EXHIBIT 10.1
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
PRANDIUM, INC.
FRI-MRD CORPORATION,
CHI-CHI'S, INC.,
each of their subsidiaries,
and
FOOTHILL CAPITAL CORPORATION
Dated as of July 19, 2000
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION..................................................... 2
1.1 Definitions................................................................. 2
1.2 Accounting Terms............................................................ 24
1.3 Code........................................................................ 24
1.4 Construction................................................................ 24
1.5 Schedules and Exhibits...................................................... 25
2. LOAN AND TERMS OF PAYMENT........................................................ 25
2.1 Revolving Advances.......................................................... 25
2.2 Letters of Credit........................................................... 26
2.3 [Intentionally Omitted]..................................................... 27
2.4 [Intentionally Omitted]..................................................... 28
2.5 Overadvances................................................................ 28
2.6 Interest and Letter of Credit Fees: Rates, Payments, and Calculations...... 28
2.7 Collections................................................................. 29
2.8 Crediting Payments; Application of Collections.............................. 29
2.9 Designated Accounts......................................................... 30
2.10 Maintenance of Loan Accounts; Statements of Obligations..................... 30
2.11 Fees........................................................................ 30
3. CONDITIONS; TERM OF AGREEMENT.................................................... 31
3.1 Conditions Precedent to the Effectiveness of this Agreement................. 31
3.2 Conditions Precedent to all Advances and Letters of Credit.................. 33
3.3 Conditions Subsequent....................................................... 34
3.4 Term........................................................................ 34
3.5 Effect of Termination....................................................... 35
3.6 Early Termination by Borrower............................................... 35
3.7 Termination Upon Event of Default........................................... 35
4. CREATION OF SECURITY INTEREST.................................................... 35
4.1 Grant of Security Interest.................................................. 35
4.2 Negotiable Collateral....................................................... 36
4.3 [Intentionally omitted]..................................................... 36
4.4 Delivery of Additional Documentation Required............................... 36
4.5 Power of Attorney........................................................... 36
4.6 Right to Inspect............................................................ 37
5. REPRESENTATIONS AND WARRANTIES................................................... 37
5.1 No Encumbrances............................................................. 37
5.2 Equipment................................................................... 37
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5.3 Location of Inventory and Equipment.................................... 37
5.4 Equipment Records...................................................... 38
5.5 Location of Chief Executive Offices; XXXXx............................. 38
5.6 Due Organization and Qualification; Subsidiaries....................... 38
5.7 Due Authorization; No Conflict - FRI-MRD and Borrower.................. 38
5.8 Due Authorization; No Conflict - Guarantors............................ 39
5.9 Litigation............................................................. 40
5.10 No Material Adverse Change............................................. 40
5.11 Solvency............................................................... 41
5.12 Employee Benefits...................................................... 41
5.13 Environmental Condition................................................ 41
5.14 Leases................................................................. 41
5.15 Issuance of Senior Secured Discount Notes.............................. 42
5.16 HGI Subsidiaries....................................................... 42
5.17 KKR Subsidiaries....................................................... 42
5.18 DDAs................................................................... 42
6. AFFIRMATIVE COVENANTS....................................................... 42
6.1 Accounting System...................................................... 42
6.2 Collateral and Operations Reporting.................................... 42
6.3 Financial Statements, Reports, Certificates............................ 43
6.4 Tax Returns............................................................ 44
6.5 Title to Equipment..................................................... 44
6.6 Maintenance of Equipment............................................... 44
6.7 Taxes.................................................................. 44
6.8 Insurance.............................................................. 45
6.9 No Setoffs or Counterclaims............................................ 47
6.10 Location of Inventory and Equipment.................................... 47
6.11 Compliance with Laws................................................... 47
6.12 Employee Benefits...................................................... 47
6.13 Leases................................................................. 48
6.14 Extension of Notes..................................................... 48
7. NEGATIVE COVENANTS.......................................................... 48
7.1 Indebtedness........................................................... 48
7.2 Liens.................................................................. 49
7.3 Restrictions on Fundamental Changes.................................... 50
7.4 Disposal of Assets..................................................... 50
7.5 Change Name............................................................ 50
7.6 Securities Accounts.................................................... 50
7.7 Nature of Business..................................................... 50
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7.8 Prepayments and Amendments.......................................................... 50
7.9 Change of Control................................................................... 51
7.10 [Intentionally omitted]............................................................. 51
7.11 Distributions....................................................................... 51
7.12 Accounting Methods.................................................................. 52
7.13 Investments......................................................................... 52
7.14 Transactions with Affiliates........................................................ 52
7.15 Suspension.......................................................................... 53
7.16 [Intentionally omitted]............................................................. 53
7.17 Use of Proceeds..................................................................... 53
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.. 53
7.19 No Prohibited Transactions Under ERISA.............................................. 53
7.20 Financial Covenants................................................................. 54
7.21 Capital Expenditures................................................................ 55
7.22 HGI Subsidiaries.................................................................... 56
7.23 KKR Subsidiaries.................................................................... 56
8. EVENTS OF DEFAULT.......................................................................... 56
9. FOOTHILL'S RIGHTS AND REMEDIES............................................................. 59
9.1 Rights and Remedies................................................................. 59
9.2 Remedies Cumulative................................................................. 61
10. TAXES AND EXPENSES......................................................................... 61
11. WAIVERS; INDEMNIFICATION................................................................... 62
11.1 Demand; Protest; etc................................................................ 62
11.2 Foothill's Liability for Collateral................................................. 62
11.3 Indemnification..................................................................... 62
12. NOTICES.................................................................................... 63
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER................................................. 65
14. DESTRUCTION OF FRI-MRD'S AND BORROWER'S DOCUMENTS.......................................... 65
15. GENERAL PROVISIONS......................................................................... 65
15.1 Effectiveness........................................................................ 66
15.2 Successors and Assigns............................................................... 66
15.3 Section Headings..................................................................... 66
15.4 Interpretation....................................................................... 66
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15.5 Severability of Provisions........................................ 66
15.6 Amendments in Writing............................................. 66
15.7 Counterparts; Telefacsimile Execution............................. 66
15.8 Revival and Reinstatement of Obligations.......................... 67
15.9 Integration....................................................... 67
15.10 Confidentiality................................................... 67
15.11 Guarantors........................................................ 67
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SCHEDULES AND EXHIBITS
Schedule B-1 Borrower Specified Assets
Schedule E-1 Eligible Real Property
Schedule E-2 Non-Encumberable More Important Contracts
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 5.6 Prandium Subsidiaries
Schedule 5.9 Litigation
Schedule 5.12 ERISA Benefit Plans
Schedule 5.16 HGI Subsidiaries
Schedule 5.17 KKR Subsidiaries
Schedule 5.18 Borrower's DDAs
Schedule 6.10 Location of Inventory and Equipment
Schedule 7.1 Indebtedness
Exhibit C-1 Form of Compliance Certificate
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of July 19, 2000, between FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill"), with a place of business
located at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000, on the one hand, and, on the other hand, FRI-MRD CORPORATION, a
Delaware corporation ("FRI-MRD"), with its chief executive office located at
00000 Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and CHI-CHI'S, INC., a
Delaware corporation ("Borrower"), with its chief executive office located at
00000 Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and in addition, for purposes
of acknowledging and agreeing to Section 15.11 of this Agreement, by PRANDIUM,
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INC., a Delaware corporation formerly known as Family Restaurants, Inc.
("Prandium"), with its chief executive office located at 00000 Xxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, FRI-ADMIN CORPORATION, a Delaware corporation
("FRI-Admin"), with its chief executive office located at 00000 Xxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, CCMR OF TIMONIUM, INC., a Delaware corporation
with its chief executive office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, CCMR OF MARYLAND, INC., a Delaware corporation with its chief
executive office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
CHI-CHI'S OF KANSAS, INC., a Kansas corporation with its chief executive office
located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CHI-CHI'S OF
GREENBELT, INC., a Kentucky corporation with its chief executive office located
at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CHI-CHI'S FRANCHISE
OPERATIONS CORPORATION, a Kentucky corporation with its chief executive office
located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF
CANTONSVILLE, INC., a Kentucky corporation with its chief executive office
located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF
GREENBELT, INC., a Kentucky corporation with its chief executive office located
at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF XXXXXXX HIGHWAY,
INC., a Kentucky corporation with its chief executive office located at 00000
Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CHI-CHI'S MANAGEMENT CORPORATION,
a Kentucky corporation with its chief executive office located at 00000 Xxxx
Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF CUMBERLAND, INC., a Kentucky
corporation with its chief executive office located at 00000 Xxxx Xxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF HARFORD COUNTY, INC., a Kentucky corporation
with its chief executive office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, CHI-CHI'S OF SOUTH CAROLINA, INC., a Kentucky corporation with
its chief executive office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, MAINTENANCE SUPPORT GROUP, INC., a Kentucky corporation with its
chief executive office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000, CCMR OF XXXXXXXXX, INC., a Kentucky corporation with its chief executive
office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF
INNER HARBOR, INC., a Kentucky corporation with its chief executive office
located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CHI-CHI'S OF
WEST VIRGINIA, INC., a Kentucky corporation with its chief executive
office located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR
ADVERTISING AGENCY, INC., a Kentucky corporation with its chief executive office
located at 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, CCMR OF GOLDEN
RING, INC., a Kentucky corporation with its chief executive office located at
00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, XXX XXX ROO, INC., a
Delaware corporation ("KKR"), with its chief executive office located at 00000
Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and THE HAMLET GROUP, INC., a
California corporation ("HGI"), with its chief executive office located at 00000
Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, with reference to the following:
WHEREAS, Borrower, Prandium, El Torito, Franchising, the Subsidiaries
of Prandium, El Torito and Borrower identified therein, and Foothill are parties
to that certain Loan and Security Agreement, dated as of January 10, 1997 (as
amended, modified, and otherwise supplemented through the date hereof, the
"Existing Loan Agreement");
WHEREAS, Borrower and Foothill desire to amend and restate the
Existing Loan Agreement in its entirety as provided in this Agreement, it being
understood that no repayment of the obligations of Borrower under the Existing
Loan Agreement is being effected hereby, but merely an amendment and restatement
in accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower and Foothill agree as
follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
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have the following definitions:
"Account Debtor" means any Person who is or who may become obligated
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under, with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter arising
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accounts, contract rights, and all other forms of obligations owing to a Person
arising out of the sale or lease of goods or the rendition of services by such
Person, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
"Acquisition" means any purchase or other acquisition by FRI-MRD or
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its Subsidiaries of the assets or Stock of any other Person, other than (a) the
purchase of Inventory or Equipment in the ordinary course of business, (b)
capital expenditures to the extent not prohibited by this Agreement, and (c) the
acquisition of cash or cash equivalents as consideration for the sale of
Inventory or the rendition of services in the ordinary course of business.
"Acquisition Lien" means in respect of the assets of any Person that
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is the subject of a Permitted Acquisition, a Lien that attaches solely to such
assets, is in existence
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immediately prior to such Acquisition, and was not created in connection with,
or in anticipation of, the Acquisition of such Person.
"Advances" shall have the meaning set forth in Section 2.1(a).
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"Affiliate" means, as applied to any Person, any other Person who
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directly or indirectly controls, is controlled by, or is under common control
with such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person; provided, that Foothill shall not be deemed an Affiliate
of Borrower or any Guarantor.
"Agreement" has the meaning set forth in the preamble hereto.
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"Anaheim Mortgage" means that certain Deed of Trust, Assignment of
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Rents, and Security Agreement, dated as of January 6, 1997, executed by FRI-
Admin in favor of Foothill that encumbers the Anaheim Property and the related
improvements thereto.
"Anaheim Property" means the Real Property of FRI-Admin located at
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0000 X. Xxxxx Xxxxxxx Xxxx., Xxxxxxx, Xxxxxxxxxx 00000.
"Apollo" means Apollo FRI Partners, L.P.
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"Apollo Related Persons" means Apollo or any of its Permitted
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Transferees (exclusive of Prandium and its Subsidiaries).
"Applicable Termination Premium" means, as of any date of
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determination thereof, (a) on or before January 10, 2001, $275,000, and (b)
thereafter, an amount equal to 0.50% of the Maximum Amount; provided, however,
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that if Borrower shall have failed to extend the maturity date of the Senior
Notes, the Senior Discount Notes, and the Senior Secured Notes, pursuant to
Section 6.14(a) and shall have elected to terminate the Loan Agreement effective
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as of October 2, 2001 pursuant to Section 6.14(b), then the Applicable
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Termination Premium shall be an amount equal to 0.25% of the Maximum Amount.
"Asset Disposition" means any sale, transfer, or other disposition,
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directly or indirectly, of any of the properties or assets of FRI-MRD or any of
its Subsidiaries on or after the date hereof.
"Authorized Person" means (a) any officer of Borrower, or (b) any
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employee of Borrower identified from time to time by an officer of Borrower in a
writing delivered to Foothill.
"Availability" means, as of any date of determination thereof, if such
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date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrower as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
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sublimits and reserves applicable hereunder).
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"Average Unused Portion of Maximum Amount" means, as of any date of
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determination, (a) the Maximum Amount, less (b) the sum of (i) the average Daily
Balance of Advances that were outstanding during the immediately preceding
month, plus (ii) the average Daily Balance of the undrawn Letters of Credit that
were outstanding during the immediately preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
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(S) 101 et seq.), as amended, and any successor statute.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
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3(35) of ERISA) for which FRI-MRD, any Subsidiary of FRI-MRD, or any ERISA
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Blockage Event" means (a) a Default under Section 8.1, or (b) any
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Event of Default.
"Books" means all of a Person's books and records, including records
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indicating, summarizing, or evidencing the Collateral or the Guarantor
Collateral and all computer programs, disk or tape files, printouts, runs, or
other computer prepared information relating to the foregoing.
"Borrower" shall have the meaning set forth in the preamble hereto.
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"Borrower Intellectual Property" means the General Intangibles of
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Borrower consisting of: (a) all trademarks, service marks, trade names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature; and (b) all the goodwill of Borrower's
business symbolized by the foregoing or associated therewith.
"Borrower Specified Assets" means the properties or assets directly
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related to the operation of restaurants of Borrower identified on Schedule B-1.
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"Borrower's Subsidiaries" means Chi-Chi's of Greenbelt, Inc., a
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Kentucky corporation, Chi-Chi's of Kansas, Inc., a Kansas corporation, Chi-Chi's
of South Carolina, Inc., a Kentucky corporation, Chi-Chi's of West Virginia,
Inc., a Kentucky corporation, Chi-Chi's Franchise Operations Corporation, a
Kentucky corporation, Chi-Chi's Management Corporation, a Kentucky corporation,
Maintenance Support Group, Inc., a Kentucky corporation, CCMR Advertising
Agency, Inc., a Kentucky corporation, CCMR of Catonsville, Inc., a Kentucky
corporation, CCMR of Cumberland, Inc., a Kentucky corporation, CCMR of
Xxxxxxxxx, Inc., a Kentucky corporation, CCMR of Golden Ring, Inc., a Kentucky
corporation, CCMR of Greenbelt, Inc., a Kentucky corporation, CCMR of Harford
County, Inc., a Kentucky corporation, CCMR of Inner Harbor, Inc., a Kentucky
corporation, CCMR of Maryland, Inc., a Delaware corporation, CCMR of Xxxxxxx
Highway, Inc., a Kentucky corporation, and CCMR of Timonium, Inc., a Delaware
corporation.
"Business Day" means any day that is not a Saturday, Sunday, or other
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day on which national banks are authorized or required to close.
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"Change of Control" shall be deemed to have occurred at such time
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after the date hereof as:
(a) the Apollo Related Persons fail to own and control (without being
subject to any voting trust, voting agreement, shareholders agreement, or any
other agreement or arrangement limiting or affecting the voting of such Voting
Stock (other than the Shareholder Agreement)) at any time 51% or more of the
outstanding Voting Stock of Prandium by vote (assuming that all convertible
instruments, warrants, or options then outstanding have been exercised),
(b) the Apollo Related Persons shall fail to have or have the power to
elect a majority of the Board of Directors of Prandium,
(c) a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act, but not including an Apollo Related Person or a
Green Related Person) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 20% or more of the
outstanding Voting Stock of Prandium by vote; provided, however, that, any
shares of Voting Stock of Prandium issued directly by Prandium to such "person"
or "group" for value shall not be counted towards the foregoing percentage
(unless they are issued in one or a series of related transactions involving the
redemption or other acquisition of shares of Voting Stock held by an Apollo
Related Person or a Green Related Person),
(d) the Apollo Related Persons shall fail to own, directly or
indirectly (which may be through Prandium or its Subsidiaries), and control
(without being subject to any voting trust, voting agreement, shareholders
agreement, or any other agreement or arrangement limiting or affecting the
voting of such Voting Stock (other than the Shareholder Agreement)) at any time
51% or more of the outstanding Voting Stock of FRI-MRD by vote (assuming that
all convertible instruments, warrants, or options then outstanding have been
exercised),
(e) FRI-MRD shall fail to own free and clear of any consensual Liens
of any Person (other than Liens in favor of Foothill) and control (without being
subject to any voting trust, voting agreement, shareholders agreement, or any
other agreement or arrangement limiting or affecting the voting of such Voting
Stock) at any time 100% of the outstanding Voting Stock of FRI-Admin by vote
(other than directors qualifying shares and assuming that all convertible
instruments, warrants, or options then outstanding have been exercised),
(f) FRI-MRD shall fail to own free and clear of any consensual Liens
of any Person (other than Liens in favor of Foothill) and control (without being
subject to any voting trust, voting agreement, shareholders agreement, or any
other agreement or arrangement limiting or affecting the voting of such Voting
Stock) at any time 100% of the outstanding Voting Stock of Borrower by vote
(other than directors qualifying shares and assuming that all convertible
instruments, warrants, or options then outstanding have been exercised),
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(g) FRI-MRD shall fail to own free and clear of any consensual Liens
of any Person (other than Liens in favor of Foothill) and control (without being
subject to any voting trust, voting agreement, shareholders agreement, or any
other agreement or arrangement limiting or affecting the voting of such Voting
Stock) at any time 100% of the outstanding Voting Stock of HGI by vote (other
than directors qualifying shares and assuming that all convertible instruments,
warrants, or options then outstanding have been exercised), or
(h) FRI-MRD shall fail to own free and clear of any consensual Liens
of any Person (other than Liens in favor of Foothill) and control (without being
subject to any voting trust, voting agreement, shareholders agreement, or any
other agreement or arrangement limiting or affecting the voting of such Voting
Stock) at any time 100% of the outstanding Voting Stock of KKR by vote (other
than directors qualifying shares and assuming that all convertible instruments,
warrants, or options then outstanding have been exercised).
"Closing Date" means the date on which each of the conditions
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precedent set forth in Section 3.1 shall have been fulfilled.
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"Code" means the California Uniform Commercial Code.
