Document:

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                               FRI-MRD CORPORATION

                                 NOTE AGREEMENT

                            Dated as of July 2, 2002

                                       Re:

                  Up to $80,000,000 12.0% Senior Secured Notes

                              due January 31, 2005

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION HEADING                                                                    PAGE
<S>                                                                                <C>
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT ...................................    1
      Section 1.1.  Description of Notes .........................................    1
      Section 1.2.  Commitment, Closing Date. ....................................    2

SECTION 2. PREPAYMENT OF NOTES ...................................................    2
      Section 2.1.  Prepayments ..................................................    2
      Section 2.2.  Notice of Prepayments ........................................    3
      Section 2.3.  Allocation of Prepayments ....................................    3

SECTION 3. REPRESENTATIONS. ......................................................    3
      Section 3.1.  Representations of the Company ...............................    3
      Section 3.2.  Representations of the Purchasers ............................    4

SECTION 4. CLOSING CONDITIONS ....................................................    4
      Section 4.1.  Closing Certificate ..........................................    4
      Section 4.2.  Company's Existence and Authority ............................    4
      Section 4.3.  Consents .....................................................    4
      Section 4.4.  Bankruptcy Court Approval. ...................................    4
      Section 4.4.  Opinion ......................................................    4
      Section 4.5.  Delivery of Pledged Securities ...............................    4

SECTION 5. COMPANY COVENANTS. ....................................................    5
      Section 5.1.  Corporate Existence, Etc. ....................................    5
      Section 5.2.  Insurance ....................................................    5
      Section 5.3.  Taxes ........................................................    5
      Section 5.4.  Maintenance, Etc. ............................................    5
      Section 5.5.  Limitations on Indebtedness. .................................    6
      Section 5.6.  Limitation on Liens. .........................................    6
      Section 5.7.  Restricted Payments ..........................................    6
      Section 5.8.  Mergers, Consolidations and Sales of Assets ..................    7
      Section 5.9.  Transactions with Affiliates .................................    8
      Section 5.10. Financial Statements, etc ....................................    9
      Section 5.11. Capital Expenditures .........................................    9
      Section 5.12. Excess Cash Flow .............................................   10
      Section 5.13. Issuance of Hamlet Securities. ...............................   10

SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR ...............................   10
      Section 6.1.  Events of Default ............................................   10
      Section 6.2.  Notice to Holders ............................................   11
      Section 6.3.  Acceleration of Maturities ...................................   12
      Section 6.4.  Rescission of Acceleration                                       12

SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS ......................................   12
      Section 7.1.  Consent Required .............................................   12
      Section 7.2.  Solicitation of Noteholders ..................................   12
      Section 7.3.  Effect of Amendment or Waiver ................................   12

SECTION 8. PLEDGE ................................................................   13
</TABLE>

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<TABLE>
<CAPTION>
SECTION HEADING                                                                              PAGE
<S>                                                                                          <C>
     Section 8.1.  Pledge. .................................................................   13
     Section 8.2.  Representations and Warranties Regarding Pledged Securities. ............   13
     Section 8.3.  Covenants Regarding Pledged Securities ..................................   13
     Section 8.4.  Voting Rights; Dividends; etc. ..........................................   14
     Section 8.5.  Remedies Upon Default. ..................................................   14
     Section 8.6.  Application of Proceeds of Sale. ........................................   16
     Section 8.7.  Termination. ............................................................   16
     Section 8.8.  Appointment .............................................................   16
     Section 8.9.  Duties of Agent .........................................................   17
     Section 8.10.  Power of Attorney. .....................................................   17
     Section 8.11.  Indemnification of Agent. ..............................................   17
     Section 8.12.  Resignation and Removal of Agent. ......................................   18

SECTION 9.  INTERPRETATION OF AGREEMENT; DEFINITIONS .......................................   18
     Section 9.1.  Definitions .............................................................   18
     Section 9.2.  Accounting Principles ...................................................   26

SECTION 10.  MISCELLANEOUS .................................................................   26
     Section 10.1.  Note Register ..........................................................   26
     Section 10.2.  Exchange of Notes ......................................................   27
     Section 10.3.  Loss, Theft, Etc. of Notes .............................................   27
     Section 10.4.  Powers and Rights Not Waived; Remedies Cumulative ......................   27
     Section 10.5.  Notices ................................................................   27
     Section 10.6.  Successors and Assigns .................................................   27
     Section 10.7.  Integration and Severability. ..........................................   28
     Section 10.8.  Governing Law ..........................................................   28
     Section 10.9.  Captions ...............................................................   28
     Section 10.10.  Paying Agent ..........................................................   28
</TABLE>

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                         ATTACHMENTS TO NOTE AGREEMENT:
              [Schedules and Exhibits other than Exhibit A omitted]

Schedule I        Name and Address of Purchasers

Exhibit A         Form of 12.0% Senior Secured Note Due January 31, 2005

Exhibit B         Closing Certificate of the Company

Exhibit C         Form of Opinion of Counsel to Seller

<PAGE>

                               FRI-MRD CORPORATION

                                 NOTE AGREEMENT

                Re: Up to $80,000,000 12.0% Senior Secured Notes

                              due January 31, 2005

                                              Dated as of July 2, 2002

To the Purchasers named in Schedule I attached hereto that are signatories to
this Agreement.

Ladies and Gentlemen:

         Prandium, Inc., a Delaware corporation, and the Company, are debtors
and debtors in possession in the Chapter 11 Cases pending in the Bankruptcy
Court. The Notes are being issued under the Plan and the Confirmation Order.

         The undersigned, FRI-MRD Corporation, a Delaware corporation (the
"Company"), agrees with each Purchaser as follows:

SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.

         Section 1.1. Description of Notes. Pursuant to the Plan, on or about
the Effective Date, the Company will authorize and issue its 12.0% Senior
Secured Notes due January 31, 2005 (the "Notes") in an aggregate principal
amount equal to $59,000,000, each such Note to be dated the Effective Date. In
addition, the Company will authorize and issue, from time to time, up to
$21,000,000 of the PIK Notes (as defined) on the terms described herein.
Interest on the Notes (and, if lawful, on any overdue principal or interest
installment) will accrue at the lower of (i) 12.0% per annum and (ii) the
highest rate permitted by law (the "Interest Rate") and will be payable
semi-annually on January 31 and July 31 of each year (each, an "Interest Payment
Date"), commencing on July 31, 2002. On each Interest Payment Date, the Company
may, at its option and in its sole discretion, in lieu of the payment of
interest in cash on the Notes, pay interest on all outstanding Notes in whole or
in part, through the issuance of additional Notes ("PIK Notes"), in
denominations (rounded, if necessary to the nearest dollar) of $1.00 and
integral multiples thereof, in an aggregate principal amount equal to the amount
of interest that would be payable with respect to such Notes, if such interest
were paid in cash. The Company shall notify the Holders in writing of its
election to pay interest through the issuance of PIK Notes not less than 5 nor
more than 45 days prior to the Interest Payment Date on which PIK Notes will be
issued.

         Each PIK Note is an additional obligation of the Company and shall be
governed by, and entitled to the benefits of, and shall be subject to the terms
of this Agreement and shall rank pari passu with and be subject to the same
terms (including the Interest Rate from time to time payable thereon) as any
other Note (except, as the case may be, with respect to the Issue Date and
aggregate principal amount).

                                       1

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                The Notes will mature on January 31, 2005, and will be
substantially in the form attached hereto as Exhibit A. Interest on the Notes
shall be computed on the basis of a 360-day year of twelve 30-day months. The
term "Notes" as used herein shall include each Note delivered pursuant to this
Agreement, including the PIK Notes. The terms that are capitalized herein shall
have the meanings set forth in Section 9.1 unless the context shall otherwise
require. The Notes will be senior secured obligations of the Company, ranking
senior in right of payment to all existing and future subordinated Indebtedness
of the Company.

         Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions of this Agreement and the Plan and on the basis of the
representations and warranties hereinafter set forth, the Company agrees to
issue to each Purchaser in partial satisfaction of its Allowed Class 5 Claim (as
defined in the Plan), the aggregate principal amount of Notes set forth under
such Purchaser's name on Schedule I attached hereto upon delivery on the
Distribution Date (as defined in the Plan) by such Purchaser of certificates (or
other evidence as specified in the Plan) representing the Company's 15% Senior
Discount Notes due 2002 (the "Old Notes") that are being cancelled under the
Plan and Confirmation Order, as set forth on Schedule I. Delivery of the Notes
will be made at the principal offices of Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York, New York, 10036-6522 at 10 A.M., Eastern time,
on July 2, 2002 (the "Closing Date") or as otherwise directed by the Purchasers.
The Notes delivered to each Purchaser will be delivered in the form of a single
registered Note registered in the name of such Purchaser or in the name of such
nominee or in such other denominations (not less than $1.00 in principal amount)
as such Purchaser may specify no later than two Business Days prior to the
Closing Date and in substantially the form attached hereto as Exhibit A.

SECTION 2. PREPAYMENT OF NOTES.

         No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement.

         Section 2.1. Prepayments.

                    (a) The Company may at any time prepay the outstanding
         Notes, either in whole or in part, by payment of the Prepayment Price
         (expressed in more detail in clause (d) below as percentages of the
         principal amount plus accrued and unpaid interest thereon to be
         prepaid) (each, an "Optional Prepayment").

                    (b) The Company shall prepay the outstanding Notes pursuant
         to Section 5.8(c) and Section 5.12 (each, a "Mandatory Prepayment").

                    (c) The Company shall use any Net Proceeds received in
         connection with a Hamlet Sale or pursuant to an Escrow Agreement to
         promptly prepay the outstanding Notes.

                    (d) All prepayments made by the Company shall be made at the
         Prepayment Price. The Prepayment Price shall be the percentage of the
         outstanding principal amount plus accrued and unpaid interest thereon
         to the date of such prepayment of the Notes being so prepaid as set
         forth below for the year 2002 and thereafter:

                                       2

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<TABLE>
<CAPTION>
         If prepaid during the period (or in the case of a
         Mandatory Prepayment pursuant to Section 5.12, if the
         prepayment relates to a substantial portion of such period):       Prepayment Price
         ------------------------------------------------------------       ----------------
         <S>                                                                <C>
         January 1, 2002 through December 31, 2002 ........................       75%

         January 1, 2003 through December 31, 2003 ........................       85%

         January 1, 2004 through September 30, 2004 .......................       90%

         October 1, 2004 and thereafter ...................................      100%
</TABLE>

Any partial prepayment shall be for an amount not less than $1.00 of the
aggregate principal amount of the Notes then outstanding.

         Section 2.2. Notice of Prepayments. The Company will give notice of any
Optional Prepayment of the Notes pursuant to Section 2.1(a) to the holder
thereof not less than 5 days nor more than 45 days before the date fixed for
such prepayment specifying (a) such date, (b) the aggregate principal amount of
the outstanding Notes (or portion thereof) of the Notes to be prepaid and (c)
accrued and unpaid interest, if any, applicable to the prepayment. Except for a
Mandatory Prepayment pursuant to Section 5.12, the Company will give notice of
any Mandatory Prepayment of the Notes pursuant to Section 2.1(b) or 2.1(c) to
the holder thereof not less than 5 days nor more than 10 days before the date
fixed for such prepayment specifying (a) such date, which shall be within 15
days of the event triggering the mandatory prepayment, (b) the aggregate
principal amount of the outstanding Notes (or portion thereof) of the Notes to
be prepaid and (c) accrued and unpaid interest, if any, applicable to the
prepayment. With respect to a Mandatory Prepayment pursuant to Section 5.12, the
Company will give notice of such Mandatory Prepayment of the Notes to the holder
thereof not less than 5 days nor more than 10 days before the date fixed for
such prepayment specifying (a) such date, which shall be within 30 days after
the end of the period described in Section 5.12, (b) the aggregate principal
amount of the outstanding Notes (or portion thereof) of the Notes to be prepaid
and (c) accrued and unpaid interest, if any, applicable to the prepayment.
Notice of prepayment having been so given, the aggregate principal amount of the
outstanding Notes (or portion thereof) specified in such notice, together with
accrued and unpaid interest thereon, if any, shall become due and payable on the
prepayment date.

         Section 2.3. Allocation of Prepayments. All prepayments made pursuant
to Section 2.1 shall be applied on all outstanding Notes ratably in accordance
with the unpaid principal amount of the outstanding Notes thereof.

SECTION 3. REPRESENTATIONS.

         Section 3.1. Representations of the Company. The Company represents and
warrants that all representations set forth in the form of certificate attached
hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.

                                       3

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         Section 3.2. Representations of the Purchasers. Each Purchaser
represents, warrants and agrees that:

                        (a) Such Purchaser is acquiring its Notes for the
         purpose of investment and not with a view to the distribution thereof,
         and that such Purchaser has no present intention of selling,
         negotiating or otherwise disposing of its Notes; provided that the
         disposition of its property shall at all times be and remain within its
         control.

                        (b) The Notes have not been registered under the
         Securities Act of 1933, as amended (the "Securities Act"), or any state
         securities laws, and may not be sold, transferred or otherwise disposed
         of by such Purchaser without such registration or an exemption
         therefrom. Such Purchaser is either an accredited investor within the
         meaning of Rule 501 of the Securities Act or a qualified institutional
         buyer within the meaning of Rule 144A of the Securities Act.

SECTION 4. CLOSING CONDITIONS.

         Each Purchaser's obligation to purchase the Notes on the Closing Date
shall be subject to the performance by the Company of its agreements hereunder
that are to be performed at or prior to the time of delivery of the Notes, and
to the following further conditions precedent:

         Section 4.1. Closing Certificate. Such Purchaser shall have received a
certificate dated such Closing Date, signed by an Officer of the Company
substantially in the form attached hereto as Exhibit B.

         Section 4.2. Company's Existence and Authority. Such Purchaser shall
have received, in form and substance reasonably satisfactory to it, such
documents and evidence with respect to the Company as such Purchaser may
reasonably request in order to establish the existence and good standing of the
Company and the authorization of the transactions contemplated by this
Agreement.

         Section 4.3. Consents. Any consents or approvals required to be
obtained by the Company, Prandium or any of their Subsidiaries that are
necessary to permit the consummation of the transactions contemplated hereby on
such Closing Date shall have been obtained.

         Section 4.4. Bankruptcy Court Approval. The Confirmation Order is in
full force and effect in accordance with its terms, has not been amended,
stayed, vacated, rescinded or appealed and is a "Final Order". As used herein
"Final Order" means an order of the Bankruptcy Court that is in effect and not
stayed, and as to which the time to appeal, petition for certiorari, or move for
reargument or rehearing has expired and as to which no appeal, petition for
certiorari, or other proceeding for reargument or rehearing shall be pending.

         Section 4.5. Opinion. Such Purchaser shall have received an opinion
dated the Closing Date from Skadden, Arps, Slate, Meagher & Flom LLP, counsel
for the Company, in substantially the form of Exhibit C hereto, and including
customary qualifications and limitations.

         Section 4.6. Delivery of Pledged Securities. The Pledged Securities
shall have been delivered to the Agent and, upon such delivery, the security
interest of the Agent in the Pledged Securities will be a perfected first
priority security interest.

                                        4

<PAGE>

         The Company's obligation to issue the Notes to a Purchaser on the
Closing Date shall be subject to the delivery by such Purchaser of the Old Notes
(or other evidence as specified in the Plan) and to the conditions precedent
contained in Section 4.3. The Company's obligation to deliver the Pledged
Collateral to the Agent shall be subject to the termination of the Old Secured
Note Agreement under the Plan and, in connection therewith, the delivery of the
Pledged Securities to the Company.

SECTION 5. COMPANY COVENANTS.

         From and after the date of this Agreement and continuing so long as any
amount remains unpaid on any Note:

         Section 5.1. Corporate Existence, Etc. The Company will preserve and
keep in force and effect its corporate existence, and will cause each Subsidiary
to preserve and keep in force and effect its corporate, partnership or other
existence in accordance with the respective organizational documents of each
such Subsidiary, and the rights and franchises of the Company and its
Subsidiaries, provided that (a) the Company shall not be required to preserve
any such right or franchise, or the existence, right or franchise of any of its
Subsidiaries, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the businesses of
the Company and its Subsidiaries taken as a whole and (b) the provisions of this
Section 5.1 shall not limit the ability of the Company or any Subsidiary of the
Company to engage in any transaction permitted by Section 5.8.

         Section 5.2. Insurance. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties.

         Section 5.3. Taxes. The Company will pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
of its Subsidiaries or upon the income, profits or property of the Company or of
any such Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment
or charge (i) whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and, if required by GAAP, for which adequate
provision has been made, or (ii) where the failure to effect such payment or
discharge is not adverse in any material respect to any Purchaser.

         Section 5.4. Maintenance, Etc. The Company will cause all material
properties owned by or leased to it or any of its Subsidiaries and material to
the business of the Company and its Subsidiaries, taken as a whole, to be
maintained and kept in normal condition and working order (ordinary wear and
tear and losses due to casualty excepted) and will from time to time cause to be
made all necessary repairs, renewals, and replacements thereof, all as in the
judgment of the Company may be necessary, so that the business carried on in
connection therewith may be properly conducted; provided, however, that (a)
nothing in this Section shall prevent the Company from discontinuing the use,
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is, in the judgment of its Board of Directors
or of the Board of Directors, board of trustees or managing partners of the
Subsidiary concerned, or of an Officer (or other agent employed by the Company
or any of its Subsidiaries) of the Company or such Subsidiary having

                                       5

<PAGE>

managerial responsibility for any such property, desirable in the conduct of the
businesses of the Company or any of its Subsidiaries (provided that any such
disposal is for a fair value after taking into account all circumstances
involved in the decision to dispose of such property); and (b) the provisions of
this Section 5.4 shall not limit the ability of the Company or any Subsidiary to
engage in any transaction permitted by Section 5.8.

         Section 5.5. Limitations on Indebtedness. The Company will not, and
will not permit any Subsidiary to, create, assume or incur any Indebtedness
except:

                      (i)    Indebtedness evidenced by the Notes;

                      (ii)   Indebtedness under the Credit Agreement not to
                 exceed $15,000,000 in principal amount outstanding at any one
                 time;

                      (iii)  Indebtedness of the Company and its Subsidiaries
                 identified on Exhibit B to the Closing Certificate outstanding
                 as of the Closing Date;

                      (iv)   Indebtedness relating to insurance premium
                 financing or in respect of workers' compensation claims, in
                 each case incurred in the ordinary course of business;

                      (v)    Indebtedness relating to the Company's and its
                 Subsidiaries' controlled disbursement accounts or in respect of
                 overdrafts of zero balance bank accounts, in each case incurred
                 in the ordinary course of business;

                      (vi)   Indebtedness in respect of Capitalized Lease
                 Obligations or purchase money financings (including the
                 purchase price of inventory); provided that such Indebtedness
                 is secured only by the applicable asset;

                      (vii)  Indebtedness between a Subsidiary and the Company
                 or between Subsidiaries;

                      (viii) Indebtedness represented by surety and performance
                 bonds and similar obligations, in each case incurred in the
                 ordinary course of business;

                      (ix)   Hedging Obligations of the Company or a Subsidiary
                 incurred in the ordinary course of business; and

                      (x)    Indebtedness issued or incurred in connection with
                 the renewal, expansion or refunding of Indebtedness permitted
                 by the preceding clauses (i) through (ix) of this Section 5.5;
                 provided that any expansion of such Indebtedness would
                 otherwise satisfy the conditions of one of the other clauses
                 (i) through (ix) of this Section 5.5.

         Section 5.6. Limitation on Liens. The Company will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any Liens
other than Permitted Liens unless the Notes are secured equally and ratably with
any other obligations thereby secured.

         Section 5.7. Restricted Payments. The Company will not, and will not
permit any Subsidiary, to make (i) any Restricted Investment or (ii) any
distribution or declare or pay any dividends (in cash or other property, other
than capital Stock) on, or purchase, redeem or

                                       6

<PAGE>

otherwise retire any of the Company's or any of its Subsidiaries' capital Stock,
whether now or hereafter outstanding, provided, however:

                      (a)   any Subsidiary may declare and pay dividends or
         other distributions to the Company; and

                      (b)   the Company may declare and pay dividends or other
         distributions to Prandium during each fiscal year equal to the sum of
         (i) an amount not in excess of the federal, state, local and foreign
         taxes and assessments payable by Prandium and its subsidiaries
         (determined on a consolidated basis) for such year, plus (ii) the
         aggregate amount of all general corporate, operating and administrative
         expenses incurred by Prandium (including, without limitation, any such
         expenses incurred on behalf of its Subsidiaries) in the ordinary course
         of business.

Notwithstanding the foregoing, this Agreement does not prevent immaterial cash
dividends in lieu of payment of fractional shares.

         Section 5.8. Mergers, Consolidations and Sales of Assets.

                      (a)   The Company will not, and will not permit any
         Subsidiary to, (1) consolidate with or be a party to a merger with any
         other corporation, (2) sell, lease or otherwise dispose of all or
         substantially all of the assets of the Company and its Subsidiaries (on
         a consolidated basis), or (3) issue any securities or any rights or
         options to purchase securities for less than fair value as determined
         in good faith by the Board of Directors, provided, however, that:

                      (i)   any Subsidiary (other than Hamlet) may merge or
                 consolidate with or into the Company or any Subsidiary;

                      (ii)  the Company may consolidate or merge with any other
                 corporation if (A) the Company shall be the surviving or
                 continuing corporation or else the surviving or continuing
                 corporation shall (x) have a consolidated EBITDA for the
                 twelve-month period ending on the last day of the calendar
                 quarter immediately preceding the date of such consolidation or
                 merger, determined on a pro forma basis, equal to or exceeding
                 that of the Company for such period and (y) assume all of the
                 obligations of the Company under the Notes and this Agreement
                 and (B) at the time of such consolidation or merger and after
                 giving effect thereto no Default or Event of Default shall have
                 occurred and be continuing; and

                      (iii) any Subsidiary (other than Hamlet) may sell, lease
                 or otherwise dispose of its assets, or issue securities, to the
                 Company or any Subsidiary.

                      (b)   The Company shall not, and shall not permit any of
         its subsidiaries to, consummate any Asset Sales where the fair market
         value of the assets being sold exceeds $500,000 in the aggregate for
         any fiscal year unless the Company or such subsidiary (but in no event
         Hamlet unless in a Hamlet Sale) receives consideration at the time of
         such Asset Sale at least equal to the fair market value (as determined
         in good faith by the Board of Directors of the Company or the
         applicable subsidiary) of the assets subject to such Asset Sale.

                                       7

<PAGE>

                      (c)   If the Company consummates any Asset Sale (other
         than a Hamlet Sale) for Net Proceeds in excess of $100,000 and other
         than in the ordinary course of business, in a single transaction or a
         series of transactions, the Company shall, to the extent permitted by
         the Credit Agreement, use (i) 50% of any Net Proceeds from such sales
         up to the first $3,000,000 of Net Proceeds and (ii) 100% of the Net
         Proceeds from such sales in excess of $3,000,000, to promptly prepay
         the outstanding Notes in accordance with the terms of Section 2.1(b).

         Section 5.9.  Transactions with Affiliates.

