Reference Hereby Is Made To That Certain Amended And Restated Loan And - PRANDIUM INC - 11-14-2001

Document Sample
Reference Hereby Is Made To That Certain Amended And Restated Loan And - PRANDIUM INC - 11-14-2001 Powered By Docstoc
					EXHIBIT 10(d) Foothill Capital Corporation 2450 Colorado Avenue, Suite 3000 West Santa Monica, California 90404 As of October 18, 2001 FRI-MRD CORPORATION Attn: Mr. Robert D. Gonda 18831 Von Karman Avenue Irvine, California 92612 Re: Foothill Capital Corporation; Chi-Chi's, Inc., as Borrower, FRI-MRD Corporation, as a Guarantor, Prandium, Inc., as a Guarantor, and each of their Subsidiaries, as Guarantors Ladies and Gentlemen: Reference hereby is made to that certain Amended and Restated Loan and Security Agreement, dated as of July 19, 2000 (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), by and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRIMRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), and for purposes of acknowledging and agreeing to Section 15.11 of the Loan Agreement, by PRANDIUM, INC., a Delaware corporation, formerly known as Family Restaurants, Inc. ("Prandium"), and each of its Affiliates that are signatories thereto, and, on the other hand, FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. Borrower, Prandium, FRI-MRD, and each of their undersigned Affiliates each acknowledge and agree that unwaived Events of Default have occurred. The Events of Default currently known by Foothill include the following Events of Default (the "Present Events of Default"): A. In violation of the financial covenant contained in Section 7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period of four consecutive fiscal quarters ending December 31, 2000 was $557,000, which fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for such period; B. In violation of the financial covenant contained in Section 7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period of four consecutive fiscal quarters ending April 1, 2001 was ($1,500,000), which fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for such period; C. In violation of the financial covenant contained in Section 7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period of four consecutive fiscal quarters ending July 1, 2001 was ($1,551,000), which fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for such period; D. In violation of the financial covenant contained in Section 7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and FRI-Admin, on a combined basis for the period of four consecutive fiscal quarters ending December 31, 2000 was $1,970,000, which fails to satisfy the required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined basis, of $6,000,000 for such period; E. In violation of the financial covenant contained in Section 7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and FRI-Admin, on a combined basis for the period of four consecutive fiscal quarters ending April 1, 2001 was ($1,825,000), which fails to satisfy the required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined basis, of $6,000,000 for such period;

D. In violation of the financial covenant contained in Section 7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and FRI-Admin, on a combined basis for the period of four consecutive fiscal quarters ending December 31, 2000 was $1,970,000, which fails to satisfy the required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined basis, of $6,000,000 for such period; E. In violation of the financial covenant contained in Section 7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and FRI-Admin, on a combined basis for the period of four consecutive fiscal quarters ending April 1, 2001 was ($1,825,000), which fails to satisfy the required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined basis, of $6,000,000 for such period; F. In violation of the financial covenant contained in Section 7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and FRI-Admin, on a combined basis for the period of four consecutive fiscal quarters ending July 1, 2001 was ($3,665,000), which fails to satisfy the required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined basis, of $6,000,000 for such period; G. In violation of the financial covenant contained in Section 7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four consecutive fiscal quarters ending December 31, 2000 was ($675,000), which fails to satisfy the required minimum EBITDA for KKR of $0 for such period; H. In violation of the financial covenant contained in Section 7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four consecutive fiscal quarters ending April 1, 2001 was ($1,162,000), which fails to satisfy the required minimum EBITDA for KKR of $500,000 for such period; I. In violation of the financial covenant contained in Section 7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four consecutive fiscal quarters ending July 1, 2001 was ($1,818,000), which fails to satisfy the required minimum EBITDA for KKR of $500,000 for such period; J. In violation of the financial covenant contained in Section 7.20(d) of the Loan Agreement, the actual EBITDA of KKR and HGI on a combined basis for the period of four consecutive fiscal quarters ending April 1, 2001 was $2,559,000, which fails to satisfy the required minimum EBITDA for KKR and HGI on a combined basis of $3,000,000 for such period; K. In violation of the financial covenant contained in Section 7.20(d) of the Loan Agreement, the actual EBITDA of KKR and HGI on a combined basis for the period of four consecutive fiscal quarters ending July 1, 2001 was $1,824,000, which fails to satisfy the required minimum EBITDA for KKR and HGI on a combined basis of $3,000,000 for such period; L. FRI-MRD is in default with respect to its payment obligations under the Senior Discount Notes and the Senior Secured Discount Notes, which constitutes an Event of Default pursuant to Section 8.10 of the Loan Agreement. 2

Borrower, Prandium, FRI-MRD, and each of their undersigned Affiliates each acknowledge and agree that, as a result of the Present Events of Default, among other things, Foothill's obligation to make Advances, issue Letters of Credit or otherwise extend credit to Borrower under the Loan Agreement has been terminated. To provide FRI-MRD with additional time to negotiate a restructuring of its Indebtedness under the Senior Secured Discount Notes and the Senior Discount Notes, among other Indebtedness, Foothill agrees to forbear from exercising its remedies relative to the Present Events of Default during the Forbearance Period (as hereinafter defined), subject to satisfaction of the following conditions precedent: (a) Foothill shall have received a fully executed counterpart of this agreement, (b) Foothill shall have received a reaffirmation and consent, in the form of Exhibit A hereto, which shall be duly executed by each Guarantor, dated as of the date hereof, and in full force and effect, and (c) Foothill shall have received a forbearance fee, in full in cash, in the amount of $50,000, which forbearance fee shall be fully earned and non- refundable as of the date hereof. The foregoing to the contrary notwithstanding, Foothill shall have no obligation to forbear from satisfying any Obligations which may be outstanding as of any date of determination from any cash or Cash Equivalents held by or on behalf of Foothill or its Affiliates to secure the Obligations.