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"Collateral" means the interests of Borrower in each of the following:
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(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Negotiable Collateral,
(g) Real Property Collateral,
(h) any money, or other assets of Borrower that now or hereafter come
into the possession, custody, or control of Foothill, and
(i) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Negotiable Collateral, Real Property, money, deposit accounts, or
other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion thereof
or interest therein, and the proceeds thereof.
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"Collateral Access Agreement" means a landlord waiver, mortgagee
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waiver, bailee letter, or acknowledgement agreement of any warehouseman,
processor, lessor, or other Person in possession of, having a Lien upon, or
having rights or interests in the Equipment or Inventory, in each case, in form
and substance reasonably satisfactory to Foothill.
"Collections" means all cash, checks, notes, instruments, and other
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items of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Compliance Certificate" means a certificate substantially in the
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form of Exhibit C-1 and delivered by an executive officer of Borrower to
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Foothill.
"Concentration Account" means (a) in the case of Borrower, account
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number 4296-911985 of Borrower maintained with the Concentration Account Bank,
and (b) in the case of FRI-MRD, account number 4296-911910 of FRI-MRD maintained
with the Concentration Account Bank, or, in each case, such other account
established and maintained with the Concentration Account Bank and designated in
writing from time to time by Borrower to Foothill upon 30 days or more prior
written notice.
"Concentration Account Bank" means (a) Xxxxx Fargo Bank, N.A., whose
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office is located in San Francisco, California, and whose ABA number is
000000000, or (b) any other domestic commercial bank that is reasonably
acceptable to Foothill and is designated in writing from time to time by
Borrower to Foothill upon 30 days or more prior written notice, subject to the
execution and delivery of such concentration account agreements as are in form
and substance reasonably satisfactory to Foothill.
"Control Agreement" means a control agreement, in form and substance
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reasonably satisfactory to Foothill, among an Obligor, Foothill, and the
applicable financial intermediary that, among other things, provides that, from
and after the giving of notice by Foothill to such financial intermediary, it
shall take instructions solely from Foothill with respect to the applicable
Securities Account and related securities entitlements.
"Daily Balance" means the amount of an Obligation owed at the end of a
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given day.
"DDA" means any checking or other demand deposit account maintained by
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Borrower.
"deems itself insecure" means that the Person deems itself insecure in
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accordance with the provisions of Section 1208 of the Code.
"Default" means an event, condition, or default that, with the giving
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of notice, the passage of time, or both, would be an Event of Default.
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"Designated Account" means account number 4296-911985 of Borrower
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maintained with the Designated Account Bank, or such other deposit account of
Borrower (located within the United States) designated, in writing and from time
to time, by Borrower to Foothill.
"Designated Account Bank" means Xxxxx Fargo Bank, N.A. whose office is
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located in San Francisco, California, and whose ABA number is 000000000.
"Dollars" or "$" means United States dollars.
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"EBITDA" means, with respect to any fiscal period of a Person, such
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Person's earnings (excluding extraordinary items (determined in accordance with
GAAP)), plus (except to the extent attributable to extraordinary items
(determined in accordance with GAAP)) the amount of any interest, taxes,
depreciation, amortization deducted in arriving at such earnings, and, without
duplication, plus losses and less gains upon dispositions of properties added or
deducted in arriving at such earnings. With respect to any determination of
EBITDA for any Subsidiaries of FRI-MRD, such EBITDA shall be determined after
the allocation of the expenses of Prandium and FRI-MRD to such Subsidiaries in
accordance with the historical practices of Prandium and FRI-MRD.
"Eligible Real Property" means the fee simple Real Property identified
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on Schedule E-1 that are and at all times continue to be acceptable to Foothill
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in all respects and that: (a) are owned by Borrower, FRI-Admin, or Chi-Chi's of
West Virginia, Inc., (b) are the subject of a first priority perfected Lien in
favor of Foothill pursuant to a Mortgage, and (c) are subject to no other Liens
other than Permitted Liens.
"El Torito" means El Torito, Inc., a Delaware corporation.
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"El Torito Sale" means the sale by FRI-MRD of all of the issued and
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outstanding Stock owned by FRI-MRD of El Torito and Franchising pursuant to the
El Torito Sale Documents.
"El Torito Sale Documents" means that certain Stock Purchase Agreement
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among Prandium, FRI-MRD, and Acapulco Acquisition Corp., dated as of March 27,
2000, together with all other agreements, instruments, and other documents
entered into or executed in connection therewith.
"Equipment" means all of a Person's present and hereafter acquired
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machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
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U.S.C. (S)(S) 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
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"ERISA Affiliate" means (a) any corporation whose employees are
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treated as employed by the same employer as the employees of FRI-MRD or its
Subsidiaries under IRC Section 414(b), (b) any trade or business whose employees
are treated as employed by the same employer as the employees of FRI-MRD or its
Subsidiaries under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization that is a member of an
affiliated service group of which FRI-MRD or its Subsidiaries are a member under
IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any party that is a party to an arrangement with FRI-MRD
or its Subsidiaries and whose employees are aggregated with the employees of
FRI-MRD or its Subsidiaries under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any Benefit
-----------
Plan or Multiemployer Plan, (b) the withdrawal of FRI-MRD or any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that reasonably might be expected to provide a basis
under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that reasonably might be expected to result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
FRI-MRD or any of its Subsidiaries or ERISA Affiliates from a Multiemployer
Plan, or (g) providing any security to any Plan under Section 401(a)(29) of the
IRC by FRI-MRD or its Subsidiaries or any of their ERISA Affiliates.
"Event of Default" has the meaning set forth in Section 8.
---------------- ---------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and any successor statute thereto.
"Excluded Contract Right" means, with respect to any Person, and with
-----------------------
respect to any contract to which such Person is a party, a right or privilege of
such Person under such contract, or an obligation due to such Person under such
contract, that: (a) In the case of a More Important Contract, arises under a
contract described on Schedule E-2 hereto; or (b) In the case of a Less
------------
Important Contract, (i) does not consist of the right of such Person to receive
a payment, or an obligation due to such Person with respect to a payment, and
(ii) is, by the express terms of such contract, subject to a restriction on
assignability that prohibits the pledge, hypothecation, mortgage, encumbrance,
or grant of a Lien on same, if such restriction is enforceable, and if the
breach of such restriction by such Person would constitute a material breach of
such contract sufficient to give rise to a right on the part of another party to
such contract to terminate such contract or to impose liability for not
insignificant damages upon such Person for breach of such contract; provided
that the proceeds of any disposition of any Excluded Contract Right shall not
constitute an Excluded Contract Right, and any such proceeds shall be subject to
Foothill's security interest.
-9-
"Existing Loan Agreement" has the meaning set forth in the recitals
-----------------------
hereto.
"Federated Securities Account" means (a) each Securities Account
----------------------------
maintained by Prandium or FRI-MRD with Federated Investors, or (b) such other
Securities Account that is maintained with a financial intermediary or
depository reasonably acceptable to Foothill and that is designated in writing
from time to time by Prandium or FRI-MRD, as applicable, to Foothill upon 30
days or more prior written notice, subject to the execution and delivery of such
Control Agreements as Foothill shall require.
"FEIN" means Federal Employer Identification Number.
----
"Foothill" has the meaning set forth in the preamble to this
--------
Agreement.
"Foothill Account" has the meaning set forth in Section 2.7.
---------------- -----------
"Foothill Expenses" means all: costs or expenses (including taxes,
-----------------
and insurance premiums) required to be paid by Prandium or its Subsidiaries
under any of the Loan Documents that are paid or incurred by Foothill as
permitted hereunder or thereunder; reasonable out-of-pocket fees or charges paid
or incurred by Foothill in connection with Foothill's transactions with Prandium
or its Subsidiaries including, fees or charges for notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and ucc searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, (subject to Section 2.11(d)) appraisal
---------------
(including periodic Collateral or Guarantor Collateral appraisals), real estate
surveys, real estate title policies and endorsements, and, subject to Section
-------
2.11(d) environmental audits; actual out-of-pocket costs and expenses incurred
-------
by Foothill in the disbursement of funds to Borrower (by wire transfer or
otherwise); actual out-of-pocket charges paid or incurred by Foothill resulting
from the dishonor of checks drawn on, or endorsed by or on behalf of Borrower;
reasonable out-of-pocket costs and expenses paid or incurred by Foothill to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral or the
Guarantor Collateral, or any portion thereof, irrespective of whether a sale is
consummated; subject to Section 2.11(d), reasonable costs and expenses paid or
---------------
incurred by Foothill in examining the Books of Prandium or its Subsidiaries;
reasonable out-of-pocket costs and expenses paid or incurred by Foothill in
connection with its prosecution of statutory third party claims or paid or
incurred by Foothill in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or
Foothill's relationship with Prandium or its Subsidiaries arising out of the
Loan Documents; and Foothill's reasonable out-of-pocket attorneys fees and
expenses incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing (including reasonable out-of-pocket attorneys
fees and expenses incurred in connection with a "workout," a "restructuring," or
an Insolvency Proceeding concerning any one of Prandium, FRI-MRD, Borrower, or
any of the other Subsidiaries of Prandium), defending, or concerning the Loan
Documents, irrespective of whether suit is brought.
-10-
"Franchising" means El Torito Franchising, Inc., a Delaware
-----------
corporation.
"FRI-Admin" has the meaning set forth in the preamble to this
---------
Agreement.
"FRI-MRD" has the meaning set forth in the preamble to this Agreement.
-------
"GAAP" means generally accepted accounting principles as in effect
----
from time to time in the United States, consistently applied.
"General Intangibles" means all of a Person's present and future
-------------------
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than its goods, Accounts, and Negotiable Collateral; provided
that General Intangibles shall not include any Excluded Contract Right.
"Green" means Green Equity Investors, L.P.
-----
"Green Related Persons" means Green or any of its Permitted
---------------------
Transferees (exclusive of Prandium and its Subsidiaries).
"Governing Documents" means the certificate or articles of
-------------------
incorporation, by-laws, or other organizational or governing documents of any
Person.
"Guaranty" means that certain Amended, Restated, and Consolidated
--------
General Continuing Guaranty, dated as of the date hereof, executed and delivered
by the Guarantors.
"Guarantor Collateral" means the properties and assets of the
--------------------
Guarantors that are hypothecated by them in favor of Foothill pursuant to the
Loan Documents, including the Anaheim Property and the Headquarters Property.
"Guarantor Security Agreement" means that certain Amended, Restated,
----------------------------
and Consolidated Security Agreement, dated as of the date hereof, among the
Guarantors and Foothill.
"Guarantors" means Prandium, FRI-MRD, FRI-Admin, HGI, KKR, Borrower's
----------
Subsidiaries and each of the other Subsidiaries of FRI-MRD from time to time
party to the Guaranty.
"Hazardous Materials" means (a) substances that are defined or listed
-------------------
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties
-11-
such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived substances,
natural gas, natural gas liquids, synthetic gas, drilling fluids, produced
waters, and other wastes associated with the exploration, development, or
production of crude oil, natural gas, or geothermal resources, (c) any
explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of 50 parts per million.
"Headquarters Mortgage" means that certain Deed of Trust, Assignment
---------------------
of Rents, and Security Agreement, dated as of January 6, 1997, executed by
Prandium in favor of Foothill, that encumbers the Headquarters Property and the
related improvements thereto.
"Headquarters Property" means the Real Property of Prandium located at
---------------------
0000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx.
"HGI" shall have the meaning set forth in the preamble hereto.
---
"HGI Subsidiaries" means those Persons identified on Schedule 5.16.
---------------- -------------
"Indebtedness" means, with respect to any Person: (a) all obligations
------------
for borrowed money, (b) all monetary obligations evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other monetary
obligations in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all monetary obligations under capital
leases, (d) all obligations of others secured by a Lien on any property or asset
of such Person, irrespective of whether such obligation is assumed, and (e) any
obligation guaranteeing or intended to guarantee (whether guaranteed, endorsed,
co-made, discounted, or sold with recourse to such Person) any other Person's
Indebtedness. The foregoing to the contrary notwithstanding, the term
"Indebtedness" shall not include (i) any liability of a Person for the deferred
purchase price of services or property incurred in the ordinary course of
business, and (ii) interest rate caps, collars, and other insurance-type
financial products. For purposes of this definition, if the obligation of any
other Person secured by a Lien in item (d) of this definition is not a monetary
obligation, then the amount of such obligation shall equal the lesser of the
value of the asset encumbered by such Lien and the reasonably estimated amount
of the secured obligation. If Indebtedness of FRI-MRD or one of its
Subsidiaries is permitted hereunder, a guaranty thereof by FRI-MRD or one or
more of its Subsidiaries also shall be permitted hereunder and the maximum
amount of Indebtedness that shall be deemed incurred for purposes of Section 7.1
-----------
is the amount of the Indebtedness that has been guarantied.
"Insolvency Event" means, with respect to any Person, the occurrence
----------------
of any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (b) such Person shall seek dissolution,
reorganization under the Bankruptcy Code or other insolvency law, or the
appointment of a receiver, trustee, custodian or liquidator for it or a
substantial portion of its property, assets or business or to effect a plan or
other arrangement generally with its creditors, (c) such Person shall make a
general assignment for the benefit
-12-
of its creditors, or consent to or acquiesce in the appointment of a receiver,
trustee, custodian or liquidator for a substantial portion of its property,
assets or business, (d) such Person shall file a voluntary petition under any
bankruptcy, insolvency or similar law, or (e) such Person, or a substantial
portion of its property, assets or business shall become the subject of an
involuntary proceeding or petition for its dissolution, reorganization, or the
appointment of a receiver, trustee, custodian or liquidator or shall become
subject to any writ, judgment, warrant of attachment, execution or similar
process, and any such proceeding, petition, writ, judgment, warrant of
attachment, execution or similar process shall not be released, vacated or fully
bonded within 30 days after commencement, filing or levy, as the case may be, or
any order for relief shall be entered in any such proceeding.
"Insolvency Proceeding" means any proceeding commenced by or against
---------------------
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, general assignments for the benefit of creditors,
moratoria, compositions, or extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of
-----------------
the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Inventory" means all present and future inventory in which a Person
---------
has any interest, including goods held for sale or lease or to be furnished
under a contract of service and all of such Person's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located.
"Investment Property" means all of a Person's present and future
-------------------
"investment property" as that term is defined in the Code.
"Investments" means (a) the acquisition of securities (whether debt or
-----------
equity) of, or other ownership interests in, a Person, (b) loans, advances,
capital contributions, or transfers of property to a Person, or (c) the
acquisition of all or substantially all of the properties or assets of a Person.
The foregoing to the contrary notwithstanding, none of the acts or events that
are permitted by the proviso to Section 7.3 shall constitute Investments.
-----------
"IRC" means the Internal Revenue Code of 1986, as amended, and the
---
Treasury regulations promulgated thereunder.
"KKR" shall have the meaning set forth in the preamble hereto.
---
"KKR Subsidiaries" means those Persons identified on Schedule 5.17.
---------------- -------------
"L/C" means a letter of credit issued by Foothill for the account of
---
Borrower.
"L/C Guaranty" means a guaranty of payment issued by Foothill with
------------
respect to a letter of credit issued by an issuing bank for the account of
Borrower.
-13-
"Less Important Contract" means, with respect to any Person, a
-----------------------
contract to which such Person is a party that is not a More Important Contract.
"Letter of Credit" means an L/C or an L/C Guaranty, as the context
----------------
requires.
"Letter of Credit Usage" means the sum of (a) the undrawn amount of
----------------------
Letters of Credit, plus (b) the amount of unreimbursed drawings under Letters of
Credit.
"Lien" means any interest in property securing an obligation owed to,
----
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.
"Loan Account" has the meaning set forth in Section 2.10.
------------ ------------
"Loan Documents" means this Agreement, the Guaranty, the Guarantor
--------------
Security Agreement, the Letters of Credit, the Mortgages, the Anaheim Mortgage,
the Headquarters Mortgage, the Stock Pledge Agreement, the Trademark Security
Agreement, the Subordination Agreement, any note or notes executed by Borrower
and payable to Foothill, and any other agreement entered into, now or in the
future, in connection with this Agreement.
"Material Adverse Change" means (a) a material and adverse change in
-----------------------
the business, prospects, assets, or financial condition of Borrower, (b) the
material impairment of Prandium or its Subsidiaries' ability to perform their
obligations under the Loan Documents to which they are parties or of Foothill's
ability to enforce the Obligations, in each case, other than as the proximate
result of the action or inaction of Foothill, or (c) a Material Adverse
Collateral Change.
"Material Adverse Collateral Change" means (a) a material and adverse
----------------------------------
decline in the value of the Collateral (exclusive of the Stock of the Borrower's
Subsidiaries and exclusive of dispositions of the Collateral that are not
prohibited by the Loan Documents) or the Guarantor Collateral (exclusive of the
Stock of Subsidiaries of such Guarantors and exclusive of dispositions of the
Guarantor Collateral that are not prohibited by the Loan Documents) or the
amount that Foothill would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral or Guarantor Collateral, or (b) a material impairment of the priority
of Foothill's Liens with respect to the Collateral or the Guarantor Collateral,
in each case, other than as the proximate result of the action or inaction of
Foothill.
-14-
"Maturity Date" has the meaning set forth in Section 3.4.
------------- -----------
"Maximum Amount" means $20,000,000.
--------------
"More Important Contract" means, with respect to any Person, a
-----------------------
contract to which such Person is a party: (a) the material breach of which by
such Person could give rise to a claim against such Person that is material in
relation to such Person's financial condition; or (b) the termination of which
could interfere substantially with the ongoing operations, businesses, or
prospects of such Person.
"Mortgages" means one or more mortgages, deeds of trust, or deeds to
---------
secure debt, executed by Borrower in favor of Foothill, in form and substance
satisfactory to Foothill, that encumber the Real Property Collateral and the
related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined in
------------------
Section 4001(a)(3) of ERISA) to which FRI-MRD, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
six years.
"Negotiable Collateral" means all of a Person's present and future
---------------------
letters of credit, notes, drafts, instruments, Investment Property, documents,
personal property leases (wherein such Person is the lessor), chattel paper, and
Books relating to any of the foregoing.
"Net Proceeds" means (a) the gross cash proceeds (including insurance
------------
proceeds, condemnation awards, and payments received from time to time in
respect of installment obligations and other non-cash proceeds, if applicable)
received by or on behalf of FRI-MRD or one of its Subsidiaries in respect of an
Asset Disposition, less (b) the sum of (i) the amount, if any, of all taxes
(other than income taxes) payable by FRI-MRD or its Subsidiary in connection
with such Asset Disposition plus Borrower's good faith best estimate of the
amount of all income taxes payable in connection with such Asset Disposition,
(ii) the amount of any reasonable reserve established in accordance with GAAP
against any liabilities associated with the properties or assets that were the
subject of such Asset Disposition, provided that the amount of any subsequent
reduction of such reserve (other than in connection with a payment in respect of
any such liability) shall be deemed to be "Net Proceeds" of an Asset Disposition
occurring on the date of such reduction, (iii) the amount applied to repay any
Indebtedness secured by a Lien upon the properties or assets that were the
subject of the Asset Disposition, to the extent such Indebtedness is required by
its terms to be repaid as a result of such Asset Disposition, and (iv)
reasonable and customary fees, commissions, and expenses and other costs paid by
FRI-MRD or its Subsidiary in connection with such Asset Disposition (other than
those payable to any Affiliate of FRI-MRD or such Subsidiary), in each case only
to the extent not already deducted in arriving at the amount referred to in
clause (a).