                      (a)   The Company will not, and will not permit any
         Subsidiary to, enter into any transaction (or series of related
         transactions) (a "Transaction") with any holder (or any Affiliate of
         such holder) of 5% or more of any class of capital Stock of the Company
         or with any Affiliate of the Company, involving payments by the Company
         or any Subsidiary (including, without limitation, any sale, purchase,
         lease or loan or any other direct or indirect payment, transfer or
         other disposition) in excess of $1,000,000, other than the following
         Transactions:

                      (i)   Transactions between or among the Company and its
                 Subsidiaries or between or among such Subsidiaries,

                      (ii)  Transactions the terms of which are at least as
                 favorable as the terms that could be obtained by the Company or
                 such Subsidiary, as the case may be, in a comparable
                 transaction made on an arm's-length basis between unaffiliated
                 parties (in each case as determined in good faith by a majority
                 of the directors of the Company unaffiliated with such holder
                 or Affiliate, or if there are no such directors, as determined
                 in good faith by its Board of Directors),

                      (iii) Transactions in which the Company or any Subsidiary
                 delivers to the holders of the Notes a written opinion of an
                 independent nationally recognized investment banking firm
                 stating that such Transaction is fair to the Company or such
                 Subsidiary from a financial point of view,

                      (iv)  the performance by the Company of its obligations
                 hereunder and under the Notes,

                      (v)   the payment of reasonable and customary compensation
                 or fees (including, without limitation, options or related
                 stock appreciation rights or similar securities issued pursuant
                 to any Stock Based Plan) to officers, directors, and employees
                 of Prandium, the Company or any of its Subsidiaries, in each
                 case as determined by the Company's Board of Directors in good
                 faith,

                      (vi)  loans or advances to officers, directors and
                 employees of Prandium, the Company or any of its Subsidiaries
                 made in the ordinary course of business not to exceed $500,000
                 at any time outstanding,

                      (vii) purchases (for equal to or less than fair value) or
                 sales (for equal to or more than fair value) of goods and
                 services made in the ordinary course of business,

                                       8

<PAGE>

                      (viii) Transactions permitted by, and complying with, the
                 provisions of Section 5.7,

                      (ix)   Transactions permitted by, and complying with, the
                 provisions of Section 5.8(a), or

                      (x)    management and tax sharing agreements in effect on
                 the date hereof or any replacements thereof which do not
                 materially increase the obligations of the Company or its
                 Subsidiaries.

                      (b)    The Company will not, and will not permit any of
         its affiliates (as defined in Rule 144 under the Securities Act) to
         resell any of the Notes that constitute "restricted securities" under
         Rule 144 that have been reacquired by the Company or any such
         affiliate.

         Section 5.10. Financial Statements, etc. (a) As long as Prandium is a
reporting company under the Exchange Act, the Company shall deliver to the
holders of the Notes, 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 reasonably practicable after the same are
filed.

                 (b)  In the event Prandium is no longer a reporting company
under the Exchange Act, the Company shall deliver to the holders of the Notes as
soon as available, but in any event within 60 days after the end of each of the
first three quarters during each of Prandium's fiscal years, a company prepared
balance sheet, income statement, and statement of cash flow covering Prandium's
and its consolidated subsidiaries' operations during such period; and (b) as
soon as available, but in any event within 105 days after the end of each of
Prandium's fiscal years, financial statements of Prandium and its consolidated
subsidiaries for each such fiscal year, audited by independent certified public
accountants. 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.

                 (c)  Each Purchaser acknowledges that it is familiar with its
responsibilities under the federal securities laws relating to restrictions on
trading in securities of an issuer while in possession of material, non-public
information, and restrictions on sharing such information with other persons who
may engage in such trading; and agrees that such Purchaser will not violate
those restrictions, and will use reasonable efforts to prevent any of its
directors, officers, employees, agents and advisors (including, without
limitation, attorneys, accountants, bankers and financial advisors) who receive
any such information from such Purchaser concerning the Company (whether
prepared by the Company, its advisors or otherwise and irrespective of the form
of communication) from violating those restrictions.

         Section 5.11. Capital Expenditures.

                      (a)  The Company will not make or incur, and will not
         permit any Subsidiary to make or incur, Capital Expenditures during
         each period set forth below, that are, in the aggregate, in excess of
         the maximum amount set forth below corresponding to such period;
         provided, however, that to the extent that the Company and the
         Subsidiaries, in the aggregate, spend less than the maximum amount for
         a

                                       9

<PAGE>

         given period, the unused portion of such maximum amount shall be
         carried over to the next period:

                      (i)   a maximum of $11,000,000 for the period from January
                 1, 2002 up to and including December 31, 2002;

                      (ii)  a maximum of $11,000,000 for the period from January
                 1, 2003 up to and including December 31, 2003; and

                      (iii) a maximum of $15,000,000 for the period from January
                 1, 2004 up to and including January 31, 2005.

                      (b)   Notwithstanding anything to the contrary herein,
         the Company will not permit Hamlet or any of its subsidiaries to make
         or incur Capital Expenditures in the aggregate in excess of $500,000
         for each of the periods set forth in subsection (a) above (the "Hamlet
         Capital Expenditures"); provided, however, that to the extent that
         Hamlet and its subsidiaries, in the aggregate, spend less than the
         maximum amount for a given period, the unused portion of such maximum
         amount shall be carried over to the next period.

         Section 5.12. Excess Cash Flow. The Company will be required to prepay
the outstanding Notes with any Excess Hamlet Cash Flow generated during:

                      (a)   the period beginning on the later of (i) April 1,
         2002 and (ii) the first day of the Company's fiscal quarter during
         which the Effective Date occurs, and ending on the earlier of (x) the
         last day of such fiscal quarter and (y) the Hamlet Sale; and

                      (b)   for each of the Company's fiscal quarters after
         the fiscal quarter set forth in subsection (a)(ii) above, the period
         beginning on the first day of such fiscal quarter and ending on the
         earlier to occur of (i) the last day of such fiscal quarter and (ii)
         the Hamlet Sale;

in each case in accordance with Section 2.

         Section 5.13. Issuance of Hamlet Securities. Prior to consummating a
Hamlet Sale, Hamlet will not, and will cause each of its subsidiaries not to,
issue any equity security or any security, convertible or exchangeable into, or
exercisable for, or warrants, options or other rights to purchase, an equity
security of Hamlet or any of its subsidiaries.

SECTION 6.  EVENTS OF DEFAULT AND REMEDIES THEREFOR.

         Section 6.1. Events of Default. Any one or more of the following
occurring after the Closing Date shall constitute an "Event of Default" as the
term is used herein:

                      (a) Failure by the Company to pay interest on any Note
         when the same shall have become due and such default shall continue for
         more than 10 Business Days;

                      (b) Failure by the Company to pay all or any part of
         the principal due on the Notes when and as the same becomes due and
         payable at maturity, by acceleration, or otherwise, including, without
         limitation, failure to make prepayments in accordance with Section 2.1
         or Section 5.8(c); or

                                       10

<PAGE>

                      (c)  Failure by the Company to observe or perform any
         other covenant or agreement contained in the Notes or this Agreement
         and the continuance of any such failure for a period of 30 days after
         the date on which written notice thereof is given to the Company by the
         Majority Holders specifying such default or breach; or

                      (d)  Any judgment or order for the payment of money shall
         be rendered against the Company or a Material Subsidiary of the Company
         by a court of competent jurisdiction and shall not be discharged or
         stayed within 90 days, and the amount thereof that is not covered by
         insurance, letters of credit or a bond shall be in excess of $5,000,000
         and either (i) an enforcement proceeding shall have been commenced by
         any creditor upon such judgment or order or (ii) there shall be any
         period of 90 consecutive days, after written notice has been given to
         the Company by the Holders of at least 25% in aggregate principal
         amount of the outstanding Notes, during which a stay of enforcement of
         such judgment or order, by reason of a pending appeal or otherwise,
         shall not be in effect; or

                      (e)  An event of default occurs which extends beyond
         any period of grace applicable thereto under any mortgage, indenture or
         other instrument under which there may be issued any Indebtedness of
         the Company or any Material Subsidiary of the Company for borrowed
         money having an outstanding principal amount of $5,000,000 or more in
         the aggregate, whether such Indebtedness now exists or shall hereafter
         be created, if either (i) such default results from the failure to pay
         principal upon the final maturity of such Indebtedness or (ii) as
         result of such event of default such Indebtedness has been declared to
         be due and payable prior to its stated maturity, provided, however,
         that if such default shall be remedied or cured or waived by the
         holders of such Indebtedness prior to judgment hereunder, then the
         Event of Default hereunder by reason thereof shall be deemed to have
         been thereupon remedied, cured or waived without further action on the
         part of the holders of the Notes; or

                      (f)  The Company or any Material Subsidiary becomes
         insolvent, is generally not paying its debts as they become due or
         makes an assignment for the benefit of creditors, or the Company or any
         Material Subsidiary applies for or consents to the appointment of a
         custodian, trustee, liquidator, or receiver for the Company or such
         Subsidiary or for the major part of the property of either; or

                      (g)  A custodian, trustee, liquidator, or receiver is
         appointed for the Company or any Material Subsidiary or for the major
         part of the property of either and is not discharged within 45 days
         after such appointment; or

                      (h)  Bankruptcy, reorganization, arrangement or
         insolvency proceedings, or other proceedings for relief under any
         bankruptcy or similar law or laws for the relief of debtors, are
         instituted by or against the Company or any Material Subsidiary and, if
         instituted against the Company or any Material Subsidiary, are
         consented to or are not dismissed within 45 days after such
         institution.

         Section 6.2. Notice to Holders. When the Company has knowledge that any
Event of Default described in the foregoing Section 6.1 has occurred, the
Company agrees to give notice to the holders of the outstanding Notes within
three Business Days of the date on which the Company becomes aware of such Event
of Default.

                                       11

<PAGE>

         Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraphs (a) through (h), inclusive, of said Section 6.1 has
happened and is continuing, the holder or holders of 25% or more of the
principal amount of outstanding Notes may, by notice to the Company, declare the
entire principal amount and all interest accrued and unpaid, if any, on all
Notes to be, and all Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived. When any Event of Default described in
paragraph (g) of Section 6.1 has occurred, then the principal amount of all
outstanding Notes (together with accrued and unpaid interest, if any) shall
immediately become due and payable without presentment, demand or notice of any
kind. Upon the Notes becoming due and payable as a result of any Event of
Default as aforesaid, the Company will forthwith pay to the holders of the Notes
the entire principal amount and interest accrued and unpaid, if any, on the
Notes without regard to Section 2.1(d). No course of dealing on the part of any
Noteholder nor any delay or failure on the part of any Noteholder to exercise
any right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies.

         Section 6.4. Rescission of Acceleration. The provisions of Section 6.3
are subject to the condition that if the principal amount of and accrued and
unpaid interest, if any, on all or any outstanding Notes have been declared
immediately due and payable by reason of the occurrence of any Event of Default
described in paragraphs (a) through (h), inclusive, of Section 6.1, the Majority
Holders may, by written instrument filed with the Company, rescind and annul
such declaration and the consequences thereof.

SECTION 7.  AMENDMENTS, WAIVERS AND CONSENTS.

         Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the Majority Holders; provided that without the
written consent of the holders of all of the Notes then outstanding, no such
waiver, modification, alteration or amendment shall be effective (a) that will
change the time of any scheduled payment of the principal amount of or the
interest on any Note or reduce the principal amount thereof or change the rate
of interest thereon, or (b) that will change any of the provisions with respect
to optional prepayments or (c) that will change the percentage of holders of the
Notes required to consent to any such amendment, modification or waiver of any
of the provisions of this Section 7 or Section 6.

         Section 7.2. Solicitation of Noteholders. Executed or true and correct
copies of any waiver effected pursuant to the provisions of Section 7.1 shall be
delivered by the Company to each holder of outstanding Notes forthwith following
the date on which the same shall have been executed and delivered by the holder
or holders of the requisite percentage of outstanding Notes.

         Section 7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.

                                       12

<PAGE>

SECTION 8. PLEDGE.

         Section 8.1. Pledge. As collateral security for payment in full of the
Notes, the Company hereby pledges, hypothecates, assigns, transfers, sets over
and delivers unto the Agent for the benefit of the Purchasers a first priority
security interest in all the Pledged Collateral. On the Closing Date, unless
previously delivered, the Company shall deliver the Pledged Securities to the
Agent for the benefit of the Purchasers. The certificates representing the
Pledged Securities shall be accompanied by executed undated stock powers, duly
endorsed to the Agent by the Company.

         If any additional Pledged Collateral described in clauses (a) and (b)
of the definition thereof (or, during an Event of Default, any dividends or
other distributions paid in cash or cash equivalents on the Pledged Securities)
shall come into the possession or control of the Company or any Subsidiary, the
Company or such Subsidiary shall hold or control in trust and forthwith transfer
and deliver the same to the Agent subject to the provisions hereof. If at any
time the Agent notifies the Company that additional stock powers endorsed in
blank with respect to the Pledged Securities are required, the Company shall
promptly execute in blank and deliver such stock powers as the Agent may
reasonably request.

         Section 8.2. Representations and Warranties Regarding Pledged
Securities. The Company hereby represents and warrants to the Agent and the
Purchasers that:

                      (a) Upon the termination of the Old Secured Note
         Agreement under the Plan and the return of the Pledged Securities to
         the Company in connection therewith, the Company will be the sole legal
         and beneficial owner of, and will have good and valid title to, the
         Pledged Securities, free and clear of all Liens other than the security
         interest created by this Agreement. The Company has the unqualified
         right and authority to execute this Agreement and, upon the termination
         of the Old Secured Note Agreement under the Plan, to pledge the Pledged
         Securities to the Agent as provided for herein.

                      (b) There are no outstanding options, warrants or other
         similar agreements providing for the sale or issuance of securities of
         Hamlet to which the Company or Hamlet is a party other than in
         connection with a Hamlet Sale.

                      (c) Upon the termination of the Old Secured Note Agreement
         under the Plan, the Pledged Securities will be validly issued and fully
         paid and non-assessable.

                      (d) No consent, approval or authorization of or
         designation or filing with any authority on the part of the Company is
         required in connection with the pledge and security interest granted
         under this Agreement, other than those that will on or prior to the
         Closing Date be obtained or effected.

         Section 8.3. Covenants Regarding Pledged Securities. The Company agrees
that:

                      (a) The Company has delivered, or will on or prior to
         the Closing Date deliver, to the Agent all instruments and stock
         certificates, if any, representing the Pledged Securities, duly
         endorsed in blank or accompanied by an assignment or assignments
         sufficient to transfer title thereto.

                                       13

<PAGE>

                      (b) The Company will not, without the prior written
         consent of the Majority Holders, sell, transfer or convey any interest
         in, or suffer or permit any Lien to be created upon or with respect to,
         any of the Pledged Collateral described in clauses (a) and (b) of the
         definition thereof (other than as created under this Agreement) during
         the term of the pledge established hereby; provided that,
         notwithstanding anything herein to the contrary, the Company may sell
         the Pledged Collateral in a Hamlet Sale.

                      (c) The Company will, at its own expense, at any time
         and from time to time at the Agent's reasonable request, do, make,
         procure, execute and deliver all acts, things, writings, assurances and
         other documents as may be reasonably required by the Agent to preserve,
         establish, demonstrate or enforce the Agent's rights, interests and
         remedies created by or provided in this Agreement including the filing
         of financing statements.

         Section 8.4. Voting Rights; Dividends; etc. So long as no Event of
Default has occurred and is continuing:

                      (a) Subject to Section 5.12, the Company shall be entitled
         to receive and retain any dividends and other cash distributions paid
         in cash or cash equivalents on the Pledged Securities.

                      (b) The Company shall be entitled to vote or consent or
         grant waivers or ratifications with respect to the Pledged Securities
         in any manner not violating any provision of this Agreement.

         Section 8.5. Remedies Upon Default. At any time when an Event of
Default has occurred and is continuing:

                      (a) The Agent may collect by legal proceedings or
         otherwise all dividends, capital distributions and other sums now or
         hereafter payable on account of said Pledged Securities, and hold the
         same as part of the Pledged Securities, or apply the same to the
         principal amount of the Notes then owing or interest thereon as set
         forth in Section 8.6.

                      (b) The Agent may discharge any taxes, liens, security
         interest or other encumbrances levied or placed on the Pledged
         Securities or pay for the maintenance and preservation of the Pledged
         Securities; the amount of such payments, plus any and all reasonable
         fees, costs and expenses of the Agent (including reasonable attorneys'
         fees and disbursements) in connection therewith shall be applied as set
         forth in Section 8.6.

                      (c) In addition to all the rights and remedies of a
         secured party under applicable law, the Agent shall have the right, and
         without demand of performance or other demand, advertisement or notice
         of any kind, except as specified below, to or upon the Company or any
         other person (all and each of which demands, advertisements and/or
         notices are hereby expressly waived to the extent permitted by law), to
         proceed forthwith to collect, receive, appropriate and realize upon the
         Pledged Securities, or any part thereof and to proceed forthwith to
         sell, assign, give an option or options to purchase, contract to sell,
         or otherwise dispose of and deliver the Pledged Securities or any part
         thereof in one or more parcels at public or private sale or sales at
         any stock exchange, broker's board or at any of the Agent's offices or

                                       14

<PAGE>

         elsewhere at such prices and on such terms (including, without
         limitation, a requirement that any purchaser of all or any part of the
         Pledged Securities shall be required to purchase any securities
         constituting the Pledged Securities solely for investment and without
         any intention to make a distribution thereof) as the Agent in its sole
         and absolute discretion deems appropriate without any liability for any
         loss due to decrease in the market value of the Pledged Securities
         during the period held. The Company agrees that if notice of sale shall
         be required by law such notification shall be deemed reasonable and
         properly given if mailed to the Company, postage prepaid, at least five
         Business Days (or such longer period required by any provision of
         applicable laws) before any such disposition, to the address indicated
         in the notice provisions below. Any disposition of the Pledged
         Securities or any part thereof may be for cash or on credit or for
         future delivery without assumption of any credit risk, with the right
         of the Agent to purchase all or any part of the Pledged Securities so
         sold at any such sale or sales, public or private, free of any equity
         or right of redemption in the Company, which right or equity is, to the
         extent permitted by applicable law, hereby expressly waived or released
         by the Company.

                      (d) All of the Agent's rights and remedies, including but
         not limited to the foregoing, shall be cumulative and not exclusive and
         shall be enforceable alternatively, successively or concurrently as the
         Agent may deem expedient.

                      (e) The Agent may elect to obtain (at the Company's
         expense) the advice of any independent investment banking firm with
         respect to the method and manner of sale or other disposition of any of
         the Pledged Securities, the best price reasonably obtainable therefor,
         the consideration of cash and/or credit terms, or any other details
         concerning such sale or disposition. The Agent, in its sole discretion,
         may elect to sell on such credit terms which it deems reasonable. The
         sale of any of the Pledged Securities on credit terms shall not relieve
         the Company of its liability under the Notes until the Notes have been
         paid in full.

                      (f) The Company recognizes that the Agent may be unable to
         effect a public sale of all or a part of the Pledged Securities by
         reason of certain prohibitions contained in any applicable securities
         laws, but may be compelled to resort to one or more private sales to a
         restricted group of purchasers who will be obliged to agree, among
         other things, to acquire the Pledged Securities for their own account,
         for investment and not with a view for the distribution or resale
         thereof. The Company agrees that private sales so made may be at prices
         and on other terms less favorable to the seller than if the Pledged
         Securities were sold at public sale, and that the Agent has no
         obligation to delay the sale of any Pledged Securities for the period
         of time necessary to permit the registration of the Pledged Securities
         for public sale under the Securities Act. The Company agrees that a
         private sale or sales made under the foregoing circumstances shall be
         deemed to have been made in a commercially reasonable manner.

                      (g) Upon any sale or other disposition, the Agent shall
         have the right to deliver, assign and transfer to the purchaser thereof
         the Pledged Securities so sold or disposed of. Each purchaser at any
         such sale or other disposition (including the Agent) shall hold the
         Pledged Securities free from any claim or right of the Company of
         whatever kind, including any equity or right of redemption of the
         Company. The Company specifically waives, to the extent permitted by
         applicable laws, all rights of redemption, stay or appraisal which it
         had or may have under any rule of law or statute now existing or
         hereafter adopted.

                                       15

<PAGE>

                     (h) The Agent shall not be obligated to make any sale or
         other disposition, unless the terms thereof shall be reasonably
         satisfactory to it. The Agent may, subject to applicable laws, without
         notice or publication, adjourn any private or public sale, and, upon
         five Business Days' prior written notice to the Company, hold such sale
         at any time or place to which the same may be so adjourned. In case of
         any sale of all or any part of the Pledged Securities, on credit or
         future delivery, the Pledged Securities so sold may be retained by the
         Agent until the selling price is paid by the purchaser thereof, but the
         Agent shall incur no liability in the case of the failure of such
         purchaser to take up and pay for the property so sold.

                     (i) The Company hereby irrevocably grants to Agent, with
         full power of substitution, a proxy to vote and exercise any and all
         voting rights held by it with respect to the Pledged Securities. The
         proxy granted hereunder is coupled with an interest and is irrevocable.

         Section 8.6. Application of Proceeds of Sale. The proceeds of sale of
the Pledged Collateral sold pursuant to Section 8.5 hereof shall be applied by
the Agent on behalf of the Purchasers as follows:

                     (a) to the payment of all reasonable out-of-pocket costs
         and expenses incurred by the Agent in connection with such sale,
         including, but not limited to, all court costs and the reasonable fees
         and expenses of counsel for the Agent in connection therewith, and the
         payment of all other costs and expenses paid or incurred by the Agent
         in connection with this Agreement, or the exercise of any right or
         remedy hereunder, to the extent that such advances, costs, and expenses
         shall not have been paid previously to the Agent; and

                     (b) to the payment in full of all interest and premium, if
         any, owed with respect to the Notes and all principal of the Notes on a
         pro rata basis in such order as determined by the Purchasers.

         Any amounts remaining after such applications shall be remitted to the
Company.

         Section 8.7. Termination. Upon the first to occur of (a) full payment
of the Notes, and (b) a Hamlet Sale, the pledge referenced herein shall
terminate and the Agent shall assign and deliver to the Company, or to such
other Person or Persons as the Company shall designate, against receipt, such of
the Pledged Collateral (if any) as shall not have been previously sold or
otherwise applied by the Agent pursuant to the terms hereof, together with
appropriate instruments of reassignment and release. The Agent shall cooperate
to make the Pledged Collateral physically available at the time and location of
the closing of a Hamlet Sale.

         Section 8.8. Appointment. Each Purchaser hereby irrevocably designates
and appoints the Agent and the Agent hereby accepts such appointment, as the
Agent of such Purchaser under Section 8 to hold the Pledged Collateral for and
on behalf of such Purchaser, and each such Purchaser irrevocably authorizes the
Agent to take such action on its behalf with respect to the Pledged Collateral
under the provisions of Section 8 and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of Section 8,
together with such other powers as are reasonably incidental thereto. The Agent
shall act in accordance with the instructions of the Majority Holders; provided
that the Agent shall not be required to take any actions hereunder in absence of
instructions from the

                                       16

<PAGE>

Majority Holders. No Purchaser shall have any obligation to pay the fees and
expenses of the Agent hereunder, which fees and expenses shall be paid by the
Company.

         Section 8.9. Duties of Agent. The Agent shall be required to exercise
the reasonable care which a secured party would customarily exercise with
respect to the Pledged Collateral in its possession, in its capacity as a
secured party. The Agent makes no representation or warranty as to the value or
condition of the Pledged Collateral and has no obligation to ensure compliance
by the Company of its obligations with respect to the Pledged Collateral.

         Section 8.10. Power of Attorney. The Company hereby constitutes and
irrevocably appoints the Agent, as the Company's true and lawful
attorney-in-fact to the full extent permitted by law, at any time or times when
an Event of Default has occurred and is continuing for the limited purpose of
allowing the Agent to affix to certificates and documents representing the
Pledged Securities the stock power delivered with respect thereto, to transfer
or cause the transfer of the Pledged Securities, or any part thereof on the
books of Hamlet, to the name of the Agent or the Agent's nominee and thereafter
exercise as to such Pledged Securities all the rights, power and remedies of an
owner. The power of attorney granted pursuant to this Agreement and all
authority hereby conferred are granted and conferred solely to protect the
Agent's interest in the Pledged Securities and shall not impose any duty upon
the Agent to exercise any power. This power of attorney shall be irrevocable and
coupled with an interest.

