is being delivered concurrently
herewith to the Company.

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               1.2 SUBSTITUTION OF COLLATERAL. Pledgor shall have the right to
require the Company to release any or all of the Retained Units to Pledgor upon
such time that Pledgor has deposited in immediately available funds with the
Company an amount equal to the greater of (i) the proceeds from a permitted sale
of the Retained Units, or (ii) the Fair Value (as defined in the Warrant dated
as of the date hereof, executed by the Company in favor of FFPE Holding Company,
Inc., a Delaware corporation) of the Retained Units to be released to Pledgor
(in either case, the "Cash Deposit"). As soon as possible after Pledgor has made
the Cash Deposit, the Company shall hold the Cash Deposit and release the
Retained Units so paid for. The Cash Deposit, together with any and all
remaining Retained Units, shall thereafter secure, or continue to secure, the
Secured Obligations. The Company shall have the same recourse against the Cash
Deposit as it would have had against the Retained Units so paid for, and Pledgor
shall have the same rights in and to the Cash Deposit as it otherwise would have
had with respect to the Retained Units so paid for.

        2.     OWNERSHIP RIGHTS OF PLEDGOR. The Company shall hold the Retained
Units for the period hereinafter specified, but all of the Retained Units shall
be registered on the books of the New Company in the name of Pledgor. All
dividends of the New Company in cash or other property declared with respect to
the Retained Units shall be paid directly to the Pledgor so long as there is no
Event of Default (as defined in Section 4, below). Any dividends in units or
other securities of the New Company or shares otherwise issuable with respect to
or as replacements of the Retained Units shall be delivered directly to the
Company to be held as a part of the pledge. Pledgor shall retain the right to
vote its Retained Units so long as there is no Event of Default.

        3.     REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor represents
and warrants that its Retained Units constitute duly and validly issued, fully
paid and nonassessable units of membership interest in the New Company and are
duly and validly pledged with the Company in accordance with applicable law, and
that Pledgor will defend the Company's security interest in and to its Retained
Units against the claims and demands of all persons whomsoever relating to such
Retained Units. Pledgor further represents and warrants to the Company that at
the time its Retained Units are deposited in pledge with the Company, all of
such Retained Units shall be free and clear of all claims, mortgages, pledges,
liens, encumbrances and restrictions of every nature whatsoever, except for (a)
any encumbrances arising out of the Purchase Agreement, and (b) any restrictions
upon sale and distribution imposed by state or federal securities laws. These
representations and warranties, and each of them, shall be deemed to be
continuing under this Agreement.

        4.     DEFAULT

               4.1 RIGHTS OF SECURED PARTY UPON DEFAULT. Upon an Event of
Default, The Company may, without demand or other notice of any kind, at its
option:

                      (a) DISPOSAL OF RETAINED UNITS. Sell, lease, or otherwise
dispose of the Retained Units at a public or private sale, with or without
having such Retained Units at the place of sale, and upon terms and in such
manner as the Company may reasonably determine and the Company may purchase the
Retained Units at any such public sale and credit bid all or any part of the
Secured
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Obligations then outstanding; provided, however, that notwithstanding any
provision to the contrary in the Uniform Commercial Code, as adopted in the
State of California, the Company shall give Pledgor not less than 10 business
days notice of the date on which any public sale or private sale will be held;
and

                      (b) BUSINESS AND COMMERCE CODE REMEDIES. Exercise all the
rights and remedies afforded a secured party by the Uniform Commercial Code, as
adopted in the State of California.

               4.2 EVENTS OF DEFAULT. An "Event of Default" shall occur with
respect to Pledgor upon the happening of any of the following events:

                      (a) BREACH OF OBLIGATIONS. A breach or default under
Article VII of the Purchase Agreement;

                      (b) DEFAULT UNDER THIS AGREEMENT. Any material breach by
Pledgor under this Agreement which is not cured within 30 days after written
notice from the Company specifying the same;

                      (c) ATTACHMENT. The levy of, or any attachment, execution
or other process against, the Retained Units owned by Pledgor, which is not
released within 90 days after the levy thereof; or

                      (d) BANKRUPTCY. The general assignment for the benefit of
the Company, or the filing of any petition in bankruptcy or for relief under the
provisions of the Federal Bankruptcy Act, by or against Pledgor or the Company,
unless such petition is dismissed within 90 days after such petition is filed;
or the appointment of a receiver by any court, whether permanent or temporary,
for all or substantially all of Pledgor's (or the New Company's) property,
unless such receiver is removed within 90 days after such receiver is appointed.

        5. COVENANTS OF PLEDGOR. Until this Agreement has been terminated
pursuant to Section 6, below, Pledgor covenants and agrees that it shall:

               (a) INFORMATION AFFECTING RETAINED UNITS. Promptly notify the
Company of any attachment or other legal process levied against any of the
Retained Units and any information received by Pledgor relative to the Retained
Units which may in any way affect the value of such Retained Units or the rights
and remedies of the Company in respect thereto;

               (b) EXECUTION OF DOCUMENTS. Execute any and all documents and do
all other things reasonably requested by the Company as necessary or appropriate
to perfect the security interest in the Retained Units. Pledgor hereby appoints
the Company as Pledgor's attorney-in-fact to do, at the Company's option and at
Pledgor's expense, all acts and things which the Company may

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reasonably deem necessary or desirable to perfect and continue the perfection
and priority of the security interest hereby created; and

               (c) SALES OR ENCUMBRANCES. Not sell, convey, retire or otherwise
dispose of all or any of the Retained Units or any interest therein, beneficial
or otherwise, or create, incur or permit to exist any pledge, mortgage, lien,
charge, encumbrance, or any security interest whatsoever in or with respect to
any of the Retained Units or the proceeds thereof, other than that created
hereby, without on or before the effective time of such sale paying all
outstanding amounts of the secured indebtedness.