----------
"Obligations" means all loans, Advances, debts, principal, interest
-----------
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations owing to Foothill
under any outstanding Letters of Credit, premiums (including Applicable
Termination Premiums), liabilities (including all
-15-
amounts charged to Borrower's Loan Account pursuant hereto), obligations, fees,
charges, or Foothill Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by Borrower to Foothill of any kind and
description pursuant to the Loan Documents, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising.
"Obligor" means Borrower or any Guarantor.
-------
"Orderly Liquidation Value" means, with respect to any Real Property,
-------------------------
the orderly liquidation value of such Real Property as determined from time to
time by a qualified appraisal company selected by Foothill.
"Ordinary Course Dispositions" means Asset Dispositions of (a)
----------------------------
Inventory in the ordinary course of business, (b) Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business, (c)
properties or assets between FRI-MRD and its Subsidiaries or between FRI-MRD's
Subsidiaries, other than Prohibited Transfers, (d) cash and cash equivalents
consistent with the provisions hereof, and (e) license rights with respect to
Borrower Intellectual Property in connection with licenses or franchises entered
into by Borrower in the ordinary course of business.
"Original Closing Date" means the 'Closing Date' as defined in the
---------------------
Existing Loan Agreement.
"Overadvance" has the meaning set forth in Section 2.5.
----------- -----------
"Participant" means any Person to which Foothill has sold a
-----------
participation interest in its rights under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
----
Title IV of ERISA, or any successor thereto.
"Permitted Acquisition" means an Acquisition of assets of another
---------------------
Person or, all or substantially all of the Stock of another Person so long as:
(a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Acquisition,
(b) the assets being acquired, or the Person whose capital Stock is
being acquired, are useful in or engaged in, as applicable, the restaurant
business or a business reasonably related thereto,
(c) if the proposed Acquisition (whether in one or a series of related
transactions (including any prior Permitted Toehold Investment)) relates to
assets or Stock with an aggregate consideration of less than $3,000,000,
Borrower has provided Foothill with written confirmation that on a pro forma
basis, calculated in good faith by officers of
-16-
Borrower and using reasonable assumptions, Borrower would have been in
compliance with each of the financial covenants in Section 7.20 hereof for the
------------
12 months ending as of the fiscal quarter ended immediately prior to the
proposed date of consummation of such proposed Acquisition for which there are
available financial statements,
(d) if the proposed Acquisition (whether in one or a series of related
transactions (including any prior Permitted Toehold Investment)) relates to
assets or Stock with an aggregate consideration of $3,000,000 or more, (i)
Borrower has provided Foothill with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis, created by adding
the historical combined financial statements of Borrower (including the combined
financial statements of any other Person or assets that were the subject of a
prior Permitted Acquisition during the relevant period) to the historical
consolidated financial statements of the Person to be acquired (or the
historical financial statements related to the assets to be acquired) pursuant
to the proposed Acquisition (adjusted to eliminate expense items that would not
have been incurred and include income items that would have been recognized, in
each case, if the combination had been accomplished at the beginning of the
relevant period; such eliminations and inclusions to be mutually agreed upon by
Borrower and Foothill), Borrower would have been in compliance with each of the
financial covenants in Section 7.20 hereof for the 12 months ending as of the
------------
fiscal quarter ended immediately prior to the proposed date of consummation of
such proposed Acquisition for which there are available financial statements,
and (ii) Foothill has completed its audit, appraisal, and standard due diligence
with respect to the assets or Person that is to be the subject of the proposed
Acquisition and the results thereof are reasonably satisfactory to Foothill,
(e) the relevant assets or Stock being acquired in such Acquisition
are acquired directly by FRI-MRD, Borrower, or any of Borrower's Subsidiaries,
(f) in the case of an asset Acquisition, Borrower or the relevant
acquiring Subsidiary thereof shall have executed and delivered any and all
security agreements, UCC-1 financing statements, fixture filings, Mortgages,
leasehold mortgages, and other documentation reasonably requested by Foothill in
order to include the newly acquired assets within the Collateral or the
Guarantor Collateral, and
(g) in the case of a Stock Acquisition, (i) Borrower or the relevant
acquiring Subsidiary thereof shall have executed and delivered a stock pledge
agreement (substantially in the form of the Stock Pledge Agreement executed and
delivered by Borrower with respect to the Stock of the Borrower's Subsidiaries)
and shall have delivered to Foothill possession of the original Stock
certificates respecting all of the issued and outstanding shares of Stock of
such new Subsidiary or Subsidiaries, together with stock powers with respect
thereto endorsed in blank, and (ii) Borrower or the relevant acquiring
Subsidiary thereof shall have caused such new Subsidiary or Subsidiaries to
execute and deliver a guaranty (substantially in the form of the Guaranty
executed and delivered by the Borrower's Subsidiaries) together with any and all
security agreements, UCC-1 financing statements, fixture filings, Mortgages,
leasehold mortgages, and other documentation reasonably requested by Foothill
-17-
in order to cause such cause Subsidiary or Subsidiaries to be obligated with
respect to the Obligations and to include the assets of the new Subsidiary or
Subsidiaries within the Guarantor Collateral.
"Permitted Disposition" means (a) Ordinary Course Dispositions, (b)
---------------------
subject to the prior or concurrent satisfaction of the applicable Release
Condition therefor, Asset Dispositions of any of the properties or assets of
FRI-MRD or any of its Subsidiaries, other than (i) the Anaheim Property, the
Headquarters Property, or the Real Property Collateral, and (ii) the Borrower
Intellectual Property, (c) subject to the prior or concurrent satisfaction of
the applicable Release Condition therefor, Permitted Sale and Lease-backs, and
(d) subject to the prior or concurrent satisfaction of the applicable Release
Condition therefor, Permitted Eligible Real Property Dispositions.
"Permitted Eligible Real Property Dispositions" means Asset
---------------------------------------------
Dispositions of Eligible Real Property having an aggregate Ordinary Liquidation
Value of not more than $10,000,000.
"Permitted Investments" means (a) Permitted Ordinary Course
---------------------
Investments, (b) Permitted Acquisitions, (c) Permitted Dispositions, (d)
Investments existing on the Closing Date, and (e) Permitted Toehold Investments.
"Permitted Liens" means: (a) Liens granted to Foothill or any
---------------
assignee under the Loan Documents, (b) Liens for unpaid taxes, assessments, and
government charges that either (i) are not yet due and payable or (ii) are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d)(i) the
------------
interests of lessors or lessees under operating leases and subleases, or (ii)
the interests of licensees or franchisees under licenses or franchises of
Borrower Intellectual Property to the extent constituting an Ordinary Course
Disposition under clause (e) of the definition of Ordinary Course Disposition,
----------
(e)(i) Liens securing purchase money Indebtedness or capital leases permitted
under Section 7.1(g), so long as the Lien only attaches to the asset purchased
--------------
or acquired, or (ii) Acquisition Liens, (f) Liens arising by operation of law,
incurred in the ordinary course of business of FRI-MRD and its Subsidiaries and
not in connection with the borrowing of money, and which Liens either (i) are
for sums not yet due and payable, (ii) are the subject of Permitted Protests, or
(iii) in the aggregate are de minimis in amount, (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders,
contracts or leases (to the extent permitted under this Agreement), incurred in
the ordinary course of business of FRI-MRD and its Subsidiaries and not in
connection with the borrowing of money, (i) Liens arising by reason of security
for surety or appeal bonds, (j) Liens of or resulting from any judgment or award
that does not constitute an Event of Default hereunder, (k) Liens with respect
to the Real Property Collateral and the Anaheim Property, that are exceptions to
the commitments for title insurance issued in connection with the Mortgages and
the Anaheim Mortgage as accepted by Foothill at the time of such issuance, (l)
with respect to any Real Property, easements, rights of way, zoning and similar
covenants and restrictions, and similar encumbrances that do not materially
interfere with or impair the use or operation thereof by FRI-MRD or its
-18-
Subsidiaries, (m) other Liens imposed by operation of law that do not materially
affect FRI-MRD's or its Subsidiaries ability to perform their respective
obligations under the Loan Documents, (n) replacement or continued Liens granted
to a Person who provides refinancing or continuation of Indebtedness pursuant to
Section 7.1(h) hereof; provided, that the replacement or continued Lien is
--------------
limited to all or part of the properties or assets that secured the refinanced
or continued Indebtedness, and (o) the pledge of the Pledged HGI Securities
pursuant to the Senior Secured Discount Note Agreement
"Permitted Ordinary Course Investment" means (a) direct obligations
------------------------------------
of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America with a maturity not exceeding one
year, (b) certificates of deposit, time deposits, banker's acceptances or other
instruments of a bank having a combined capital and surplus of not less than
$500,000,000 with a maturity not exceeding one year, (c) investments in
commercial paper rated at least A-1 or P-1 maturing within one year after the
date of acquisition thereof, (d) money market accounts maintained at a bank
having combined capital and surplus of no less than $500,000,000 or at another
financial institution reasonably satisfactory to Foothill, (e) loans and
advances to officers and employees of Borrower in the ordinary course of
business (including in connection with the purchase of Stock of Prandium or its
Subsidiaries) in an aggregate amount at any one time outstanding not to exceed
$2,000,000, (f) investments in negotiable instruments for collection, (g)
advances in connection with purchases of goods or services in the ordinary
course of business, (h) deposits required in connection with leases, (i) loans
or distributions made by FRI-MRD on the Original Closing Date to Prandium of
approximately $23,000,000, and (j) Investments made or received in consideration
of Permitted Dispositions.
"Permitted Protest" means the right of FRI-MRD or its Subsidiaries to
-----------------
protest any Lien (other than any such Lien that secures the Obligations), tax
(other than taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) if required in accordance with GAAP, a reserve
with respect to such obligation is established on the books of FRI-MRD or its
Subsidiary, as applicable under the circumstances, in accordance with GAAP, and
(b) any such protest is instituted and diligently prosecuted by FRI-MRD or its
Subsidiary, as applicable under the circumstances, in good faith.
"Permitted Sale and Lease-backs" means sale and lease-back
------------------------------
transactions that are (a) in respect of Equipment or Real Property (and related
improvements thereto) constituting a restaurant that is first opened or acquired
by FRI-MRD or any of its Subsidiaries after the Original Closing Date, (b) in
good faith designated in writing to Foothill, at the time of initial acquisition
of such Equipment or Real Property, as a projected Permitted Sale and Lease-
back, and (c) fully consummated within 18 months following the date of initial
acquisition of such Equipment or Real Property, as applicable.
"Permitted Toehold Investment" means an Investment in the Voting Stock
----------------------------
of another Person so long as (a) no Default or Event of Default shall have
occurred and be continuing or would result from the consummation of the proposed
Acquisition, (b) the Person whose Stock is being acquired, is engaged in, the
restaurant business or a business
-19-
reasonably related thereto, (c) the relevant Voting Stock being acquired in such
Investment is acquired directly by Borrower or its Subsidiaries, (d) Borrower or
the relevant acquiring Subsidiary thereof shall have executed and delivered a
stock pledge agreement (substantially in the form of the Stock Pledge Agreement)
or an amendment to the Stock Pledge Agreement, and shall have perfected
Foothill's security interest in the acquired Investment, and (e) the aggregate
amount of all such Toehold Investments does not exceed $1,000,000 in the
aggregate.
"Permitted Transferee" means, with respect to any Person: (a) any
--------------------
Affiliate of such Person; (b) any investment manager, investment advisor, or
constituent general partner of such Person; or (c) any investment fund,
investment account, or investment entity that is organized by such Person or its
Affiliates and whose investment manager, investment advisor, or constituent
general partner is such Person or a Permitted Transferee of such Person.
"Person" means and includes natural persons, corporations, limited
------
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than the
----------------------------
Real Property Collateral.
"Plan" means any employee benefit plan, program, or arrangement
----
maintained or contributed to by FRI-MRD or its Subsidiaries or with respect to
which it may incur liability.
"Pledged HGI Collateral" means: (a) the Pledged HGI Securities and
----------------------
the certificates representing the Pledged HGI Securities and any interest of
FRI-MRD in the entries on the books of any financial intermediary pertaining to
the Pledged HGI Securities, and all dividends or distributions of any kind
whatsoever (other than cash or cash equivalents) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged HGI Securities; (b) all additional shares of, and all securities
convertible into, and warrants, options and other rights to purchase, Stock
(whether certificated or uncertificated and now existing or hereafter created)
of HGI from time to time acquired by FRI-MRD in any manner (which shares shall
be deemed to be part of the Pledged HGI Securities), the certificates or other
instruments representing such additional shares, securities, warrants, options,
or other rights and any interest of FRI-MRD in the entries on the books of any
financial intermediary pertaining to such additional shares, and all dividends
or distributions of any kind whatsoever (other than cash or cash equivalents)
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such additional shares, securities, warrants,
options or other rights; and (c) to the extent not covered in clause (a) or (b)
-----------------
hereof, all Proceeds thereof.
"Pledged HGI Securities" means all of the issued and outstanding
----------------------
shares of Stock of HGI as of the Closing Date.
-20-
"Prandium" has the meaning set forth in the preamble to this
--------
Agreement.
"Proceeds" shall have, for purposes of the definition of "Pledged HGI
--------
Collateral," the meaning ascribed thereto under the Uniform Commercial Code as
in effect in any relevant jurisdiction or under relevant law.
"Prohibited Transfers" means: (a) Asset Dispositions of Equipment by
--------------------
FRI-MRD or any of its Subsidiaries to FRI-Admin; (b) Asset Dispositions by any
Subsidiary of FRI-MRD to FRI-MRD; (c) Asset Dispositions of any Real Property
Collateral by FRI-MRD or any of its Subsidiaries to FRI-MRD or any of its
Subsidiaries; and (c) Asset Dispositions of the Borrower Intellectual Property
(other than those constituting Ordinary Course Dispositions under clause (e) of
----------
the definition of Ordinary Course Disposition).
"Real Property" means any real property fee estates or leasehold
-------------
interests now owned or hereafter acquired by FRI-MRD or its Subsidiaries.
"Real Property Collateral" means the parcels of Real Property and the
------------------------
related improvements thereto identified on Schedule R-1, and any Real Property
------------
fee estates hereafter acquired by Borrower.
"Reference Rate" means the rate of interest announced within Xxxxx
--------------
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Release Condition" means that (a) no Default or Event of Default has
-----------------
occurred and is continuing or would result therefrom, (b) in all cases other
than Asset Dispositions of the Borrower Specified Assets, FRI-MRD or its
Subsidiary is receiving at least fair value for the property or assets, (c) with
regard to any Permitted Eligible Real Property Disposition, a portion of the
proceeds shall be remitted to Foothill as a payment against the Obligations in
an amount equal to the greater of (i) the Orderly Liquidation Value of the
Eligible Real Property that is the subject thereof, and (ii) the amount of any
Overadvance then existing after giving effect to such Permitted Eligible Real
Property Disposition, provided, however, that if, at the time of any such
-------- -------
Permitted Eligible Real Property Disposition, no cash Advances are outstanding
after giving effect to such Permitted Eligible Real Property Disposition (and
the resulting reduction in the Borrowing Base), no Overadvance shall be existing
and no Event of Default shall have occurred and be continuing, then there shall
be no such obligation to remit a portion of the proceeds of such Permitted
Eligible Real Property Disposition to Foothill, and (d) following such Asset
Disposition, the subject properties or assets are not to be the subject of a
lease (other than in connection with a Permitted Sale and Lease-back) by FRI-MRD
or any of its Subsidiaries.
"Reportable Event" means any of the events described in Section
----------------
4043(c) (other than subsections (b)(7) and (b)(9)) of ERISA or the regulations
thereunder other than a
-21-
Reportable Event as to which the provision of 30 days notice to the PBGC is
waived under applicable regulations.
"Retiree Health Plan" means an "employee welfare benefit plan" within
-------------------
the meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Revolver Usage" means, on the date any determination thereof is to be
--------------
made, the sum of (a) the outstanding amount of the Advances, plus (b) the Letter
of Credit Usage
"SEC" means the United States Securities and Exchange Commission and
---
any successor Federal agency having similar powers.
"Securities Account" means a "securities account" as that term is
------------------
defined in the Code.
"Senior Discount Notes" means the senior, unsecured notes of FRI-MRD
---------------------
which rank pari-passu with all existing and future unsecured, unsubordinated
debt of FRI-MRD and have an outstanding principal amount, as of the date hereof,
of approximately $75,000,000.
"Senior Discount Note Agreement" shall mean the Note Agreement, dated
------------------------------
August 12, 1997, entered into between FRI-MRD and each of the purchasers
referred to therein in connection with the issuance of the Senior Discount Notes
by FRI-MRD, and any other note agreement providing for the issuance of the
Senior Discount Notes.
"Senior Notes" means the 9-3/4% senior notes of Prandium due 2002 that
------------
originally were issued in January, 1994 and have outstanding principal amount,
as of the date hereof, of approximately $104,000,000.
"Senior Secured Discount Notes" means the 14.0% Senior Secured
-----------------------------
Discount Notes due January 24, 2002 issued by FRI-MRD, in the aggregate
principal amount of $24,000,000, the proceeds from the sale of which were used
to purchase the Pledged HGI Securities, and are secured by the Pledged HGI
Collateral.
"Senior Secured Discount Note Agreement" means the Note Agreement,
--------------------------------------
dated as of June 9, 1998, between FRI-MRD and each of the purchasers referred to
therein in connection with the issuance of the Senior Secured Discount Notes,
and any other note agreement providing for the issuance of the Senior Secured
Discount Notes, in each case, in form and substance satisfactory to Foothill.
"Shareholder Agreement" means, collectively, (a) that certain
---------------------
Shareholder Agreement, dated as of January 27, 1994, among Prandium, Apollo and
its "Related Persons" (as such term is defined therein), Green and its "Related
Persons" (as such term is defined therein), and Foodmaker, Inc. and its "Related
Persons" (as such term is defined therein), as amended prior to the Closing
Date, (b) that certain Exchange Agreement, dated
-22-
as of November 20, 1995, between Green and Apollo, as amended prior to the
Closing Date, and (c) that certain Exchange Agreement, dated as of November 20,
1995, between Foodmaker, Inc. and Apollo, in each case, as amended prior to the
Closing Date.
"Solvent" means, with respect to any Person on a particular date, that
-------
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
"Stock" means all shares, options, warrants, interests,
-----
participations, or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act).
"Stock Pledge Agreement" means that certain Amended, Restated, and
----------------------
Consolidated Stock Pledge Agreement, dated as of the date hereof, among
Foothill, Prandium, FRI-MRD, and Borrower.