         Section 8.11. Indemnification of Agent.

                       (a) The Company agrees to indemnify the Agent, the
         Paying Agent, the Note Registrar and each of their respective
         directors, officers, employees and agents (each such person being
         called an "Indemnitee") against, and to hold each Indemnitee harmless
         from, any and all losses, claims, damages, liabilities and related
         expenses, including reasonable counsel fees, charges and disbursements,
         incurred by or asserted against any Indemnitee arising out of or as a
         result of any claim, litigation, investigation or proceeding (whether
         or not an Indemnitee is a party thereto) relating to the execution or
         delivery of this Agreement or any agreement or instrument contemplated
         hereby or the performance by the parties hereto of their respective
         obligations hereunder; provided that such indemnity shall not be
         available to the extent that such losses, claims, damages, liabilities
         or related expenses result from or arise out of the gross negligence or
         wilful misconduct of any Indemnitee.

                       (b) To the extent (x) the same shall not have been
         reimbursed by the Company (and the Agent shall have utilized reasonable
         efforts to seek such reimbursement from the Company) and (y) such
         claims, damages, liabilities and related expenses relate to actions
         taken by the Agent in accordance with this Agreement or that have been
         authorized by the Purchasers in accordance with this Agreement, each
         Purchaser agrees to indemnify the Agent and each of its directors,
         officers, employees and agents (each such person being called an "Agent
         Indemnitee") against, and to hold each Agent Indemnitee harmless from,
         in the amount of its pro rata share (based on the outstanding principal
         amount of the Notes held by such Purchaser), any and all losses,
         claims, damages, liabilities and related expenses, including reasonable
         counsel fees, charges and disbursements, incurred by or asserted
         against any Agent Indemnitee arising out of or as a
            result of any claim, litigation, investigation or
         proceeding (whether or not an Agent Indemnitee is a party thereto)
         relating to the execution or delivery of this Agreement or any
         agreement or instrument contemplated hereby or the performance by the
         parties hereto of their respective obligations hereunder; provided that
         such indemnity

                                       17

<PAGE>

         shall not be available to the extent that such losses, claims, damages,
         liabilities and related expenses result from or arise out of the gross
         negligence or wilful misconduct of any Agent Indemnitee.

                       (c) The indemnities set forth in this Section 8.11 shall
         survive termination of this Agreement and shall be applicable to any
         Agent, Paying Agent and Note Registrar following the resignation or
         removal of such Agent, Paying Agent and Note Registrar with respect to
         actions taken by such Agent prior to such resignation or removal.

         Section 8.12.  Resignation and Removal of Agent.

                       (a) The Agent may resign from the performance of its
         functions and duties hereunder at any time by giving 30 days' prior
         written notice to the Purchasers. Such resignation shall take effect
         upon the appointment of a successor Agent pursuant to clause (b) below.
         The Agent may be removed at any time by the affirmative vote of the
         Majority Holders.

                       (b) Upon any such notice of resignation or removal, the
         Majority Holders shall appoint a successor Agent hereunder; provided
         that such Agent shall be subject to prior written approval of the
         Company (which shall not unreasonably be withheld). If no successor
         Agent has been appointed within 30 days of the Agent's resignation, the
         resigning Agent may appoint a successor Agent. Upon the appointment of
         a successor Agent, the resigning or removed Agent shall transfer and
         assign all Pledged Collateral in its possession to the successor Agent.
         Any such successor Agent shall agree to be bound by the provisions of
         this Agreement.

SECTION 9. INTERPRETATION OF AGREEMENT; DEFINITIONS.

         Section 9.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:

         "Affiliate" shall mean any Person (a) that directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, any other Person or (b) is an officer, director or employee
of any such Affiliate. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting Stock, by contract
or otherwise.

         "Agent" shall mean The Bank of New York.

         "Agent Indemnitee" shall have the meaning provided in Section 8.11(b).

         "Agreement" shall mean this Note Agreement, dated as of July 2, 2002
Re: Up to $80,000,000 12.0% Senior Secured Notes due January 31, 2005.

         "Asset Sale" shall mean any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of Equity
Interests of a subsidiary of the Company (other than directors' qualifying
shares and shares issued pursuant to the Prandium, Inc. 2002 Stock Incentive
Plan), or property or other assets, including by way of a sale/leaseback
transaction (each referred to for the purposes of this definition as a
"disposition"), by the Company or any of

                                       18

<PAGE>

its subsidiaries (including any disposition by means of merger, consolidation or
similar transaction) other than (i) a disposition by a subsidiary to the Company
or by the Company to a wholly owned subsidiary, (ii) a disposition of property
or assets in the ordinary course of business in an aggregate amount not to
exceed $300,000, (iii) dispositions of inventory in the ordinary course of
business, (iv) for purposes of Section 5.8(c) only, a disposition that
constitutes a Restricted Payment permitted by Section 5.7 hereof, (v) the grant
of Liens permitted by Section 5.6 hereof and (vi) sales of obsolete or worn-out
equipment.

         "Bankruptcy Court" shall mean the United States Bankruptcy Court for
the Central District of California.

         "Board of Directors" shall mean, with respect to any Person, the Board
of Directors of such Person or any committee of the Board of Directors
authorized to act for it hereunder.

         "Business Day" shall mean any day other than a Saturday, Sunday,
statutory holiday or other day on which banks in Los Angeles, California or New
York, New York are required by law to close or are customarily closed.

         "Capital Expenditures" shall mean, for any period and for any Person,
(i) additions to property, plant and equipment and other capital expenditures of
such Person and its subsidiaries that are (or would be) classified as capital
expenditures in accordance with GAAP.

         "Capitalized Lease Obligation" shall mean, with respect to any Person,
an obligation of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP and the amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP.

         "Cash Equivalents" shall mean (i) securities issued by the United
States of America or any agency or instrumentality thereof (provided that the
full faith and credit of the United States of America is pledged in support
thereof), (ii) time deposits and certificates of deposit and commercial paper
issued by the parent corporation of any domestic commercial bank of recognized
standing having capital and surplus in excess of $250,000,000 and commercial
paper issued by others rated at least A-2 or the equivalent thereof by Standard
& Poor's Corporation or at least P-2 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing within one year after the date
of acquisition and (iii) investments in money market funds substantially all of
whose assets comprise securities of the types described in clauses (i) and (ii)
above.

         "Chapter 11 Cases" shall mean the chapter 11 cases, Case No.
SA-02-13529 (RA) (Jointly Administered), pending in the Bankruptcy Court.

         "Closing Date" shall have the meaning provided in Section 1.2.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Company" shall mean FRI-MRD Corporation, a Delaware corporation.

         "Confirmation Order" shall mean the order of the Bankruptcy Court dated
June 20, 2002 confirming the Plan.

         "Credit Agreement" shall mean (i) the Loan and Security Agreement,
dated as of July 2, 2002, among the Company, certain of its Subsidiaries,
Prandium, and Foothill Capital

                                       19

<PAGE>

Corporation, as such agreement may be restated, amended, supplemented or
otherwise modified from time to time hereafter and (ii) any refunding or
replacement of any agreement provided for in clause (i) or this clause (ii).

         "Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6.1.

         "EBITDA" shall mean, for any Person, such Person's earnings (loss)
before (i) gain (loss) on disposition of properties, (ii) provision for
divestitures and writedown of long-lived assets, (iii) writedown of goodwill,
(iv) restructuring costs, (v) interest, (vi) income taxes, (vii) depreciation,
(viii) amortization, (ix) gain (loss) on extinguishment of debt, and (x)
extraordinary items, in each case as determined in accordance with GAAP.

         "Effective Date" shall have the meaning set forth in the Plan.

         "Environmental Legal Requirement" shall mean any international,
Federal, state or local statute, law, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction, common law, treaty,
convention, ordinance or other requirement relating to public health, safety or
the environment, including, without limitation, those relating to releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use and handling of polychlorinated biphenyls or
asbestos, to the disposal, treatment, storage or management of hazardous or
solid waste, or Hazardous Substances or crude oil, or any fraction thereof, or
to exposure to toxic or hazardous materials, to the handling, transportation,
discharge or release of gaseous or liquid Hazardous Substances and any
regulation, order, notice or demand issued pursuant to such law, statute or
ordinance, in each case applicable to the property of the Company or any of its
Subsidiaries or the operation, construction or modification of any such
property, including without limitation the following: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Hazardous Material
Transportation Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking Water Act, the Clean
Air Act, as amended, the Toxic Substances Control Act of 1976, the Occupational
Safety and Health Act of 1970, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the National Environmental Policy Act of 1975, the
Oil Pollution Act of 1990 and any similar or implementing state law, and any
state statute and any further amendments to these laws providing for financial
responsibility for cleanup or other actions with respect to the release or
threatened release of Hazardous Substances or crude oil, or any fraction thereof
and all rules and regulations promulgated thereunder.

         "Equity Interests" shall mean capital Stock or warrants, options or
other rights to acquire capital Stock (but excluding any publicly-traded debt
security that is convertible into, or exchangeable for, capital Stock).

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.

                                       20

<PAGE>

         "Escrow Agreement" shall mean any escrow agreement or arrangement
reasonably satisfactory to the Majority Holders pursuant to which a portion of
the Net Proceeds of a Hamlet Sale not distributed concurrently with the
consummation of such Hamlet Sale shall be deposited.

         "Event of Default" shall have the meaning set forth in Section 6.1.

         "Excess Hamlet Cash Flow" means, for any period, without duplication,
(a) the EBITDA of Hamlet and its subsidiaries, minus (b) the sum of (i) the
provision for income taxes of Hamlet and its subsidiaries for such period, (ii)
the consolidated interest expense of Hamlet and its subsidiaries for such period
(including the interest component of any deferred payment obligations, the
interest component of all payments associated with Capitalized Lease
Obligations, and commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financing, but excluding
amortization of deferred financing fees), (iii) Hamlet Capital Expenditures that
are paid in cash other than from the proceeds of Capitalized Lease Obligations
or purchase money financings and (iv) principal payments on any Indebtedness of
Hamlet (including payments of amounts associated with Capitalized Lease
Obligations).

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto.

         "Existing Notes" shall mean the 15.0% Senior Discount Notes of the
Company due January 24, 2002.

         "GAAP" shall mean generally accepted accounting principles in the
United States as in effect on the date of this Agreement and not including any
interpretations or regulations that have been proposed but that have not been
enacted.

         "Hamlet" shall mean The Hamlet Group, Inc.

         "Hamlet Sale" shall mean the sale of substantially all of the stock or
the assets of Hamlet, H.H. of Maryland, Inc. and H.H.K. of Virginia, Inc. on
terms reasonably satisfactory to the Majority Holders.

         Hamlet Capital Expenditures" shall have the meaning set forth in
Section 5.11(b).

         "Hazardous Substance" shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional or
federal authority having jurisdiction over the property of the Company and it
Subsidiaries or its use, including but not limited to any material, substance or
waste which is: (a) defined as a hazardous substance under Section 31 1 of the
Federal Water Pollution Control Act (33 U.S.C. SS1317) as amended; (b) regulated
as a hazardous waste under Section 1004 or Section 3001 of the Federal Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.) as amended; (c) defined as a hazardous substance
under Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) or (d) defined or regulated as a
hazardous substance or hazardous waste under any rules or regulations
promulgated under any of the foregoing statutes.

                                       21

<PAGE>

         "Hedging Obligations" shall mean, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.

         "Indebtedness" of any Person as of any date shall mean and includes,
without duplication, (i) all debt of such Person, (ii) all obligations of such
Person (A) in respect of letters of credit or letter of credit reimbursement
obligations (whether or not such items would appear on the balance sheet of such
Person), (B) in respect of borrowed money or the balance deferred and unpaid of
the purchase price of any property or services, except those incurred in the
ordinary course of business that would constitute ordinarily a trade payable to
trade creditors and/or (C) evidenced by bonds, notes, debentures or similar
instruments, (iii) all guarantees by such Person of items that would constitute
Indebtedness under this definition (whether or not such items would appear on
such balance sheet) and (iv) all obligations of the type described in (i) -
(iii) above secured by any asset or property of such Person. The amount of
Indebtedness of any Person at any date shall be, without duplication, the
principal amount that would be shown on a balance sheet of such Person prepared
as of such date in accordance with GAAP and the maximum liability of any
contingent obligations referred to in clauses (i) through (iv) above at such
date.

         "Indemnitee" shall have the meaning provided in Section 8.11(a).

         "Information" shall have the meaning provided under Section 3.2.

         "Interest Rate" shall have the meaning provided under Section 1.1.

         "Investments" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the form of loans,
guarantees, advances or capital contributions (excluding (i) commission, travel
and similar advances to officers and employees of such Person made in the
ordinary course of business and (ii) bona fide accounts receivable arising from
the sale of goods or services in the ordinary course of business) and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

         "Issue Date" shall mean the date the Plan becomes effective, except in
the case of PIK Notes where Issue Date shall mean the Interest Payment Date with
respect to which the PIK Notes were issued.

         "Lien" shall mean any lien, security interest, charge or encumbrance of
any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).

         "Mandatory Prepayment" shall have the meaning provided in Section
2.1(b).

         "Majority Holders" shall mean the holders of at least a majority in
aggregate principal amount of the outstanding Notes.

         "Material Subsidiary" shall mean a Subsidiary of the Company that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X
promulgated under the Securities Act.

                                       22

<PAGE>

         "Net Proceeds" shall mean the aggregate proceeds received in the form
of cash or Cash Equivalents, including any cash received on account of or upon
the disposition of any non-cash consideration, in respect of any asset sale or
Hamlet Sale, net of (i) the reasonable and customary direct out-of-pocket costs
relating to such asset sale or Hamlet Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions), (ii) taxes
actually payable as a result of such asset sale or Hamlet Sale, (iii) amounts
required to be applied to the permanent repayment of Indebtedness in connection
with such asset sale or Hamlet Sale, but only to the extent such Indebtedness
was secured by the assets so sold or the repayment has otherwise been consented
to by the Majority Holder, and (iv) appropriate amounts held for no longer than
12 months from the consummation of the relevant asset sale or Hamlet Sale and
reasonably satisfactory to the Majority Holders provided as a reserve by the
Company or any subsidiary of the Company, in accordance with GAAP, against any
liabilities associated with such asset sale or Hamlet Sale and retained by the
Company or such subsidiary, as the case may be, it being understood that any
reserves not utilized at the end of such 12 month period shall constitute "Net
Proceeds" for purposes of Sections 2.1(c) and 5.8(c).

         "Note" shall have the meaning provided in Section 1.1.

         "Note Register" shall have the meaning provided in Section 10.1.

         "Note Registrar" shall have the meaning provided in Section 10.1.

         "Noteholder" shall mean any of the holders of one or more Notes from
time to time.

         "Officer" shall mean the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of any Person.

         "Old Secured Note Agreement" means the FRI-MRD Corporation Note
Agreement, dated as of June 9, 1998, Re: $24,000,000 14.0% Senior Secured
Discount Notes due January 24, 2002, as amended by the First Amendment to Note
Agreement, dated as of October 30, 1998, and as further amended from time to
time in accordance with the terms thereof, among FRI-MRD Corporation and each of
the purchasers listed therein.

         "Optional Prepayment" shall have the meaning provided in Section
2.1(a).

         "Paying Agent" shall have the meaning provided in Section 10.10.

         "Permitted Investments" means (i) Investments in the Company or in any
Wholly Owned Subsidiary of the Company, (ii) Investments in Cash Equivalents,
(iii) Investments in a Person, if as a result of such Investment (a) such Person
becomes a Wholly Owned Subsidiary of the Company or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly Owned
Subsidiary of the Company, (iv) Hedging Obligations, (v) Investments in
securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers, (vi) Investments as a result of consideration
received in connection with an asset sale made in compliance with Section 5.8(c)
of this Agreement, (vii) Investments existing on the Closing Date, (viii)
accounts receivable owing to the Company or any subsidiary of the Company, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms, (ix) payroll, travel and
similar advances in the ordinary course of business in accordance with Section
5.9 of

                                       23

<PAGE>

this Agreement, (x) loans or advances to employees made in the ordinary course
of business; and (xi) guarantees permitted to be made pursuant to Section 5.5 of
this Agreement.

         "Permitted Lien" shall mean (i) Liens existing on the date of, or
pursuant to, this Agreement and that, if material, are identified on Exhibit C
to the Closing Certificate; (ii) Liens for taxes, assessments or governmental
charges or claims that are not yet due or delinquent or that are being contested
in good faith by appropriate proceedings if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (iii) statutory Liens or landlords', carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens arising
in the ordinary course of business with respect to amounts not yet overdue for a
period of 45 days or amounts being contested in good faith by appropriate
proceedings if a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor; (iv) Liens incurred by or
deposits made in connection with workers' compensation, unemployment insurance
and other types of social security benefits; (v) Liens incurred or deposits made
to secure the performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, government contracts, performance and return-of-money
bonds and other obligations of like nature incurred in the ordinary course of
business; (vi) attachment or judgment Liens not giving rise to a Default or an
Event of Default; (vii) easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering with the ordinary conduct of the
business of the Company or any of its Subsidiaries; (viii) leases or subleases
granted to others incurred in the ordinary course of business; (ix) purchase
money Liens incurred to secure the purchase price of property (and Liens on
property existing at the time of the acquisition thereof), which Lien shall not
cover any property other than that being acquired, purchased, improved or
constructed, and shall not cover property purchased, acquired, constructed or
improved more than 12 months before the creation of such Lien; (x) title defects
or irregularities that do not in the aggregate materially impair the use of the
property; (xi) obligations with respect to Capitalized Lease Obligations; (xii)
Liens pursuant to sale and leaseback transactions incurred in the ordinary
course of business; (xiii) Liens securing obligations under the Credit Agreement
and the documents entered into in connection therewith; (xiv) Liens in favor of
the Company or any wholly owned Subsidiary of the Company; (xv) any other Liens
imposed by operation of law that do not materially affect the Company's ability
to perform its obligations under the Notes and this Agreement; (xvi) extensions
(but not expansions that are not otherwise Permitted Liens), renewals or
refundings of any Liens referred to in clauses (i) through (xv) above; and
(xvii) Liens in addition to the foregoing, provided that the amount of the
obligations secured by such Liens does not exceed in the aggregate $1,000,000.

         "Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.

         "PIK Notes" shall have the same meaning provided in Section 1.1.

         "Plan" shall mean the Debtors' Joint Reorganization Plan dated May 6,
2002 filed in the Chapter 11 Cases.

         "Pledged Collateral" shall mean:

                  (a)   the Pledged Securities and the certificates representing
         the Pledged Securities and any interest of the Company in the entries
         on the books of any financial intermediary pertaining to the Pledged
         Securities, and all dividends or distributions of any kind whatsoever
         (other than cash or cash equivalents) from time

                                       24

<PAGE>

         to time received, receivable or otherwise distributed in respect of or
         in exchange for any or all of the Pledged Securities;

               (b)   all additional shares of, and all securities convertible
         into, or exchangeable into or exercisable for, warrants, options and
         other rights to purchase, stock (whether certificated or uncertificated
         and now existing or hereafter created) of Hamlet from time to time
         acquired by the Company in any manner (which shares shall be deemed to
         be part of the Pledged Securities), the certificates or other
         instruments representing such additional shares, securities, warrants,
         options or other rights and any interest of the Company 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 above, all Proceeds thereof.

         "Pledged Securities" shall mean 1,000 shares of common stock, no par
value per share, of Hamlet, which are all the outstanding shares of capital
stock of Hamlet and are evidenced by stock certificate number 3 to be delivered
to the Agent on or prior to the Closing Date.

         "Proceeds" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect in any relevant jurisdiction or under relevant law.

         "Prandium" shall mean Prandium, Inc., a Delaware corporation.

         "Purchaser" shall mean the Persons listed under Schedule I attached
hereto.

         "Restricted Investment" means any Investment other than a Permitted
Investment.

         "Section" shall mean a Section in this Agreement unless otherwise
indicated.

         "Securities Act" shall have the same meaning provided in Section
3.2(h).

         "Stock" shall mean 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 Based Plan" shall mean any stock option plan, stock appreciation
rights plan or other similar plan or supplement relating to capital Stock of
Prandium or any of its subsidiaries, whether in effect on the date hereof or
established hereafter, established for the benefit of employees of Prandium or
of any subsidiary of Prandium.

         "subsidiary" shall mean, as to any particular parent corporation, any
corporation, partnership, limited liability company, business trust or other
entity of which more than 50% (by number of votes) of the Voting Stock shall be
owned by such parent corporation and/or one or more corporations which are
themselves subsidiaries of such parent corporation. The term "Subsidiary" shall
mean a subsidiary of the Company.

                                       25

<PAGE>

         "Transaction" shall have the meaning provided in Section 5.9.

         "Voting Stock" shall mean securities of any class or classes the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

         "Wholly Owned Subsidiary" of any Person means a subsidiary of such
Person all of the outstanding voting stock or other ownership interests of which
(other than shares issued to someone other than such Person in order to comply
with state laws, including liquor license laws) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such person.

         Section 9.2. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with GAAP,
to the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.

SECTION 10.  MISCELLANEOUS.

         Section 10.1. Note Register. The Company may appoint one or more Note
Registrars and may itself act as Note Registrar. The term "Note Registrar"
includes any such Note Registrars. The Company hereby appoints The Bank of New
York to act as the initial Note Registrar. The Company may change or terminate
any Note Registrar at any time. The Note Registrar shall cause to be kept a
register (the "Note Register") for the registration and transfer of the Notes.
The Note Registrar will register or transfer or cause to be registered or
transferred, as hereinafter provided and under such reasonable regulations as it
may prescribe, any Note issued pursuant to this Agreement.

         At any time, and from time to time, the holder of any Note which has
been duly registered as hereinabove provided may transfer such Note upon
surrender thereof with the Note Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by the holder of such Note or its
attorney duly authorized in writing and, unless transferred pursuant to an
effective registration statement under the Securities Act, by an opinion of
counsel in form and substance satisfactory to the Company to the effect that
such transfer will be made in compliance with an exemption from the registration
requirements of the Securities Act. Notes shall not be transferred in
denominations of less than $1.00. Notwithstanding any other provision of this
Note Agreement, the Company shall not be required to issue, transfer or exchange
any Note for a denomination of less than $1.00.

         Promptly upon request of a Noteholder, the Company shall provide such
holder, and any qualified institutional buyer designated by such holder, such
financial and other information as is necessary in order to permit compliance
with the information requirements of Rule 144A(d)(4) under the Securities Act in
connection with the resale of Notes, except at such times as the Company is
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act. For purposes of this paragraph, the term "qualified institutional buyer"
shall have the meaning specified in Rule 144A under the Securities Act.

         The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement.
Payment of or on

                                       26

<PAGE>

account of the principal amount and interest, if any, on any Note shall be made
to or upon the written order of such holder.

         Section 10.2. Exchange of Notes. At any time and from time to time,
upon not less than ten days' notice given by the holder of any Note initially
delivered or of any Note substituted therefor pursuant to Section 10.1, this
Section 10.2 or Section 10.3, and, upon surrender of such Note at its office,
the Company will deliver in exchange therefor, without expense to the holder,
except as set forth below, Notes for the same aggregate principal amount as the
then unpaid principal amount of the Note so surrendered, in the denomination of
$1.00 or any amount in excess thereof as such holder shall specify, dated as of
the date of issue, registered in the name of such Person or Persons as may be
designated by such holder, and otherwise of the same form and tenor as the Notes
so surrendered for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.