Borrower, Prandium, FRI-MRD, and each of their undersigned Affiliates each acknowledge and agree that, as a result of the Present Events of Default, among other things, Foothill's obligation to make Advances, issue Letters of Credit or otherwise extend credit to Borrower under the Loan Agreement has been terminated. To provide FRI-MRD with additional time to negotiate a restructuring of its Indebtedness under the Senior Secured Discount Notes and the Senior Discount Notes, among other Indebtedness, Foothill agrees to forbear from exercising its remedies relative to the Present Events of Default during the Forbearance Period (as hereinafter defined), subject to satisfaction of the following conditions precedent: (a) Foothill shall have received a fully executed counterpart of this agreement, (b) Foothill shall have received a reaffirmation and consent, in the form of Exhibit A hereto, which shall be duly executed by each Guarantor, dated as of the date hereof, and in full force and effect, and (c) Foothill shall have received a forbearance fee, in full in cash, in the amount of $50,000, which forbearance fee shall be fully earned and non- refundable as of the date hereof. The foregoing to the contrary notwithstanding, Foothill shall have no obligation to forbear from satisfying any Obligations which may be outstanding as of any date of determination from any cash or Cash Equivalents held by or on behalf of Foothill or its Affiliates to secure the Obligations. FRI-MRD, Prandium, Borrower and each of their undersigned Affiliates each covenants and agrees as follows: 1. FRI-MRD, Prandium, Borrower and each such undersigned Affiliate (collectively, the "Releasing Parties") each hereby releases and discharges absolutely and forever, Foothill, Foothill's predecessors, assigns and their respective officers, directors, shareholders, partners, agents, employees, servants, related corporations, subsidiaries, affiliates, partnerships, or other entities related thereto, whether controlled by or related to Foothill and their attorneys (collectively, the "Released Parties") of and from any and all claims, rights, demands, injuries, debts, damages, liabilities, omissions, accounts, contracts, agreements, promissory notes, obligations, causes of action, costs, expenses, liens, things, matters, and defenses, whether known or unknown, suspected or unsuspected, of every kind and nature which now exist, and/or heretofore have existed in the favor of the Releasing Parties against the Released Parties arising or in any way connected with the financial relationship between the parties arising from the underlying Loan Documents and documents related thereto. Each of the Releasing Parties acknowledges that Section 1542 of the Civil Code of California provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his-favor at the time of executing a release, which "if known by him must have materially affected his settlement with the debtor." Each of the Releasing Parties have been advised by counsel with respect to the release contained herein. Each such Releasing Party also acknowledges that it may hereafter discover facts in addition to or different from those which each such party know or believe to be true with respect to the subject matter of the release given hereby, but that it is the intention of each such Releasing Party to, and each such Releasing Party does hereby, fully, finally and 3

forever waive any and all rights and defenses as set forth hereinabove. Upon advice of such counsel, and in furtherance of such intention, each Releasing Party waives all rights granted to each such Releasing Party by Section 1542 of the Civil Code of California and acknowledges that the release herein given shall be and remain in effect as a full and complete general release as to the matters released herein, notwithstanding the subsequent discovery or existence of any such additional or different facts. 2. FRI-MRD, Prandium, Borrower, and each such undersigned Affiliate each agrees that Foothill and its Affiliates may continue to hold any cash or Cash Equivalents which were previously provided to Foothill as additional security for the Obligations until such time as (a) all Obligations have been satisfied in full in cash, and (b) (i) Foothill has received an irrevocable letter of credit from a financial institution acceptable to Foothill in its discretion, in form and substance acceptable to Foothill in its discretion, in favor of Foothill in an amount equal to 105% of the maximum amount of Foothill's obligations under all outstanding Letters of Credit, or (ii) all Letters of Credit have expired or have been released.

forever waive any and all rights and defenses as set forth hereinabove. Upon advice of such counsel, and in furtherance of such intention, each Releasing Party waives all rights granted to each such Releasing Party by Section 1542 of the Civil Code of California and acknowledges that the release herein given shall be and remain in effect as a full and complete general release as to the matters released herein, notwithstanding the subsequent discovery or existence of any such additional or different facts. 2. FRI-MRD, Prandium, Borrower, and each such undersigned Affiliate each agrees that Foothill and its Affiliates may continue to hold any cash or Cash Equivalents which were previously provided to Foothill as additional security for the Obligations until such time as (a) all Obligations have been satisfied in full in cash, and (b) (i) Foothill has received an irrevocable letter of credit from a financial institution acceptable to Foothill in its discretion, in form and substance acceptable to Foothill in its discretion, in favor of Foothill in an amount equal to 105% of the maximum amount of Foothill's obligations under all outstanding Letters of Credit, or (ii) all Letters of Credit have expired or have been released. 3. FRI-MRD, Prandium, Borrower, and each such undersigned Affiliate each waives any right to seek authority from the bankruptcy court in which an Insolvency Proceeding is pending to obtain the use of any cash or Cash Equivalents held by or on behalf of Foothill or its Affiliates to secure the Obligations. In addition, FRI-MRD, Prandium, Borrower and each of their undersigned Affiliates each covenants and agrees that such Person shall not seek authority of such bankruptcy court to use such cash or Cash Equivalents. Such cash collateral will bear interest at the per annum rate applicable from time to time with respect to ninety (90) day certificates of deposit offered by Wells Fargo Bank, National Association, a national banking association. If at any time the aggregate amount of such collateral exceeds 105% of the maximum amount of Foothill's obligations under outstanding Letters of Credit by more than $50,000, Foothill shall promptly (and in any event within five (5) Business Days of Foothill's receipt of a written notice from Borrower of the existence of such excess) pay such excess to Borrower, to the extent that such excess is greater than $50,000; provided, however, that if at any time the maximum amount of Foothill's obligations under outstanding Letters of Credit does not exceed $6,000,000, Foothill shall only be required to return a portion of such collateral to Borrower to the extent that the aggregate amount of such collateral exceeds 105% of the maximum amount of Foothill's obligations under outstanding Letters of Credit by more than $250,000. Foothill also agrees to pay to Borrower, on the last Business Day of each month, all accrued and unpaid interest on such collateral during such month pursuant to the first sentence of this paragraph. 4. On or before the earlier to occur of (a) October 18, 2001, and (b) the date when an Insolvency Proceeding is commenced with respect to FRI-MRD, Prandium, Borrower or any of their Affiliates, FRI-MRD, Prandium, Borrower and such Affiliates shall cause the releases of the mortgages and deeds of trust previously executed and delivered in favor of Foothill with respect to the Real Property Collateral, which releases were executed by Foothill prior to the date hereof, to be recorded in each jurisdiction where the Real Property Collateral is located. 5. Before the date when an Insolvency Proceeding is commenced with respect to FRI-MRD, Prandium, Borrower or any of their Affiliates, Foothill shall have received 4