"Subordination Agreement" means that certain Amended and Restated
-----------------------
Subordination Agreement, dated as of the date hereof, among Prandium, FRI-MRD,
and Foothill.
"Subordinated Notes" means the 10-7/8% senior subordinated discount
------------------
notes of Prandium due 2004 that originally were issued in January, 1994 and have
fully accreted outstanding principal amount, as of the date hereof, of
approximately $31,000,000.
"Subsidiary" of a Person means a corporation, partnership, limited
----------
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or appoint
other managers of such corporation, partnership, limited liability company, or
other entity.
-23-
"Trademark Security Agreement" means that certain Amended and Restated
----------------------------
Trademark Security Agreement, dated as of the date hereof, between Borrower and
Foothill.
"Triggering Event" means any of (a) the occurrence and continuation of
----------------
an Event of Default under Section 8.1 (other than an Event of Default based
-----------
solely on acceleration of the maturity of the Obligations based on an Event of
Default arising other than under Section 8.1), or (b) the occurrence of an
-----------
Insolvency Event relative to Borrower.
"Voidable Transfer" has the meaning set forth in Section 15.8.
----------------- ------------
"Voting Stock" means Stock or similar equity interest of a Person
------------
pursuant to which the holders thereof have, at the time of determination, the
general voting power under ordinary circumstances to vote for the election of
directors (or individuals performing similar functions), managers, trustees, or
general partners of such Person (irrespective of whether at the time any other
class or classes will have or might have voting power by reason of the happening
of any contingency).
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
-----------
banking association.
1.2 Accounting Terms. All accounting terms not specifically defined
----------------
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
a particular Person is identified with respect to a financial covenant or a
related definition, it shall be understood to mean such Person on a consolidated
basis unless the context clearly requires otherwise. The first sentence of this
Section 1.2 notwithstanding, if one or more changes in GAAP after the date
hereof are required to be applied to the then existing transactions, and such
change has a material effect on the financial computations required under this
Agreement, the parties agree to negotiate in good faith to attempt to draft an
amendment of this Agreement that shall approximate, to the extent possible, the
economic effect of the original provisions hereof after taking into account such
change or changes in GAAP; provided, however, that until the parties are able to
negotiate such amendment, then as used in this Agreement, "GAAP" shall mean
generally accepted accounting principles in effect prior to such change or
changes.
1.3 Code. Any terms used in this Agreement that are defined in the Code
---------------------------------------------------------------------
shall be construed and defined as set forth in the Code unless otherwise defined
--------------------------------------------------------------------------------
herein.
-------
1.4 Construction. Unless the context of this Agreement clearly requires
-------------
otherwise, references to the plural include the singular, references to the
singular include the plural, the term "including" is not limiting, and the term
"or" has, except where otherwise indicated, the inclusive meaning represented by
the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Foothill. Section, subsection, clause, schedule, and exhibit
references are to this Agreement unless otherwise specified. Any reference in
this Agreement or in the Loan Documents to
-24-
this Agreement or any of the Loan Documents shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable.
1.5 Schedules and Exhibits.
-----------------------
All of the schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Advances.
-------------------
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, Foothill agrees to make advances ("Advances") to
Borrower in an amount at any one time outstanding not to exceed an amount equal
to (i) the lesser of (A) the Maximum Amount or (B) the Borrowing Base, minus
-----
(ii) the Letter of Credit Usage. For purposes of this Agreement, "Borrowing
Base," as of any date of determination, shall mean the result of:
(y) the lesser of
(i) 100% of the Orderly Liquidation Value of Eligible
Real Property, and
(ii) an amount equal to (A) the combined EBITDA of
Borrower and KKR for the period of 4 consecutive fiscal quarters
then most recently ended, times (B) (1) on or before March 30,
-----
2001, 3.0, and (2) thereafter, 2.5; minus
-----
(z) the aggregate amount of reserves, if any, established
by Foothill under Section 2.1(b).
--------------
(b) Anything to the contrary in this Section 2.1 notwithstanding,
-----------
Foothill shall have the right to establish reserves in such amounts as Foothill
shall deem necessary or appropriate against the Borrowing Base, if Foothill
shall determine that a Material Adverse Change shall have occurred.
(c) Foothill shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed the Maximum Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid
-----------
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement without penalty.
-25-
(e) On the Closing Date, the aggregate outstanding Advances under
the Existing Loan Agreement (the "Existing Advances") shall be converted into
Advances hereunder. The parties hereto acknowledge and agree that no repayment
of the Existing Advances is being effected hereby, but merely an amendment and
restatement in accordance with the terms hereof.
2.2 Letters of Credit.
------------------
(a) Subject to the terms and conditions of this Agreement, Foothill
agrees to issue L/Cs or L/C Guarantees for the account of Borrower in an
aggregate undrawn and unreimbursed amount at any one time outstanding not to
exceed (i) the lesser of (A) the Maximum Amount, or (B) the Borrowing Base,
minus (ii) the amount of outstanding Advances. Foothill and Borrower
-----
acknowledge and agree that certain of the letters of credit that are to be the
subject of L/C Guarantees may be outstanding on the Closing Date. Each Letter
of Credit shall have an expiry date no later than 20 days prior to the date on
which this Agreement is scheduled to terminate under Section 3.4 and all such
-----------
Letters of Credit shall be in form and substance acceptable to Foothill and
Borrower. If Foothill is obligated to advance funds under a Letter of Credit,
Borrower immediately shall reimburse such amount to Foothill and, in the absence
of such reimbursement, the amount so advanced immediately and automatically
shall be deemed to be an Advance hereunder and, thereafter, shall bear interest
at the rate then applicable to Advances under Section 2.6.
-----------
(b) Borrower agrees to be bound by the issuing bank's regulations and
interpretations of any Letters of Credit guarantied by Foothill and opened to or
for Borrower's account or by Foothill's interpretations of any L/C issued by
Foothill to or for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and agrees that Foothill
shall not be liable (other than for the willful misconduct, gross negligence, or
bad faith of Foothill) for any error, negligence, or mistake, whether of
omission or commission, in following Borrower's instructions or those contained
in the Letter of Credit or any modifications, amendments, or supplements
thereto. Borrower understands that the L/C Guarantees may require Foothill to
indemnify the issuing bank for certain costs or liabilities arising out of
claims by Borrower against such issuing bank. Borrower hereby agrees to
indemnify, save, defend, and hold Foothill harmless with respect to any loss,
cost, expense (including reasonable attorneys fees), or liability incurred by
Foothill under any L/C Guaranty as a result of Foothill's indemnification of any
such issuing bank (other than if such loss, cost, or expense is the proximate
result of the gross negligence, willful misconduct, or bad faith of Foothill).
(c) Borrower hereby authorizes and directs any bank that issues a
letter of credit guaranteed by Foothill to deliver to Foothill all instruments,
documents, and other writings and property received by the issuing bank pursuant
to such letter of credit, and to accept and rely upon Foothill's instructions
and agreements with respect to all matters arising in connection with such
letter of credit and the related application; provided, that Foothill agrees to
consider in good faith Borrower's reasonable requests with respect to
-26-
waivers of discrepancies and amendments with respect thereto. Borrower may or
may not be the "applicant" or "account party" with respect to such letter of
credit.
(d) Any and all actual charges, commissions, fees, and costs incurred
by Foothill relating to the letters of credit guaranteed by Foothill shall be
considered Foothill Expenses for purposes of this Agreement and immediately
shall be reimbursable by Borrower to Foothill.
(e) Immediately upon the termination of this Agreement, Borrower
agrees to either (i) cause to be delivered to Foothill releases of all of
Foothill's obligations under outstanding Letters of Credit, or (ii) provide
Foothill with an irrevocable letter of credit, in form and substance and from an
issuer, that is reasonably acceptable to Foothill, in an amount equal to 105% of
the maximum amount of Foothill's obligations under outstanding Letters of
Credit.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application by any
governmental authority of any such applicable law, treaty, rule, or regulation,
or (ii) compliance by the issuing bank or Foothill with any direction, request,
or requirement (irrespective of whether having the force of law) of any
governmental authority or monetary authority including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System as from
time to time in effect (and any successor thereto):
(A) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letters of Credit issued
hereunder, or
(B) there shall be imposed on the issuing bank or Foothill any
other condition regarding any letter of credit, or Letter of Credit,
as applicable, issued pursuant hereto;
and the result of the foregoing is to increase, directly the cost to the issuing
bank or Foothill of issuing, making, guaranteeing, or maintaining any letter of
credit, or Letter of Credit, as applicable, or to reduce the amount receivable
in respect thereof by such issuing bank or Foothill, then, and in any such case,
Foothill may, at any time within a reasonable period after the additional cost
is incurred or the amount received is reduced, notify Borrower, and Borrower
shall pay no later than 3 Business Days following a demand for payment such
amounts as the issuing bank or Foothill may specify to be reasonably necessary
to compensate the issuing bank or Foothill for such additional cost or reduced
receipt. The determination by the issuing bank or Foothill, as the case may be,
of any amount due pursuant to this Section 2.2(f), as set forth in a certificate
--------------
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.
2.3 [Intentionally Omitted].
-----------------------
-27-
2.4 [Intentionally Omitted].
------------------------
2.5 Overadvances.If, at any time or for any reason, the amount of
-------------
Obligations owed by Borrower to Foothill pursuant to Sections 2.1 or 2.2 is
greater than either the Dollar limitations set forth in Sections 2.1 or 2.2 (an
"Overadvance"), Borrower immediately shall pay to Foothill, in cash, the amount
of such excess to be used by Foothill first, to repay Advances outstanding under
Section 2.1 and, thereafter, to be held by Foothill as cash collateral to secure
Borrower's obligation to repay Foothill for all amounts paid pursuant to Letters
of Credit.
2.6 Interest and Letter of Credit Fees: Rates, Payments, and
---------------------------------------------------------
Calculations.
-------------
(a) Interest Rate. Except as provided in clause (b) below (i)
------------- ----------
at such times as the aggregate amount of Advances outstanding hereunder is less
than $10,000,000, all monetary Obligations that are charged to the Loan Account
(except for undrawn Letters of Credit) shall bear interest at a per annum rate
of 1.875 percentage points above the Reference Rate, and (ii) at such times as
the aggregate amount of Advances outstanding hereunder is equal to or greater
than $10,000,000, all monetary Obligations that are charged to the Loan Account
(except for undrawn Letters of Credit) in excess of $10,000,000 shall bear
interest at a per annum rate of 2.875 percentage points above the Reference Rate
and the portion of such monetary Obligations not in excess of $10,000,000 shall
bear interest at a per annum rate of 1.875 percentage points above the Reference
Rate.
(b) Default Rate. From and after and during the continuation
------------
of an Event of Default, (i) all monetary Obligations (except for undrawn
Letters of Credit) shall bear interest at a per annum rate equal to 2 percentage
points above the rate that otherwise is applicable under Section 2.6(a) hereof,
--------------
and (ii) the fee provided in Section 2.6(c) shall be increased to a fee equal to
--------------
5% per annum times the actual Daily Balance of the undrawn Letters of Credit
that were outstanding during the immediately preceding month.
(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 3.0% per annum times the actual
--------------
Daily Balance of the undrawn Letters of Credit that were outstanding during the
immediately preceding month.
(d) Minimum Interest. In no event shall the rate of interest
----------------
chargeable hereunder for any day be less than 7% per annum. To the extent that
interest accrued hereunder at the rate set forth herein would be less than the
foregoing minimum daily rate, the interest rate chargeable hereunder for such
day automatically shall be deemed increased to the minimum rate.
(e) Payments. Interest and Letter of Credit fees payable
--------
hereunder shall be due and payable, in arrears, on the first day following the
end of each month during the term hereof. Borrower hereby authorizes Foothill,
at its option, without prior notice to Borrower, to charge such interest and
Letter of Credit fees, all Foothill Expenses (as and when incurred), the Letter
of Credit fees and related charges, commissions, fees, and costs
-28-
provided for in Section 2.2(d) (as and when accrued or incurred), the fees and
-------------
charges provided for in Section 2.11 (as and when accrued or incurred), and all
------------
installments or other payments due by Borrower under any Loan Document to its
respective Loan Account, which amounts thereafter shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded and shall thereafter accrue interest at the rate then applicable
to Advances hereunder.
(f) Computation. In the event the Reference Rate is changed
-----------
from time to time hereafter, the applicable rate of interest hereunder
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Reference Rate. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate. In no
----------------------------------------------
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under applicable law. Borrower and Foothill, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance (but not below zero) of the Obligations to the extent of such
excess. Any amount not applied to so reduce such principal balance promptly
shall be refunded, without interest, to Borrower.
2.7 Collections.Borrower shall at all times maintain the Concentration
-----------
Account and agrees that all Collections shall be deposited into its
Concentration Account or into a deposit account of Borrower the proceeds of
which are remitted no less frequently than has been its past practice to its
Concentration Account. Borrower, Foothill, and the Concentration Account Bank
shall enter into an agreement that, among other things, shall provide that, from
and after the giving of notice by Foothill to such Concentration Account Bank,
the Concentration Account Bank shall remit all proceeds received in such
Concentration to an account (the "Foothill Account") maintained by Foothill at a
depositary selected by Foothill. Foothill agrees that it will not give such
notice to the Concentration Account Bank unless a Triggering Event has occurred
and is continuing. No arrangement contemplated hereby shall be modified by
Borrower without the prior written consent of Foothill. Upon the occurrence and
during the continuance of a Triggering Event, Foothill may elect to notify the
Concentration Account Bank to remit all amounts received in the Concentration
Account to the Foothill Account.
2.8 Crediting Payments; Application of Collections.The receipt of any
-----------------------------------------------
Collections of Borrower by Foothill (whether from transfers to Foothill by the
Concentration Account Bank or otherwise) immediately shall be applied
provisionally to reduce the Advances outstanding under Section 2.1, but shall
not be considered a payment on account
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unless such Collection item is a wire transfer of immediately available federal
funds and is made to the Foothill Account or unless and until such Collection
item is honored when presented for payment. Should any Collection item not be
honored when presented for payment, then Borrower shall be deemed not to have
made such payment, and interest shall be recalculated accordingly. Anything to
the contrary contained herein notwithstanding, any Collection item shall be
deemed received by Foothill only if it is received into the Foothill Account on
a Business Day on or before 11:00 a.m. Los Angeles time. If any Collection item
is received into the Foothill Account on a non-Business Day or after 11:00 a.m.
Los Angeles time on a Business Day, it shall be deemed to have been received by
Foothill as of the opening of business on the immediately following Business
Day.
2.9 Designated Accounts. Foothill is authorized to make the Advances and
-------------------
the Letters of Credit under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person, or
without instructions if pursuant to Section 2.6(e). Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances requested by Borrower
and made by Foothill hereunder. Unless otherwise agreed by Foothill and
Borrower, any Advance requested by Borrower and made by Foothill hereunder shall
be made to the Designated Account.
2.10 Maintenance of Loan Accounts; Statements of Obligations.Foothill
--------------------------------------------------------
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with all Advances made by Foothill
to Borrower or for Borrower's account, including, accrued interest, Foothill
Expenses, and any other payment Obligations of Borrower. In accordance with
Section 2.8, the Loan Account will be credited with all payments received by
Foothill from Borrower or for Borrower's account, including all amounts received
in the Foothill Account from the Borrower Concentration Account Bank. Foothill
shall render statements, in accordance with its customary practices in respect
of rendering statements to its customers, regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Foothill Expenses owing, and such
statements shall (absent manifest error) be conclusively presumed to be correct
and accurate and constitute an account stated between Borrower and Foothill
unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver
to Foothill by registered or certified mail or overnight courier at its address
specified in Section 12, written objection thereto describing the error or
errors contained in any such statements.
2.11 Fees. Borrower shall pay to Foothill the following fees:
-----
(a) Unused Line Fee. On the first day following the end of
each month during the term of this Agreement, an unused line fee in an amount
equal to 0.375% per annum times the Average Unused Portion of the Maximum
Amount;
(b) Annual Facility Fee. On each anniversary of the Original
Closing Date, an annual facility fee in an amount equal to 0.25% of the Maximum
Amount, which fee shall be fully earned and non-refundable when due;
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(c) Financial Examination, Documentation, and Appraisal
Fees. (i) Foothill's customary fee of $750 per day per examiner, plus reasonable
out-of-pocket expenses for each financial analysis and examination (i.e.,
audits) of Prandium and its Subsidiaries performed by personnel employed by
Foothill; Foothill's customary appraisal fee of $1,500 per day per appraiser,
plus reasonable out-of-pocket expenses for each appraisal of the Collateral and
the Guarantor Collateral performed by personnel employed by Foothill; and (ii)
without duplication, the actual charges paid or incurred by Foothill if it
elects to employ the services of one or more third Persons to perform such
financial analyses and examinations (i.e., audits) of FRI-MRD and its
Subsidiaries or to appraise the Collateral or the Guarantor Collateral or to
perform environmental audits; and (iii) on each anniversary of the Closing Date,
Foothill's customary fee of $5,000 per year for its loan documentation review.