         Section 10.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft, or destruction upon delivery of a
bond or indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of any Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note.

         Section 10.4. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 7 hereof or otherwise, shall extend to or affect
any obligation or right not expressly waived or consented to.

         Section 10.5. Notices. All communications provided for hereunder shall
be in writing and, if to any Purchaser, delivered or mailed by prepaid overnight
air courier, or by facsimile communication, in each case addressed to such
Purchaser at its address appearing on Schedule I to this Agreement or such other
address as such Purchaser or subsequent holder may designate to the Company and
the Agent in writing, if to the Company, delivered and mailed by prepaid
overnight air courier, or by facsimile communication, in each case to the
Company at 2701 Alton Parkway, Irvine, California 92606, Attention: General
Counsel or to such other address as the Company may in writing designate to the
Agent, such Purchaser or subsequent holder, and if to the Agent, delivered and
mailed by prepaid overnight air courier, or by facsimile communication, in each
case to the Agent at the address set forth on the signature page hereto or to
such other address as the Agent may in writing designate to the Company, such
Purchaser or subsequent holder; provided, however, that a notice sent by
overnight air courier shall only be effective if delivered at a street address
designated for such purpose in Schedule I, and a notice to such Purchaser by
facsimile communication shall only be effective if confirmed by a copy thereof
by prepaid overnight air courier, in either case, as such Purchaser or a
subsequent holder of any Note may designate to the Company in writing.

         Section 10.6. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to each
Purchaser's and the Agent's

                                       27

<PAGE>

benefit and to the benefit of their respective successors and assigns, including
each successive holder or holders of any Notes.

         Section 10.7. Integration and Severability. This Agreement and the Plan
embody the entire agreement and understanding between the Purchasers, the Agent
and the Company with respect to the subject matter hereof, and supersede all
prior agreements and understandings relating to the subject matter hereof.
Should any part of this Agreement for any reason be declared invalid or
unenforceable, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid or unenforceable portion thereof
eliminated (or, if possible, rewritten to the extent necessary to eliminate such
invalidity or unenforceability) and it is hereby declared the intention of the
parties hereto that they would have executed the remaining portion of this
Agreement without including therein any such part, parts or portion which may,
for any reason, be hereafter declared invalid or unenforceable.

         Section 10.8. Governing Law. THIS AGREEMENT AND THE NOTES ISSUED AND
SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL
PRACTICE LAWS AND RULES, AND WITHOUT REFERENCE TO ANY NEW YORK CONFLICT OF LAWS
RULE THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A STATE OTHER THAN NEW
YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST

         EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

         Section 10.9. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.

         Section 10.10. Paying Agent. The Company may, at its option, appoint a
paying agent (the "Paying Agent") with respect to the Notes, which is authorized
by the Company to make payments pursuant to the instructions of and on behalf of
the Company in respect of the principal of and interest on the Notes. The
Company hereby appoints The Bank of New York] to act as initial Paying Agent
with respect to the Notes. The Company may appoint one or more additional Paying
Agents and may itself act as Paying Agent. The term "Paying Agent" includes any
such additional Paying Agents. The Company may also change or terminate at any
time any Paying Agent.

                                       28

<PAGE>

         The execution hereof by you shall constitute a contract between us for
the uses and purposes herein above set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.

                                         FRI-MRD CORPORATION, as Company

                                         By:  /s/ R. T. Trebing, Jr.
                                              Name: R. T. Trebing, Jr.
                                              Title: President

                    [signature pages continued on next page]

<PAGE>

                                         THE BANK OF NEW YORK, as Agent

                                         By:  /s/ Stacey B. Poindexter
                                              Name: Stacey B. Poindexter
                                              Title: Assistant Treasurer

                                         Address:

                                              101 Barclay St - 8W
                                              New York, NY 10286

                    [signature pages continued on next page]

<PAGE>

                                       THE BROWN & WILLIAMS MASTER
                                       RETIREMENT TRUST

                                       By:  GoldenTree Asset Management, L.P.
                                       Its: Investment Advisor

                                       By: /s/Laurie Lapine
                                           Name: Laurie Lapine
                                           Title: Authorized Signatory

                    [signature pages continued on next page]

<PAGE>

                                       THE MAINSTAY FUNDS, INC. ON BEHALF OF
                                       ITS STRATEGIC INCOME FUND

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       THE 1199 HEALTH CARE EMPLOYEE'S
                                       PENSION FUND

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       THE MAINSTAY FUNDS, ON BEHALF OF ITS
                                       HIGH YIELD CORPORATE BOND FUND
                                       SERIES

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       MAINSTAY VP SERIES FUND, INC., ON
                                       BEHALF OF ITS HIGH YIELD CORPORATE
                                       BOND PORTFOLIO

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       POLICE OFFICERS PENSION SYSTEM OF THE
                                       CITY OF HOUSTON

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       THE VULCAN MATERIALS COMPANY

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

<PAGE>

                                       THE MAINSTAY FUNDS, INC. ON BEHALF OF
                                       ITS STRATEGIC VALUE FUND

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       THE MAINSTAY STRATEGIC INCOME HIGH
                                       YIELD LIQUIDATION ACCOUNT

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                       EMPLOYEES RETIREMENT SYSTEM OF THE
                                       CITY OF FORT WORTH

                                       By:  MacKay Shields LLC
                                       Its: Investment Advisor

                                       By: /s/ Robert Nisi
                                           Name: Robert Nisi
                                           Title: General Counsel

                    [signature pages continued on next page]

<PAGE>

                                          GOLDMAN, SACHS & CO.

                                          By:/s/ James Shim
                                              Name: James Shim
                                              Title: Managing Director

                    [signature pages continued on next page]

<PAGE>

                                   THE PRUDENTIAL SERIES FUND, INC., HIGH
                                   YIELD BOND PORTFOLIO

                                   By:   Prudential Investment Management, Inc.
                                   Its:  Investment Advisor

                                   By: /s/ Richard Burns
                                       Name: Richard Burns
                                       Title: Vice President

<PAGE>

                                                                      EXHIBIT A

                               FRI-MRD CORPORATION

                 12.0% Senior Secured Note Due January 31, 2005

No. T-                                                             July 2, 2002

This Note has been issued with original issue discount and is subject to the
alternative payment schedule rules for United States federal income tax
purposes. Upon request by a holder of this Note, the Company will make available
to such holder the issue price, the amount of the original issue discount, the
issue date, and the yield to maturity of this Note. Holders should contact
FRI-MRD Corporation,2701 Alton Parkway, Irvine, California 92606, Attention:
Robert T. Trebing, Jr., President.

FRI-MRD CORPORATION, a Delaware corporation (the "Company"), for value received,
hereby promises to pay to

                              or registered assigns

                    on the thirty-first day of January, 2005

                             the principal amount of

                          [_____] DOLLARS ($__________)

         The Company promises to pay interest on the principal amount of this
Note (and, if lawful on any overdue principal or interest installment) at the
rate of 12.0% per annum (or, if less, the highest rate permitted by law) (the
"Interest Rate") from the date of issuance until maturity, semi-annually on
January 31 and July 31 of each year (each, an "Interest Payment Date"),
commencing July 31, 2002. On each Interest Payment Date, the Company may, at its
option and in its sole discretion, in lieu of the payment of interest in cash on
the Notes, pay interest on all outstanding Notes in whole or in part, through
the issuance of PIK Notes, in denominations (rounded, if necessary to the
nearest dollar) of $1.00 and integral multiples thereof, in an aggregate
principal amount equal to the amount of interest that would be payable with
respect to such Notes, if such interest were paid in cash. The Company shall
notify the Holders in writing of its election to pay interest through the
issuance of PIK Notes not less than 5 nor more than 45 days prior to the
Interest Payment Date on which PIK Notes will be issued.

         Each PIK Note is an additional obligation of the Company and shall be
governed by, and entitled to the benefits of, and shall be subject to the terms
of the Note Agreement (as defined below) and shall rank pari passu with and be
subject to the same terms (including the Interest Rate from time to time payable
thereon) as any other Note (except, as the case may be, with respect to the
Issue Date and aggregate principal amount). Interest will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Both the principal
hereof and interest hereon are payable at the principal office of the Company at
2701 Alton Parkway, Irvine, California 92606 in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of principal or interest, if
any, on or in respect of this Note becomes due and payable on any date which is
not a Business Day, such amount shall be payable on the next preceding Business
Day. "Business Day" means any day other than a

<PAGE>

Saturday, Sunday, statutory holiday or other day on which banks in Los Angeles,
California are required by law to close or are customarily closed.

         This Note is one of the 12.0% Senior Secured Notes due January 31, 2005
of the Company in the aggregate principal amount of up to $_____________ issued
under and pursuant to the terms and provisions of the Note Agreement, dated as
of July 2, 2002 (the "Note Agreement"), among the Company and the original
purchasers named therein. The terms of the 12.0% Senior Secured Notes due
January 31, 2005 include those stated in the Note Agreement. This Note is
subject to all such terms and the Holder is referred to the Note Agreement for a
statement of them. Capitalized terms used herein and not otherwise defined shall
have the meanings provided in the Note Agreement.

         This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreement.

         The Notes are subject to prepayment at the option of the Company prior
to their expressed maturity dates on the terms and conditions and in the amounts
set forth in the Note Agreement.

         This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing and,
unless transferred pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by an opinion of counsel in form and
substance satisfactory to the Company to the effect that such transfer will be
made in compliance with an exemption from the registration requirements of the
Securities Act of 1933, as amended. THIS NOTE IS SUBJECT TO SIGNIFICANT
ADDITIONAL RESTRICTIONS ON TRANSFER CONTAINED IN THE NOTE AGREEMENT. Payment of
or on account of principal and interest, if any, on this Note shall be made only
to or upon the order in writing of the registered holder.

         This Note and said Note Agreement are governed by and construed in
accordance with the laws of New York, including, without limitation, Sections
5-1401 and 5-1402 of the New York General Obligations Law and Rule 327(b) of the
New York Civil Practice Laws and Rules, and without reference to any New York
conflict of laws rule that would result in the application of the laws of a
state other than New York.

                                     FRI-MRD CORPORATION

                                     By   _____________________________
                                     Name:
                                     Title:

                                      A-2<PAGE>
                                                                   EXHIBIT 10(g)

================================================================================

                           LOAN AND SECURITY AGREEMENT

                                  by and among

                                 PRANDIUM, INC.,

                              FRI-MRD CORPORATION,

                                CHI-CHI'S, INC.,

                               KOO KOO ROO, INC.,

                       and certain of their subsidiaries,

                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                       and

                          FOOTHILL CAPITAL CORPORATION

                            Dated as of July 2, 2002

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                                                     <C>
1.    DEFINITIONS AND CONSTRUCTION ................................................................      1
      1.1     Definitions .........................................................................      1
      1.2     Accounting Terms ....................................................................     23
      1.3     Code ................................................................................     23
      1.4     Construction ........................................................................     23
      1.5     Schedules and Exhibits ..............................................................     23

2.    LOAN AND TERMS OF PAYMENT ...................................................................     23
      2.1     Advances ............................................................................     23
      2.2     [Intentionally omitted] .............................................................     24
      2.3     Borrowing Procedures and Settlements ................................................     24
      2.4     Payments ............................................................................     31
      2.5     Overadvances ........................................................................     34
      2.6     Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations .........     34
      2.7     Collections .........................................................................     35
      2.8     Crediting Payments; Application of Collections ......................................     36
      2.9     Designated Account ..................................................................     36
      2.10    Maintenance of Loan Account; Statements of Obligations ..............................     36
      2.11    Fees ................................................................................     37
      2.12    Letters of Credit ...................................................................     37
      2.13    [Intentionally omitted] .............................................................     40
      2.14    Capital Requirements ................................................................     40

3.    CONDITIONS; TERM OF AGREEMENT ...............................................................     41
      3.1     Conditions Precedent to the Initial Advance or Initial Letter of Credit .............     41
      3.2     Conditions Subsequent to the Initial Extension of Credit ............................     45
      3.3     Conditions Precedent to all Advances and Letters of Credit ..........................     45
      3.4     Term ................................................................................     46
      3.5     Effect of Termination ...............................................................     46
      3.6     Early Termination by Borrowers ......................................................     47

4.    CREATION OF SECURITY INTEREST ...............................................................     47
      4.1     Grant of Security Interest ..........................................................     47
      4.2     Negotiable Collateral ...............................................................     47
      4.3     Collection of Accounts, General Intangibles, and Negotiable Collateral ..............     48
      4.4     Delivery of Additional Documentation Required .......................................     48
      4.5     Power of Attorney ...................................................................     48
      4.6     Right to Inspect ....................................................................     49
</TABLE>

                                      -1-

<PAGE>

<TABLE>
<S>                                                                             <C>
        4.7      Control Agreements .........................................   49

5.      REPRESENTATIONS AND WARRANTIES ......................................   49
        5.1      No Encumbrances ............................................   49
        5.2      [Intentionally omitted] ....................................   50
        5.3      [Intentionally omitted] ....................................   50
        5.4      Equipment ..................................................   50
        5.5      Location of Inventory and Equipment ........................   50
        5.6      Equipment Records ..........................................   50
        5.7      Location of Chief Executive Office; FEIN ...................   50
        5.8      Due Organization and Qualification; Subsidiaries ...........   50
        5.9      Due Authorization; No Conflict .............................   51
        5.10     Litigation .................................................   52
        5.11     No Material Adverse Change .................................   52
        5.12     Fraudulent Transfer ........................................   52
        5.13     Employee Benefits ..........................................   53
        5.14     Environmental Condition ....................................   53
        5.15     Brokerage Fees .............................................   53
        5.16     Intellectual Property ......................................   53
        5.17     Leases .....................................................   54
        5.18     DDAs .......................................................   54
        5.19     Complete Disclosure ........................................   54
        5.20     Indebtedness ...............................................   54
        5.21     Inactive Subsidiaries ......................................   54

6.      AFFIRMATIVE COVENANTS ...............................................   54
        6.1      Accounting System ..........................................   55
        6.2      Collateral and Operations Reporting ........................   55
        6.3      Financial Statements, Reports, Certificates ................   55
        6.4      Tax Returns ................................................   57
        6.5      [Intentionally omitted] ....................................   58
        6.6      Maintenance of Properties ..................................   58
        6.7      Taxes ......................................................   58
        6.8      Insurance ..................................................   58
        6.9      Location of Inventory and Equipment ........................   60
        6.10     Compliance with Laws .......................................   60
        6.11     Leases .....................................................   60
        6.12     Brokerage Commissions ......................................   60
        6.13     Existence ..................................................   60
        6.14     Environmental ..............................................   61
        6.15     Disclosure Updates .........................................   61

7.      NEGATIVE COVENANTS ..................................................   61
        7.1      Indebtedness ...............................................   61
        7.2      Liens ......................................................   62
</TABLE>

                                      -2-

<PAGE>

<TABLE>
<S>                                                                                                                     <C>
         7.3      Restrictions on Fundamental Changes ..............................................................    62
         7.4      Disposal of Assets ...............................................................................    63
         7.5      Change Name ......................................................................................    63
         7.6      Guarantee ........................................................................................    63
         7.7      Nature of Business ...............................................................................    63
         7.8      Prepayments and Amendments .......................................................................    63
         7.9      Change of Control ................................................................................    63
         7.10     [Intentionally omitted] ..........................................................................    63
         7.11     Distributions ....................................................................................    64
         7.12     Accounting Methods ...............................................................................    64
         7.13     Investments ......................................................................................    64
         7.14     Transactions with Affiliates .....................................................................    64
         7.15     Suspension .......................................................................................    64
         7.16     [Intentionally omitted] ..........................................................................    64
         7.17     Use of Proceeds ..................................................................................    64
         7.18     Change in Location of Chief Executive Office; Inventory and Equipment with Bailees ...............    65
         7.19     Securities Accounts ..............................................................................    65
         7.20     Financial Covenants ..............................................................................    65
         7.21     Inactive Subsidiaries ............................................................................    67

8.       EVENTS OF DEFAULT. ........................................................................................    67

9.       THE LENDER GROUP'S RIGHTS AND REMEDIES ....................................................................    69
         9.1      Rights and Remedies ..............................................................................    69
         9.2      Remedies Cumulative ..............................................................................    71

10.      TAXES AND EXPENSES ........................................................................................    71

11.      WAIVERS; INDEMNIFICATION ..................................................................................    72
         11.1     Demand; Protest; etc .............................................................................    72
         11.2     The Lender Group's Liability for Collateral ......................................................    72
         11.3     Indemnification ..................................................................................    72

12.      NOTICES ...................................................................................................    73

13.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER ................................................................    74

14.      ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS ................................................................    75
         14.1     Assignments and Participations ...................................................................    75
         14.2     Successors .......................................................................................    78

15.      AMENDMENTS; WAIVERS .......................................................................................    78
         15.1     Amendments and Waivers ...........................................................................    78
         15.2     Replacement of Holdout Lender ....................................................................    79
         15.3     No Waivers; Cumulative Remedies ..................................................................    79
</TABLE>

                                      -3-

<PAGE>

<TABLE>
<S>                                                                                                                             <C>
16.    AGENT; THE LENDER GROUP ................................................................................................ 80
       16.1     Appointment and Authorization of Agent ........................................................................ 80
       16.2     Delegation of Duties .......................................................................................... 81
       16.3     Liability of Agent ............................................................................................ 81
       16.4     Reliance by Agent ............................................................................................. 81
       16.5     Notice of Default or Event of Default ......................................................................... 81
       16.6     Credit Decision ............................................................................................... 82
       16.7     Costs and Expenses; Indemnification ........................................................................... 82
       16.8     Agent in Individual Capacity .................................................................................. 83
       16.9     Successor Agent ............................................................................................... 83
       16.10    Lender in Individual Capacity ................................................................................. 84
       16.11    Withholding Taxes ............................................................................................. 84
       16.12    Collateral Matters ............................................................................................ 86
       16.13    Restrictions on Actions by Lenders; Sharing of Payments ....................................................... 87
       16.14    Agency for Perfection ......................................................................................... 88
       16.15    Payments by Agent to the Lenders .............................................................................. 88
       16.16    Concerning the Collateral and Related Loan Documents .......................................................... 88
       16.17    Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
                Information ................................................................................................... 88
       16.18    Several Obligations; No Liability ............................................................................. 89
       16.19    Legal Representation of Agent ................................................................................. 90

17.    GENERAL PROVISIONS ..................................................................................................... 90
       17.1     Section Headings .............................................................................................. 90
       17.2     Interpretation ................................................................................................ 90
       17.3     Severability of Provisions .................................................................................... 90
       17.4     Counterparts; Telefacsimile Execution ......................................................................... 90
       17.5     Revival and Reinstatement of Obligations ...................................................................... 90
       17.6     Integration ................................................................................................... 91
       17.7     Confidentiality ............................................................................................... 91
       17.8     Guarantors .................................................................................................... 91
</TABLE>

                                      -4-

<PAGE>

                             EXHIBITS AND SCHEDULES

Exhibit A-1                         Form of Assignment and Acceptance
Exhibit C-1                         Form of Compliance Certificate
Exhibit 3.1(c)(i)                   Form of Concentration Account Agreement

Schedule A-1                        Agent's Account
Schedule C-1                        Commitments
Schedule D-1                        Designated Account
Schedule E-1                        Eligible Real Property
Schedule H-1                        HGI Subsidiaries
Schedule K-1                        KKR Subsidiaries
Schedule P-1                        Permitted Dispositions
Schedule P-2                        Permitted Liens
Schedule P-3                        Permitted Holders
Schedule R-1                        Real Property Collateral
Schedule 5.5                        Locations of Inventory and Equipment
Schedule 5.7                        Chief Executive Office
Schedule 5.8(b)                     Capitalization of Prandium's Subsidiaries
Schedule 5.10                       Litigation
Schedule 5.14                       Environmental Matters
Schedule 5.16                       Intellectual Property
Schedule 5.18                       Demand Deposit Accounts
Schedule 5.20                       Permitted Indebtedness
Schedule 7.21                       Permitted Inactive Subsidiary Indebtedness

                                      -5-

<PAGE>

                                                                   Exhibit 10(G)

                           LOAN AND SECURITY AGREEMENT

               THIS LOAN AND SECURITY  AGREEMENT (this  "Agreement"), is entered
into as of July 2, 2002, between and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION,
a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"), and, on the other hand, CHI-CHI'S, INC., a Delaware
corporation ("Chi-Chi's"), KOO KOO ROO, INC., a Delaware corporation ("KKR";
KKR, together with Chi-Chi's, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the
"Borrowers"), PRANDIUM, INC., a Delaware corporation ("Prandium"), FRI-MRD
CORPORATION, a Delaware corporation ("FRI-MRD"), FRI-ADMIN CORPORATION, a
Delaware corporation ("FRI-Admin"), CCMR OF TIMONIUM, INC., a Delaware
corporation, CCMR OF MARYLAND, INC., a Delaware corporation, CCMR OF
CATONSVILLE, INC., a Kentucky corporation, CCMR OF GREENBELT, INC., a Kentucky
corporation, CCMR OF RITCHIE HIGHWAY, INC., a Kentucky corporation, CCMR OF
CUMBERLAND, INC., a Kentucky corporation, CCMR OF HARFORD COUNTY, INC., a
Kentucky corporation, MAINTENANCE SUPPORT GROUP, INC., a Kentucky corporation,
CCMR OF FREDERICK, INC., a Kentucky corporation, CHI-CHI'S OF WEST VIRGINIA,
INC., a Kentucky corporation, and THE HAMLET GROUP, INC., a California
corporation ("HGI").

               The parties agree as follows:

1.   DEFINITIONS AND CONSTRUCTION.

       1.1     Definitions. As used in this Agreement, the following terms shall
have the following definitions:

               "14% Notes" means the 14.0% senior secured discount notes issued
by FRI-MRD in the aggregate principal amount of $24,000,000.

               "15% Notes" means the 15.0% senior unsecured discount notes
issued by FRI-MRD in the aggregate principal amount of approximately
$75,000,000.

               "Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.

               "Accounts" means all currently existing and hereafter arising
accounts, contract rights, and 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.

                                      -1-

<PAGE>

                 "Additional Documents" has the meaning set forth in Section
4.4.

                 "Advances" has the meaning set forth in Section 2.1(a).

                 "Affiliate" means, as applied to any Person, any other Person
who, 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, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of Section 7.14 hereof: (a) any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 10% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person, (b) each director (or comparable manager) of a
Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.

                 "Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.

                 "Agent's Account" means the account identified on Schedule A-1.

                 "Agent Advance" has the meaning set forth in Section 2.3(e)(i).

                 "Agent's Liens" means the Liens granted by Borrowers or the
Guarantors to Agent for the benefit of the Lender Group under this Agreement or
the other Loan Documents.

                 "Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.

                 "Agreement" has the meaning set forth in the preamble hereto.

                 "Applicable Real Estate Advance Rate" shall mean, (i) during
the period of time from and including the Closing Date up to but not including
the date that is the first anniversary of the Closing Date, 80%; (ii) during the
period of time from and including the date that is the first anniversary of the
Closing Date up to but not including the date that is the second anniversary of
the Closing Date, 75%; (iii) during the period of time from and including the
date that is the second anniversary of the Closing Date up to but not including
the date that is the third anniversary of the Closing Date, 70%; and (iv) during
the period of time from and including the date that is the third anniversary of
the Closing Date up to the Maturity Date, 65%.

                 "Assignee" has the meaning set forth in Section 14.1.