a copy of a commitment letter, which shall provide for, among other things, (a) the delivery to Foothill of an irrevocable letter of credit from a financial institution acceptable to Foothill in its discretion, in form and substance acceptable to Foothill in its discretion, in favor of Foothill in an amount equal to 105% of the maximum amount of Foothill's obligations under all outstanding Letters of Credit, or (b) the issuance of replacement letters of credit in connection with the release of all existing Letters of Credit. FRI-MRD, Prandium, Borrower, each of their undersigned Affiliates and Foothill each agree that Section 2.6(c) of the Loan Agreement is hereby amended and restated in its entirety as follows: "(c) Letter of Credit Fees. On the first day of each month, Borrower will pay Foothill a fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.2(d)) equal to 5.0% per annum times the actual Daily Balance of the undrawn Letters of Credit that were outstanding during the immediately preceding month (it being understood that Borrower will not be charged default interest based on the Present Events of Default or an Event of Default which occurs as a result of any failure by Borrower, any Guarantor or any of their Affiliates to comply

a copy of a commitment letter, which shall provide for, among other things, (a) the delivery to Foothill of an irrevocable letter of credit from a financial institution acceptable to Foothill in its discretion, in form and substance acceptable to Foothill in its discretion, in favor of Foothill in an amount equal to 105% of the maximum amount of Foothill's obligations under all outstanding Letters of Credit, or (b) the issuance of replacement letters of credit in connection with the release of all existing Letters of Credit. FRI-MRD, Prandium, Borrower, each of their undersigned Affiliates and Foothill each agree that Section 2.6(c) of the Loan Agreement is hereby amended and restated in its entirety as follows: "(c) Letter of Credit Fees. On the first day of each month, Borrower will pay Foothill a fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.2(d)) equal to 5.0% per annum times the actual Daily Balance of the undrawn Letters of Credit that were outstanding during the immediately preceding month (it being understood that Borrower will not be charged default interest based on the Present Events of Default or an Event of Default which occurs as a result of any failure by Borrower, any Guarantor or any of their Affiliates to comply with the requirements set forth in Sections 7.20 or 7.21 of the Loan Agreement)." As used herein, Forbearance Period shall mean the period commencing on the date when the above referenced conditions precedent have been satisfied and continuing through the earliest to occur of: (i) January 10, 2002 (or such later date as Foothill may designate in writing in its sole discretion); (ii) the occurrence of any Event of Default other than a Present Event of Default or an Event of Default which occurs as a result of any failure by Borrower, any Guarantor or any of their Affiliates to comply with the requirements set forth in Sections 7.20 or 7.21 of the Loan Agreement; or (iii) the first date when FRI-MRD, Prandium, Borrower, or any of their undersigned Affiliates have failed to comply with any of the covenants set forth above in paragraphs 3, 4, 5 and 6. The forbearance referenced herein is limited to the specifics hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall not excuse future non-compliance with the Loan Agreement (as it may from time to time be amended), and, except as expressly set forth herein, shall not operate as a waiver or an amendment of any right, power or remedy of Foothill, nor as a consent to any further or other matter, under the Loan Documents. This letter agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this letter agreement by signing any such counterpart. Delivery of an executed counterpart of this letter agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this letter agreement. Any party delivering an executed counterpart of this letter agreement by telefacsimile also shall deliver an original executed counterpart of this letter agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this letter agreement. This letter agreement is a Loan Document. 5

Please indicate your agreement with the foregoing by signing this letter agreement in the space provided for your signature below and returning it to the undersigned. FOOTHILL CAPITAL CORPORATION
By /s/ Teresa M. Bolick -------------------Title Vice President

Acknowledged and Agreed: FRI-MRD CORPORATION, a Delaware corporation

Please indicate your agreement with the foregoing by signing this letter agreement in the space provided for your signature below and returning it to the undersigned. FOOTHILL CAPITAL CORPORATION
/s/ Teresa M. Bolick -------------------Title Vice President By

Acknowledged and Agreed: FRI-MRD CORPORATION, a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title President By

CHI-CHI'S, INC., a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

PRANDIUM, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. ----------------------Title EVP/CFO

FRI-ADMIN CORPORATION, a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title President By

CCMR OF TIMONIUM, INC., a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF MARYLAND, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. -----------------------

CCMR OF TIMONIUM, INC., a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF MARYLAND, INC., a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF CATONSVILLE, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF GREENBELT, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF RITCHIE HIGHWAY, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF CUMBERLAND, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF HARFORD COUNTY, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

MAINTENANCE SUPPORT GROUP, INC.,

CCMR OF CUMBERLAND, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF HARFORD COUNTY, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

MAINTENANCE SUPPORT GROUP, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF FREDERICK, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF INNER HARBOR, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CHI-CHI'S OF WEST VIRGINIA, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

KOO KOO ROO, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

THE HAMLET GROUP, INC.,

CHI-CHI'S OF WEST VIRGINIA, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

KOO KOO ROO, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

THE HAMLET GROUP, INC., a California corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

cc: David Reamer, Esq. John Francis Hilson, Esq.