The foregoing notwithstanding, (a) so long as no Event of Default has occurred
and is continuing, Borrower only shall be obligated to reimburse Foothill for
the foregoing fees, expenses, and charges with respect to 1 appraisal (not
including any appraisal performed at any time an Event of Default shall have
occurred and be continuing) of the Collateral and Guarantor Collateral per year
(which appraisal may be conducted in different stages and a copy of which
appraisal Foothill agrees to provide to FRI-MRD upon request, without
representations or warranties of any kind whatsoever, and at FRI-MRD's expense)
and with respect to 1 environmental audit (not including any environmental audit
performed at any time an Event of Default shall have occurred and be continuing)
of the Collateral or the Guarantor Collateral per year (which environmental
audit may be performed in different stages and a copy of which environmental
audit Foothill agrees to provide to FRI-MRD upon request, without
representations or warranties of any kind whatsoever, and at FRI-MRD's expense),
and (b) Borrower shall be obligated to reimburse Foothill for the foregoing
fees, expenses, and charges with respect to any appraisal or environmental audit
of the Collateral or Guarantor Collateral performed at any time an Event of
Default shall have occurred and be continuing; and
(d) Servicing Fee. On the first day of each month during the
term of this Agreement, and thereafter so long as any Obligations are
outstanding, a servicing fee in an amount equal to $11,500.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Effectiveness of this Agreement. The
------------------------------------------------------------
effectiveness of this Agreement is subject to the fulfillment, to the
satisfaction of Foothill and its counsel, of each of the following conditions on
or before the Closing Date:
(a) the Closing Date shall occur on or before July 21, 2000;
(b) Foothill shall have received confirmation of the filing of
its financing statements, fixture filings, and any amendments thereto;
(c) Foothill shall have received each of the following documents,
duly executed, and each such document shall be in full force and effect:
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(i) the Trademark Security Agreement;
(ii) the Guaranty;
(iii) the Guarantor Security Agreement;
(iv) the Stock Pledge Agreement;
(v) the Subordination Agreement;
(vi) [intentionally omitted]
(vii) such Mortgages and amendments to Mortgages, the
Anaheim Mortgage, or the Headquarters Mortgage as Foothill shall
require;
(viii) [intentionally omitted];
(ix) notification letters to each depository identified on
Schedule 5.18 (to the extent such notification letters have not
-------------
been delivered by Borrower to Foothill prior to the Closing Date)
pursuant to Section 9302(g) of the Code;
(d) Foothill shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of its Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party and authorizing specific officers of
it to execute the same;
(e) Foothill shall have received, with respect to each of
Prandium, FRI-MRD, FRI-Admin, Borrower, HGI, and KKR, (i) copies of its
respective Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by its Secretary, or (ii) a certificate from its
Secretary certifying that its Governing Documents, as delivered to Lender prior
to the date hereof, remain in full force and effect and have not been revoked,
rescinded, altered, amended or changed;
(f) Foothill shall have received certificates of status
with respect to Borrower, Prandium, FRI-MRD, FRI-Admin, KKR, dated within 10
days of the Closing Date, such certificates to be issued by the appropriate
officer of the jurisdiction of organization of such Obligor, which certificate
shall indicate that such Obligor is in good standing in such jurisdiction;
(g) [intentionally omitted];
(h) Foothill shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
-------
6.8, the form and substance of which shall be reasonably satisfactory to
---
Foothill and its counsel;
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(i) Foothill shall have received an opinion of Borrower's and
Guarantors' counsel in form and substance satisfactory to Foothill and its
counsel;
(j) Foothill shall have received mortgagee title insurance policies
(or marked commitments to issue the same) for the Real Property Collateral, the
Anaheim Property, and the Headquarters Property issued by Chicago Title Company
(each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts
reasonably satisfactory to Foothill assuring Foothill that the Mortgages (or the
Anaheim Mortgage or the Headquarters Mortgage, as applicable) on such Real
Property Collateral (or the Anaheim Property or the Headquarters Property, as
applicable) are valid and enforceable first priority mortgage Liens on such Real
Property Collateral (or the Anaheim Property or the Headquarters Property, as
applicable) free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policies otherwise shall be in form and substance
reasonably satisfactory to Foothill;
(k) Foothill shall have (i) received an officer's certificate to the
effect that all tax returns required to be filed by Prandium and its
Subsidiaries have been timely filed and all taxes upon Prandium and its
Subsidiaries or their properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest, and (ii) entered into a
tax servicing agreement with a third Person satisfactory to Foothill, the form
and substance of such agreement being reasonably satisfactory to Foothill;
(l) no Material Adverse Change shall have occurred;
(m) copies of the El Torito Sale Documents, certified as being, true,
correct, and complete by the Secretary of FRI-MRD shall have been delivered to
Foothill;
(n) The El Torito Sale shall have been consummated in accordance with
the El Torito Sale Documents;
(o) All fee simple and leasehold interests in Real Property that were
conveyed by El Torito to FRI-MRD as a condition to the El Torito Sale shall have
been conveyed by FRI-MRD to FRI-Admin;
(p) Foothill shall have completed its business, legal, and Collateral
due diligence, in each case, the results of which shall be satisfactory to
Foothill; and
(q) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered or
executed or recorded and shall be in form and substance reasonably satisfactory
to Foothill and its counsel.
3.2 Conditions Precedent to all Advances and Letters of Credit. The
-----------------------------------------------------------
following shall be conditions precedent to all Advances and Letters of Credit
hereunder:
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(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any governmental authority against
Borrower or Foothill.
3.3 Conditions Subsequent. As conditions subsequent to the effectiveness
---------------------
of this Agreement, each of FRI-MRD and Borrower shall perform or cause to be
performed the following (the failure by FRI-MRD or Borrower to so perform or
cause to be performed constituting an Event of Default hereunder):
(a) On or before the date that is 10 days after the Closing Date,
deliver to Foothill a certificate of status with respect to HGI, dated within 10
days of the Closing Date, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of HGI, which certificate shall
indicate that HGI is in good standing in such jurisdiction;
(b) On or before the date that is 15 days after the Closing Date,
Foothill shall have received the agreements contemplated hereby with the
Concentration Account Bank, duly executed and each such agreement shall be in
full force and effect;
(c) On or before the date that is 30 days after the Closing Date,
deliver to Foothill (i) a Control Agreement among Prandium, Foothill, and
Federated Services Company, a Pennsylvania corporation ("Federated"), relative
to the Federated Securities Account maintained by Prandium, (ii) a Control
Agreement among FRI-MRD, Foothill, and Federated relative to the Federated
Securities Account maintained by FRI-MRD, and (iii) a Control Agreement among
FRI-MRD, Foothill, and the applicable financial intermediary relative to any
other account, if any, where any portion of the proceeds from the El Torito Sale
are maintained; and
(d) On or before the date that is 30 days after the Closing Date,
deliver to Foothill a revised Schedule P-1 hereto, in form and substance
------------
reasonably satisfactory to Foothill (it being expressly understood that until
such revised Schedule P-1 shall be delivered to Foothill, Schedule P-1 to the
------------ ------------
Existing Loan Agreement shall be attached hereto as Schedule P-1).
------------
3.4 Term. This Agreement shall become effective upon the later of (a)
-----
the execution and delivery of this Agreement by Prandium, FRI-MRD, Borrower,
Foothill, and each of the other parties hereto, and (b) the Closing Date, and
shall continue in full force and
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effect for a term ending on January 10, 2002 (the "Maturity Date"). The
foregoing notwithstanding, Foothill shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
----------------------
all Obligations (including contingent reimbursement obligations of Borrower with
respect to any outstanding Letters of Credit) immediately shall become due and
payable without notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrower of Borrower's duties, Obligations, or
covenants hereunder unless, and Foothill's continuing security interests in the
Collateral shall remain in effect until, all Obligations have been fully and
finally discharged and Foothill's obligation to provide additional credit
hereunder is terminated.
3.6 Early Termination by Borrower. Borrower has the option, at any time
------------------------------
upon 10 Business Days prior written notice to Foothill, to terminate this
Agreement by paying to Foothill, in cash, the Obligations (including a release
of all Letters of Credit or delivery of an irrevocable letter of credit, in form
and substance and from an issuer, that is reasonably acceptable to Foothill, in
an amount equal to 105% of the maximum amount of Foothill's obligations under
outstanding Letters of Credit), in full, together with the Applicable
Termination Premium. The foregoing to the contrary notwithstanding, if the
Obligations are refinanced with a financing that is provided or agented by
Foothill, then no Applicable Termination Premium shall be payable in connection
with such refinancing of the Obligations. Anything to the contrary
notwithstanding, if at any time Foothill is no longer owned by Xxxxx Fargo or
any Affiliate thereof and if Foothill is unable to arrange for the issuance of
letters of credit requested hereunder, then no Applicable Termination Premium
shall be payable in connection with any termination of this Agreement by
Borrower pursuant to the first sentence of this Section.
3.7 Termination Upon Event of Default. If Foothill terminates this
----------------------------------
Agreement upon the occurrence of an Event of Default that intentionally is
caused by Borrower for the purpose, in Foothill's reasonable and good faith
judgment, of avoiding payment of the Early Termination Premium provided in
Section 3.6, in view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Foothill's lost profits as a result thereof, Borrower
shall pay to Foothill upon the effective date of such termination, a premium in
an amount equal to the Applicable Termination Premium. The Applicable
Termination Premium shall be presumed to be the amount of damages sustained by
Foothill as the result of the early termination and Borrower agrees that it is
reasonable under the circumstances currently existing. The Applicable
Termination Premium provided for in this Section 3.7 shall be deemed included in
the Obligations.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest.
---------------------------
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(a) Borrower hereby grants to Foothill a continuing security interest
in all of Borrower's currently existing and hereafter acquired or arising
Personal Property Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents.
(b) Foothill's security interests in the Personal Property Collateral
shall attach to all Personal Property Collateral without further act on the part
of Foothill or Borrower. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, except for Permitted Dispositions,
Borrower has no authority, express or implied, to dispose of any item or portion
of the Personal Property Collateral or the Real Property Collateral. Concurrent
with the consummation of any Permitted Disposition, Foothill agrees to release
its Liens on the subject property or asset (but not the proceeds from the Asset
Disposition).
4.2 Negotiable Collateral. In the event that any Collateral, including
---------------------
proceeds, is evidenced by or consists of Negotiable Collateral (other than
Collections items that are received by Borrower in the ordinary course of
business and that are deposited in accordance with Section 2.7), Borrower,
promptly upon the request of Foothill, shall endorse and deliver physical
possession of such Negotiable Collateral to Foothill to the extent required for
Foothill to have a first priority perfected Lien thereon.
4.3 [Intentionally omitted]
-----------------------
4.4 Delivery of Additional Documentation Required. At any time upon the
---------------------------------------------
request of Foothill, Borrower shall execute and deliver to Foothill all
financing statements, continuation financing statements, fixture filings,
security agreements, chattel mortgages, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that
Foothill reasonably may request, in form reasonably satisfactory to Foothill, to
perfect and continue perfected Foothill's security interests in the Collateral,
and in order to fully consummate all of the transactions contemplated hereby and
under the other Loan Documents. Without limiting the foregoing, each of
Prandium, FRI-MRD, and Borrower agrees (and by the execution and delivery of
their Guarantees, each of the other Guarantors agree) to execute and deliver any
supplementary security agreements, financing statements, or other documents
reasonably required by Foothill to create or perfect its security interest in
Borrower's (or Guarantor's, as applicable) Investment Property (subject to the
remedial restrictions contained herein).
4.5 Power of Attorney. Borrower hereby irrevocably makes, constitutes,
-----------------
and appoints Foothill (and any of Foothill's officers, employees, or agents
designated by Foothill) as Borrower's true and lawful attorney, with power to
(a) if Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4, sign the name of Borrower on any of the
documents described in Section 4.4, (b) endorse Borrower's name on any
Collection item that may come into Foothill's possession, and (c) and at any
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time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance. The
appointment of Foothill as Borrower's attorney, and each and every one of
Foothill's rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully and finally repaid and performed
and Foothill's obligation to extend credit hereunder is terminated.
4.6 Right to Inspect. Prior to the time that an Event of Default has
----------------
occurred and is continuing or Foothill deems itself insecure, Foothill (through
any of its officers, employees, or agents) shall have the right, from time to
time hereafter upon reasonable prior notification to Borrower and during normal
business hours, to inspect FRI-MRD's and its Subsidiaries' Books and to check,
test, and (subject to Section 2.11(d)) appraise the Collateral (and the
Guarantor Collateral) in order to verify Borrower's financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral (or the Guarantor Collateral). After the time that an Event of
Default has occurred and is continuing or Foothill deems itself insecure,
Foothill (through any of its officers, employees, or agents) shall have the
right, from time to time thereafter, to inspect FRI-MRD's and its Subsidiaries'
Books and to check, test, and (subject to Section 2.11(d)) appraise the
Collateral (and the Guarantor Collateral) in order to verify Borrower's
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral (or the Guarantor Collateral).
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Foothill to enter into this Agreement, each of FRI-
MRD and Borrower makes the following representations and warranties which shall
be true, correct, and complete in all material respects as of the date hereof,
and shall be true, correct, and complete in all material respects as of the
Closing Date, and at and as of the date of the making of each Advance or
issuance of each Letter of Credit thereafter, as though made on and as of the
date of such Advance or Letter of Credit (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement until the repayment in full of the Obligations:
5.1 No Encumbrances. Borrower has good and marketable title to the
---------------
Collateral, free and clear of Liens except for Permitted Liens. The Guarantors
have good and marketable title to the Guarantor Collateral hypothecated by them
under the Loan Documents to which they are parties, free and clear of Liens
except for Permitted Liens.
5.2 Equipment. All of the Equipment of FRI-MRD and its Subsidiaries is
---------
used or held for use in their business and is fit for such purposes (ordinary
wear and tear excepted).
5.3 Location of Inventory and Equipment. The Inventory and Equipment of
-----------------------------------
FRI-MRD and its Subsidiaries is not stored with a bailee, warehouseman, or
similar party (without Foothill's prior written consent) and is located only at
the locations identified on Schedule 6.10 or otherwise permitted by Section
6.10.
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5.4 Equipment Records. Borrower keeps correct and accurate records
-----------------
itemizing and describing the kind, type, quality, and quantity of its Equipment,
and Borrower's cost therefor.
5.5 Location of Chief Executive Offices; XXXXx. The chief executive
------------------------------------------
office of Borrower and each Guarantor is at the location set forth in the
preamble to this Agreement; provided, however, that Borrower may amend this
Section 5.5 to identify a new chief executive office for a Guarantor or Borrower
so long as such amendment occurs by written notice to Foothill not less than 30
days prior to the date on which Borrower or such Guarantor, as applicable, moves
its chief executive office to such new location, so long as such new location is
within the continental United States, and so long as, at the time of such
written notification, Borrower or such Guarantor, as applicable, provides any
financing statements necessary to perfect and continue perfected Foothill's
security interests in such Person's assets. Borrower's FEIN is 00-0000000.
5.6 Due Organization and Qualification; Subsidiaries.
-------------------------------------------------
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation and qualified and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified reasonably could be expected to have a Material
Adverse Change.
(b) Each Guarantor is duly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation and qualified
and licensed to do business in, and in good standing in, any state where the
failure to be so licensed or qualified reasonably could be expected to have a
Material Adverse Change.
(c) Set forth on Schedule 5.6 attached hereto is a complete and
------------
accurate list of Prandium's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their incorporation; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Prandium. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable .
(d) Except as set forth on Schedule 5.6 attached hereto, no
------------
capital Stock (or any securities, instruments, warrants, options, purchase
rights, conversion or exchange rights, calls, commitments or claims of any
character convertible into or exercisable for capital Stock) of any direct or
indirect Subsidiary of Borrower is subject to the issuance of any security,
instrument, warrant, option, purchase right, conversion or exchange right, call,
commitment or claim of any right, title, or interest therein or thereto.
5.7 Due Authorization; No Conflict - FRI-MRD and Borrower.
------------------------------------------------------
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(a) The execution, delivery, and performance by each of FRI-MRD
and Borrower of this Agreement and the Loan Documents to which each is a party
have been duly authorized by all necessary corporate action.
(b) The execution, delivery, and performance by each of FRI-MRD
and Borrower of this Agreement and the Loan Documents to which each is a party
do not and will not (i) violate, in any material respect, any provision of
federal, state, or local law or regulation (including Regulations T, U, and X of
the Federal Reserve Board) applicable to FRI-MRD and Borrower, the Governing
Documents of FRI-MRD and Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on FRI-MRD and Borrower, (ii)
conflict with, result in a material breach of, or constitute (with due notice or
lapse of time or both) a material default under any material contractual
obligation or material lease of FRI-MRD or Borrower, (iii) result in or require
the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of FRI-MRD and Borrower, other than Permitted Liens, or
(iv) require any approval of stockholders or any approval or consent of any
Person under any material contractual obligation of FRI-MRD or Borrower.
(c) Other than the filing of appropriate financing statements,
fixture filings, recordations in the applicable trademark and copyright
registries, and mortgages and related documents in respect of the Collateral and
the Guarantor Collateral, the execution, delivery, and performance by each of
FRI-MRD and Borrower of this Agreement and the Loan Documents to which each is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any federal, state, foreign, or
other Governmental Authority or other Person.
(d) This Agreement and the Loan Documents to which each of FRI-
MRD and Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by them, as applicable, will be the legally
valid and binding obligations of such Person, enforceable against it in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.
(e) The Liens granted by each of FRI-MRD and Borrower to Foothill
in and to their properties and assets pursuant to this Agreement and the other
Loan Documents are validly created, and first priority Liens, subject only to
Permitted Liens.
5.8 Due Authorization; No Conflict - Guarantors.
--------------------------------------------
(a) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party have been duly authorized by all
necessary corporate action.
(b) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party do not and will not (i) violate, in
any material respect, any provision of federal, state, or local law or
regulation (including Regulations T,
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U, and X of the Federal Reserve Board) applicable to such Guarantor, the
Governing Documents of such Guarantor, or any order, judgment, or decree of any
court or other Governmental Authority binding on such Guarantor, (ii) conflict
with, result in a material breach of, or constitute (with due notice or lapse of
time or both) a material default under any material contractual obligation or
material lease of such Guarantor, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Guarantor, other than Permitted Liens, or (iv) require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of such Guarantor.
(c) Other than the filing of appropriate financing statements,
fixture filings, and mortgages and related documents in respect of the Guarantor
Collateral, the execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any federal, state, foreign, or other Governmental Authority or other
Person.
(d) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against it in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Liens granted by each Guarantor to Foothill in and to its
properties and assets are validly created, and first priority Liens, subject
only to Permitted Liens.
5.9 Litigation. There are no actions or proceedings pending against
----------
FRI-MRD and its Subsidiaries before any court or administrative agency and each
of FRI-MRD or Borrower does not have knowledge of any pending, threatened, or
imminent litigation, governmental investigations, or claims, complaints,
actions, or prosecutions involving FRI-MRD and its Subsidiaries, except for: (a)
matters existing as of the date hereof that (i) have claimed damages of less
than $250,000, or, if no claimed damages, have estimated damages of less than
$250,00 (assuming a determination adverse to FRI-MRD or such Subsidiary, as
applicable), and (ii) are not reasonably expected to result in a Material
Adverse Change, (b) matters disclosed on Schedule 5.9; and (c) matters arising
after the date hereof that would not reasonably be expected to result in a
Material Adverse Change.
5.10 No Material Adverse Change. All financial statements relating to
--------------------------
Borrower or the Guarantors that have been delivered by Borrower to Foothill have
been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present, in all material respects, Borrower's (or
such Guarantor's, as applicable) financial condition as of the date thereof and
Borrower's (or such Guarantor's, as applicable) results of operations for the
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period then ended. On the Closing Date there has not been a material adverse
change in the financial condition of Borrower and the Guarantors, taken as a
whole since the date of the latest financial statements submitted to Foothill on
or before the Closing Date.
5.11 Solvency. FRI-MRD and each of its Subsidiaries is Solvent. No
--------
transfer of property is being made by FRI-MRD or any of its Subsidiaries and no
obligation is being incurred by FRI-MRD or any of its Subsidiaries in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of FRI-MRD or its Subsidiaries.
5.12 Employee Benefits. None of FRI-MRD, any of its Subsidiaries, or any
-----------------
of their ERISA Affiliates maintains or contributes to any Benefit Plan, other
than those listed on Schedule 5.12. FRI-MRD, each of its Subsidiaries and each
ERISA Affiliate have satisfied the minimum funding standards of ERISA and the
IRC with respect to each Benefit Plan to which it is obligated to contribute.