                                      -2-

<PAGE>

                 "Assignment and Acceptance" means an Assignment and Acceptance
in the form of Exhibit A-1.

                 "Authorized Person" means (a) any officer of either Borrower,
or (b) any employee of any Borrower identified from time to time by an officer
of such Borrower in a writing delivered to Agent.

                 "Availability" means, as of any date of determination thereof,
if such 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 Borrowers are entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
sublimits and reserves applicable hereunder).

                 "Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.

                 "Base Rate" means the rate of interest announced within Wells
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells 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 Wells Fargo may designate.

                 "Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.

                 "Base Rate Margin" means 4.25 percentage points.

                 "Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Prandium or any Subsidiary or ERISA Affiliate
of Prandium 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 Event of Default.

                 "Board of Directors" means the board of directors (or
comparable managers) of Prandium or any committee thereof duly authorized to act
on behalf of the board.

                 "Books" means all of a Person's books and records, including
records 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" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.

                                      -3-

<PAGE>

                 "Borrower Stock Pledge Agreement" means a stock pledge
agreement, in form and substance satisfactory to Agent, executed and delivered
by Borrowers to Agent with respect to the pledge of the Stock owned by Borrowers
(other than the Stock of the KKR Subsidiaries owned by KKR).

                 "Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance.

                 "Borrowing Base" has the meaning set forth in Section 2.1.

                 "Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.

                 "Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.

                 "Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.

                 "Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Moody's,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Moody's, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof that are
either (i) issued by any bank organized under the laws of the United States or
any state thereof which bank has a rating of A or A2, or better, from S&P or
Moody's, or (ii) in an amount less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.

                 "Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than
Permitted Holders, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 30% or more of the Stock of
Prandium, having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) any Obligor ceases to directly own and
control 100% of the outstanding capital Stock of each of its respective
Subsidiaries extant as of the Closing Date (other than directors' qualifying
shares, shares that were issued to third Persons in order to qualify the issuer
to acquire a liquor license, and other than shares of Stock sold or otherwise
disposed of pursuant to a Permitted Disposition).

                                      -4-

<PAGE>

               "Chi-Chi's" has the meaning set forth in the preamble to this
Agreement.

               "Chi-Chi's Subsidiaries" means CCMR of Timonium, Inc., a Delaware
corporation, CCMR of Maryland, Inc., a Delaware corporation, CCMR of
Catonsville, Inc., a Kentucky corporation, CCMR of Greenbelt, Inc., a Kentucky
corporation, CCMR of Ritchie Highway, Inc., a Kentucky corporation, CCMR of
Cumberland, Inc., a Kentucky corporation, CCMR of Harford County, Inc., a
Kentucky corporation, Maintenance Support Group, Inc., a Kentucky corporation,
CCMR of Frederick, Inc., a Kentucky corporation, and Chi-Chi's of West Virginia,
Inc., a Kentucky corporation.

               "Closing Date" means the date of the first to occur of the making
of the initial Advance or the issuance of the initial Letter of Credit.

               "Closing Date Business Plan" means the set of Projections of
Prandium and its Subsidiaries, for the period from the Closing Date through
December 31, 2002 (on a month by month basis), on a consolidated basis and in
form and substance (including as to scope and underlying assumptions) reasonably
satisfactory to Agent.

               "Code" means the California Uniform Commercial Code, as in effect
from time to time.

               "Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:

                        (a) Accounts,

                        (b) Books,

                        (c) Equipment,

                        (d) General Intangibles,

                        (e) Inventory,

                        (f) Investment Property, other than the Stock of HGI
owned by FRI-MRD,

                        (g) Negotiable Collateral,

                        (h) Real Property Collateral,

                        (i) deposit accounts,

                        (j) any money or other assets of each such Borrower that
now or hereafter come into the possession, custody, or control of any member of
the Lender Group, and

                                      -5-

<PAGE>

                     (k) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, 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.

              "Collateral Access Agreement" means a landlord waiver, mortgagee
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 Agent.

              "Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of the Obligors.

              "Commitment" means, with respect to each Lender, its Revolver
Commitment, Letter of Credit Commitment, or Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, Letter
of Credit Commitments, or Total Commitments, as the context requires, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.

              "Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Prandium to
Agent.

              "Concentration Account" means (a) in the case of Chi-Chi's,
account number 4296-911985 of Chi-Chi's maintained with the Concentration
Account Bank, (b) in the case of KKR, account number 4763-395365 of KKR
maintained with the Concentration Account Bank, (c) in the case of FRI-Admin,
account number 4296-912033 of FRI-Admin maintained with the Concentration
Account Bank, (d) in the case of HGI, account number 4296-912090 of HGI
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 Borrowers to Agent upon 30 days or
more prior written notice.

              "Concentration Account Bank" means (a) Wells Fargo Bank, N.A.,
whose office is located in San Francisco, California and whose ABA number is
121000248, or (b) any other domestic commercial bank that is reasonably
acceptable to Agent and is designated in writing from time to time by Borrowers
to Agent 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 Agent.

              "Confirmation Orders" means the confirmation orders entered by the
bankruptcy court pursuant to the Insolvency Proceedings of Prandium and FRI-MRD.

                                      -6-

<PAGE>

              "Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Prandium on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Prandium (as such terms are used in Rule 14a-11 under
the Exchange Act), and whose initial assumption of office resulted from such
contest or the settlement thereof.

              "Control Agreement" means a control agreement (a) for any
Securities Account or any deposit account, as applicable, which has a balance at
any time in excess of $10,000; and (b) which is in form and substance reasonably
satisfactory to Agent, among an Obligor, Agent, and the applicable securities
intermediary with respect to a Securities Account or a bank with respect to a
deposit account.

              "Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.

              "DDA" means any checking or other demand deposit account.

              "Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.

              "Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.

              "Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).

              "Designated Account" means that certain DDA of Borrowers
identified on Schedule D-1.

              "Disbursement Letter" means an instructional letter executed and
delivered by each Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is reasonably
satisfactory to Agent.

              "Dollars" or "$" means United States dollars.

              "EBITDA" means, with respect to any fiscal period of a Person,
such Person's earnings (excluding extraordinary

                                      -7-

<PAGE>

items (determined in accordance with GAAP), non-cash impairment charges relating
to goodwill, and any non-ordinary decreases in such Person's reserves for
self-insurance liabilities), plus (except to the extent attributable to
extraordinary items (determined in accordance with GAAP)) the amount of any
interest, taxes, depreciation, amortization and restructuring costs 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 parcels of Real
Property identified on Schedule E-1 that are and at all times continue to be
reasonably acceptable to Agent in all respects and that: (a) are owned by
Chi-Chi's or Prandium, (b) are the subject of a first priority perfected Lien in
favor of Agent pursuant to a Mortgage, and (c) are subject to no other Liens
other than Permitted Liens.

              "Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrowers,
and (f) during the continuation of an Event of Default, any other Person
approved by Agent.

              "Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Prandium or any of its Subsidiaries or any predecessor in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by Prandium or any of
its Subsidiaries or any predecessor in interest.

              "Environmental Law" means any applicable federal, state,
provincial, or local statute, law, rule, regulation, ordinance, code, binding
and enforceable guideline, binding and enforceable written policy, or rule of
common law now or hereafter in effect and in each case as amended, or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Prandium or any of its Subsidiaries, relating to the environment, employee
health and safety, or Hazardous Materials, including CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 USC (S) 1251 et seq; the Toxic Substances
Control Act, 15 USC, (S) 2601 et seq; the Clean Air Act, 42

                                      -8-

<PAGE>

USC (S) 651 et seq.; the Safe Drinking Water Act, 42 USC (S) 3803 et seq.; the
Oil Pollution Act of 1990, 33 USC (S) 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 USC (S) 11001 et seq.; the Hazardous
Material Transportation Act, 49 USC (S) 1801 et seq.; and the Occupational
Safety and Health Act, 29 USC (S) 651 et seq. (to the extent it regulates
occupational exposure to Hazardous Materials); any state and local counterparts
or equivalents, in each case as amended from time to time.

          "Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.

          "Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

          "Equipment" means all of a Person's present and hereafter acquired
machinery, machine tools, equipment, motors, 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, as
amended, and any successor statute thereto.

          "ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Prandium or any of its Subsidiaries under IRC Section 414(b), (b) any trade or
business subject to ERISA whose employees are treated as employed by the same
employer as the employees of Prandium or any of its Subsidiaries under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which Prandium or any of its Subsidiaries is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Prandium or any of its Subsidiaries and whose employees are aggregated with
the employees of Prandium or any of its Subsidiaries under IRC Section 414(o).

          "Event of Default" has the meaning set forth in Section 8.

          "Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of historical
levels with respect thereto and all book overdrafts in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.

                                      -9-

<PAGE>

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute thereto.

          "Existing Lender" means Foothill.

          "Existing Loan Agreement" means that certain Amended and Restated Loan
and Security Agreement, dated as of July 19, 2000, by and among Prandium,
FRI-MRD, Chi-Chi's, each of their subsidiaries, and Foothill.

          "Fee Letter" means that certain fee letter, dated as of even date
herewith, among Borrowers and Agent, in form and substance satisfactory to
Agent.

          "FEIN" means Federal Employer Identification Number.

          "Foothill" means Foothill Capital Corporation, a California
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.

          "Funding Date" means the date on which a Borrowing occurs.

          "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, the goodwill
symbolized by such trade names, trademarks, and 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, Investment Property, and Negotiable
Collateral.

          "Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.

          "Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.

          "Guarantor" means any one or more of Prandium, FRI-MRD, FRI-Admin,
HGI, each of the Chi-Chi's Subsidiaries, and each of the other Subsidiaries of
Prandium from time to time party to the Guaranty.

                                      -10-

<PAGE>

          "Guarantor Collateral" means the properties and assets of the
Guarantors that are hypothecated by them in favor of Agent pursuant to the Loan
Documents.

          "Guarantor Security Agreement" means that certain security agreement
executed and delivered by Guarantors in favor of Agent, for the benefit of the
Lender Group, in form and substance satisfactory to Agent.

          "Guarantor Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by the
Guarantors to Agent with respect to the pledge of the Stock owned by the
Guarantors (other than the Stock of HGI).

          "Guaranty" means that certain general continuing guaranty executed and
delivered by Guarantors in favor of Agent, for the benefit of the Lender Group,
in form and substance satisfactory to Agent.

          "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 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 flammable substances or 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 Property" means the Real Property of Prandium located at
2701 Alton Parkway, Irvine, California.

          "HGI" shall have the meaning set forth in the preamble to this
Agreement.

          "HGI Prepayment" means the "Hamlet Prepayment" as that term is defined
in Section 1.45 of the Plan of Reorganization.

          "HGI Sale" means (a) the sale by FRI-MRD of all of the issued and
outstanding Stock owned by FRI-MRD of HGI, or (b) the sale of all or
substantially all of the assets of HGI and the HGI Subsidiaries.

          "HGI Subsidiaries" means those Persons identified on Schedule H-1.

          "Inactive Subsidiary" means (a) Inner Harbor, and (b) each of the KKR
Subsidiaries.

                                      -11-

<PAGE>

          "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 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 directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any
Indebtedness of any other Person. 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.

          "Indemnified Liabilities" has the meaning set forth in Section 11.3.

          "Indemnified Person" has the meaning set forth in Section 11.3.

          "Inner Harbor" means CCMR of Inner Harbor, Inc., a Kentucky
corporation.

          "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 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.

                                      -12-

<PAGE>

              "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, raw materials, work in process, or
materials, wherever located.

              "Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers, Prandium, FRI-MRD, FRI-Admin, the
Chi-Chi's Subsidiaries, the KKR Subsidiaries, HGI, the HGI Subsidiaries, Inner
Harbor, and Agent, the form and substance of which is reasonably satisfactory to
Agent.

              "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 (other
than pursuant to a Permitted Disposition), or (c) the acquisition of all or
substantially all of the properties or assets of a Person.

              "IRC" means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.

              "Issuing Lender" means Foothill or any other Lender that, at the
request of Borrowers and with the consent of Agent agrees, in such Lender's sole
discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.

              "KKR" shall have the meaning set forth in the preamble to this
Agreement.

              "KKR Subsidiaries" means those Persons identified on Schedule K-1.

              "L/C" means a letter of credit issued by the Issuing Lender.

              "L/C Disbursement" means a payment made by Agent pursuant to a
Letter of Credit.

              "L/C Undertaking" means the purchase of participations or
execution of indemnities or reimbursement obligations with respect to an L/C.

              "Lender" and "Lenders" have the respective meanings set forth in
the preamble to this Agreement, and shall include any other Person made a party
to this Agreement in accordance with the provisions of Section 14.1.

              "Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.

              "Lender Group Expenses" means all (a) 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 the
Lender Group, (b) actual out-of-pocket fees

                                      -13-

<PAGE>

or charges paid or incurred by Agent in connection with the Lender Group's
transactions with Prandium and its Subsidiaries, including, feesor charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office), filing, recording, publication,
appraisal (including periodic Collateral appraisals or business valuations to
the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement), real estate surveys, real estate title policies
and endorsements, and environmental audits, (c) actual out-of-pocket costs and
expenses incurred by Agent in the disbursement of funds to Borrowers (by wire
transfer or otherwise), (d) actual out-of-pocket charges paid or incurred by
Agent resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group 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 any portion thereof, irrespective of
whether a sale is consummated, (f) actual out-of-pocket audit fees and expenses
of Agent related to audit examinations of the Books to the extent of the fees
and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with Prandium and its Subsidiaries
or any guarantor of the Obligations, (h) Agent's and each Lender's reasonable
fees and expenses (including attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable fees and expenses (including attorneys
fees) incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning any Borrower or in exercising rights or remedies under the
Loan Documents), or defending the Loan Documents, irrespective of whether suit
is brought, or in taking any Remedial Action concerning the Collateral.

              "Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.

              "Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires, issued for the benefit of any Borrower.

              "Letter of Credit Commitment" means, with respect to each Lender,
its Letter of Credit Commitment, and, with respect to all Lenders, their Letter
of Credit Commitments, in each case as such Dollar amounts are set forth beside
such Lender's name under the applicable heading on Schedule C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.

              "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.

                                      -14-

<PAGE>

              "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.

              "Liquidity Reserve" means a reserve equal to $3,000,000; provided,
however, that, so long as no Event of Default has occurred and is continuing on
each such date, such reserve shall be reduced to (a) $2,000,000 on the date that
is 90 days after the Closing Date; (b) $1,000,000 on the date that is 180 days
after the Closing Date; and (c) $0 on the date that is 270 days after the
Closing Date.

              "Loan Account" has the meaning set forth in Section 2.10.

              "Loan Documents" means this Agreement, the Control Agreements, the
Disbursement Letter, the Fee Letter, the Guarantor Security Agreement, the
Guaranty, the Intercompany Subordination Agreement, the Letters of Credit, the
Mortgages, the Borrower Stock Pledge Agreement, the Guarantor Stock Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrowers in connection with this Agreement and payable to a member of the
Lender Group, and any other agreement entered into, now or in the future, in
connection with this Agreement.

              "Material Adverse Change" means (a) a material adverse change in
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of any Borrower, or (b) a material
impairment of Prandium's or its Subsidiaries' ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of any Borrower.

              "Maturity Date" has the meaning set forth in Section 3.4.

              "Maximum Amount" means $15,000,000.

              "Maximum Revolver Amount" means $4,000,000.

              "Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Chi-Chi's or Prandium in

                                      -15-

<PAGE>

favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.

              "Negotiable Collateral" means all of a Person's present and future
letters of credit, notes, drafts, instruments, documents, and personal property
leases (wherein such Person is the lessor), and chattel paper and Books relating
to any of the foregoing.

              "New FRI-MRD Notes" means the "New FRI-MRD Notes", as that term is
defined in Section 1.57 of the Plan of Reorganization, and any "PIK Notes" (as
defined in the New FRI-MRD Notes) issued in connection therewith.

              "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 the
Lender Group under any outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to the Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
Lender Group 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 Borrowers to Lender Group of any kind
and description pursuant to the Loan Documents. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all amendments,
changes, extensions, modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.

              "Obligor" means any Borrower or 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 Agent.

              "Originating Lender" has the meaning set forth in Section 14.1(e).

              "Overadvance" has the meaning set forth in Section 2.5.

              "Participant" has the meaning set forth in Section 14.1(e).

              "Permitted Discretion" means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.

              "Permitted Dispositions" means (a) sales or other dispositions by
any Borrower or its Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete in the ordinary course of business, (b) sales by any
Borrower or its Subsidiaries of Inventory to buyers in the ordinary course of
business, (c) the transfer of Equipment or Inventory in the ordinary course of
business from (i) a Borrower to another Borrower, (ii) Chi-Chi's to a Chi-Chi's
Subsidiary, (iii) a Chi-Chi's Subsidiary to Chi-Chi's or another Chi-Chi's
Subsidiary,

                                      -16-

<PAGE>

(d) the use or transfer of money or Cash Equivalents by Prandium or its
Subsidiaries in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents (including, without limitation, as permitted by
Section 7.8(a)(iv)), (e) the licensing by any Borrower or its Subsidiaries, on a
non-exclusive basis (or on an exclusive basis so long as the license relates to
a market segment different than the market segments in which Prandium and its
Subsidiaries are conducting business), of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business, (f) the
HGI Sale so long as (i) the HGI Sale is consummated in accordance with the
applicable provisions of the Plan of Reorganization, (ii) the net proceeds of
the HGI Sale are first used to repay in full in cash any Permitted Intercompany
Advances owed by HGI or the HGI Subsidiaries to any of the Obligors (other than
HGI), and (iii) the net proceeds of the HGI Sale are next used to pay the HGI
Prepayment before such net proceeds are used for any other purpose, (g) the
dissolution of the Inactive Subsidiaries, (h) the sale or other disposition of
the properties set forth on Schedule P-1 for the applicable amount identified to
such property on the schedule, and (i) so long as no Event of Default has
occurred and is continuing, the sale or other disposition, pursuant to a
condemnation or the threat of a condemnation, of Borrowers' restaurant located
at 952 3rd Street, Huntington, West Virginia.

              "Permitted Holders" means the Persons identified on Schedule P-3.

              "Permitted Intercompany Advances" means loans or advances (a) from
a Borrower to another Borrower, (b) from a Borrower to HGI or one or more of the
HGI Subsidiaries, so long as the aggregate amount of all such loans or advances
outstanding to HGI and the HGI Subsidiaries, collectively, does not exceed
$10,000 per year, (c) from a Borrower to any of the Chi-Chi's Subsidiaries, from
any of the Chi-Chi's Subsidiaries to a Borrower, or from any of the Chi-Chi's
Subsidiaries to any of the other Chi-Chi's Subsidiaries, or (d) from a Borrower
to any of the Inactive Subsidiaries, so long as the aggregate amount of all such
loans or advances outstanding to all Inactive Subsidiaries, collectively, does
not exceed $10,000 per year.

              "Permitted Investments" means (a) Investments in Cash Equivalents,
(b) Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Permitted Intercompany Advances, (e) Permitted Parent
Distributions, and (f) Investments by any Obligor in any other Obligor that is a
wholly-owned Subsidiary of the Person making the Investment.

              "Permitted Liens" means: (a) Liens held by Agent for the benefit
of Agent and the Lenders under the Loan Documents, (b) Liens for unpaid taxes
that either (i) are not yet delinquent or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) Liens set forth
on Schedule P-2, (d) the interests of lessors under operating leases and
interests of licensees or franchisees in any Borrower's intellectual property,
and (e) purchase money Liens or the interests of lessors under Capital Leases to
the extent that such Liens or interests secure Permitted Purchase Money
Indebtedness and so long as such Lien attaches only to the asset purchased or
acquired and the proceeds thereof,

                                      -17-

<PAGE>

(f) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business of Prandium and its Subsidiaries and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, (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 or leases, incurred
in the ordinary course of business of Prandium and its Subsidiaries and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (k) Liens with respect to the Real Property Collateral,
that are exceptions to the commitments for title insurance issued in connection
with the Mortgages as accepted by Agent, (l) with respect to any Real Property
that is not part of the Real Property Collateral, easements, rights of way and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof by Prandium or its Subsidiaries, (m) other Liens imposed by
operation of law that do not materially affect Prandium's or its Subsidiaries'
ability to perform their respective obligations under the Loan Documents, (n)
Liens arising from the security deposit made with Wells Fargo in the amount of
$500,000, and (o) the pledge of the Stock of HGI owned by FRI-MRD in accordance
with the applicable provisions of the New FRI-MRD Notes.

              "Permitted Parent Distributions" means (a) so long as no
Triggering Event exists and is continuing at the time of such payment or would
result therefrom, loans by a Borrower, or the declaration and payments of
dividends or other distributions in cash by a Borrower, to FRI-MRD or FRI-Admin
to enable FRI-MRD or FRI-Admin to make loans to or declare and pay dividends or
other distributions in cash to Prandium to make payment of its general and
administrative operating expenses 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 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
FRI-MRD, FRI-Admin, and Prandium each promptly uses the proceeds of such loans,
dividends, or other distributions solely for such purposes; and (b) so long as
no Blockage Event exists and is continuing at the time of such payment or would
result therefrom, and so long as the aggregate amount of all loans, dividends,
or distributions made under this clause do not exceed $2,000,000 in any fiscal
year, loans by a Borrower, or the declaration and payments of dividends or other
distributions in cash by a Borrower, to FRI-MRD or FRI-Admin to enable FRI-MRD
or FRI-Admin to make loans to or declare and pay dividends or other
distributions in cash to Prandium to redeem shares of Stock of Prandium 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, if and so
long as FRI-MRD, FRI-Admin, and Prandium each promptly uses the proceeds of such
loans, dividends, or other distributions solely for such purposes.

                                      -18-

<PAGE>

              "Permitted Protest" means the right of Prandium or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) if
required under GAAP, a reserve with respect to such obligation is established on
the books of Prandium or any of its Subsidiaries, as applicable under the
circumstances, (b) any such protest is promptly instituted and diligently
prosecuted by Prandium or any of its Subsidiaries, as applicable, in good faith,
and (c) Agent is reasonably satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Agent's Liens.

              "Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred (i) to finance the
acquisition of Equipment after the Closing Date, in an aggregate principal
amount outstanding at any one time not in excess of $5,000,000, and (ii) to
finance the acquisition of Real Property (and related improvements) after the
Closing Date, in an aggregate principal amount outstanding at any one time not
in excess of $2,000,000.

              "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
Real Property.

              "Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by Prandium or its Subsidiaries or with respect to
which it may incur liability.

              "Plan of Reorganization" means a joint plan of reorganization to
be filed by each of Prandium and FRI-MRD pursuant to their voluntary
pre-negotiated or prepackaged insolvency proceedings under Chapter 11 of the
Bankruptcy Code, which plan shall be in form and substance satisfactory to
Agent.

              "Prandium" has the meaning set forth in the preamble to this
Agreement.

              "Projections" means Prandium's and its Subsidiaries' forecasted
(a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a basis consistent with Prandium's and its
Subsidiaries' historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

              "Pro Rata Share" means:

                      (a) with respect to a Lender's obligation to make Advances
and receive payments of principal, interest, fees, costs, and expenses with
respect thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,

                                      -19-

<PAGE>

                     (b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, the percentage obtained by dividing (i) such Lender's
Letter of Credit Commitment, by (ii) the aggregate Letter of Credit Commitments
of all Lenders, and

                     (c) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of
Total Commitments of all Lenders; provided, however, that, in each case, in the
event all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.

              "Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.

              "Real Property" means any real property fee estates or leasehold
interests now owned or hereafter acquired by Prandium 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 any Obligor.

              "Record" means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.

              "Relyea Employment Agreement" means the Second Amended and
Restated Employment Agreement, dated as of July 13, 2000, by and among Prandium
and certain of its Subsidiaries and Kevin S. Relyea.