EXHIBIT A Reaffirmation and Consent Reference hereby is made to (a) that certain Amended and Restated Loan and Security Agreement, dated as of July 19, 2000 (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), by and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRIMRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), and for purposes of acknowledging and agreeing to Section 15.11 of the Loan Agreement, by PRANDIUM, INC., a Delaware corporation, formerly known as Family Restaurants, Inc. ("Prandium"), and each of its Affiliates that are signatories thereto, and, on the other hand, FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"); and (b) that certain letter agreement dated as of October __, 2001 (the "Letter Agreement"), by and among, on the one hand, FRI-MRD, Borrower, Prandium and each of its Affiliates that are signatories thereto, and on the other hand, Foothill. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. Each of the undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Loan Agreement by the Letter Agreement; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligation to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall

EXHIBIT A Reaffirmation and Consent Reference hereby is made to (a) that certain Amended and Restated Loan and Security Agreement, dated as of July 19, 2000 (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), by and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRIMRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), and for purposes of acknowledging and agreeing to Section 15.11 of the Loan Agreement, by PRANDIUM, INC., a Delaware corporation, formerly known as Family Restaurants, Inc. ("Prandium"), and each of its Affiliates that are signatories thereto, and, on the other hand, FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"); and (b) that certain letter agreement dated as of October __, 2001 (the "Letter Agreement"), by and among, on the one hand, FRI-MRD, Borrower, Prandium and each of its Affiliates that are signatories thereto, and on the other hand, Foothill. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. Each of the undersigned hereby (a) represents and warrants to Foothill that the execution, delivery, and performance of this Reaffirmation and Consent are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendment of the Loan Agreement by the Letter Agreement; (c) acknowledges and reaffirms its obligations owing to Foothill under the Guaranty and any other Loan Documents to which it is party; and (d) agrees that each of the Guaranty and any other Loan Documents to which it is a party is and shall remain in full force and effect. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, it understands that Foothill has no obligation to inform it of such matters in the future or to seek its acknowledgement or agreement to future amendments, and nothing herein shall create such a duty. This Reaffirmation and Consent may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Reaffirmation and Consent. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent.

This Reaffirmation and Consent shall be governed by internal laws of the State of California as more fully set forth in Section 13 of the Loan Agreement. FRI-MRD CORPORATION, a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title President By

PRANDIUM, INC., a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title EVP/CFO By

This Reaffirmation and Consent shall be governed by internal laws of the State of California as more fully set forth in Section 13 of the Loan Agreement. FRI-MRD CORPORATION, a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title President By

PRANDIUM, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. ----------------------Title EVP/CFO

FRI-ADMIN CORPORATION, a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title President By

CCMR OF TIMONIUM, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF MARYLAND, INC., a Delaware corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF CATONSVILLE, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF GREENBELT, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF CATONSVILLE, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF GREENBELT, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF RITCHIE HIGHWAY, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF CUMBERLAND, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF HARFORD COUNTY, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

MAINTENANCE SUPPORT GROUP, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF FREDERICK, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF INNER HARBOR, INC.,

MAINTENANCE SUPPORT GROUP, INC., a Kentucky corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

CCMR OF FREDERICK, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CCMR OF INNER HARBOR, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

CHI-CHI'S OF WEST VIRGINIA, INC., a Kentucky corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

KOO KOO ROO, INC., a Delaware corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

THE HAMLET GROUP, INC., a California corporation
/s/ R. T. Trebing, Jr. ----------------------Title Vice President By

[PRANDIUM LETTERHEAD] November 7, 2001 MacKay Shields Financial Corporation 9 West 57th Street New York, New York 10019

THE HAMLET GROUP, INC., a California corporation
By /s/ R. T. Trebing, Jr. ----------------------Title Vice President

[PRANDIUM LETTERHEAD] November 7, 2001 MacKay Shields Financial Corporation 9 West 57th Street New York, New York 10019 Attention: Don E. Morgan, CFA Re: Prandium Restructuring Gentlemen: Reference is made (i) to that certain Note Agreement, dated as of August 12, 1997, by and between FRI-MRD Corporation (the "Company") and each Purchaser of the 15% Senior Discount Notes (the "Senior Discount Notes") of the Company due January 24, 2002, as amended, and (ii) to that certain Note Agreement, dated as of June 9, 1998, between the Company and each Purchaser of the 14% Senior Secured Discount Notes (the "Senior Secured Discount Notes," together with the Senior Discount Notes, the "Notes") of the Company due January 24, 2002, as amended (together, the "Note Agreements"). Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Note Agreements. This letter agreement (this "Letter of Intent") confirms our mutual intentions regarding restructuring (the "Restructuring") the capital structure of the Company and Prandium, Inc. ("Prandium") for the purpose of restructuring the indebtedness of the Company to the Majority Holders under the Notes on the terms set forth on the term sheet attached hereto as Exhibit A (the "Term Sheet"). This Letter of Intent and the Term Sheet set forth the terms of our mutual understanding and will serve as the basis for definitive agreements related to the Restructuring (collectively, the "Definitive Agreements") to be negotiated in good faith by the parties. 1. Definitive Agreements. The parties will in good faith use their best efforts to implement the Restructuring contemplated by the Term Sheet. However, each party acknowledges that the terms described on the Term Sheet only constitute a statement of our mutual intentions with respect to the terms of the Restructuring and acknowledge that the Term Sheet does not contain all matters upon which agreement must be reached in order to consummate a Restructuring and, therefore, this Letter of Intent and the Term Sheet do not constitute a binding commitment with respect to the Restructuring itself. 2. Representations and Warranties. (a) MacKay Shields Financial Corporation ("MacKay") represents and warrants that it is the representative of a majority of the Purchasers (the "Majority Holders") of each of (i) the issued and outstanding Senior Discount Notes and (ii) the issued and outstanding Senior Secured Discount Notes and that it is agreeing to the matters set forth herein on their behalf. Further, MacKay represents and warrants that it (i) has the requisite authority to execute and deliver this Letter of Intent and to perform its obligations hereunder; (ii) the execution and delivery of this Letter of Intent and the performance by it of its obligations hereunder have been

duly authorized by its governing body, and no other proceedings on its part are necessary for the execution and delivery of this Letter of Intent and the performance of its obligations provided for herein; and