No ERISA Event has occurred nor has any other event occurred that may result in
an ERISA Event that reasonably could be expected to result in a Material Adverse
Change. None of FRI-MRD or its Subsidiaries, any ERISA Affiliate, or any
fiduciary of any Plan is subject to any direct or indirect liability with
respect to any Plan under any applicable law, treaty, rule, regulation, or
agreement that reasonably could be expected to result in a Material Adverse
Change. None of FRI-MRD or its Subsidiaries or any ERISA Affiliate is required
to provide security to any Plan under Section 401(a)(29) of the IRC.
5.13 Environmental Condition. Except (i) as may be in compliance, in all
-----------------------
material respects, with applicable legal requirements, or (ii) may have occurred
or exists, without the knowledge of FRI-MRD or any of its Subsidiaries, as a
result of the acts or omissions of previous owners, or (iii) could not
reasonably be expected to result in a material adverse change in the value of
the subject Real Property: (a) none of FRI-MRD's or its Subsidiaries'
properties or assets ever has been used by them in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials;
(b) none of FRI-MRD's or its Subsidiaries' properties or assets has been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental protection statute; (c) no Lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned or operated by FRI-MRD or any of its Subsidiaries; and
(d) FRI-MRD and its Subsidiaries have not received a summons, citation, or
directive from the United States Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by them
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.14 Leases. No material default by FRI-MRD or its Subsidiaries exists
------
under any lease to which it is a party and no event has occurred or exists
which, with notice or lapse of time or both, would constitute a material default
by FRI-MRD or its Subsidiaries thereunder.
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5.15 Issuance of Senior Secured Discount Notes. The Senior Secured
-----------------------------------------
Discount Note Agreement and the transactions contemplated thereunder have been
duly executed, delivered and performed in accordance with their terms by the
respective parties thereto in all respects, including the fulfillment of all
conditions precedent set forth therein. All actions and proceedings required by
the Senior Secured Discount Note Agreement, applicable law or regulation have
been taken and the transactions required thereunder have been duly and validly
taken and consummated. No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits consummation of the
transactions described in the Senior Secured Discount Note Agreement. Borrower
has received the proceeds pursuant to each issuance of the Senior Secured
Discount Notes. Borrower has delivered, or caused to be delivered, to Foothill
true, correct and complete copies of the Senior Secured Discount Note Agreement.
5.16 HGI Subsidiaries. Except as set forth on Schedule 5.16, the HGI
----------------
Subsidiaries have no liabilities, properties or assets, or engage in any
business activities.
5.17 KKR Subsidiaries. Except as set forth on Schedule 5.17, the KKR
----------------
Subsidiaries have no liabilities, properties or assets, or engage in any
business activities.
5.18 DDAs.
-----
Set forth on Schedule 5.18 are all of Borrower's DDAs, including, with
-------------
respect to each depository (i) the name and address of such depository, and (ii)
the account numbers of the accounts maintained with such depository.
6. AFFIRMATIVE COVENANTS.
Each of FRI-MRD and Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations, and unless Foothill shall otherwise consent in writing FRI-MRD and
its Subsidiaries shall do all of the following:
6.1 Accounting System. Maintain a standard system of accounting that
-----------------
enables each of them to produce financial statements in accordance with GAAP and
also maintain records pertaining to the Collateral and the Guarantor Collateral
that contain information as from time to time may reasonably be requested by
Foothill.
6.2 Collateral and Operations Reporting. Provide Foothill with the
-----------------------------------
following documents at the following times in form satisfactory to Foothill:
(a) on a quarterly basis, and in any event, by no later than the
30th day following the end of each quarter during the term of this Agreement, a
listing of each Borrower's and each Guarantor's currently operating restaurants,
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(b) on a quarterly basis, and in any event, by no later than the
30th day following the end of each quarter during the term of this Agreement, a
listing of each of the restaurants of Borrower and the Guarantors that have been
closed during such quarter,
(c) on a quarterly basis, and in any event, by no later than the
30th day following the end of each quarter during the term of this Agreement, a
detailed listing of the properties or assets that have been sold or otherwise
disposed of since the Closing Date (other than Ordinary Course Dispositions) and
a statement of the Net Proceeds received by FRI-MRD and its Subsidiaries from
each such sale or other disposition,
(d) on a monthly basis, and in any event, by no later than the
10th Business Day following the end of each month, a summary aging, by vendor,
of each of Prandium's and its Subsidiaries' accounts payable and any book
overdraft, and
(e) such other reports as to the Collateral and the Guarantor
Collateral or the financial condition of FRI-MRD or its Subsidiaries as Foothill
may request from time to time.
6.3 Financial Statements, Reports, Certificates. Deliver to Foothill:
-------------------------------------------
(a) as soon as available, but in any event within 45 days after the end of each
quarter during each of Prandium's fiscal years, a company prepared balance
sheet, income statement, and statement of cash flow covering Prandium's
operations during such period; and (b) as soon as available, but in any event
within 90 days after the end of each of Prandium's fiscal years, financial
statements of Prandium for each such fiscal year, audited by KPMG Peat Marwick
LLP or such other independent certified public accountants reasonably acceptable
to Foothill and certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP, together with a certificate of such
accountants addressed to Foothill stating that such accountants do not have
knowledge of the existence of any Default or Event of Default. Such audited
financial statements shall include a balance sheet, profit and loss statement,
and statement of cash flow and, promptly after receipt and if prepared, such
accountants' letter to management. In addition to the financial statements
referred to above, each of FRI-MRD and Borrower agrees to deliver, as soon as
available, but in any event within 30 days after the end of each month during
each of Prandium's fiscal years, the "key data report" covering Prandium, KKR,
HGI, and Borrower for the month then ended and the year to date.
Together with the above, Borrower also shall deliver to Foothill
Prandium's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K
Current Reports, and any other filings made by Prandium with the SEC, if any, as
soon as the same are filed, and any other report reasonably requested by
Foothill relating to the Collateral or the Guarantor Collateral or the financial
condition of FRI-MRD or its Subsidiaries.
Each quarter, together with the financial statements provided pursuant
to Section 6.3(a), each of FRI-MRD and Borrower shall deliver to Foothill a
--------------
certificate signed by its chief financial officer to the effect that: (i) all
financial statements delivered or caused to be delivered to Foothill hereunder
have been prepared in accordance with GAAP (except,
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in the case of unaudited financial statements, for the lack of footnotes and
being subject to year-end audit adjustments) and fairly present in all material
respects the financial condition of the applicable Person, (ii) to such
officer's best knowledge the representations and warranties of FRI-MRD and its
Subsidiaries contained in this Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of such certificate,
as though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date), (iii) for each
quarter that also is the date on which a financial covenant in Section 7.20, or
------------
7.21 is to be tested, a Compliance Certificate demonstrating in reasonable
----
detail compliance at the end of such period with the applicable financial
covenants contained in Section 7.20, or 7.21, and (iv) to such officer's best
------------ ----
knowledge on the date of delivery of such certificate to Foothill there does not
exist any condition or event that constitutes a Default or Event of Default (or,
in the case of clauses (i), (ii), or (iii), to the extent of any non-compliance,
---------------------------
describing such non-compliance as to which he or she may have knowledge and what
action FRI-MRD or Borrower has taken, is taking, or proposes to take with
respect thereto).
6.4 Tax Returns. Upon Foothill's request, make available to Foothill
-----------
for review at Borrower's chief executive office, copies of each of Prandium's
future federal income tax returns, and any amendments thereto.
6.5 Title to Equipment. With the exception of Equipment of HGI, in the
------------------
event that the book value of all Equipment of Borrower and the Guarantors the
ownership of which is evidenced by a certificate of title or similar form of
evidence of ownership exceeds $200,000 in the aggregate, then, upon Foothill's
request, FRI-MRD and its Subsidiaries shall deliver to Foothill, properly
endorsed, any and all evidences of ownership of, certificates of title, or
applications for title to any items of Equipment owned by Borrower or any
Guarantor.
6.6 Maintenance of Equipment. Maintain their Equipment in good operating
------------------------
condition and repair (ordinary wear and tear excepted), and make all necessary
replacements thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved; provided, however, that the foregoing
shall not be deemed to prevent Permitted Dispositions to the extent otherwise
permitted hereunder.
6.7 Taxes. Other than taxes of which FRI-MRD and its Subsidiaries are
-----
unaware or that in the aggregate are de minimis in amount, all assessments and
taxes (including withholding taxes), whether real, personal, or otherwise, due
or payable by, or imposed, levied, or assessed against FRI-MRD or its
Subsidiaries, or any of their properties, shall be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax (other than taxes that are
the subject of a United States federal tax lien) shall be the subject of a
Permitted Protest. FRI-MRD and its Subsidiaries, upon request, shall furnish
Foothill with proof reasonably satisfactory to Foothill indicating that FRI-MRD
and its Subsidiaries have made all due and timely payments or deposits of all
such federal, state, and local taxes, assessments, or contributions required of
them by law.
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6.8 Insurance.
----------
(a) Keep their properties and assets insured against loss or
damage by fire, theft, explosion, sprinklers, and other hazards and risks, and
in such amounts, as are ordinarily insured against by other owners in similar
businesses. FRI-MRD and its Subsidiaries also shall maintain business
interruption, public liability, product liability, and property damage insurance
relating to their ownership and use of their properties and assets, and
insurance against larceny, embezzlement, and criminal misappropriation, in each
case, consistent with the coverages evidenced by the certificates of insurance
delivered pursuant to Section 3.1. Foothill agrees that Prandium or its
-----------
Subsidiaries may self-insure for workers compensation insurance, general
liability insurance, auto liability insurance, and health insurance, in each
case, consistent with past practices and for not more than $500,000 per
occurrence.
(b) Obtain and maintain to the extent available (i) insurance of
the type necessary to insure their properties and assets for the full
replacement cost thereof, against loss by fire, lightning, windstorm, hail,
explosion, aircraft, smoke damage, vehicle damage, earthquakes, elevator
collision, and other risks included under "extended coverage" policies or an
"extended coverage" endorsement, in amounts as are ordinarily insured against by
other similar companies in the same industry, but in any event in amounts
sufficient to prevent FRI-MRD or Borrower, as applicable, from becoming a co-
insurer under such policies, and (ii) combined single limit bodily injury and
property damage liability insurance against any loss, liability, or damages on,
about, or relating to each parcel of Real Property Collateral, in an amount of
not less than $1,000,000; provided, however, that FRI-MRD and its Subsidiaries
only shall be required to use their reasonable best efforts to maintain
earthquake insurance, in amounts and subject to deductibles consistent with
those ordinarily insured against by other similar companies in the same
industry, so long as it is available at reasonable commercial rates.
(c) All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be reasonably satisfactory to
Foothill. Insurance policies covering property and assets against loss by fire,
lightning, windstorm, hail, explosion, aircraft, smoke damage, earthquake,
elevator collisions and other risks included under an "extended coverage"
endorsement shall contain a California Form 438BFU (NS) mortgagee endorsement,
or an equivalent endorsement satisfactory to Foothill, showing Foothill as a
loss payee thereof as its interests may appear, and shall contain a waiver of
warranties. All such insurance (with the exception of workers' compensation and
health insurance policies and policies of insurance covering the property or
assets of HGI) shall name Foothill as an additional insured as its interest may
appear. Every policy of insurance referred to in this Section 6.8 (with the
-----------
exception of workers' compensation and health insurance policies and policies of
insurance covering the property or assets of HGI) shall contain an agreement by
the insurer that it will not cancel such policy except after 10 days prior
written notice to Foothill. Certified copies or originals of such policies or
certificates thereof satisfactory to Foothill evidencing such insurance shall be
delivered to Foothill prior to the expiration or cancellation of the existing or
preceding policies. Each of FRI-MRD and
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Borrower shall deliver to Foothill, upon the request of Foothill, evidence of
the payment of all premiums for such policies of insurance.
(d) Each of FRI-MRD and Borrower shall give Foothill prompt notice of
any loss or damage to their properties and assets by fire, lightning, windstorm,
hail, explosion, aircraft, smoke damage, vehicle damage, earthquake, elevator
collision, and other risks included under an "extended coverage" endorsement
covered by such insurance in excess of $250,000. With the exception of
insurance policies covering the property or assets of HGI, upon the occurrence
and during the continuance of an Event of Default, Foothill shall have the
exclusive right to adjust all losses payable under the applicable insurance
policies without any liability to FRI-MRD or Borrower, as applicable, whatsoever
in respect of such adjustments. Any monies received as payment for any loss or
damage to their properties and assets by fire, lightning, windstorm, hail,
explosion, aircraft, smoke damage, vehicle damage, earthquake, elevator
collision, and other risks included under an "extended coverage" endorsement
under the applicable insurance policy (exclusive of any casualty loss wherein
the insurance proceeds are less than $50,000 and excluding insurance proceeds
received with respect to the assets or properties of HGI), shall be paid over to
Foothill, and FRI-MRD and Borrower shall have the right to designate in writing
to Foothill within 45 days of such payment whether such payment shall be (i)
applied to the prepayment of the Obligations without premium, in such order or
manner as Foothill may elect, or (ii) disbursed to FRI-MRD or its Subsidiary, as
applicable, under staged payment terms satisfactory to Foothill for application
to the cost of repairs, replacements, or restorations and subject to the
conditions set forth in this Section 6.8(d). In the event Foothill fails to
--------------
receive timely such written designation or the conditions set forth in the
following sentence are not satisfied, the payment shall be applied in the manner
set forth in clause (i) of the immediately preceding sentence. If FRI-MRD and
----------
Borrower elect to cause Foothill to disburse any monies received as payment for
any loss pursuant to this Section 6.8(d), Foothill only shall be obligated to
--------------
disburse such money for the repair, replacement or restoration of the affected
property or assets if all of the following conditions are satisfied: (A) no
Default or Event of Default has occurred and is continuing or would result from
the disbursement or application of such monies; (B) FRI-MRD or Borrower have
cash, cash equivalents, Availability, and/or business interruption insurance
proceeds in amounts sufficient, in Foothill's reasonable judgment, to ensure
that Borrower will be able to make payment as and when due of each of its direct
Obligations that will be payable during the period of such repair, replacement,
or restoration; (C) Foothill is reasonably satisfied that the amount of such
cash, cash equivalents, borrowing availability, and/or insurance proceeds will
be sufficient fully to repair, replace, or restore the affected property or
assets; (D) construction, completion of the repair, replacement, or restoration
of the affected property or assets shall be completed in accordance with plans,
specifications, and drawings submitted to and approved by Foothill, which
approval shall not be unreasonably withheld or delayed; (E) all construction and
completion of the repair, replacement, or restoration shall be effected with
reasonable promptness and shall be of a value (the "Replaced Value") (i) at
least equal to the replacement value (the "Destroyed Value") of such items of
property destroyed or condemned prior to such destruction or condemnation, or
(ii) less than the Destroyed Value so long as the difference between the
Destroyed Value and the Replaced Value is applied to
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the prepayment of the Obligations without premium, in such order or manner as
Foothill may elect; and (f) all monies paid by Borrower to Foothill may be
commingled with other funds of Foothill and will not bear interest pending
disbursement hereunder. Upon the occurrence and during the continuance of an
Event of Default, Foothill shall have the right to apply all prepaid premiums to
the payment of the Obligations in such order or form as Foothill shall
determine.
6.9 No Setoffs or Counterclaims. Unless otherwise required by
---------------------------
applicable law, all payments hereunder and under the other Loan Documents made
by or on behalf of FRI-MRD or Borrower shall be made without setoff or
counterclaim.
6.10 Location of Inventory and Equipment. With the exception of the
-----------------------------------
Inventory and Equipment of HGI, keep their Inventory and Equipment only at or
in-transit between the locations identified on Schedule 6.10; provided, however,
that Borrower may amend Schedule 6.10 so long as such amendment occurs by
written notice to Foothill not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, FRI-MRD or its Subsidiary, as applicable, provides
any financing statements or fixture filings necessary to perfect and continue
perfected Foothill's security interests in such assets.
6.11 Compliance with Laws. Comply, in all material respects, with the
--------------------
requirements of all applicable laws, rules, regulations, and orders of any
governmental authority, including the Fair Labor Standards Act and the Americans
With Disabilities Act, other than laws, rules, regulations, and orders the non-
compliance with which, individually or in the aggregate, would not have and
could not reasonably be expected to have a Material Adverse Change.
6.12 Employee Benefits.
------------------
(a) (i) Promptly, and in any event within 10 Business Days after
FRI-MRD or any of its Subsidiaries knows or has reason to know that an ERISA
Event has occurred that reasonably could be expected to result in a Material
Adverse Change, a written statement of the chief financial officer of FRI-MRD
and Borrower describing such ERISA Event and any action that is being taking
with respect thereto by FRI-MRD or Borrower, any such Subsidiary or ERISA
Affiliate, and any action taken or threatened by the IRS, Department of Labor,
or PBGC and (ii) promptly, and in any event within 10 Business Days after the
filing thereof with the IRS, a copy of each funding waiver request filed with
respect to any Benefit Plan and, within 10 days of receipt by FRI-MRD or any of
its Subsidiaries, all written communications received by FRI-MRD, any of its
Subsidiaries or, to the knowledge of FRI-MRD or Borrower, any ERISA Affiliate
with respect to such request. FRI-MRD, Borrower, or such Subsidiary, as
applicable, shall be deemed to know all facts known by the administrator of any
Benefit Plan of which it is the plan sponsor.
(b) FRI-MRD and Borrower will cause to be delivered to Foothill,
upon Foothill's request, each of the following: (i) a copy of each Plan (or,
where any such
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plan is not in writing, complete description thereof) (and if
applicable, related trust agreements or other funding instruments) and all
amendments thereto, all written material interpretations thereof and material
written descriptions thereof that have been distributed to employees or former
employees of FRI-MRD or its Subsidiaries; (ii) the most recent determination
letter issued by the IRS with respect to each Benefit Plan; (iii) for the three
most recent plan years, annual reports on Form 5500 Series required to be filed
with any governmental agency for each Benefit Plan; (iv) all actuarial reports
prepared for the last three plan years for each Benefit Plan; (v) a listing of
all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by FRI-MRD, Borrower, or any ERISA Affiliate
to each such plan and copies of the collective bargaining agreements requiring
such contributions; and (vi) any information that has been provided to FRI-MRD,
Borrower, or any ERISA Affiliate regarding withdrawal liability under any
Multiemployer Plan.
6.13 Leases. Pay when due all rents and other amounts payable under
------
any material leases to which FRI-MRD or its Subsidiaries is a party or by which
their properties and assets are bound (other than amounts of which they are
unaware or that in the aggregate are de minimis amount), unless such payments
are the subject of a Permitted Protest. To the extent that FRI-MRD or its
Subsidiaries fail timely to make payment of such rents and other amounts payable
when due under its leases, Foothill shall be entitled, in its discretion, to
reserve an amount equal to such unpaid amounts against the Borrowing Base until
such amounts are actually paid in full.