              "Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.

              "Report" has the meaning set forth in Section 16.17.

              "Required Availability" means Excess Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $500,000.

                                      -20-

<PAGE>

            "Required Lenders" means, at any time, (a) Agent, and (b) Lenders
whose Pro Rata Shares aggregate 51% of the Total Commitments, or if the
Commitments have been terminated irrevocably, 51% of the Obligations then
outstanding.

            "Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.

            "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.

            "Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.

            "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.

            "Settlement" has the meaning set forth in Section 2.3(f)(i).

            "Settlement Date" has the meaning set forth in Section 2.3(f)(i).

            "Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).

            "Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, 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).

            "Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other Person in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or other comparable managers) of such
corporation, partnership, limited liability company, or other Person.

                                      -21-

<PAGE>

            "Swing Lender" means Foothill or any other Lender that, at the
request of Borrowers and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.

            "Swing Loan" has the meaning set forth in Section 2.3(d)(i).

            "Taxes" has the meaning set forth in Section 16.11(e).

            "Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.

            "Total Debt" means, as of any date of determination, all outstanding
Indebtedness of Prandium and any of its Subsidiaries, determined on a
consolidated basis, after eliminating intercompany items, in accordance with
GAAP.

            "Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower, each Guarantor, and Agent, the form and
substance of which is satisfactory to Agent.

            "Triggering Event" means any of (a) the occurrence and continuation
of an Event of Default under Section 8.1, or (b) the occurrence of an Insolvency
Event relative to any Obligor.

            "UCC Filing Authorization Letter" means a letter duly executed by
each Obligor authorizing the Agent to file appropriate financing statements on
Form UCC-1 without the signature of such Obligor in such office or offices as
may be necessary or, in the opinion of the Agent, desirable to perfect the
security interests purported to be created by this Loan Agreement, the Guarantor
Security Agreement, the Borrower Stock Pledge Agreement, the Guarantor Stock
Pledge Agreement, or each Mortgage.

            "Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of any Borrower.

            "Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.

            "Voidable Transfer" has the meaning set forth in Section 17.7.

             "Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.

                                      -22-

<PAGE>

     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 and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.

     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 or any other Loan
Document 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 or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Agent. Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the other Loan Documents to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

     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 Advances.

              (a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the least of (i) the Maximum
Revolver Amount less the Liquidity Reserve, (ii) the Maximum Amount less the
amount of the Letter of Credit Usage in excess of $11,000,000, or (iii) the
Borrowing Base less the Letter of Credit Usage. For purposes of this Agreement,
"Borrowing Base," as of any date of determination, shall mean the result of:

                                      -23-

<PAGE>

                              (x)   the lesser of

                                         (i)  the Applicable Real Estate Advance
                                    Rate times the Orderly  Liquidation  Value
                                    of Eligible Real Property,

                                         (ii) as of any date of determination on
                                    and after June 30, 2002 (A) the EBITDA of
                                    Prandium and its Subsidiaries (other than
                                    HGI and the HGI Subsidiaries) on a
                                    consolidated basis for the period of 12
                                    consecutive months ending with the last day
                                    of the second consecutive month preceding
                                    such date of determination, times (B) 2.5,
                                    minus

                              (z)   the sum of (i) the Liquidity Reserve and
                              (ii) the aggregate  amount of reserves,  if any,
                              established by Agent under Section 2.1(b).

                      (b)     Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that any Obligor is required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
any Obligor to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral, which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral, other than Permitted Liens.

                      (c)     The Lenders with Revolver Commitments shall have
no obligation to make additional Advances hereunder to the extent that such
additional Advances and any concurrent requests for Letters of Credit would
cause the outstanding Obligations to exceed the Maximum Amount.

                      (d)     Amounts borrowed pursuant to this Section 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.

       2.2   [Intentionally omitted].

       2.3   Borrowing Procedures and Settlements.

                      (a)     Procedure for Borrowing. Each Borrowing shall be
made by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must

                                      -24-

<PAGE>

be received by Agent no later than 10:00 a.m. (California time) on the Business
Day prior to the date that is the requested Funding Date in the case of a
request for an Advance specifying (i) the amount of such Borrowing, which amount
shall be a multiple of $100,000 equal to or greater than $500,000, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for a Swing Loan in an amount of $1,000,000 or less,
such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding
Date specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.

                 (b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.

                 (c) Making of Advances.

                 (i) In the event that Agent shall elect to have the terms of
          this Section 2.3(c) apply to a requested Borrowing as described in
          Section 2.3(b), then promptly after receipt of a request for a
          Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders,
          not later than 1:00 p.m. (California time) on the Business Day
          immediately preceding the Funding Date applicable thereto, by
          telecopy, telephone, or other similar form of transmission, of the
          requested Borrowing. Each Lender shall make the amount of such
          Lender's Pro Rata Share of the requested Borrowing available to Agent
          in immediately available funds, to Agent's Account, not later than
          10:00 a.m. (California time) on the Funding Date applicable thereto.
          After Agent's receipt of the proceeds of such Advances, upon
          satisfaction of the applicable conditions precedent set forth in
          Section 3 hereof, Agent shall make the proceeds thereof available to
          Borrowers on the applicable Funding Date by transferring immediately
          available funds equal to such proceeds received by Agent to the
          Designated Account; provided, however, that, subject to the provisions
          of Section 2.3(i), Agent shall not request any Lender to make, and no
          Lender shall have the obligation to make, any Advance if Agent shall
          have actual knowledge that (1) one or more of the applicable
          conditions precedent set forth in Section 3 will not be satisfied on
          the requested Funding Date for the applicable Borrowing unless such
          condition has been waived, or (2) the requested Borrowing would exceed
          the Availability on such Funding Date.

                                      -25-

<PAGE>

                     (ii)  Unless Agent receives notice from a Lender on or
                prior to the Closing Date or, with respect to any Borrowing
                after the Closing Date, at least 1 Business Day prior to the
                date of such Borrowing, that such Lender will not make available
                as and when required hereunder to Agent for the account of
                Borrowers the amount of that Lender's Pro Rata Share of the
                Borrowing, Agent may assume that each Lender has made or will
                make such amount available to Agent in immediately available
                funds on the Funding Date and Agent may (but shall not be so
                required), in reliance upon such assumption, make available to
                Borrowers on such date a corresponding amount. If and to the
                extent any Lender shall not have made its full amount available
                to Agent in immediately available funds and Agent in such
                circumstances has made available to Borrowers such amount, that
                Lender shall on the Business Day following such Funding Date
                make such amount available to Agent, together with interest at
                the Defaulting Lender Rate for each day during such period. A
                notice submitted by Agent to any Lender with respect to amounts
                owing under this subsection shall be conclusive, absent manifest
                error. If such amount is so made available, such payment to
                Agent shall constitute such Lender's Advance on the date of
                Borrowing for all purposes of this Agreement. If such amount is
                not made available to Agent on the Business Day following the
                Funding Date, Agent will notify Borrowers of such failure to
                fund and, upon demand by Agent, Borrowers shall pay such amount
                to Agent for Agent's account, together with interest thereon for
                each day elapsed since the date of such Borrowing, at a rate per
                annum equal to the interest rate applicable at the time to the
                Advances composing such Borrowing. The failure of any Lender to
                make any Advance on any Funding Date shall not relieve any other
                Lender of any obligation hereunder to make an Advance on such
                Funding Date, but no Lender shall be responsible for the failure
                of any other Lender to make the Advance to be made by such other
                Lender on any Funding Date.

                     (iii) Agent shall not be obligated to transfer to a
                Defaulting Lender any payments made by Borrowers to Agent for
                the Defaulting Lender's benefit, and, in the absence of such
                transfer to the Defaulting Lender, Agent shall transfer any such
                payments to each other non-Defaulting Lender member of the
                Lender Group ratably in accordance with their Commitments (but
                only to the extent that such Defaulting Lender's Advance was
                funded by the other members of the Lender Group) or, if so
                directed by Borrowers and if no Default or Event of Default had
                occurred and is continuing (and to the extent such Defaulting
                Lender's Advance was not funded by the Lender Group), retain
                same to be re-advanced to Borrowers as if such Defaulting Lender
                had made Advances to Borrowers. Subject to the foregoing, Agent
                may hold and, in its Permitted Discretion, re-lend to Borrowers
                for the account of such Defaulting Lender the amount of all such
                payments received and retained by it for the account of such
                Defaulting Lender. Solely for the purposes of voting or
                consenting to matters with respect to the Loan Documents, such
                Defaulting Lender shall be deemed not to be a "Lender" and such
                Lender's Commitments

                                      -26-

<PAGE>

                 shall be deemed to be zero. This Section shall remain effective
                 with respect to such Lender until (x) the Obligations under
                 this Agreement shall have been declared or shall have become
                 immediately due and payable, (y) the non-Defaulting Lenders,
                 Agent, and Borrowers shall have waived such Defaulting Lender's
                 default in writing, or (z) the Defaulting Lender makes its Pro
                 Rata Share of the applicable Advance and pays to Agent all
                 amounts owing by Defaulting Lender in respect thereof. The
                 operation of this Section shall not be construed to increase or
                 otherwise affect the Commitments of any Lender, to relieve or
                 excuse the performance by such Defaulting Lender or any other
                 Lender of its duties and obligations hereunder, or to relieve
                 or excuse the performance by Borrowers of their duties and
                 obligations hereunder to Agent or to the Lenders other than
                 such Defaulting Lender. Any such failure to fund by any
                 Defaulting Lender shall constitute a material breach by such
                 Defaulting Lender of this Agreement and shall entitle Borrowers
                 at their option, upon written notice to Agent, to arrange for a
                 substitute Lender to assume the Commitments of such Defaulting
                 Lender, such substitute Lender to be reasonably acceptable to
                 Agent. In connection with the arrangement of such a substitute
                 Lender, the Defaulting Lender shall have no right to refuse to
                 be replaced hereunder, and agrees to execute and deliver a
                 completed form of Assignment and Acceptance Agreement in favor
                 of the substitute Lender (and agrees that it shall be deemed to
                 have executed and delivered such document if it fails to do so)
                 subject only to being repaid its share of the outstanding
                 Obligations (including an assumption of its Pro Rata Share of
                 the Risk Participation Liability) without any premium or
                 penalty of any kind whatsoever; provided further, however, that
                 any such assumption of the Commitments of such Defaulting
                 Lender shall not be deemed to constitute a waiver of any of the
                 Lender Group's or Borrowers' rights or remedies against any
                 such Defaulting Lender arising out of or in relation to such
                 failure to fund.

                      (d)   Making of Swing Loans.

                      (i)   In the event Agent shall elect, with the consent of
                 Swing Lender, as a Lender, to have the terms of this Section
                 2.3(d) apply to a requested Borrowing as described in Section
                 2.3(b), Swing Lender as a Lender shall make such Advance in the
                 amount of such Borrowing (any such Advance made solely by Swing
                 Lender as a Lender pursuant to this Section 2.3(d) being
                 referred to as a "Swing Loan" and such Advances being referred
                 to collectively as "Swing Loans") available to Borrowers on the
                 Funding Date applicable thereto by transferring immediately
                 available funds to the Designated Account. Each Swing Loan is
                 an Advance hereunder and shall be subject to all the terms and
                 conditions applicable to other Advances, except that all
                 payments on any Swing Loan shall be payable to Swing Lender as
                 a Lender solely for its own account (and for the account of the
                 holder of any participation interest with respect to such Swing
                 Loan). Subject to the provisions of Section 2.3(i), Agent shall
                 not request Swing Lender as a Lender

                                      -27-

<PAGE>

              to make, and Swing Lender as a Lender shall not make, any Swing
              Loan if Agent has actual knowledge that (i) one or more of the
              applicable conditions precedent set forth in Section 3 will not be
              satisfied on the requested Funding Date for the applicable
              Borrowing unless such condition has been waived, or (ii) the
              requested Borrowing would exceed the Availability on such Funding
              Date. Swing Lender as a Lender shall not otherwise be required to
              determine whether the applicable conditions precedent set forth in
              Section 3 have been satisfied on the Funding Date applicable
              thereto prior to making, in its sole discretion, any Swing Loan.

                      (ii) The Swing Loans shall be secured by the Agent's
              Liens, shall constitute Advances and Obligations hereunder, and
              shall bear interest at the rate applicable from time to time to
              Advances that are Base Rate Loans.

                      (e)  Agent Advances.

                      (i)  Agent hereby is authorized by Borrowers and the
              Lenders, from time to time in Agent's sole discretion, upon
              receipt by Agent of a request for an Advance (delivered in
              accordance with Section 2.3(a)) and (1) after the occurrence and
              during the continuance of a Default or an Event of Default, or (2)
              at any time that any of the other applicable conditions precedent
              set forth in Section 3 have not been satisfied, to make an Advance
              to Borrowers on behalf of the Lenders that Agent, in its Permitted
              Discretion deems necessary or desirable (A) to preserve or protect
              the Collateral, or any portion thereof, (B) to enhance the
              likelihood of repayment of the Obligations, or (C) to pay any
              other amount chargeable to Borrowers pursuant to the terms of this
              Agreement, including Lender Group Expenses and the costs, fees,
              and expenses described in Section 10 (any Advance described in
              this Section 2.3(e) shall be referred to as an "Agent Advance").
              Each Agent Advance is an Advance hereunder and shall be subject to
              all the terms and conditions applicable to other Advances, except
              that all payments thereon shall be payable to Agent solely for its
              own account (and for the account of the holder of any
              participation interest with respect to such Agent Advance).

                      (ii) The Agent Advances shall be repayable on demand and
              secured by the Agent's Liens granted to Agent under the Loan
              Documents, shall constitute Advances and Obligations hereunder,
              and shall bear interest at the rate applicable from time to time
              to Advances that are Base Rate Loans.

                      (f)  Settlement. It is agreed that each Lender's funded
portion of the Advances is intended by the Lenders to equal, at all times, such
Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan

                                      -28-

<PAGE>

Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:

                         (i) Agent shall request settlement ("Settlement") with
                  the Lenders on a weekly basis, or on a more frequent basis if
                  so determined by Agent, (1) on behalf of Swing Lender, with
                  respect to each outstanding Swing Loan, (2) for itself, with
                  respect to each Agent Advance, and (3) with respect to
                  Collections received, as to each by notifying the Lenders by
                  telecopy, telephone, or other similar form of transmission, of
                  such requested Settlement, no later than 2:00 p.m. (California
                  time) on the Business Day immediately prior to the date of
                  such requested Settlement (the date of such requested
                  Settlement being the "Settlement Date"). Such notice of a
                  Settlement Date shall include a summary statement of the
                  amount of outstanding Advances, Swing Loans, and Agent
                  Advances for the period since the prior Settlement Date.
                  Subject to the terms and conditions contained herein
                  (including Section 2.3(c)(iii)): (y) if a Lender's balance of
                  the Advances, Swing Loans, and Agent Advances exceeds such
                  Lender's Pro Rata Share of the Advances, Swing Loans, and
                  Agent Advances as of a Settlement Date, then Agent shall, by
                  no later than 12:00 p.m. (California time) on the Settlement
                  Date, transfer in immediately available funds to the account
                  of such Lender as such Lender may designate, an amount such
                  that each such Lender shall, upon receipt of such amount, have
                  as of the Settlement Date, its Pro Rata Share of the Advances,
                  Swing Loans, and Agent Advances, and (z) if a Lender's balance
                  of the Advances, Swing Loans, and Agent Advances is less than
                  such Lender's Pro Rata Share of the Advances, Swing Loans, and
                  Agent Advances as of a Settlement Date, such Lender shall no
                  later than 12:00 p.m. (California time) on the Settlement Date
                  transfer in immediately available funds to the Agent's
                  Account, an amount such that each such Lender shall, upon
                  transfer of such amount, have as of the Settlement Date, its
                  Pro Rata Share of the Advances, Swing Loans, and Agent
                  Advances. Such amounts made available to Agent under clause
                  (z) of the immediately preceding sentence shall be applied
                  against the amounts of the applicable Swing Loan or Agent
                  Advance and, together with the portion of such Swing Loan or
                  Agent Advance representing Swing Lender's Pro Rata Share
                  thereof, shall constitute Advances of such Lenders. If any
                  such amount is not made available to Agent by any Lender on
                  the Settlement Date applicable thereto to the extent required
                  by the terms hereof, Agent shall be entitled to recover for
                  its account such amount on demand from such Lender together
                  with interest thereon at the Defaulting Lender Rate.

                         (ii) In determining whether a Lender's balance of the
                  Advances, Swing Loans, and Agent Advances is less than, equal
                  to, or greater than such Lender's Pro Rata Share of the
                  Advances, Swing Loans, and Agent Advances as of a Settlement
                  Date, Agent shall, as part of the relevant Settlement, apply
                  to such balance the portion of payments actually received in
                  immediately

                                      -29-

<PAGE>

                  available funds by Agent with respect to principal, interest,
                  fees payable by Borrowers and allocable to the Lenders
                  hereunder, and proceeds of Collateral. To the extent that a
                  net amount is owed to any such Lender after such application,
                  such net amount shall be distributed by Agent to that Lender
                  as part of such next Settlement.

                      (iii) Between Settlement Dates, Agent, to the extent no
                  Agent Advances or Swing Loans are outstanding, may pay over to
                  Swing Lender any payments received by Agent, that in
                  accordance with the terms of this Agreement would be applied
                  to the reduction of the Advances, for application to Swing
                  Lender's Pro Rata Share of the Advances. If, as of any
                  Settlement Date, Collections received since the then
                  immediately preceding Settlement Date have been applied to
                  Swing Lender's Pro Rata Share of the Advances other than to
                  Swing Loans, as provided for in the previous sentence, Swing
                  Lender shall pay to Agent for the accounts of the Lenders, and
                  Agent shall pay to the Lenders, to be applied to the
                  outstanding Advances of such Lenders, an amount such that each
                  Lender shall, upon receipt of such amount, have, as of such
                  Settlement Date, its Pro Rata Share of the Advances. During
                  the period between Settlement Dates, Swing Lender with respect
                  to Swing Loans, Agent with respect to Agent Advances, and each
                  Lender (subject to the effect of letter agreements between
                  Agent and individual Lenders) with respect to the Advances
                  other than Swing Loans and Agent Advances, shall be entitled
                  to interest at the applicable rate or rates payable under this
                  Agreement on the daily amount of funds employed by Swing
                  Lender, Agent, or the Lenders, as applicable.

                      (g)  Notation. Agent shall record on its books the
principal amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the interests
therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.

                      (h)   Lenders' Failure to Perform. All Advances (other
than Swing Loans and Agent Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.

                      (i)   Optional Overadvances. Any contrary provision of
this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing
Lender, as

                                      -30-

<PAGE>

applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers, notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including Swing
Loans), the outstanding Revolver Usage does not exceed the Borrowing Base by
more than $400,000, (ii) after giving effect to such Advances (including Swing
Loans), the outstanding Revolver Usage (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) does not
exceed the Maximum Amount, and (iii) at the time of the making of any such
Advance (including Swing Loans), Agent does not believe, in good faith, that the
Overadvance created by such Advance will be outstanding for more than 90 days.
The Advances and Swing Loans, as applicable, that are made pursuant to this
Section 2.3(i) shall be subject to the same terms and conditions as any other
Advance or Swing Loan, as applicable, except that the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.

                 (i)  In the event Agent obtains actual knowledge that the
            Revolver Usage exceeds the amounts permitted by the preceding
            paragraph, regardless of the amount of, or reason for, such excess,
            Agent shall notify Lenders as soon as practicable (and prior to
            making any (or any additional) intentional Overadvances (except for
            and excluding amounts charged to the Loan Account for interest,
            fees, or Lender Group Expenses) unless Agent determines that prior
            notice would result in imminent harm to the Collateral or its
            value), and the Lenders with Revolver Commitments thereupon shall,
            together with Agent, jointly determine the terms of arrangements
            that shall be implemented with the applicable Borrower, intended to
            reduce, within a reasonable time, the outstanding principal amount
            of the Advances, to the applicable Borrower, to an amount permitted
            by the preceding paragraph. In the event Agent or any Lender
            disagrees over the terms of reduction or repayment of any
            Overadvance, the terms of reduction or repayment thereof shall be
            implemented according to the determination of the Required Lenders.

                 (ii) Each Lender with a Revolver Commitment shall be obligated
            to settle with Agent as provided in Section 2.3(f) for the amount of
            such Lender's Pro Rata Share of any unintentional Overadvances by
            Agent reported to such Lender, any intentional Overadvances made as
            permitted under this Section 2.3(i), and any Overadvances resulting
            from the charging to the Loan Account of interest, fees, or Lender
            Group Expenses.

   2.4      Payments.

                 (a)  Payments by Borrowers.

                 (i)  Except as otherwise expressly provided herein, all
            payments by Borrowers shall be made to Agent's Account for the
            account of the Lender

                                      -31-

<PAGE>

            Group and shall be made in immediately available funds, no later
            than 11:00 a.m. (California time) on the date specified herein. Any
            payment received by Agent later than 11:00 a.m. (California time)
            shall be deemed to have been received on the following Business Day
            and any applicable interest or fee shall continue to accrue until
            such following Business Day.

                 (ii) Unless Agent receives notice from Borrowers prior to the
            date on which any payment is due to the Lenders that Borrowers will
            not make such payment in full as and when required, Agent may assume
            that Borrowers have made (or will make) such payment in full to
            Agent on such date in immediately available funds and Agent may (but
            shall not be so required), in reliance upon such assumption,
            distribute to each Lender on such due date an amount equal to the
            amount then due such Lender. If and to the extent Borrowers do not
            make such payment in full to Agent on the date when due, each Lender
            severally shall repay to Agent on demand such amount distributed to
            such Lender, together with interest thereon at the Defaulting Lender
            Rate for each day from the date such amount is distributed to such
            Lender until the date repaid.

                 (b)  Apportionment and Application of Payments.

                 (i)  Except as otherwise provided with respect to Defaulting
            Lenders and except as otherwise provided in the Loan Documents
            (including letter agreements between Agent and individual Lenders),
            aggregate principal and interest payments shall be apportioned
            ratably among the Lenders (according to the unpaid principal balance
            of the Obligations to which such payments relate held by each
            Lender) and payments of fees and expenses (other than fees or
            expenses that are for Agent's separate account, after giving effect
            to any letter agreements between Agent and individual Lenders) shall
            be apportioned ratably among the Lenders having a Pro Rata Share of
            the type of Commitment or Obligation to which a particular fee
            relates. All payments shall be remitted to Agent and all such
            payments (other than payments received while no Event of Default has
            occurred and is continuing and which relate to the payment of
            principal or interest of specific Obligations or which relate to the
            payment of specific fees), and all proceeds of Accounts or other
            Collateral received by Agent, shall be applied as follows:

                      (A) first, to pay any Lender Group Expenses then due to
                 Agent under the Loan Documents, until paid in full,

                      (B) second, to pay any Lender Group Expenses then due to
                 the Lenders under the Loan Documents, on a ratable basis, until
                 paid in full,

                      (C) third, to pay any fees then due to Agent (for its
                 separate accounts, after giving effect to any letter agreements
                 between Agent and individual Lenders) under the Loan Documents
                 until paid in full,

                                      -32-

<PAGE>

               (D) fourth, to pay any fees then due to any or all of the Lenders
          (after giving effect to any letter agreements between Agent and
          individual Lenders) under the Loan Documents, on a ratable basis,
          until paid in full,

               (E) fifth, to pay interest due in respect of all Agent Advances,
          until paid in full,

               (F) sixth, ratably to pay interest due in respect of the Advances
          (other than Agent Advances) and the Swing Loans until paid in full,

               (G) seventh, to pay the principal of all Agent Advances until
          paid in full,

               (H) eighth, to pay the principal of all Swing Loans until paid in
          full,

               (I) ninth, ratably to pay the principal of all Advances until
          paid in full,

               (J) tenth, if an Event of Default has occurred and is continuing,
          to Agent, to be held by Agent, for the ratable benefit of Issuing
          Lender and those Lenders having a Letter of Credit Commitment, as cash
          collateral in an amount up to 105% of the then extant Letter of Credit
          Usage until paid in full,

               (K) eleventh, to pay any other Obligations until paid in full,
          and

               (L) twelfth, to Borrowers (to be wired to the Designated Account)
          or such other Person entitled thereto under applicable law.