[PRANDIUM LETTERHEAD] November 7, 2001 MacKay Shields Financial Corporation 9 West 57th Street New York, New York 10019 Attention: Don E. Morgan, CFA Re: Prandium Restructuring Gentlemen: Reference is made (i) to that certain Note Agreement, dated as of August 12, 1997, by and between FRI-MRD Corporation (the "Company") and each Purchaser of the 15% Senior Discount Notes (the "Senior Discount Notes") of the Company due January 24, 2002, as amended, and (ii) to that certain Note Agreement, dated as of June 9, 1998, between the Company and each Purchaser of the 14% Senior Secured Discount Notes (the "Senior Secured Discount Notes," together with the Senior Discount Notes, the "Notes") of the Company due January 24, 2002, as amended (together, the "Note Agreements"). Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Note Agreements. This letter agreement (this "Letter of Intent") confirms our mutual intentions regarding restructuring (the "Restructuring") the capital structure of the Company and Prandium, Inc. ("Prandium") for the purpose of restructuring the indebtedness of the Company to the Majority Holders under the Notes on the terms set forth on the term sheet attached hereto as Exhibit A (the "Term Sheet"). This Letter of Intent and the Term Sheet set forth the terms of our mutual understanding and will serve as the basis for definitive agreements related to the Restructuring (collectively, the "Definitive Agreements") to be negotiated in good faith by the parties. 1. Definitive Agreements. The parties will in good faith use their best efforts to implement the Restructuring contemplated by the Term Sheet. However, each party acknowledges that the terms described on the Term Sheet only constitute a statement of our mutual intentions with respect to the terms of the Restructuring and acknowledge that the Term Sheet does not contain all matters upon which agreement must be reached in order to consummate a Restructuring and, therefore, this Letter of Intent and the Term Sheet do not constitute a binding commitment with respect to the Restructuring itself. 2. Representations and Warranties. (a) MacKay Shields Financial Corporation ("MacKay") represents and warrants that it is the representative of a majority of the Purchasers (the "Majority Holders") of each of (i) the issued and outstanding Senior Discount Notes and (ii) the issued and outstanding Senior Secured Discount Notes and that it is agreeing to the matters set forth herein on their behalf. Further, MacKay represents and warrants that it (i) has the requisite authority to execute and deliver this Letter of Intent and to perform its obligations hereunder; (ii) the execution and delivery of this Letter of Intent and the performance by it of its obligations hereunder have been

duly authorized by its governing body, and no other proceedings on its part are necessary for the execution and delivery of this Letter of Intent and the performance of its obligations provided for herein; and (iii) this Letter of Intent has been duly executed and delivered by it, and assuming this Letter of Intent is a binding obligation of the other parties, this Letter of Intent constitutes a valid and binding obligation of it enforceable against it in accordance with its terms. (b) Each of Prandium and the Company represents and warrants, jointly and severally, that (i) it has the requisite authority to execute and deliver this Letter of Intent and to perform its obligations hereunder; (ii) the execution and delivery of this Letter of Intent and the performance by it of its obligations hereunder have been duly authorized by its governing body, and no other proceedings on its part are necessary for the execution and delivery of this Letter of Intent and the performance of its obligations provided for herein; and (iii) this Letter of Intent has been duly executed and delivered by it, and assuming this Letter of Intent is a binding obligation of

duly authorized by its governing body, and no other proceedings on its part are necessary for the execution and delivery of this Letter of Intent and the performance of its obligations provided for herein; and (iii) this Letter of Intent has been duly executed and delivered by it, and assuming this Letter of Intent is a binding obligation of the other parties, this Letter of Intent constitutes a valid and binding obligation of it enforceable against it in accordance with its terms. (b) Each of Prandium and the Company represents and warrants, jointly and severally, that (i) it has the requisite authority to execute and deliver this Letter of Intent and to perform its obligations hereunder; (ii) the execution and delivery of this Letter of Intent and the performance by it of its obligations hereunder have been duly authorized by its governing body, and no other proceedings on its part are necessary for the execution and delivery of this Letter of Intent and the performance of its obligations provided for herein; and (iii) this Letter of Intent has been duly executed and delivered by it, and assuming this Letter of Intent is a binding obligation of the other parties, this Letter of Intent constitutes a valid and binding obligation of it enforceable against it in accordance with its terms. 3. Standstill Agreement. MacKay hereby agrees to refrain from taking any enforcement action under the Notes or the Note Agreements as long as (i) Prandium and the Company are in compliance with the terms of the Letter of Intent and Term Sheet, (ii) since the date of this Letter of Intent, neither Prandium nor the Company has suffered a material adverse change and (iii) other than as specifically contemplated by this Letter of Intent and Term Sheet, each of Prandium and the Company are being operated in the ordinary course consistent with prior practice. 4. Confidentiality. The letter agreement, dated as of February 15, 2001, by and among the parties hereto shall remain in full force and effect notwithstanding the execution and delivery of this Letter of Intent. 5. Effect of Agreement. Each of the parties hereto acknowledges that this Letter of Intent specifies our agreement regarding the material terms and conditions to our respective obligations to proceed in good faith to consummate a restructuring. However, the parties further acknowledge that the Term Sheet is an expression of intent only and is not legally binding upon any of the parties hereto. Furthermore, the parties agree that the implementation of the Hamlet Sale Procedure (as defined in the Term Sheet) shall begin immediately upon execution of this Letter of Intent. 6. Governing Law. The Note Agreements and the notes are governed by, and construed in accordance with, the laws of the State of New York. Accordingly, the parties to this Letter of Intent hereby acknowledge and agree that this Letter of Intent is also governed by New York law. Furthermore, in order to avoid any confusion or misunderstanding, each of us also agrees that this Letter of Intent may only be amended in writing. 7. Assignment and Transfer of Notes. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Except as provided herein, this Letter of Intent shall not be assignable by any party hereto without the prior written consent of the other party hereto. On behalf of the Majority Purchasers, MacKay agrees that prior to any sale of the Notes to any party other than a Majority Purchaser and as a condition thereto, each Majority Purchaser shall cause any such 2