6.14 Extension of Notes. On or before October 2, 2001 (a) extend the
------------------
maturity date of the Senior Notes, the Senior Discount Notes, and the Senior
Secured Discount Notes, in each case, to not earlier than January 24, 2003, or
(b) terminate this Agreement effective as of October 2, 2001, in accordance with
Section 3.6, or (c) pay to Foothill, in cash, the Obligations (including a
release of all Letters of Credit or delivery of an irrevocable letter of credit,
in form and substance and from an issuer, that is reasonably acceptable to
Foothill, in an amount equal to 105% of the maximum amount of Foothill's
obligations under outstanding Letters of Credit). If Borrower shall have
elected to pay Foothill, in cash, the Obligations in accordance with the
foregoing clause (c), then, effective as of October 2, 2001, Foothill shall have
no obligation to make any Advances or issue any Letters of Credit.
7. NEGATIVE COVENANTS.
Each of FRI-MRD and Borrower covenants and agrees that, so long as
any credit hereunder shall be available and until full and final payment of the
Obligations, FRI-MRD and its Subsidiaries will not do any of the following
without Foothill's prior written consent:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or
------------
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
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(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness to issuers of letters of credit that are
the subject of L/C Guaranties;
(b) Indebtedness set forth on Schedule 7.1;
------------
(c) (i) Indebtedness owed by FRI-MRD to Prandium, so long as such
Indebtedness is unsecured and is the subject of the Subordination Agreement; and
(ii) Indebtedness owed by FRI-MRD or its Subsidiaries to FRI-MRD or its
Subsidiaries;
(d) Indebtedness relating to insurance premium financing;
(e) Indebtedness relating to FRI-MRD's and its Subsidiaries'
controlled disbursement accounts or in respect of overdrafts of zero balance
bank accounts so long as such Indebtedness is outstanding for not more than 2
Business Days at any one time;
(f) Other unsecured Indebtedness not exceeding $1,500,000 in
principal amount at any time outstanding in the aggregate for all of FRI-MRD and
its Subsidiaries;
(g) (i) Indebtedness in respect of capital leases or purchase money
financings for Equipment so long as the acquisition of the subject asset or
assets is not prohibited by Section 7.21 hereof and so long as the aggregate
------------
amount of such Indebtedness outstanding at any one time does not exceed
$5,149,000; and (ii) Indebtedness in respect of capital leases or purchase money
financings for Real Property (and the related improvements thereto) acquired
after the Closing Date; and
(h) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) through (g) of this Section 7.1 (and continuance or renewal of
----------------------- -----------
any Permitted Liens associated therewith) so long as: (i) as compared to the
Indebtedness being refinanced, renewed, or extended, the terms and conditions of
such refinancings, renewals, or extensions do not materially impair the
prospects of repayment of the Obligations by FRI-MRD and its Subsidiaries, (ii)
the net cash proceeds of such refinancings, renewals, or extensions do not
result in an increase in the aggregate principal amount of the Indebtedness so
refinanced, renewed, or extended (other than the inclusion of customary fees and
expenses incurred in connection with such financing), (iii) such refinancings,
renewals, refundings, or extensions do not result in a shortening of the average
weighted maturity of the Indebtedness so refinanced, renewed, or extended, and
(iv) to the extent that Indebtedness that is refinanced was subordinated in
right of payment to the Obligations, then the subordination terms and conditions
of the refinancing Indebtedness must be at least as favorable to Foothill as
those applicable to the refinanced Indebtedness.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
-----
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens.
-49-
7.3 Restrictions on Fundamental Changes. Except to the extent
-----------------------------------
otherwise permitted by Section 7.13, enter into any Acquisition, merger,
consolidation, reorganization, or recapitalization, or reclassify its capital
Stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of related transactions, all or substantially all
of its property or assets; provided, however, that: (i) any Borrower's
Subsidiary may be merged with any other Borrower's Subsidiary or with Borrower;
and (ii) any Subsidiary of FRI-MRD (other than one of the Borrower's
Subsidiaries, Borrower, KKR, or HGI) may be merged with FRI-MRD or any of its
Subsidiaries (other than the Borrower's Subsidiaries, Borrower, KKR, or HGI).
7.4 Disposal of Assets. Except for Permitted Dispositions, consummate
------------------
any Asset Disposition.
7.5 Change Name. Except upon 30 days prior written notice to Foothill,
-----------
change FRI-MRD's or any of its Subsidiaries' name, FEIN, corporate structure
(within the meaning of Section 9402(7) of the Code), or identity, or add any new
fictitious name.
7.6 Securities Accounts.
--------------------
(a) Transfer assets out of any Securities Accounts other than
in the ordinary course of business or as otherwise permitted hereunder and, if
to another financial intermediary, unless each of FRI-MRD, Borrower, Foothill,
and the substitute financial intermediary have entered into a Control Agreement,
or
(b) amend or otherwise modify any Control Agreement or
arrangement contemplated thereby without the prior written consent of Foothill.
7.7 Nature of Business. Make any change in the principal nature of
------------------
FRI-MRD's or any of its Subsidiaries' business.
7.8 Prepayments and Amendments.
---------------------------
(a) Except in connection with a refinancing permitted by
Section 7.1(h), prepay, redeem, retire, defease, purchase, or otherwise acquire
--------------
the Senior Discount Notes or the Senior Secured Discount Notes, provided,
--------
however, that FRI-MRD may prepay, redeem, retire, defease, purchase, or
-------
otherwise acquire all or any portion of the Senior Discount Notes or the Senior
Secured Discount Notes so long as (X) no Event of Default shall have occurred
and be continuing or would result therefrom, (Y) Borrower shall have
Availability, cash, or cash equivalents of not less than $10,000,000 in the
aggregate after giving effect thereto, and (Z) on or before the date that is 30
days prior to the date of the making thereof, (1) Borrower shall have delivered
to Foothill updated operating and capital budgets for Prandium and its
Subsidiaries, which budgets are reasonably acceptable to Foothill, and (2)
Borrower and Foothill shall have agreed on maximum capital expenditure amounts
(individually and in the aggregate) for Borrower, HGI, KKR, and Fri-Admin and
shall have amended Section 7.21 accordingly, which maximum capital expenditure
------------
amounts Borrower and Foothill hereby agree to negotiate in good faith to
establish; and
-50-
(b) Other than pursuant to Section 6.14, directly or
------------
indirectly, amend, modify, alter, increase, or change any of the terms or
conditions of the Senior Discount Note Agreement or the Senior Secured Discount
Note Agreement without the prior written consent of Foothill.
7.9 Change of Control. Cause, permit, or suffer, directly or
-----------------
indirectly, any Change of Control.
7.10 [Intentionally omitted].
------------------------
7.11 Distributions. Make any loan to Prandium or any of its
-------------
Subsidiaries or make any distribution or declare or pay any dividends (in cash
or other property, other than capital Stock) on, or purchase, acquire, redeem,
or retire any of FRI-MRD's or any of its Subsidiaries' capital Stock, of any
class, whether now or hereafter outstanding, except:
(a) (i) Borrower may make loans, or declare and pay dividends
or other distributions in cash to FRI-MRD so long as no Event of Default shall
have occurred and be continuing and Borrower shall have Availability, cash, or
cash equivalents of not less than $2,000,000 after giving effect thereto, (ii)
any Subsidiary of FRI-MRD other than Borrower may make loans, or declare and pay
dividends or other distributions in cash, to such Subsidiary's immediate parent;
and (iii) FRI-MRD and its Subsidiaries may make Permitted Ordinary Course
Investments.
(b) FRI-MRD may make loans to or declare and pay dividends or
other distributions in cash to Prandium (i) to make payment of regularly
scheduled payments of interest then due and owing with respect to the Senior
Notes and the Subordinated Notes, if and so long as Prandium promptly uses the
proceeds of such dividends or other distributions solely to satisfy such
obligations, no Event of Default shall have occurred and be continuing, and
Borrower shall have Availability, cash, or cash equivalents of not less than
$2,000,000 after giving effect thereto, and (ii) to prepay, redeem, retire,
defease, purchase, or otherwise acquire the Senior Notes or the Subordinated
Notes, if and so long as, with respect to any such loan, dividend, or other
distribution pursuant to this clause (ii), (X) Prandium promptly uses the
-----------
proceeds of such dividends or other distributions solely to satisfy such
obligations, (Y) no Event of Default shall have occurred and be continuing, and
Borrower shall have Availability, cash, or cash equivalents of not less than
$10,000,000 after giving effect thereto, and (Z) on or before the date that is
30 days prior to the date of the making of such loan, dividend, or distribution,
(1) Borrower shall have delivered to Foothill, updated operating and capital
budgets for Prandium and its Subsidiaries, which budgets are reasonably
acceptable to Foothill, and (2) Borrower and Foothill shall have agreed on
maximum capital expenditure amounts (individually and in the aggregate) for
Borrower, HGI, KKR, and Fri-Admin and shall have amended Section 7.21
------------
accordingly, which maximum capital expenditure amounts Borrower and Foothill
hereby agree to negotiate in good faith to establish.
-51-
(c) so long as no Triggering Event exists and is continuing at
the time of such payment or would result therefrom, FRI-MRD may make loans to or
declare and pay dividends or other distributions in cash to Prandium to make
payment of its and its Restricted Subsidiaries' (as defined in the Guaranty)
general and administrative operating expenses (other than: (i) those set forth
in clause (b) above; (ii) the repurchase or retirement of the Senior Notes or
----------
the Subordinated Notes; and (iii) management or other fees payable to any Apollo
Related Person or any Green Related Person (other than customary directors fees
paid to directors generally) and federal, state, local, and foreign taxes and
other assessments of a similar nature (whether imposed directly or through
withholding) then due and owing, in each case, as determined in good faith by
the Board of Directors of FRI-MRD and to the extent arising from or directly
related to Prandium's ownership interest in FRI-MRD and its Subsidiaries, if and
so long as Prandium promptly uses the proceeds of such dividends or other
distributions solely to satisfy such obligations; and
(d) so long as no Blockage Event exists and is continuing at
the time of such payment or would result therefrom, FRI-MRD may make loans to or
declare and pay dividends or other distributions in cash to Prandium to redeem
shares of Stock of Prandium or any of its Subsidiaries held by its officers,
directors, or employees or its former officers, directors, or employees (or
their estates or beneficiaries under their estates) that were issued pursuant to
any stock option plan, restricted stock plan, or similar arrangement, upon the
death, disability, retirement, termination of employment, or pursuant to the
terms under which such shares of Stock were issued; provided, that the aggregate
consideration paid for all such redemptions does not exceed $2,000,000 in any
fiscal year.
7.12 Accounting Methods. Modify or change its method of accounting or
------------------
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of FRI-MRD's and its Subsidiaries'
accounting records without said accounting firm or service bureau agreeing to
provide Foothill information regarding the Collateral or the Guarantor
Collateral or FRI-MRD's and its Subsidiaries' financial condition.
7.13 Investments. Directly or indirectly make any Investments except
-----------
for Permitted Investments.
7.14 Transactions with Affiliates. Except as permitted by Sections 7.11
---------------------------- -------------
and 7.13 and except for Permitted Ordinary Course Investments, directly or
----
indirectly, enter into or permit to exist any material transaction with any
Affiliate of FRI-MRD or its Subsidiaries except for (a) transactions that are in
the ordinary course of FRI-MRD's and its Subsidiaries' business, are upon fair
and reasonable terms, and are no less favorable to FRI-MRD and its Subsidiaries
than would be obtained in an arm's length transaction with a non-Affiliate, (b)
transactions between or among FRI-MRD and its Subsidiaries, (c) the payment of
reasonable and customary compensation or similar fees (including options and
related Stock appreciation or value creation rights or similar rights pursuant
to any Stock option or other similar plan or arrangement) to officers,
directors, and employees of FRI-MRD or any of its Subsidiaries (so long as such
individuals are not also officers, directors, partners, or
-52-
employees of an Apollo Related Person), or (d) the payment by Prandium or FRI-
MRD of reasonable and customary director fees and the reimbursement of expenses
to directors of Prandium and its Subsidiaries (including such payments to Apollo
Related Persons), in each case as determined by the Board of Directors (or the
compensation committee thereof) of FRI-MRD or such Subsidiary, as applicable.
Anything contained herein to the contrary notwithstanding, without Foothill's
prior written consent, FRI-MRD and its Subsidiaries shall not pay (but, upon the
execution and delivery by the applicable Apollo Related Persons of a
subordination agreement in form and substance reasonably satisfactory to
Foothill, may accrue) any management, consulting, advisory, or other fee to an
Apollo Related Person.
7.15 Suspension. Voluntarily suspend or go out of a substantial
----------
portion of its business.
7.16 [Intentionally omitted].
------------------------
7.17 Use of Proceeds. Use the proceeds of the Advances made hereunder
---------------
for any purpose other than (i) to pay transactional costs and expenses incurred
in connection with this Agreement, and (ii) consistent with the terms and
conditions hereof, for its lawful and permitted corporate purposes.
7.18 Change in Location of Chief Executive Office; Inventory and
-----------------------------------------------------------
Equipment with Bailees. Relocate its chief executive office to a new location
----------------------
without providing 30 days prior written notification thereof to Foothill and
so long as, at the time of such written notification, FRI-MRD or its Subsidiary,
as applicable, provides any financing statements necessary to perfect and
continue perfected Foothill's security interests. The Inventory and Equipment of
FRI-MRD and its Subsidiaries shall not at any time now or hereafter be stored
with a bailee, warehouseman, or similar party without Foothill's prior written
consent.
7.19 No Prohibited Transactions Under ERISA. Directly or indirectly:
----------------------------------------------------------------
(a) Engage, or permit any Subsidiary of FRI-MRD to engage, in
any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for
which a statutory or class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of FRI-MRD to fail, to pay
timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
-53-
(d) terminate, or permit any Subsidiary of FRI-MRD to
terminate, any Benefit Plan where such event would result in any material
liability of FRI-MRD, any of its Subsidiaries or any ERISA Affiliate under Title
IV of ERISA;
(e) fail, or permit any Subsidiary of FRI-MRD to fail, to make
any required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of FRI-MRD to fail, to pay
any required installment or any other payment required under Section 412 of the
IRC on or before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary of FRI-MRD to amend, a Plan
resulting in a material increase in current liability for the plan year such
that either of FRI-MRD, any Subsidiary of FRI-MRD, or any ERISA Affiliate is
required to provide security to such Plan under Section 401(a)(29) of the IRC;
or
(h) withdraw, or permit any Subsidiary of FRI-MRD to withdraw,
from any Multiemployer Plan where such withdrawal is reasonably likely to result
in any liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of FRI-MRD, any of its
Subsidiaries or any ERISA Affiliate in excess of $1,000,000.
7.20 Financial Covenants.
--------------------
(a) EBITDA - Borrower. In the case of Borrower, fail to
maintain EBITDA as of the last day of each fiscal quarter, for the period of 4
consecutive fiscal quarters then ending of at least (i) as of the last day of
the fiscal quarter ending June 30, 2000, $2,000,000, and (ii) as of the last day
of each fiscal quarter thereafter, $4,500,000.
(b) EBITDA - Combined. In the case of Borrower, HGI, KKR, and
FRI-Admin on a combined basis, fail to maintain EBITDA as of the last day of
each fiscal quarter ending on or after September 30, 2000, for the period of 4
consecutive fiscal quarters then ending of at least $6,000,000.
(c) EBITDA - KKR. In the case of KKR, fail to maintain EBITDA
as of the last day of each fiscal quarter, for the period of 4 consecutive
fiscal quarters then ending of at least (i) as of the last day of each fiscal
quarter ending on or after September 30, 2000 and ending on or before December
31, 2000, $0, and (ii) as of the last day of each fiscal quarter thereafter,
$500,000.
(d) EBITDA - KKR/HGI. In the case of KKR and HGI on a combined
basis, fail to maintain EBITDA as of the last day of each fiscal quarter ending
on or after June 30, 2000, for the period of 4 consecutive fiscal quarters then
ending of at least $3,000,000.
-54-
7.21 Capital Expenditures.
---------------------
(a) In the case of FRI-MRD and its Subsidiaries, make capital
expenditures during each period set forth below, in the aggregate, in excess of
the maximum amount corresponding thereto:
---------------------------------------------------
Period Maximum Amount
---------------------------------------------------
Fiscal year ending $24,000,000
December 31, 2000
---------------------------------------------------
Fiscal year ending $36,250,000
December 31, 2001
---------------------------------------------------
January 1, 2002 through the $ 3,350,000
Maturity Date
---------------------------------------------------
(b) In the case of Borrower, make capital expenditures during
each period set forth below in excess of the maximum amount corresponding
thereto:
---------------------------------------------------
Period Maximum Amount
---------------------------------------------------
Fiscal year ending $11,000,000
December 31, 2000
---------------------------------------------------
Fiscal year ending $18,000,000
December 31, 2001
---------------------------------------------------
January 1, 2002 through the $ 1,500,000
Maturity Date
---------------------------------------------------
(c) In the case of HGI, make capital expenditures during each
period set forth below in excess of the maximum amount corresponding thereto:
----------------------------------------------------
Period Maximum Amount
----------------------------------------------------
Fiscal year ending $850,000
December 31, 2000
----------------------------------------------------
Fiscal year ending $700,000
December 31, 2001
----------------------------------------------------
January 1, 2002 through the $250,000
----------------------------------------------------
-55-
----------------------------------------------------
Maturity Date
----------------------------------------------------
(d) In the case of KKR, make capital expenditures during each
period set forth below in excess of the maximum amount corresponding thereto:
--------------------------------------------------
Period Maximum Amount
--------------------------------------------------
Fiscal year ending $ 6,750,000
December 31, 2000
--------------------------------------------------
Fiscal year ending $16,700,000
December 31, 2001
--------------------------------------------------
January 1, 2002 through the $ 1,500,000
Maturity Date
--------------------------------------------------
7.22 HGI Subsidiaries. Permit, except as set forth on Schedule 5.16,
-----------------
the HGI Subsidiaries to incur any liabilities, or to hold any properties or
assets, or to engage in any business activities.