          (ii)  Agent promptly shall distribute to each Lender, pursuant to the
     applicable wire instructions received from each Lender in writing, such
     funds as it may be entitled to receive, subject to a Settlement delay as
     provided in Section 2.3(f).

          (iii) In each instance, so long as no Event of Default has occurred
     and is continuing, Section 2.4(b) shall not be deemed to apply to any
     payment by Borrowers specified by Borrowers to be for the payment of
     specific Obligations then due and payable (or prepayable) under any
     provision of this Agreement.

          (iv)  For purposes of the foregoing, "paid in full" means payment of
     all amounts owing under the Loan Documents according to the terms thereof,
     including loan fees, service fees, professional fees, interest (and
     specifically including interest accrued after the commencement of any
     Insolvency Proceeding), default interest, interest on interest, and expense
     reimbursements,

                                      -33-

<PAGE>

          whether or not the same would be or is allowed or disallowed in whole
          or in part in any Insolvency Proceeding.

               (v) In the event of a direct conflict between the priority
          provisions of this Section 2.4 and other provisions contained in any
          other Loan Document, it is the intention of the parties hereto that
          such priority provisions in such documents shall be read together and
          construed, to the fullest extent possible, to be in concert with each
          other. In the event of any actual, irreconcilable conflict that cannot
          be resolved as aforesaid, the terms and provisions of this Section 2.4
          shall control and govern.

     2.5  Overadvances

          If, at any time or for any reason, the amount of Obligations owed by
Borrowers to the Lender Group pursuant to Sections 2.1 and 2.12 is greater than
either the Dollar or percentage limitations set forth in Sections 2.1 or 2.12,
(an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the
amount of such excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full to the Lender Group as
and when due and payable under the terms of this Agreement and the other Loan
Documents.

     2.6  Interest Rates and Letter of Credit Fee:  Rates, Payments, and
Calculations.

               (a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to the Base Rate plus the Base Rate
Margin.

               (b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Letter of Credit Commitment, subject to
any letter agreement between Agent and individual Lenders), a Letter of Credit
fee (in addition to the charges, commissions, fees, and costs set forth in
Section 2.12(e)) which shall accrue at a rate equal to 8.0% per annum times the
average Daily Balance of the undrawn amount of all outstanding Letters of
Credit.

               (c) Default Rate. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),

               (i) all Obligations (except for undrawn Letters of Credit) that
          have been charged to the Loan Account pursuant to the terms hereof
          shall bear interest on the Daily Balance thereof at a per annum rate
          equal to 2 percentage points above the per annum rate otherwise
          applicable hereunder, and

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<PAGE>

               (ii) the Letter of Credit fees provided for above shall be
          increased to 2 percentage points above the per annum rate otherwise
          applicable hereunder.

               (d)  Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrowers
hereby authorize Agent, from time to time without prior notice to Borrowers to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in Section 2.12(e) (as
and when accrued or incurred), the fees and costs provided for in Section 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document to the Loan Account, which amounts thereafter
shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to the Loan Account and shall thereafter constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances that are Base Rate Loans hereunder.

               (e)  Computation. 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. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

               (f)  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
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, 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, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.

     2.7  Collections. Each Borrower shall at all times maintain its respective
Concentration Account and agrees that all Collections shall be deposited into
its Concentration Account or into a deposit account of such Borrower the
proceeds of which are remitted no less frequently than has been its past
practice to its Concentration Account. Each Borrower, Agent, 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 Agent to such
Concentration Account Bank, the Concentration Account Bank shall remit all
proceeds received in such Concentration Account to an account (the "Agent
Account") maintained by

                                      -35-

<PAGE>

Agent at a depositary selected by Agent. Agent 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
either Borrower without the prior written consent of Agent. Upon the occurrence
and during the continuance of a Triggering Event, Agent may elect to notify the
Concentration Account Bank to remit all amounts received in the Concentration
Account to the Agent Account.

     2.8  Crediting Payments; Application of Collections. The receipt of any
Collections of Borrowers by Agent (whether from transfers to Agent 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 unless such Collection item is a wire
transfer of immediately available federal funds and is made to the Agent's
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 the applicable 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 Agent
only if it is received into the Agent's Account on a Business Day on or before
11:00 a.m. (California time). If any Collection item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

     2.9  Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue 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(d). Borrowers agree to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Borrowers, any Advance, Agent Advance, or
Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder
shall be made to the Designated Account.

     2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with all Advances (including Agent Advances
and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for
Borrowers' account, the Letters of Credit issued by Issuing Lender for
Borrowers' account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any
Concentration Account Bank. Agent shall render statements, in accordance with
its customary practices in respect of rendering statements to its customers,
regarding the Loan Account to Borrowers, including principal, interest, fees,
and including an itemization of all charges and expenses constituting Lender
Group Expenses owing, and such statements shall

                                      -36-

<PAGE>

(absent manifest error) be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Borrowers, Borrowers shall deliver to
Agent 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. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:

                (a)  Fee Letter Fees. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the
Fee Letter, and

                (b)  Audit, Appraisal, and Valuation Charges. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Prandium and its Subsidiaries performed by personnel employed
by Agent, (ii) a fee of $1,500 per day per appraiser, plus out-of-pocket
expenses, for each appraisal of the Collateral performed by personnel employed
by Agent, and (iii) without duplication, the actual charges paid or incurred by
Agent if it elects to employ the services of one or more third Persons to
perform financial audits of Prandium or its Subsidiaries, to appraise the
Collateral, or any portion thereof, or to assess Prandium or its Subsidiaries'
business valuation.

     2.12 Letters of Credit.

                (a)  Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue L/Cs or L/C Undertakings for the account of
Borrowers; provided, however, that such L/Cs or L/C Undertakings shall be used
(i) to support Prandium's and its Subsidiaries' workers compensation insurance,
(ii) to support the Relyea Employment Agreement, and (iii) for other corporate
purposes of Prandium and its Subsidiaries. To request the issuance of an L/C or
an L/C Undertaking (or the amendment, renewal, or extension of an outstanding
L/C or L/C Undertaking), the applicable Borrower shall hand deliver or telecopy
(or transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or the beneficiary of the Underlying
Letter of Credit, as applicable), and such other information as shall be
necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, the applicable Borrower also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C

                                      -37-

<PAGE>

Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:

               (i)  the Revolver Usage would exceed $15,000,000, or

               (ii) the Letter of Credit Usage would exceed (A) the Borrowing
          Base; less (B) the then extant amount of outstanding Advances.

          Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit will be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. Letters of Credit outstanding under the Existing Agreement as of the
Closing Date shall remain outstanding after the Closing Date and be treated as
Letters of Credit under this Agreement.

          If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrowers shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrowers prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day following the
Business Day on which Borrowers receive such notice, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6. To
the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrowers pursuant to this paragraph, Agent shall distribute such payment
to the Issuing Lender or, to the extent that Lenders have made payments pursuant
to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.

               (b)  Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Letter of Credit Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if a Borrower had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Letter of Credit Commitments, the Issuing Lender shall be deemed to have granted
to each Lender with a Letter of Credit Commitment, and each Lender with a Letter
of Credit Commitment shall be deemed to have purchased, a participation in each
Letter of Credit, in

                                      -38-

<PAGE>

an amount equal to its Pro Rata Share of the Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Letter of Credit Commitment
hereby absolutely and unconditionally agrees to pay to Agent, for the account of
the Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made
by the Issuing Lender and not reimbursed by Borrowers on the date due as
provided in clause (a) of this Section, or of any reimbursement payment required
to be refunded to Borrowers for any reason. Each Lender with a Letter of Credit
Commitment acknowledges and agrees that its obligation to deliver to Agent, for
the account of the Issuing Lender, an amount equal to its respective Pro Rata
Share pursuant to this Section 2.12(b) shall be absolute and unconditional and
such remittance shall be made notwithstanding the occurrence or continuation of
an Event of Default or Default or the failure to satisfy any condition set forth
in Section 3 hereof. If any such Lender fails to make available to Agent the
amount of such Lender's Pro Rata Share of any payments made by the Issuing
Lender in respect of such Letter of Credit as provided in this Section, Agent
(for the account of the Issuing Lender) shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate until paid in full.

               (c)  Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence, bad faith, or willful misconduct of the
Issuing Lender or any other member of the Lender Group. Each Borrower agrees to
be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following any
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by a Borrower
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence, bad faith, or willful
misconduct of the Issuing Lender or any other member of the Lender Group.

               (d)  Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit

                                      -39-

<PAGE>

and to accept and rely upon the Issuing Lender's instructions with respect to
all matters arising in connection with such Underlying Letter of Credit and the
related application; provided, that Issuing Lender agrees to consider Borrowers'
reasonable requests with respect to waivers of discrepancies and amendments with
respect thereto.

               (e)  Any and all charges, commissions, fees, and costs incurred
 by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.

               (f)  If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):

               (i)  any reserve, deposit, or similar requirement is or shall be
          imposed or modified in respect of any Letter of Credit issued
          hereunder, or

               (ii) there shall be imposed on the Underlying Issuer or the
          Lender Group any other condition regarding any Underlying Letter of
          Credit or any Letter of Credit issued pursuant hereto,

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period (not to exceed 90 days) after the additional cost is incurred or the
amount received is reduced, notify Borrowers, and Borrowers shall pay on demand
such amounts as Agent may specify to be necessary to compensate the Lender Group
for such additional cost or reduced receipt, together with interest on such
amount from the date of such demand until payment in full thereof at the rate
then applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, 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.

     2.13 [Intentionally omitted].

     2.14 Capital Requirements. If, after the date hereof, any Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital

                                      -40-

<PAGE>

requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with any guideline, request, or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender's or such holding company's capital
as a consequence of such Lender's Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
such Lender to be material, then such Lender may notify Borrowers and Agent
thereof. Following receipt of such notice, Borrowers agree to pay such Lender on
demand the amount of such reduction of return of capital as and when such
reduction is determined (but in no event for a period of more than 90 days prior
to the date of written notice), payable within 90 days after presentation by
such Lender of a statement in the amount and setting forth in reasonable detail
such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable
averaging and attribution methods. The foregoing notwithstanding, in the event
that payments to any Lender are required to be made hereunder as a result of
such additional costs, Borrowers shall be entitled to substitute for such Lender
any other bank or financial institution reasonably acceptable to Agent, and such
Lender shall have no right to refuse to be replaced hereunder.

3.  CONDITIONS; TERM OF AGREEMENT.

       3.1 Conditions Precedent to the Initial Advance or Initial Letter of
Credit. The obligation of the Lender Group (or any member thereof) to make the
initial Advance or to issue the initial Letter of Credit, is subject to the
fulfillment, to the satisfaction of Agent, of each of the conditions precedent
set forth below:

                 (a) the Closing Date shall occur on or before July 8, 2002;

                 (b) Agent shall have received a UCC Filing Authorization
Letter, duly executed by each Obligor, together with appropriate financing
statements on Form UCC-1 duly filed in such office or offices as may be
necessary or, in the opinion of the Agent, desirable to perfect the security
interests purported to be created by this Agreement, the Guarantor Security
Agreement, the Borrower Stock Pledge Agreement, the Guarantor Stock Pledge
Agreement, and each Mortgage, and Agent shall have received searches reflecting
the filing of all such financing statements;

                 (c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:

                 (i) the agreements contemplated hereby with the Concentration
          Account Bank, in substantially the form of Exhibit 3.1(c)(i),

                                      -41-

<PAGE>

                 (ii)   a Control Agreement for all deposit accounts at Wells
                 Fargo,

                 (iii)  the Disbursement Letter,

                 (iv)   the Fee Letter,

                 (v)    the Guaranty,

                 (vi)   the Guarantor Security Agreement,

                 (vii)  the Intercompany Subordination Agreement,

                 (viii) the Mortgages,

                 (ix)   the Borrower Stock Pledge Agreement, together with all
                 certificates representing the shares of Stock pledged
                 thereunder, as well as Stock powers with respect thereto
                 endorsed in blank,

                 (x)    the Guarantor Stock Pledge Agreement, together with all
                 certificates representing the shares of Stock pledged
                 thereunder, as well as Stock powers with respect thereto
                 endorsed in blank, and

                 (xi)   the Trademark Security Agreement;

                 (d)    Agent shall have received a certificate from the
Secretary of each Borrower attesting to the resolutions of such Borrower's board
of directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same;

                 (e)    Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;

                 (f)    Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;

                 (g)    Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower and other than for
Arizona, Washington, D.C., Kansas, Missouri, Nebraska, North Carolina, North
Dakota, Oregon, South Dakota, and Washington) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;

                                      -42-

<PAGE>

                 (h)    Agent shall have received a certificate from the
Secretary of each Guarantor attesting to the resolutions of such Guarantor's
board of directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantor is a party and authorizing specific
officers of such Guarantor to execute the same;

                 (i)    Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;

                 (j)    Agent shall have received a certificate of status with
respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;

                 (k)    Agent shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor and other than for
Arizona, Washington, D.C., Kansas, Missouri, Nebraska, North Carolina, North
Dakota, Oregon, South Dakota, and Washington) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;

                 (l)    Agent 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 Agent and its
counsel;

                 (m)    Agent shall have received an opinion of Borrowers' and
Guarantors' counsel in form and substance reasonably satisfactory to Agent;

                 (n)    Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Prandium) 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;

                 (o)    Agent shall have received the Plan of Reorganization,
certified as being true, correct, and complete by the Secretary of Prandium and
the Plan of Reorganization shall have become effective;

                 (p)    Agent shall have received the Confirmation Orders which
shall be in form and substance reasonably satisfactory to Agent, in full force
and effect, final and non-appealable;

                 (q)    Prandium and its Subsidiaries shall have the Required
Availability after giving effect to the initial extensions of credit hereunder;

                                      -43-

<PAGE>

                 (r)    Agent shall have completed its business, legal, and
collateral due diligence, including a collateral audit (including an updated
audit) and review of the Obligor's books and records and verification of the
Obligors' representations and warranties to the Lender Group, the results of
which shall be reasonably satisfactory to Agent;

                 (s)    Agent shall have received completed reference checks
with respect to Borrowers' and their Subsidiaries' senior management, the
results of which are satisfactory to Agent in its sole discretion;

                 (t)    Agent shall have received the Closing Date Business
Plan;

                 (u)    Borrowers shall pay all Lender Group Expenses incurred
in connection with the transactions evidenced by this Agreement;

                 (v)    Agent shall have received (i) appraisals of the Real
Property Collateral reasonably satisfactory to Agent, and (ii) mortgagee title
insurance policies (or marked commitments to issue the same) for the Real
Property Collateral issued by a title insurance company reasonably satisfactory
to Agent (each a "Mortgage Policy" and, collectively, the "Mortgage Policies")
in amounts reasonably satisfactory to Agent assuring Agent that the Mortgages on
such Real Property Collateral are valid and enforceable first priority mortgage
Liens on such Real Property Collateral 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 Agent;

                 (w)    Agent shall have received a phase-I environmental report
and a real estate survey with respect to each of the following parcels of Real
Property Collateral listed on Schedule R-1: (1) 2701 Alton Parkway, Irvine,
California, (2) 4000 West Market Street, Akron, Ohio, (3) 5075 Dressler Road NW,
Canton, Ohio, (4) 13905 Lakeside Circle, Sterling Heights, Michigan, (5) 13865
West Bluemound Rd., Brookfield, Wisconsin, (6) 750 Middletown Blvd., Langhorne,
Pennsylvania, (7) 2408 Austin Parkway, Flint, Michigan, (8) 1421 River Valley
Road, Lancaster, Ohio, (9) 599 Franklin Mills, Philadelphia, Pennsylvania, (10)
3776 South State Street, Ann Arbor, Michigan. The environmental consultants and
surveyors retained for such reports or surveys, the scope of the reports or
surveys, and the results thereof shall be reasonably acceptable to Agent;

                 (x)    no Material Adverse Change shall have occurred;

                 (y)    Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby; and

                 (z)    all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance reasonably satisfactory
to Agent.

                                      -44-

<PAGE>

     3.2   Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):

               (a)   within 30 days of the Closing Date, Borrowers shall deliver
to Agent certified copies of the policies 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 Agent and its counsel;

               (b)   within 30 days of the Closing Date, Obligors shall deliver
to Agent the Control Agreements;

               (c)   Obligors shall use their reasonable best efforts to amend
in a manner satisfactory to Agent the collateral descriptions in (i) the
Security Agreement, dated as of December 5, 1994, by and between KKR and
Crossroads Alliance L.P., and (ii) that certain financing statement filed
against KKR in favor of Crossroads Alliance L.P. (and assigned to Marc Spizzirri
and further assigned to Auto Orange), and shall provide Agent evidence
satisfactory to Agent of such amendments promptly upon the effectiveness
thereof;

               (d)   within 30 days of the Closing Date, Obligors shall provide
Agent evidence satisfactory to Agent that the following financing statements
have been terminated: (i) financing statement, dated April 20, 2001, in favor of
A&B Company against Prandium Inc., (ii) financing statement, dated March 26,
1998, in favor of State of Connecticut Department of Labor Employment Security
Division, and (iii) financing statement, dated August 7, 1997, in favor of the
State of California Board of Equalization; and

               (e)   within 30 days of the Closing Date, Obligors shall provide
Agent with evidence satisfactory to Agent that all defects and encumbrances
(including without limitation tax liens, mechanics liens, and judgment liens)
reflected in the preliminary title reports issued by Chicago Title with respect
to the Real Property Collateral have been removed.

     3.3   Conditions Precedent to all Advances and Letters of Credit. The
obligation of the Lender Group (or any member thereof) to make all Advances and
to extend all Letters of Credit hereunder shall be subject to the following
conditions precedent:

               (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 solely to an earlier date),

                                      -45-

<PAGE>

               (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,

               (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
any Borrower, Agent, any Lender, or any of their Affiliates, and

               (d)   no Material Adverse Change shall have occurred.

     3.4   Term. This Agreement shall continue in full force and effect for a
term ending on July 2, 2006 (the "Maturity Date"), provided, however, that the
Maturity Date shall be January 1, 2005 in the event that, on or before January
1, 2005, the maturity date of the New FRI-MRD Notes has not been extended to
October 2, 2006 or later or the New FRI-MRD Notes have not been refinanced with
securities which have a maturity date of October 2, 2006 or later. The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
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. Concurrent with the consummation of the HGI Sale in
accordance with the applicable provisions of this Agreement, HGI shall be
released from all Obligations and shall no longer be a party to the Loan
Agreement and any other Loan Document to which HGI is a party.

     3.5   Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand (including either (i) providing cash collateral
to be held by Agent for the benefit of those Lenders with a Letter of Credit
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, or (iii) providing a standby letter of credit (containing terms and
conditions, and from an issuer, satisfactory to Agent) to support all of the
Obligations in respect of outstanding Letters of Credit and L/C Undertakings).
No termination of this Agreement, however, shall relieve or discharge Borrowers
of their duties, Obligations, or covenants hereunder and the Agent's Liens in
the Collateral shall remain in effect until all Obligations have been fully and
finally discharged (or secured or supported as provided above) and the Lender
Group's obligations to provide additional credit hereunder have been terminated.
When this Agreement has been terminated and all of the Obligations have been
fully and finally discharged (or secured or supported as provided above) and the
Lender Group's obligations to provide additional credit under the Loan Documents
have been terminated irrevocably, Agent will, at Borrowers' sole expense,
execute and deliver any UCC termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent's Liens
and all notices of security interests and liens previously filed by Agent with

                                       -46

<PAGE>

respect to the Obligations and Agent will return to Borrowers all Collateral in
Agent's possession.

     3.6   Early Termination by Borrowers. Borrowers have the option, at any
time upon 10 Business Days prior written notice to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Letter of Credit Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender or (iii)
providing a standby letter of credit (containing terms and conditions, and from
an issuer, satisfactory to Agent) to support all of the Obligations in respect
of outstanding Letters of Credit and L/C Undertakings), in full (to be allocated
based upon letter agreements between Agent and individual Lenders). If Borrowers
have sent a notice of termination pursuant to the provisions of this Section,
then the Commitments shall terminate as of the date specified as the date of
termination of this Agreement in such notice and Borrowers shall be obligated to
repay the Obligations (including either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Letter of Credit Commitment in
an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender or
(iii) providing a standby letter of credit (containing terms and conditions, and
from an issuer, satisfactory to Agent) to support all of the Obligations in
respect of outstanding Letters of Credit and L/C Undertakings), in full, on the
date set forth as the date of termination of this Agreement in such notice.

4. CREATION OF SECURITY INTEREST.

     4.1   Grant of Security Interest. Each Borrower hereby grants to Agent, for
the benefit of the Lender Group, a continuing security interest in all of its
right, title, and interest in all currently existing and hereafter acquired or
arising Personal Property Collateral in order to secure prompt repayment of any
and all of the Obligations in accordance with the terms and conditions of the
Loan Documents and in order to secure prompt performance by the Obligors of each
of their covenants and duties under the Loan Documents. The Agent's Liens in and
to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or Borrowers. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have 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, if requested by an Obligor, Agent agrees to release
its Liens on the subject property or asset.

     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 any Borrower in the ordinary course of
business and that are deposited in accordance with Section 2.7), and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower,

                                      -47-

<PAGE>

promptly upon the request of Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to Agent.

     4.3   Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Concentration Account Bank in their original form as received by such
Borrower.

     4.4   Delivery of Additional Documentation Required. At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance reasonably satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, each Borrower
authorizes Agent to execute any such Additional Documents in such Borrower's
name and authorizes Agent to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as Agent shall
reasonably require, each Borrower shall (a) provide Agent with a report of all
new material patentable, copyrightable, or trademarkable materials acquired or
generated by such Borrower during the prior period, (b) cause all material
patents, copyrights, and trademarks acquired or generated by Borrower that are
not already the subject of a registration with the appropriate filing office (or
an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Borrower's ownership thereof, and (c) cause to be prepared, executed,
and delivered to Agent supplemental schedules to the applicable Loan Documents
to identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.

     4.5   Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or bill of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) at any time that an Event of Default has
occurred and is continuing, send requests for verification of Accounts, (d)
endorse such Borrower's name on any

                                      -48-

<PAGE>

Collection item that may come into the Lender Group's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed (in accordance
with the provisions for termination hereof) and the Lender Group's obligations
to extend credit hereunder are terminated.

     4.6   Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter during normal business hours to inspect the Books and to check,
test, and, subject to Section 6.2(d), appraise the Collateral in order to verify
Borrowers' financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral.

     4.7   Control Agreements. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of such Borrower, Agent,
and the substitute securities intermediary have entered into a Control
Agreement. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by any Borrower without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Triggering Event, Agent may notify
any securities intermediary to liquidate the applicable Securities Account or
any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Agent's Account.

5.  REPRESENTATIONS AND WARRANTIES.

           In order to induce the Lender Group to enter into this Agreement,
each of the Obligors makes the following representations and warranties to the
Lender Group 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:

     5.1   No Encumbrances. Each Borrower has good and marketable title to the
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens. Each of the Guarantors has good and marketable title to the Guarantor
Collateral hypothecated by

                                      -49-

<PAGE>

them under the Loan Documents to which they are parties, free and clear of Liens
except for Permitted Liens.