transferee to agree in writing to be bound by the terms and conditions of this Letter of Intent. 8. Third Party Beneficiaries. This Letter of Intent is solely for the benefit of the parties hereto and is not intended to create any rights in any third parties other than permitted assignees. 9. Counterparts. This Letter of Intent may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same document. If this Letter of Intent accurately reflects our understanding, please so indicate by signing and returning the enclosed copy. 3

transferee to agree in writing to be bound by the terms and conditions of this Letter of Intent. 8. Third Party Beneficiaries. This Letter of Intent is solely for the benefit of the parties hereto and is not intended to create any rights in any third parties other than permitted assignees. 9. Counterparts. This Letter of Intent may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same document. If this Letter of Intent accurately reflects our understanding, please so indicate by signing and returning the enclosed copy. 3

Very truly yours, PRANDIUM, INC.
By: /s/ R.T. Trebing, Jr. ---------------------------------Name: R.T. Trebing, Jr. Title: EVP/CFO

FRI-MRD CORPORATION
By: /s/ R.T. Trebing, Jr. --------------------------------Name: R.T. Trebing, Jr. Title: President

ACCEPTED AND AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE MACKAY SHIELDS FINANCIAL CORPORATION
By: /s/ Donald E. Morgan III ---------------------------------Name: Donald E. Morgan III Title: Managing Director

4

Exhibit A Confidential Proposed Terms and Conditions for Restructuring of FRI-MRD Corporation's $75MM 15% Senior Discount Notes dated 8/12/97 (the "15% Notes") and $24MM 14% Senior Secured Discount Notes dated 6/9/98 (the "14% Secured Notes") in Connection with Prandium Restructuring
Borrower: Facilities: FRI-MRD Corporation. The 15% Notes and the 14% Secured Notes (collectively, the "Facilities") will be amended and restated to include the terms and changes outlined herein. Except as contemplated herein, the

Very truly yours, PRANDIUM, INC.
By: /s/ R.T. Trebing, Jr. ---------------------------------Name: R.T. Trebing, Jr. Title: EVP/CFO

FRI-MRD CORPORATION
By: /s/ R.T. Trebing, Jr. --------------------------------Name: R.T. Trebing, Jr. Title: President

ACCEPTED AND AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE MACKAY SHIELDS FINANCIAL CORPORATION
By: /s/ Donald E. Morgan III ---------------------------------Name: Donald E. Morgan III Title: Managing Director

4

Exhibit A Confidential Proposed Terms and Conditions for Restructuring of FRI-MRD Corporation's $75MM 15% Senior Discount Notes dated 8/12/97 (the "15% Notes") and $24MM 14% Senior Secured Discount Notes dated 6/9/98 (the "14% Secured Notes") in Connection with Prandium Restructuring
Borrower: Facilities: FRI-MRD Corporation. The 15% Notes and the 14% Secured Notes (collectively, the "Facilities") will be amended and restated to include the terms and changes outlined herein. Except as contemplated herein, the Facilities will remain unchanged. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Note Agreements. January 31, 2005. Interest rate is 12%; no cash interest payments required. The 14% Secured Notes will continue to be secured by the existing collateral (or by any segregated proceeds received by Borrower in accordance with this term sheet) until the Hamlet Prepayment, after which time any 14% Secured Notes remaining outstanding will be unsecured. The 15% Notes will continue to be unsecured. Scheduled Amortization: None.

Final Maturity: Interest Rate: Collateral:

Exhibit A Confidential Proposed Terms and Conditions for Restructuring of FRI-MRD Corporation's $75MM 15% Senior Discount Notes dated 8/12/97 (the "15% Notes") and $24MM 14% Senior Secured Discount Notes dated 6/9/98 (the "14% Secured Notes") in Connection with Prandium Restructuring
Borrower: Facilities: FRI-MRD Corporation. The 15% Notes and the 14% Secured Notes (collectively, the "Facilities") will be amended and restated to include the terms and changes outlined herein. Except as contemplated herein, the Facilities will remain unchanged. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Note Agreements. January 31, 2005. Interest rate is 12%; no cash interest payments required. The 14% Secured Notes will continue to be secured by the existing collateral (or by any segregated proceeds received by Borrower in accordance with this term sheet) until the Hamlet Prepayment, after which time any 14% Secured Notes remaining outstanding will be unsecured. The 15% Notes will continue to be unsecured. Scheduled Amortization: Call Premium: Prepayments: None. None. Prepayments of the Facilities will be allowed at any time under terms outlined under Prepayment Discount section below. All prepayments will reduce the remaining principal balance, and interest accrued thereon, of the Facilities as follows: From the Closing Date up to and including December 31, 2002, by 133.33% of the actual prepayment amount; From January 1, 2003 up to and including December 31, 2003, by 117.65% of the actual prepayment amount; From January 1, 2004 up to and including September 30, 2004, by 111.11% of the actual prepayment amount; and From October 1, 2004 up to and including January 31, 2005, by 100.00% of the actual prepayment amount.

Final Maturity: Interest Rate: Collateral:

Prepayment Discount:

Page 1 of 6

Exhibit A Confidential
Application of Payments Among Facilities: Principal payments and prepayments will be applied pro-rata between the Facilities, except for prepayments from net proceeds from the sale of the stock or substantially all of the assets of The Hamlet Group, Inc. ("Hamlet"). See the section entitled "Hamlet Prepayment" below. Net proceeds from the sale of Hamlet will be applied as a prepayment (the "Hamlet Prepayment"), upon the Closing Date, first to reduce principal under the 14% Secured Notes until paid in full; any excess will be applied to the 15% Notes. The holders of the Facilities shall consent to a sale of Hamlet prior to the