7.23 KKR Subsidiaries. Permit, except as set forth on Schedule 5.17,
---------------- -------------
the KKR Subsidiaries to incur any liabilities, or to hold any properties or
assets, or to engage in any business activities.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event
of default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable or when declared due
and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
provided, however, that in the case of Overadvances that are caused by the
-------- -------
charging of interest, fees, or Foothill Expenses to Borrower's Loan Account,
such event shall not constitute an Event of Default if, within 3 Business Days
prior telephonic notice of such Overadvance, Borrower prepays, or otherwise
eliminates, such Overadvance;
8.2 If (a) FRI-MRD or its Subsidiaries fails or neglects to perform,
keep, or observe, in any material respect any term, provision, condition,
covenant, or agreement contained in Sections 6.1 (Accounting System), 6.2
------------ ---
(Collateral Reports), 6.4 (Tax Returns), 6.5 (Title to Equipment), 6.6
--- --- ---
(Maintenance of Equipment), 6.10 (Location of Inventory and Equipment), 6.11
---- ----
(Compliance with Laws), or 6.12 (Employee Benefits) of this Agreement
----
-56-
and such failure continues for a period of 15 days from the date on which any of
FRI-MRD and its Subsidiaries first had knowledge or reasonably should have had
knowledge of such failure or neglect, or (b) Prandium or its Subsidiaries fails
or neglects to perform, keep, or observe, in any material respect, any other
term, provision, condition, covenant, or agreement contained in this Agreement
or any of the other Loan Documents (other than any such term, provision,
condition, covenant, or agreement that is the subject of another provision of
this Section 8, including Section 8.15, and, in each instance, after giving
--------- ------------
effect to any notice, grace, or cure periods provided for in such Loan
Documents);
8.3 If there is a Material Adverse Collateral Change;
8.4 If any material property of FRI-MRD or any of its Subsidiaries is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
and such attachment, seizure, writ, warrant, or levy is not released,
discharged, or bonded against before the earlier of 30 days of the date it first
arises or 5 days of the date when such property or asset is subject to being
forfeited by FRI-MRD or its Subsidiary;
8.5 If an Insolvency Proceeding is commenced by FRI-MRD or any of its
Subsidiaries;
8.6 If an Insolvency Proceeding is commenced against FRI-MRD or any of its
Subsidiaries and any of the following events occur: (a) FRI-MRD or any such
Subsidiary consents to the institution of the Insolvency Proceeding against it;
(b) the petition commencing the Insolvency Proceeding is not timely
controverted; (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Foothill shall be relieved of
its obligation to extend additional credit hereunder; (d) an interim trustee is
appointed to take possession of all or a substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
FRI-MRD or any such Subsidiary; or (e) an order for relief shall have been
issued or entered therein;
8.7 If FRI-MRD or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs and such injunction, restraining order, or other
court order is not stayed within 30 days of the date on which it first arises;
8.8 (a) If a notice of lien, levy, or assessment is filed of record with
respect to any of Prandium's or any of its Subsidiaries' properties or assets by
the United States, or if any taxes or debts owing at any time hereafter to the
United States becomes a lien, whether xxxxxx or otherwise, upon any of
Prandium's or any of its Subsidiaries' properties or assets; or
(b) If a notice of lien, levy, or assessment is filed of record with
respect to any of FRI-MRD's or any of its Subsidiaries' properties or assets by
any state, county, municipal, or other non-federal governmental agency, or if
any taxes or debts owing for an amount in excess of $250,000 at any time
hereafter to any one or more of such entities becomes a lien,
-57-
whether xxxxxx or otherwise, upon any of FRI-MRD's or any of its Subsidiaries'
properties or assets and, in any such case, such taxes or debts are not the
subject of a Permitted Protest, and the lien, levy, or assessment is not
released, discharged, or bonded against before the earlier of 30 days of the
date it first arises or 5 days of the date when such property or asset is
subject to being forfeited; or
(c) If a notice of lien, levy, or assessment is filed of record with
respect to the Headquarters Property by any state, county, municipal, or other
non-federal governmental agency, or if any Real Property taxes owing for an
amount in excess of $250,000 at any time hereafter to any one or more of such
entities becomes a lien, whether xxxxxx or otherwise, upon the Headquarters
Property and, in any such case, such taxes are not the subject of a Permitted
Protest, and the lien, levy, or assessment is not released, discharged, or
bonded against before the earlier of 30 days of the date it first arises or 5
days of the date when the Headquarters Property is subject to being forfeited;
or
8.9 If a judgment or other claim becomes a Lien upon any material property
of FRI-MRD and its Subsidiaries and the same is not released, discharged, bonded
against, or stayed pending appeal before the earlier of 30 days of the date it
first arises or 5 days of the date when such property or asset is subject to
being forfeited by FRI-MRD or any of its Subsidiaries; provided, however, that
during such period Foothill shall be entitled to create a reserve against the
Borrowing Base, in an amount sufficient to discharge such lien or encumbrance
and any and all penalties or interest payable in connection therewith;
8.10 If there is a material default in any material agreement relating to
Indebtedness to which FRI-MRD or any of its Subsidiaries is a party with one or
more third Persons and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of FRI-MRD's or
its Subsidiaries' obligations thereunder or to terminate the subject agreement;
8.11 If Borrower makes any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
8.12 If any material misstatement or misrepresentation exists now or
hereafter in any written warranty, representation, statement, or report made
pursuant to any of the Loan Documents to Foothill by FRI-MRD or its Subsidiaries
or by any officer, director, employee, or agent of FRI-MRD or its Subsidiaries
(in the case of employees or agents who are not officers or directors, to the
extent authorized by an officer or director to communicate or transact business
with Foothill or who regularly communicate or transact business with Foothill),
or if any such warranty or representation is withdrawn;
8.13 If the obligation of any Guarantor under any Loan Document is
terminated by operation of law, or any Guarantor becomes the subject of an
Insolvency Proceeding; or
-58-
8.14 With respect to any Loan Document to which Borrower or any Guarantor
is a party that includes a guaranty of any of the Obligations or the grant or
conveyance of a Lien on any real or personal property or any interest or estate
therein to secure all or any part of the Obligations or any guaranty thereof, if
Borrower or any Guarantor that is a party thereto shall have purported to
rescind, revoke, or terminate such Loan Document, or shall have asserted that
such Loan Document is not effective, in the case of a Loan Document that
includes a guaranty, to guaranty all or any part of the present or future
Obligations, or, in the case of a Loan Document that grants or conveys a Lien,
to secure all or any part of the present or future Obligations.
9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
-------------------
of an Event of Default Foothill may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by FRI-MRD and Borrower:
(a) Declare all Obligations, evidenced by this Agreement, or any of
the other Loan Documents, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, or under any of the Loan Documents;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of Foothill, but without affecting
Foothill's rights and security interests in the Personal Property Collateral or
the Real Property Collateral and without affecting the Obligations;
(d) [intentionally omitted]
(e) [intentionally omitted]
(f) Without notice to or demand upon FRI-MRD or Borrower or any
Guarantor, make such payments and do such acts as Foothill considers reasonably
necessary to protect its security interests in the Collateral. Borrower agrees
to assemble the Personal Property Collateral if Foothill so requires, and to
make the Personal Property Collateral available to Foothill as Foothill may
designate. Borrower authorizes Foothill to enter the premises where the
Personal Property Collateral is located, to take and maintain possession of the
Personal Property Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or Lien that in Foothill's reasonable
determination appears to conflict with its security interests and to pay all
expenses incurred in connection therewith. With respect to any of FRI-MRD's or
Borrower's owned or leased premises, each of them hereby grants Foothill a
license to enter into possession of such premises and to occupy the same,
without charge, for up to 120 days in order to exercise any of Foothill's rights
or remedies provided herein, at law, in equity, or otherwise;
-59-
(g) [intentionally omitted]
(h) [intentionally omitted]
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. Foothill is hereby granted a license or other
right to use, without charge, FRI-MRD's and Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Personal Property Collateral, in advertising for sale and
selling any Personal Property Collateral and FRI-MRD's and Borrower's rights
under all licenses and all franchise agreements shall inure to Foothill's
benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including FRI-MRD's and
Borrower's premises) as Foothill determines is commercially reasonable. It is
not necessary that the Personal Property Collateral be present at any such sale;
(k) Foothill shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Foothill shall give Borrower and each holder of a security
interest in the Personal Property Collateral who has filed with Foothill a
written request for notice, a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other disposition
other than a public sale is to be made of the Personal Property Collateral,
then the time on or after which the private sale or other disposition is to
be made;
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12, at least 10 days before the
----------
date fixed for the sale, or at least 10 days before the date on or after
which the private sale or other disposition is to be made; no notice needs
to be given prior to the disposition of any portion of the Personal
Property Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized market. Notice
to Persons other than Borrower claiming an interest in the Personal
Property Collateral shall be sent to such addresses as they have furnished
to Foothill;
(iii) If the sale is to be a public sale, Foothill also shall give
notice of the time and place by publishing a notice one time at least 10
days before the date of the sale in a newspaper of general circulation in
the county in which the sale is to be held;
(l) Foothill may credit bid and purchase at any public sale; and
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(m) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid promptly (and in any event
within 2 Business Days) by FRI-MRD and the other Guarantors (pursuant to their
respective Guaranty) and Borrower. Any excess will be returned promptly, without
interest and subject to the rights of third Persons, by Foothill to Borrower.
Anything in this Agreement to the contrary notwithstanding, upon the
occurrence of and during the continuation of a Triggering Event Foothill shall
have the right to (a) exercise any of its default remedies with respect to the
Concentration Accounts or any other deposit accounts of Prandium or its
Subsidiaries, (b) exercise any of its default remedies with respect to the
Investment Property, or (c) notify the applicable financial intermediary to
liquidate or transfer the securities entitlements in any Securities Account and
remit the proceeds thereof to the Foothill Account. At any time that a
Triggering Event has not occurred and is continuing Foothill shall not exercise
any of the rights set forth in the immediately preceding sentence; provided,
--------
however, that except as expressly set forth in this paragraph, nothing in this
-------
paragraph shall be deemed to restrict the right of Foothill to exercise any of
its other rights and remedies upon the occurrence of any Event of Default.
9.2 Remedies Cumulative. Foothill's rights and remedies under this
-------------------
Agreement and the other Loan Documents shall be cumulative. Foothill shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Foothill of one right or remedy
shall be deemed an election, and no waiver by Foothill of any Event of Default
shall be deemed a continuing waiver. No delay by Foothill shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If FRI-MRD or any of its Subsidiaries fails to pay any monies (whether
taxes, assessments, insurance premiums, or, in the case of leased properties or
assets, rents or other amounts payable under such leases) due to third Persons,
or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement or the other Loan
Documents, then, to the extent that Foothill determines that such failure by
FRI-MRD or any of its Subsidiaries could reasonably be expected to result in a
Material Adverse Collateral Change, without prior notice to FRI-MRD or Borrower,
Foothill may do any or all of the following: (a) make payment of the same or
any part thereof; (b) set up such reserves in one or more of the Loan Accounts
as Foothill reasonably deems necessary to protect Foothill from the exposure
created by such failure; or (c) obtain and maintain insurance policies of the
type described in Section 6.8, and take any action with respect to such policies
-----------
as Foothill reasonably deems prudent. Any such amounts paid by Foothill shall
constitute Foothill Expenses. Any such payments made by Foothill shall not
constitute an agreement by Foothill to make similar payments in the future or a
waiver by Foothill of any Event of Default under this Agreement. Foothill need
not inquire as to, or contest the validity of, any such expense, tax, or Lien
and the receipt of the usual official notice for the payment thereof shall for
purposes of this Agreement be conclusive evidence that the same was validly due
and owing. Foothill agrees to endeavor in good faith promptly
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to provide notice to FRI-MRD or Borrower of any action taken by Foothill under
this Section 10, but the failure of Foothill to do so (except if such failure is
----------
the result of Foothill's bad faith) shall not create any liability whatsoever on
the part of Foothill.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each of FRI-MRD and Borrower waives, to the
--------------------
extent permitted by law, all demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Foothill on which
FRI-MRD or Borrower may in any way be liable.
11.2 Foothill's Liability for Collateral. So long as Foothill complies
-----------------------------------
with its obligations, if any, under Section 9207 of the Code, Foothill shall not
in any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; (d) any act or
default of any carrier, warehouseman, bailee, forwarding agency, or other
Person; or (e) any risk of loss, damage, or destruction of the Collateral or the
Guarantor Collateral.
11.3 Indemnification. Each of FRI-MRD and Borrower, jointly and severally,
---------------
shall pay, indemnify, defend, and hold Foothill, each Participant, and each of
their respective officers, directors, employees, counsel, agents, and attorneys-
in-fact (each, an "Indemnified Person") harmless (to the fullest extent
permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other out-of-pocket costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). Each of FRI-MRD and
Borrower shall have no obligation to any Indemnified Person under this Section
11.3: (a) with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person; (b) with respect to any
settlement in excess of $250,000 made without Borrower's consent (which shall
not be unreasonably withheld, conditioned, or delayed and which consent need not
be obtained if FRI-MRD or Borrower is in default of its obligations under this
Section 11.3); or (c) without Borrower's consent (which shall not be reasonably
withheld, conditioned, or delayed and which consent need not be obtained if FRI-
MRD or Borrower is in default of its obligations under this Section 11.3), for
the fees and disbursements of more than one separate firm of attorneys for all
Indemnified Persons relative to a particular
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Indemnified Liability. This provision shall survive the termination of this
Agreement and the repayment of the Obligations for a period of two years (and
shall continue thereafter with respect to claims made or asserted during such
period).
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, or telefacsimile to FRI-MRD, Borrower, or
to Foothill, as the case may be, at its address set forth below:
If to FRI-MRD or Borrower FRI-MRD CORPORATION
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Fax No. 000.000.0000
with copies to SKADDEN, ARPS, SLATE, XXXXXXX &
XXXX LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Fax No. 000.000.0000
If to Foothill FOOTHILL CAPITAL CORPORATION
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Business Finance Division
Manager
Fax No. 000.000.0000
And XXXXXXX, XXXXXXX & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this Section 12, other
----------
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3 days
after the deposit thereof in the mail. Each of FRI-MRD and Borrower
acknowledges and agrees that notices sent by Foothill in connection with
Sections
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9504 or 9505 of the Code shall be deemed sent when deposited in the mail or
transmitted by telefacsimile or other similar method set forth above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANY
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
FOOTHILL'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE FOOTHILL ELECTS TO
BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
OF FRI-MRD, BORROWER, AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13. EACH OF FRI-MRD, BORROWER, AND FOOTHILL HEREBY
----------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF
FRI-MRD, BORROWER, AND FOOTHILL REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF FRI-MRD'S AND BORROWER'S DOCUMENTS. Except for Negotiable
Collateral, all documents, schedules, invoices, agings, or other papers
delivered to Foothill may be destroyed or otherwise disposed of by Foothill 4
months after they are delivered to or received by Foothill, unless FRI-MRD or
Borrower requests, in writing, the return of said documents, schedules, or other
papers and makes arrangements, at FRI-MRD's or Borrower's expense, for their
return.
15. GENERAL PROVISIONS.
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15.1 Effectiveness. This Agreement shall be binding and deemed effective
-------------
upon the later of (a) the execution of this Agreement by Prandium, FRI-MRD,
Borrower, FRI-Admin, the Borrower's Subsidiaries, and Foothill and (b) the
Closing Date.
15.2 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the respective successors and assigns of each of the parties;
provided, however, that FRI-MRD and Borrower may not assign this Agreement or
any rights or duties hereunder without Foothill's prior written consent and any
prohibited assignment shall be absolutely void. No consent to an assignment by
Foothill shall release FRI-MRD or Borrower from their respective Obligations.
Foothill may assign this Agreement and its rights and duties hereunder and no
consent or approval by FRI-MRD or Borrower is required in connection with any
such assignment and Foothill reserves the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of, or any interest in
Foothill's rights and benefits hereunder; in each case, so long as, after giving
effect thereto, Foothill or its Affiliates retain commitments of not less than
ten thirty-fifths (10/35ths) of the Maximum Amount. In connection with any such
assignment or participation, Foothill may disclose all documents and information
which Foothill now or hereafter may have relating to FRI-MRD and Borrower or
their respective businesses. To the extent that Foothill assigns its rights and
obligations hereunder to a third Person, Foothill thereafter shall be released
from such assigned obligations to FRI-MRD and Borrower and such assignment shall
effect a novation between FRI-MRD and Borrower, on the one hand, and such third
Person, on the other hand.
15.3 Section Headings. Headings and numbers have been set forth herein for
----------------
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Agreement.
15.4 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against Foothill, FRI-MRD, or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
15.5 Severability of Provisions. Each provision of this Agreement shall be
--------------------------
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement can only be amended by a
---------------------
writing signed by Foothill, FRI-MRD, and Borrower.
15.7 Counterparts; Telefacsimile Execution. This Agreement 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
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an
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executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.
15.8 Revival and Reinstatement of Obligations. If the incurrence or
----------------------------------------
payment of the Obligations by Borrower, or any Guarantor or the transfer by any
or all of such parties to Foothill of any property of any or all of such parties
should for any reason subsequently be declared to be void or voidable under any
state or federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Foothill is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Foothill is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of
Foothill related thereto, the liability of Borrower, or such Guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
15.9 Integration. This Agreement, together with the other Loan Documents,
-----------
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
15.10 Confidentiality. Foothill agrees that material, non-public
---------------
information regarding Prandium and its Subsidiaries, their operations, assets,
and existing and contemplated business plans shall be treated by Foothill in a
confidential manner, and shall not be disclosed by it to Persons who are not
parties to this Agreement, except: (a) to counsel for and other advisors,
accountants, and auditors to Foothill, (b) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, (c) as may
be agreed to in advance by Borrower, (d) as to any such information that is or
becomes generally available to the public (other than as a result of prohibited
disclosure by Foothill), and (e) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participation,
or pledge or prospective pledge of Foothill's interests under this Agreement,
provided that any such counsel, advisors, accountants, auditors and any such
assignee, prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to take its interest hereunder subject to the terms hereof. The
provisions of this Section 15.10 shall survive for 2 years after the full and
final repayment of the Obligations.
15.11 Guarantors. By its execution and delivery of this Agreement, each
----------
Guarantor hereby agrees to be bound by each of the provisions hereof applicable
to such Guarantor or the assets and properties thereof and hereby agrees to
guaranty the Obligations, as more particularly set forth in the Guaranty to
which it is party and whose terms and conditions are by this reference
incorporated herein mutatis mutandis.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Los Angeles, California.
FRI-MRD CORPORATION,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: President
CHI-CHI'S, INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx
By: Xxxxxx X. Xxxxxxx, Xx
Title: Vice President
FOOTHILL CAPITAL CORPORATION,
a California corporation
/s/ Xxxxxx Xxxxxx
By: Xxxxxx Xxxxxx
Title: Vice President
S-1
Acknowledgement and Agreement
of Guarantors under Section
-------
15.11 of the Agreement:
-----
PRANDIUM, INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President & CFO
FRI-MRD CORPORATION,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: President
FRI-ADMIN CORPORATION,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: President
CCMR OF TIMONIUM, INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF MARYLAND, INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S OF KANSAS, INC.,
a Kansas corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
S-2
CHI-CHI'S OF GREENBELT, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S FRANCHISE OPERATIONS CORPORATION,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF CANTONSVILLE, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF GREENBELT, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF XXXXXXX HIGHWAY, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S MANAGEMENT CORPORATION,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
S-3
CCMR OF CUMBERLAND, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF HARFORD COUNTY, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S OF SOUTH CAROLINA, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
MAINTENANCE SUPPORT GROUP, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF XXXXXXXXX, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF INNER HARBOR, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
S-4
CHI-CHI'S OF WEST VIRGINIA, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR ADVERTISING AGENCY, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF GOLDEN RING, INC.,
a Kentucky corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
XXX XXX ROO, INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
THE HAMLET GROUP, INC.,
a California corporation
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
S-5