        6.     TERMINATION; RETURN OF RETAINED UNITS. The pledge of the
Retained Units shall terminate upon the satisfaction or termination, whichever
is the first to occur, of all of the Secured Obligations; provided, however,
immediately prior to any purchase of Retained Units by the Company from Pledgor
pursuant to that certain Put Option Agreement (Tamara Sarkisian-Celmo), the
pledge of the Retained Units so purchased shall terminate. Upon a termination of
the pledge created hereby, this Agreement and all provisions hereof shall
terminate and the Company shall return all of the Retained Units, as well as
such incidental property and cash as are then held in pledge by The Company
which have not been used or applied toward the payment or satisfaction of such
liabilities.

        7.     MISCELLANEOUS.

               7.1 REMEDIES CUMULATIVE. The remedies provided herein in favor of
the Company shall not be deemed exclusive but shall be cumulative and shall be
in addition to all of the remedies in favor of The Company existing at law or in
equity.

               7.2 EXECUTION OF ENDORSEMENTS, ASSIGNMENTS. Upon the occurrence
of a Default, the Company shall have the right for and in the name, place and
stead of Pledgor to execute endorsements, assignments or other instruments of
conveyance or transfer with respect to all or any of the Retained Units.

               7.3 WAIVER OF RIGHTS, MODIFICATION OF AGREEMENT. No delay on the
part of the Company in exercising any of the Company's options, powers or
rights, or the partial or single exercise thereof, shall constitute a waiver
thereof. No provision of this Agreement may be changed, waived, modified or
varied in any manner orally, but only by an instrument in writing signed by the
party against whom enforcement of the change, waiver, modification or variation
is sought.

               7.4 NOTICES. All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
duly given in the manner set forth in the Credit Agreement.

               7.5 SUCCESSORS; AGREEMENT BINDING UPON SUCCESSORS. This Agreement
is binding upon and shall inure to the benefit of the parties and their
respective heirs, executors, administrators, successors or assigns.

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               7.6 APPLICABLE LAW. This Agreement and the rights and obligations
of the parties hereunder shall be construed in accordance with and governed by
the internal laws of the State of California.

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

"PLEDGOR"                                  "PLEDGEE":

FFPE HOLDING COMPANY, INC.,                SIZZLER INTERNATIONAL, INC.,
a Delaware corporation                     a Delaware corporation

By: /s/ TAMARA SARKISIAN-CELMO            By: /s/ CHARLES L. BOPPELL
   ----------------------------               --------------------------

Title: Vice President                      Title: President and CEO
      -------------------------                  -----------------------

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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. John Sarkisian, an individual
               resident of California ("John"), is the holder of 33.94%, Tamara
               Sarkisian-Celmo, as trustee of the Tamara Sarkisian-Celmo Family
               Trust UDT 10/16/97 ("Tamara"), is the holder of 28.94% and the
               Sarkisian 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 John Sarkisian, Tamara
                        Sarkisian-Celmo 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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<PAGE>   8

                        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 (John Sarkisian) and the Put Option Agreement
                        (Tamara Sarkisian-Celmo), each as of even date herewith
                        between the Optionor and the Optionee.

                                      -8-
<PAGE>   9

               (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.

                                      -9-
<PAGE>   10

               (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:

                                      -10-
<PAGE>   11

                   if to Optionee at:

                   Sizzler International, Inc.
                   6101 West Centinela Avenue
                   Culver City, California 90230
                   Attn:  Michael B. Green
                   Tel:    (310) 568-0135
                   Fax:    (310) 568-8255

                   with a copy to its counsel at:

                   Pachulski, Stang, Ziehl, Young & Jones PC
                   10100 Santa Monica Boulevard Suite 1100
                   Los Angeles, California 90067
                   Attn:  David J. Barton, Esq.
                   Tel:    (310) 277-6910
                   Fax:    (310) 201-0760

                   and if to Optionor at:

                   FFPE Holding Company, Inc.
                   9823 Pacific Heights Blvd., Suite J
                   San Diego, California 92121
                   Attn:  John Sarkisian
                   Tel: 858-843-3266
                   Fax: 858-552-4930

                   and with a copy to each of the
                   following counsel at:

                   Sheppard, Mullin, Richter & Hampton, LLP
                   501 West Broadway, 19th Floor
                   San Diego, California  92101-3598
                   Attn:  Richard L. Kintz, Esq.
                   Tel:    (619) 338-6500
                   Fax:    (619) 234-3815

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

                                      -11-
<PAGE>   12

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.

                                      -12-
<PAGE>   13

        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

                                      -13-
<PAGE>   14

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/ JOHN SARKISIAN
        --------------------------

Its:    President
        --------------------------

By:     /s/ TAMARA SARKISIAN-CELMO
        --------------------------

Its:    Vice President
        --------------------------

"OPTIONEE":

Sizzler International, Inc.

By:     /s/ CHARLES L. BOPPELL
        --------------------------

Its:    President and CEO
        --------------------------

By:     /s/ STEVEN R. SELCER
        --------------------------

Its:    Vice President and CFO
        --------------------------

                                      -14-
<PAGE>   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 John Sarkisian
shall be conclusively presumed to be the agreement of the Optionor and of the
Shareholders.

                                      -1-

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