Hamlet Prepayment

Exhibit A Confidential
Application of Payments Among Facilities: Principal payments and prepayments will be applied pro-rata between the Facilities, except for prepayments from net proceeds from the sale of the stock or substantially all of the assets of The Hamlet Group, Inc. ("Hamlet"). See the section entitled "Hamlet Prepayment" below. Net proceeds from the sale of Hamlet will be applied as a prepayment (the "Hamlet Prepayment"), upon the Closing Date, first to reduce principal under the 14% Secured Notes until paid in full; any excess will be applied to the 15% Notes. The holders of the Facilities shall consent to a sale of Hamlet prior to the confirmation of the Plan of Reorganization (as defined) provided such sale is consummated in accordance with the terms set forth in this term sheet and on terms otherwise reasonably acceptable to the holders of the Facilities and further provided that any proceeds therefrom received prior to the Closing are segregated by Borrower in accordance with the first paragraph of the section entitled "Segregation of Cash" below. Borrower will market and sell the stock and/or assets of Hamlet in an orderly fashion (the "Hamlet Sale Procedure"). The following performance milestones will be put in place: 1. Execute an agreement for sale of stock and/or assets of Hamlet no later than October 31, 2001(or within such longer time period as MacKay Shields Financial Corporation ("MacKay Shields") may agree); Consummate the sale no later than 90 days after the execution of such agreement (or within such longer time period as MacKay Shields may agree).

Hamlet Prepayment

Sale of Hamlet:

2.

Sale of Hamlet may only be for all cash. Failure to meet any milestone will result in a covenant breach. The milestones may be waived in the sole discretion of the holders of a majority of the outstanding indebtedness under each of the Facilities. Proceeds from the sale of Hamlet will be applied as described in the Section entitled "Applications of Payments Among Facilities". Sale of Anaheim Property: Borrower will be allowed to sell the contiguous sites at 1751 S. State College Blvd. and 1801 E. Katella Avenue in Anaheim, CA (the "Anaheim Property") and retain 100% of the net proceeds up to $4.3 million and 25% of the net proceeds in excess of $4.3 million, subject to the Section entitled "Segregation of Cash". As soon as possible following any such sale, Borrower will use 75% of any net proceeds in excess of $4.3 million to prepay the Facilities in accordance with this term sheet (the "Anaheim Excess Proceeds").

Page 2 of 6

Exhibit A Confidential
Accrued Interest: At the Closing Date, upon compliance with all the terms and conditions set forth in this Term Sheet (including the payment of the Cash Prepayment (as defined below) and the interest accrued thereon), interest calculated with respect to the Facilities prior to the Closing Date will be waived. In addition to the Hamlet Prepayment and the payment of any Anaheim Excess Proceeds, at the Closing Date, Borrower will pay to holders of the Facilities $30 million in cash to be applied as a prepayment (the "Cash Prepayment") to principal outstanding under the Facilities in accordance with this term sheet.

Cash Prepayment:

Exhibit A Confidential
Accrued Interest: At the Closing Date, upon compliance with all the terms and conditions set forth in this Term Sheet (including the payment of the Cash Prepayment (as defined below) and the interest accrued thereon), interest calculated with respect to the Facilities prior to the Closing Date will be waived. In addition to the Hamlet Prepayment and the payment of any Anaheim Excess Proceeds, at the Closing Date, Borrower will pay to holders of the Facilities $30 million in cash to be applied as a prepayment (the "Cash Prepayment") to principal outstanding under the Facilities in accordance with this term sheet. Upon receipt of any net proceeds from the sale of Hamlet, Borrower shall segregate such proceeds received in connection with such sale for the purpose of making the Hamlet Prepayment at the Closing and the 14% Secured Notes shall be collateralized by such segregated proceeds until the Hamlet Prepayment is made. Within three business days of the mutual execution of the letter of intent, Borrower shall segregate $14 million in cash or cash equivalents (the "Initial Segregated Amount") for the purpose of making the Cash Prepayment at the Closing. As of the date of this term sheet, Borrower has provided approximately $12 million in cash or cash equivalents to Foothill in order to cash collateralize letters of credit outstanding under the Foothill facility. Borrower agrees to segregate any cash or cash equivalents returned to Borrower by Foothill prior to the Closing (the "Foothill Segregated Amount") for the purpose of making the Cash Prepayment at the Closing. In addition, Borrower agrees to segregate up to $4 million of the net proceeds (the "Anaheim Segregated Amount," together with the Initial Segregated Amount and the Foothill Segregated Amounted, the "Segregated Amount"), received from the sale of the Anaheim Property no later than three business days after the closing of such transaction for the purpose of making the Cash Prepayment at the Closing. Borrower agrees that it shall not use such Segregated Amount for any purpose other than making the Cash Prepayment. Borrower agrees to pay to the holders of the Facilities at the Closing Date an aggregate amount of interest in cash calculated at an annual rate of 4.5% on the $30 million Cash Prepayment accruing from the date of filing the Chapter 11 case to the Closing Date. Borrower shall not allow any person or persons, including the holders of the Facilities, other than Foothill but only to the extent provided under the current Foothill facility) to hold a security interest in the segregated Cash Prepayment. Financial Covenants: Additional Covenants: No change. The amended and restated Facilities dated as of the Closing Date will contain the following additional covenants:

Cash Prepayment:

Segregation of Cash:

Page 3 of 6

Exhibit A Confidential
From and after the Closing, Borrower and its subsidiaries will not incur Indebtedness other than Maximum Permitted Indebtedness. For the purposes of this term sheet, "Maximum Permitted Indebtedness" means, subject to the Capital Expenditures Limitations set forth below and to any other limitations agreed upon by MacKay Shields and Borrower: (i) Indebtedness evidenced by the Facilities; (ii) Indebtedness under the senior secured credit facility to be entered into with Hilco Capital LP (as it may be amended, restated or replaced, the "Hilco Credit Facility") not to exceed $14 million at any one time; (iii) Indebtedness of Borrower and its subsidiaries outstanding as of April 1, 2001; (iv) Indebtedness relating to insurance premium financing or in respect of workers' compensation claims, in each case as incurred in the ordinary course of

Exhibit A Confidential
From and after the Closing, Borrower and its subsidiaries will not incur Indebtedness other than Maximum Permitted Indebtedness. For the purposes of this term sheet, "Maximum Permitted Indebtedness" means, subject to the Capital Expenditures Limitations set forth below and to any other limitations agreed upon by MacKay Shields and Borrower: (i) Indebtedness evidenced by the Facilities; (ii) Indebtedness under the senior secured credit facility to be entered into with Hilco Capital LP (as it may be amended, restated or replaced, the "Hilco Credit Facility") not to exceed $14 million at any one time; (iii) Indebtedness of Borrower and its subsidiaries outstanding as of April 1, 2001; (iv) Indebtedness relating to insurance premium financing or in respect of workers' compensation claims, in each case as incurred in the ordinary course of business; (v) Indebtedness relating to Borrower's and its subsidiaries' controlled disbursement accounts or in respect of overdrafts of zero balance bank accounts, in each case as incurred in the ordinary course of business; (vi) Indebtedness in respect of Capitalized Lease Obligations or purchase money financings (including the purchase price of inventory) if such Indebtedness is secured only by the applicable asset; (vii) Indebtedness between Borrower and a subsidiary or between Borrower's subsidiaries; (viii) Indebtedness represented by surety and performance bonds and similar obligations, in each case as incurred in the ordinary course of business; (ix) Hedging Obligations of Borrower or its subsidiaries incurred in the ordinary course of business; and (x) Indebtedness issued or incurred in connection with the renewal, expansion, refinancing or refunding of Indebtedness permitted by the preceding clauses (i) through (ix); provided that any expansion of such Indebtedness would otherwise satisfy the conditions of one of the other clauses (i) through (ix). From and after the Closing, to the extent permitted by the Hilco Credit Facility, Borrower will agree to prepay the Facilities on a pro rata basis with the net cash proceeds of any disposition of assets (subject to de minimis carve outs and other than proceeds received from the sale of Hamlet or the Anaheim Property) as follows: (1) 50% of the first $3 million of proceeds; and (ii) 100% of the proceeds thereafter. From and after the Closing, Borrower will not, and will not permit its subsidiaries to, make capital expenditures in excess of (each instance, a "Capital Expenditures Limitation"): (i) $11 million for the period from January 1, 2002 up to and including December 31, 2002; (ii) $11 million for the period from January 1, 2003 up to and including December 31, 2003; and (iii) $15 million for the period from January 1, 2004 through the maturity date. A carry forward allowance will be included to adjust for spending patterns of capital expenditures. From and after the Closing, Borrower will not, and will not permit its subsidiaries to, make any Restricted Payments

Page 4 of 6

Exhibit A Confidential
except that Borrower and its subsidiaries may make Restricted Payments equal to the sum of (i) an amount not in excess of the Federal, state, local and foreign taxes and assessments payable by Prandium and its subsidiaries (determined on a consolidated basis) for such year, plus (ii) the aggregate amount of all general corporate, operating and administrative expenses incurred by Prandium (including, without limitation, any such expenses incurred on behalf of its subsidiaries) in the ordinary course of business consistent with past practice. Waiver of Defaults: All existing and prior defaults under the Facilities to be waived.

Exhibit A Confidential
except that Borrower and its subsidiaries may make Restricted Payments equal to the sum of (i) an amount not in excess of the Federal, state, local and foreign taxes and assessments payable by Prandium and its subsidiaries (determined on a consolidated basis) for such year, plus (ii) the aggregate amount of all general corporate, operating and administrative expenses incurred by Prandium (including, without limitation, any such expenses incurred on behalf of its subsidiaries) in the ordinary course of business consistent with past practice. Waiver of Defaults: Legal Fees: All existing and prior defaults under the Facilities to be waived. On or before the date of this term sheet, borrower will reimburse MacKay Shields for reasonable legal costs incurred up to and including July 31, 2001. At the Closing Date borrower to reimburse MacKay-Shields for reasonable legal costs incurred after July 31, 2001 through the Closing Date. 1) The Hilco Credit Facility must be entered into under terms substantially the same as described in the term sheet dated as of August 10, 2001, but including: . . Minimum facility availability of up to $14 million; No requirement to cash collateralize L/Cs in excess of $1 million; Maturity date no earlier than 1 year from Closing Date; No minimum cash balance required as a condition to partial or full repayment of the Facilities; Other financial covenants and terms reasonably acceptable to Borrower.

Conditions to Closing:

. .

.

2)

Restructuring of the debt and equity of Prandium, Inc. on terms reasonably satisfactory to Prandium, Inc. and MacKay Shields. Confirmation of a plan of reorganization (the "Plan of Reorganization") under the Bankruptcy Code as a pre-negotiated or pre-packaged Chapter 11 that incorporates the terms outlined in this Term Sheet, including entering into the Hilco Credit Facility with terms described above and restructuring of the existing debt and equity of Prandium, Inc., on terms reasonably satisfactory to Prandium, Inc. and MacKay-Shields. MacKay-Shields must consent to the terms of the Hilco Credit Facility and the sale of Hamlet.

3)

4)

Closing Date:

The effective date of the Chapter 11 bankruptcy plan described in Conditions to Closing.

Page 5 of 6

Exhibit A Confidential
Governing Law Projected Dates: New York Borrower will use its commercially reasonable efforts to file the Plan of Reorganization under the Bankruptcy Code as a pre-negotiated or pre-packaged Chapter 11 on or before 60 days from the date of the Letter of Intent and will use its commercially reasonable efforts to have such Plan of Reorganization confirmed under the Bankruptcy Code on or before February 28, 2002.

Page 6 of 6

Exhibit A Confidential
Governing Law Projected Dates: New York Borrower will use its commercially reasonable efforts to file the Plan of Reorganization under the Bankruptcy Code as a pre-negotiated or pre-packaged Chapter 11 on or before 60 days from the date of the Letter of Intent and will use its commercially reasonable efforts to have such Plan of Reorganization confirmed under the Bankruptcy Code on or before February 28, 2002.

Page 6 of 6