       5.2  [Intentionally omitted].

       5.3  [Intentionally omitted].

       5.4  Equipment. All of the Equipment is used or held for use in
Prandium's and its Subsidiaries' business and is fit for such purposes, ordinary
wear and tear excepted, and except for Equipment which becomes obsolete in the
ordinary course of business.

       5.5  Location of Inventory and Equipment. The Inventory and Equipment of
Prandium and its Subsidiaries are not stored with a bailee, warehouseman, or
similar party of which Agent has not been given written notice and are located
only at the locations identified on Schedule 5.5; provided, however, that
Borrowers may amend Schedule 5.5 to identify new locations so long as such new
location is within the continental United States.

       5.6  Equipment Records. Each Borrower keeps records which are correct and
accurate in all material respects itemizing and describing the type, quality,
and quantity of its Equipment and such Borrower's cost therefor.

       5.7  Location of Chief Executive Office; FEIN. As of the date hereof, the
chief executive office of each Borrower and each Guarantor is located at the
address indicated in Schedule 5.7. Chi-Chi's FEIN is 41-0901437 and KKR's FEIN
is 22-3132583.

       5.8  Due Organization and Qualification; Subsidiaries.

                  (a)  Prandium and each of its Subsidiaries is duly organized
and existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to be
so qualified reasonably could be expected to have a Material Adverse Change.

                  (b)  Set forth on Schedule 5.8(b), is a complete and accurate
list of Prandium's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (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.

                  (c)  Except as set forth on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Prandium's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Prandium nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Prandium or its
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any

                                      -50-

<PAGE>

such capital Stock. The Borrowers may amend Schedule 5.8 to reflect the sale or
dissolution of any Subsidiaries of Prandium so long as such sale or dissolution
is permitted under this Agreement.

      5.9   Due Authorization; No Conflict.

                (a)  The execution, delivery, and performance by each Borrower
of this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower.

                (b)  The execution, delivery, and performance by each Borrower
of this Agreement and 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 applicable to such Borrower, the Governing Documents of
such Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on such Borrower, (ii) conflict with, result in a
material breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of such Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of such Borrower, other than Permitted Liens, or
(iv) require any approval of such Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of such Borrower
(other than any which have been obtained).

                (c)  Other than the filing of financing statements, fixture
filings, and the Mortgages, and other than the recordation of the Trademark
Security Agreement with the United States Patent and Trademark Office, the
recordation of appropriate evidence of Agent's lien in registrations and
applications for intellectual property acquired by an Obligor after the date
hereof, the registration of unregistered copyrights in the United States
Copyright Office, and the taking of actions necessary to perfect Agent's lien in
intellectual property applications and registrations filed in registrars outside
the United States, and other than the Plan of Reorganization becoming effective,
the execution, delivery, and performance by each Borrower of this Agreement and
the Loan Documents to which such Borrower 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 Governmental Authority or other Person.

                (d)  This Agreement and the other Loan Documents to which each
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against such Borrower 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)  Upon the recordation of the Mortgages and the filing of the
financing statements, the Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.

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<PAGE>

                (f)  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 action on the part of such Guarantor.

                (g)  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 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 default
under any material contractual obligation 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 such Guarantor's interestholders or any approval or
consent of any Person under any material contractual obligation of such
Guarantor (other than any which have been obtained).

                (h)  Other than the filing of financing statements, fixture
filings and the Mortgages, and other than the Plan of Reorganization becoming
effective, the execution, delivery, and performance by each Guarantor of the
Loan Documents to which such Guarantor 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 Governmental Authority or other Person.

                (i)  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 such Guarantor 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.

      5.10  Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
each of the Obligors, threatened against Prandium or its Subsidiaries, except
for (a) matters that are fully covered by insurance (subject to customary
deductibles), or (b) matters arising after the Closing Date that reasonably
could not be expected to result in a Material Adverse Change.

      5.11  No Material Adverse Change. All financial statements relating to
Prandium and its Subsidiaries that have been delivered by Prandium or Borrowers
to the Lender Group 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 present fairly in all material
respects, Prandium's and its Subsidiaries' financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Prandium and its Subsidiaries, taken
as a whole, since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.

      5.12  Fraudulent Transfer.

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<PAGE>

                     (a) Prandium and each of its Subsidiaries is Solvent.

                     (b) No transfer of property is being made by Prandium or
any of its Subsidiaries and no obligation is being incurred by Prandium 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 Prandium or its Subsidiaries.

       5.13   Employee Benefits. Neither Prandium nor any of its Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

       5.14   Environmental Condition. Except as set forth on Schedule 5.14, (a)
to each of the Obligors' knowledge, none of Prandium's or any of its
Subsidiaries' assets has ever been used by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law in a manner that could reasonably be expected to result in a
Material Adverse Change, (b) to each of the Obligors' knowledge, none of
Prandium's or any of its Subsidiaries' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) neither Prandium nor any of
its Subsidiaries have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Prandium or any of its Subsidiaries, and (d) neither Prandium nor
any of its Subsidiaries have received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Prandium or any of its
Subsidiaries resulting in the releasing or disposing of Hazardous Materials into
the environment that could reasonably be expected to result in a Material
Adverse Change.

       5.15   Brokerage Fees. Neither Prandium nor any of its Subsidiaries has
utilized the services of any broker or finder in connection with Borrowers'
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Prandium or any of its Subsidiaries in
connection herewith.

       5.16   Intellectual Property. Prandium and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of their business as currently
conducted. Attached hereto as Schedule 5.16 is a true, correct, and complete
listing of all material patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which Prandium or
any of its Subsidiaries are the owner or are exclusive licensees. The Borrowers
may amend Schedule 5.16 to include patents, patent applications, trademarks,
trademark applications, copyrights, or copyright registrations as to which
Prandium or any of its Subsidiaries become the owner after the Closing Date
provided that, in connection with such amendment, Agent obtains a first priority
perfected Lien on such intellectual property.

                                      -53-

<PAGE>

       5.17   Leases. Prandium and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to the business of Prandium and
its Subsidiaries and to which any of them are a party or under which any of them
are a party. All of such leases are valid and subsisting and no material default
by Prandium or any of its Subsidiaries exists under any of them.

       5.18   DDAs. Set forth on Schedule 5.18 are all of Prandium's and its
Subsidiaries' 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. The Borrowers may amend Schedule 5.18 to
include DDAs as to which Prandium or any of its Subsidiaries become the account
holder after the Closing Date provided that, in connection with such amendment,
Agent obtains a first priority perfected Lien on such DDA.

       5.19   Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Prandium and its Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Prandium and its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Prandium's and its Subsidiaries'
good faith best estimate of their future performance for the periods covered
thereby (it being understood that both the Closing Date Projections and such
additional Projections are subject to inherent contingencies and uncertainties
beyond the control of Prandium and its Subsidiaries, and that no assurance can
be given that such Projections will be realized).

       5.20   Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Prandium and its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately reflects the aggregate principal
amount of such Indebtedness.

       5.21   Inactive Subsidiaries. The Inactive Subsidiaries do not own any
material assets and do not engage in any material business activity.

6. AFFIRMATIVE COVENANTS.

              Each of the Obligors, jointly and severally, covenants and agrees
that, so long as any credit hereunder shall be available and until full and
final payment of the Obligations (in accordance with the provisions for
termination hereof), and, unless Agent shall otherwise consent in writing, each
of the Obligors will, and will cause each of its respective Subsidiaries to, do
all of the following:

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<PAGE>

       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
Agent.

       6.2    Collateral and Operations Reporting. Provide Agent, with a copy to
each Lender, with the following documents at the following times in form
satisfactory to Agent:

                     (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,

                     (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 Borrowers 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 Permitted Dispositions)
and a statement of the Net Proceeds received by FRI-MRD and any of its
Subsidiaries from each such sale or other disposition,

                     (d)  upon Agent's request (but, so long as no Event of
Default has occurred or is continuing, no more frequently than one time per
year), an updated appraisal of the Orderly Liquidation Value of the Eligible
Real Property, and

                     (e)  such other reports as to the Collateral and the
Guarantor Collateral or the financial condition of Prandium or its Subsidiaries
as Agent may reasonably request from time to time.

       6.3     Financial Statements, Reports, Certificates. Deliver to Agent,
with copies to each Lender:

                     (a)  as soon as available, but in any event within 30 days
(45 days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Prandium's
fiscal years,

                     (i)  a company prepared consolidated balance sheet, income
              statement, and statement of cash flow covering Prandium's and its
              Subsidiaries' operations during such period,

                     (ii) a summary aging, by vendor, of each of Prandium's and
              its Subsidiaries' accounts payable and any book overdraft,

                     (b)  as soon as available, but in any event within 45 days
after the end of each of Prandium's fiscal quarters,

                                      -55-

<PAGE>

              (i)        a certificate signed by the chief financial officer of
       Prandium to the effect that:

                     (A) the financial statements delivered hereunder have been
              prepared in accordance with GAAP (except for the lack of footnotes
              and being subject to year-end audit adjustments) and fairly
              present in all material respects the financial condition of
              Prandium and its Subsidiaries,

                     (B) to such officer's best knowledge, the representations
              and warranties of the Obligors 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), and

                     (C) to such officer's best knowledge, there does not exist
              any condition or event that constitutes a Default or Event of
              Default (or, to the extent of any non-compliance, describing such
              non-compliance as to which he or she may have knowledge and what
              action the Obligors have taken, are taking, or propose to take
              with respect thereto), and

              (ii)   a Compliance Certificate demonstrating, in reasonable
       detail, compliance at the end of such period with the applicable
       financial covenants contained in Section 7.20, and

              (c) as soon as available, but in any event within 90 days after
the end of each of Prandium's fiscal years,

              (i)        financial statements of Prandium and its Subsidiaries
       for each such fiscal year, audited by independent certified public
       accountants reasonably acceptable to Agent and certified, without any
       qualifications, by such accountants to have been prepared in accordance
       with GAAP (such audited financial statements to include a balance sheet,
       income statement, and statement of cash flow and, if prepared, such
       accountants' letter to management),

              (ii)       beginning with fiscal year 2002, a certificate of such
       accountants addressed to Agent and the Lenders stating that such
       accountants do not have knowledge of the existence of any Default or
       Event of Default under Section 7.20,

              (d)        as soon as available, but in any event within 10 days
prior to the start of each of Prandium's fiscal years, copies of the
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming
3 years, year by year, and for the forthcoming fiscal year,

                                      -56-

<PAGE>

month by month, certified by the chief financial officer of Prandium as being
such officer's good faith best estimate of the financial performance of Prandium
and its Subsidiaries during the period covered thereby,

                   (e)   if and when filed by any Borrower or any Guarantor,

                   (i)   Form 10-Q quarterly reports, Form 10-K annual reports,
              and Form 8-K current reports,

                   (ii)  any other filings made by any Borrower or any Guarantor
              with the SEC, and

                   (iii) any other information that is provided by any Borrower
              or any Guarantor to its shareholders generally,

                   (f)   if and when filed by any Obligor and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdiction in which (i) any Obligor conducts business or is required to pay
any such excise tax, (ii) where any Obligor's failure to pay any such applicable
excise tax would result in a Lien on the properties or assets of such Obligor,
or (iii) where any Obligor's failure to pay any such applicable excise tax
reasonably could be expected to result in a Material Adverse Change,

                   (g)   as soon as any Obligor has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that the Obligors propose to take with
respect thereto, and

                   (h)   upon the request of Agent, any other report reasonably
requested relating to the financial condition of Prandium and its Subsidiaries.

              In addition to the financial statements referred to above,
Prandium agrees to deliver financial statements prepared on both a consolidated
and consolidating basis and agrees that no Subsidiary of Prandium will have a
fiscal year different from that of Prandium. Prandium and its Subsidiaries agree
that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Prandium and its Subsidiaries Agent reasonably may request. Prandium
and its Subsidiaries waive the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any information requested by Agent pursuant to or in accordance with this
Agreement, and agrees that Agent may contact directly any such accounting firm
or service bureau in order to obtain such information; provided, however, that,
so long as no Event of Default has occurred and is continuing, Agent agrees to
endeavor to provide Prandium with prior notice of any such contact and agrees
that Prandium may participate in any such discussions.

       6.4    Tax Returns. Upon Agent's request, make available to Agent at
Prandium's chief executive office, copies of each of Prandium's federal income
tax returns and all amendments thereto.

                                      -57-

<PAGE>

       6.5    [Intentionally omitted].

       6.6    Maintenance of Properties. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
so as to prevent any loss or forfeiture thereof or thereunder; provided,
however, that the foregoing shall not be deemed to prevent Permitted
Dispositions to the extent otherwise permitted hereunder.

       6.7    Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Prandium,
any of its Subsidiaries, or any of their assets to 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 shall be the subject of a
Permitted Protest. Prandium and its Subsidiaries will make timely payment or
deposit of all material tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Prandium and its
Subsidiaries have made such payments or deposits.

       6.8    Insurance.

                     (a)  At Prandium's and its Subsidiaries' expense, maintain
insurance respecting its assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Prandium and its Subsidiaries also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Prandium and its Subsidiaries shall deliver
copies of all such policies to Agent with a satisfactory lender's loss payable
endorsement naming Agent as sole loss payee or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give (i) not less than 10 days prior written notice to
Agent in the event of cancellation of the policy due to non-payment of premium,
and (ii) not less than 20 days prior written notice to Agent in the event of
cancellation of the policy for any other reason. Agent 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) Prandium and its Subsidiaries shall give Agent prompt
notice of any loss in excess of $100,000 covered by property insurance;
provided, however, that if the aggregate amount of the losses that do not exceed
$100,000 is greater than $250,000, then Prandium and its Subsidiaries shall give
Agent prompt notice of all such losses in excess of $50,000. With the exception
of insurance policies covering the property or assets of HGI and the HGI
Subsidiaries (as to which Agent shall not have the right to adjust losses), upon

                                      -58-

<PAGE>

the occurrence and during the continuation of an Event of Default, Agent shall
have the exclusive right to adjust any losses payable under any such insurance
policies, without any liability to Prandium or its Subsidiaries whatsoever in
respect of such adjustments. Any monies received as payment for any loss or
damage to Prandium's or its Subsidiaries' properties and assets by fire,
lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle damage,
earthquake, elevator collision, or 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 Agent, and Prandium and its Subsidiaries shall have the
right to designate in writing to Agent 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 Agent may elect, or (ii) disbursed to
Prandium or any of its Subsidiaries, as applicable, under staged payment terms
satisfactory to Agent for application to the cost of repairs, replacements, or
restorations and subject to the conditions set forth in this Section 6.8(b). In
the event Agent 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 Prandium and its Subsidiaries elect to cause Agent to
disburse any monies received as payment for any loss pursuant to this Section
6.8(b), Agent 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) Borrowers have cash, cash equivalents, Availability, and/or
business interruption insurance proceeds in amounts sufficient, in Agent's
reasonable judgment, to ensure that Borrowers will be able to make payment as
and when due of each of their direct Obligations that will be payable during the
period of such repair, replacement, or restoration; (C) Agent 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 Agent, 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 the prepayment of the Obligations without premium,
in such order or manner as Agent may elect; and (F) all monies paid by Prandium
or its Subsidiaries to Agent may be commingled with other funds of the Lender
Group and will not bear interest pending disbursement hereunder. Anything in the
foregoing sentence to the contrary notwithstanding, if any lease for any Real
Property or Personal Property leased by Prandium or any of its Subsidiaries
requires that monies received as payment for any loss or damage to such property
under an applicable insurance policy be applied to the cost of repairs,
replacements, or restorations of such property, any such monies shall be paid
over to Agent and disbursed to Prandium or any of its Subsidiaries, as

                                      -59-

<PAGE>

applicable, under staged payment terms satisfactory to Agent
for application to such costs, regardless of whether the conditions set forth in
clauses (A) through (F) above have been satisfied. Upon the occurrence and
during the continuance of an Event of Default, Agent shall have the right to
apply all prepaid premiums to the payment of the Obligations in such order or
form as Agent shall determine.

                     (c) Neither Prandium nor any of its Subsidiaries will take
out separate insurance concurrent in form or contributing in the event of loss
with that required to be maintained under this Section 6.8, unless Agent is
included thereon as named or additional insured with, in the event Agent is a
named insured, the loss payable to Agent under a lender's loss payable
endorsement or its equivalent. Prandium and its Subsidiaries immediately shall
notify Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and copies of such policies promptly shall be provided to Agent.

       6.9    Location of Inventory and Equipment. Keep the Inventory and
Equipment only at, or in transit between, the locations identified on Schedule
5.5; provided, however, that Borrowers may amend Schedule 5.5 so long as such
amendment occurs by written notice to Agent prior to the date on which 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, Borrowers provide any financing statements or fixture
filings necessary to perfect and continue perfected the Agent's Liens on such
assets and also provides to Agent a Collateral Access Agreement, if reasonably
requested by Agent.

       6.10   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 result in
and reasonably could not be expected to result in a Material Adverse Change.

       6.11   Leases. Pay when due all rents and other amounts payable under any
material leases to which Prandium or any of its Subsidiaries is a party or by
which Prandium's or any of its Subsidiaries' properties and assets are bound,
unless such payments are the subject of a Permitted Protest.

       6.12   Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Each Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers, and each Borrower agrees to
indemnify, defend, and hold Agent and the Lender Group harmless from and against
any claim of any broker or finder arising out of Borrowers' obtaining financing
from the Lender Group under this Agreement.

       6.13   Existence. At all times preserve and keep in full force and effect
Prandium's and its Subsidiaries' valid existence and good standing and any
rights and franchises material

                                      -60-

<PAGE>

to Prandium's and its Subsidiaries' businesses (except that no Obligor shall be
required to maintain the existence and good standing of any of their
Subsidiaries that they are permitted to sell, dissolve, merge, or consolidate
pursuant to the provisions of this Agreement).

     6.14 Environmental.

               (a)  Keep any property either owned or operated by Prandium or
any of its Subsidiaries free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Prandium or any of its Subsidiaries and take any Remedial Actions
required to abate said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly provide Agent with written notice
within 10 days of the receipt of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Prandium or any of its Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Prandium or
any of its Subsidiaries, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.

     6.15 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.

7. NEGATIVE COVENANTS.

          Each of the Obligors, jointly and severally, covenants and agrees
that, so long as any credit hereunder shall be available and until full and
final payment of the Obligations (in accordance with the provisions for
termination hereof), each of the Obligors will not, and will not permit any of
their Subsidiaries to, do any of the following without Agent'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:

               (a)  Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,

               (b)  Indebtedness set forth on Schedule 5.20,

                                      -61-

<PAGE>

               (c)  Permitted Purchase Money Indebtedness,

               (d)  refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by Prandium and its
Subsidiaries or materially impair Prandium and its Subsidiaries'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended (except to the extent of accrued interest and fees on such
Indebtedness and fees incurred in connection with any such refinancing, renewal
or extension), (iii) such refinancings, renewals, or extensions do not result in
a shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to Prandium and its
Subsidiaries, and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness,

               (e)  Indebtedness composing Permitted Investments,

               (f)  Indebtedness relating to insurance premium financing
incurred in the ordinary course of business, and

               (g)  Indebtedness relating to Prandium'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.

     7.2  Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).

     7.3  Restrictions on Fundamental Changes.

               (a)  Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock; provided, that any Subsidiary of
FRI-MRD that is not a Borrower may be merged or consolidated with a Borrower (so
long as a Borrower is the survivor of such merger or consolidation) or with any
other Subsidiary of FRI-MRD that is not a Borrower.

               (b)  Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution); provided, that if all of the assets of any
Subsidiary of Prandium are sold,

                                      -62-

<PAGE>

transferred or otherwise disposed of in accordance with this Agreement, such
Subsidiary may be liquidated, wound up, or dissolved; provided further, however,
that Inner Harbor may be dissolved.

               (c)  Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets other than pursuant to a Permitted Disposition.

     7.4  Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Prandium's or
its Subsidiaries' assets.

     7.5  Change Name. Change its name, FEIN, corporate structure, or identity,
or add any new fictitious name; provided, however, that Prandium and any of its
Subsidiaries may change its name or add fictitious names upon at least 30 days
prior written notice to Agent of such change and so long as, at the time of such
written notification, Prandium, or its Subsidiary, as applicable, provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens.

     7.6  Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person (other than any Subsidiary of
FRI-MRD) except by endorsement of instruments or items of payment for deposit to
the account of Prandium or its Subsidiaries or which are transmitted or turned
over to Agent.

     7.7  Nature of Business. Make any change in the principal nature of its
business.

     7.8  Prepayments and Amendments.

               (a)  Except in connection with a refinancing permitted by Section
7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Obligor, other than (i) the Obligations in accordance with this
Agreement, (ii) the 15% Notes pursuant to the provisions of the Plan of
Reorganization, (iii) the 14% Notes pursuant to the provisions of the Plan of
Reorganization, and (iv) the New FRI-MRD Notes with the cash flow from HGI
pursuant to Section 5.12 of that certain "FRI-MRD Corporation Note Agreement,
dated as of July 2, 2002 Re: Up to $80,000,000 12.0% Senior Secured Notes due
January 31, 2005" (without giving effect to any amendments thereto).

               (b)  Except in connection with (i) a refinancing permitted by
Section 7.1(d) or (ii) the Plan of Reorganization, directly or indirectly,
amend, modify, alter, increase, or change any of the terms or conditions of any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Sections 7.1(b) or (c).

     7.9  Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.

     7.10 [Intentionally omitted].

                                      -63-

<PAGE>

     7.11 Distributions

               (a)  Make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Prandium's or any of its Subsidiaries' Stock, of any
class, whether now or hereafter outstanding; provided, that (i) any Subsidiary
of a Borrower may make distributions or declare or pay dividends to its
immediate parent, and (ii) Borrowers may make Permitted Parent Distributions.

     7.12 Accounting Methods. Modify or change its method of accounting (other
than as may be required or permitted to conform to GAAP) 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 Prandium's or its Subsidiaries' accounting records without said
accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or Prandium's or its Subsidiaries' financial condition.

     7.13 Investments. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Prandium and its Subsidiaries shall not have Permitted Investments (other than
in the Concentration Accounts) in deposit accounts or Securities Accounts in
excess of $250,000 outstanding at any one time unless Prandium or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements governing such Permitted Investments, as
Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.

     7.14 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Prandium or its
Subsidiaries except for transactions that are in the ordinary course of their
business, upon fair and reasonable terms, that are fully disclosed to Agent, and
that are no less favorable to Prandium or its Subsidiaries than would be
obtained in an arm's length transaction with a non-Affiliate.

     7.15 Suspension. 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 for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender (other than any Letters of Credit which will be deemed Letters of Credit
supported by L/C Undertakings issued under this Agreement), and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.

                                      -64-

<PAGE>

     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 Agent and so long as, at
the time of such written notification, Prandium or its Subsidiary, as
applicable, provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location, if reasonably
requested by Agent. Other than Inventory and Equipment of the Obligors with a
fair market value of less than $500,000 in the aggregate or unless subject to a
Collateral Access Agreement, the Inventory and Equipment of the Obligors shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent.

     7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Neither Prandium nor any of its Subsidiaries shall transfer
assets out of any Securities Account; provided, however, that, so long as no
Triggering Event has occurred and is continuing or would result therefrom,
Prandium and its Subsidiaries may use such assets (and the proceeds thereof) to
the extent not prohibited by this Agreement.

     7.20 Financial Covenants.

               (a)  EBITDA - Prandium. In the case of Prandium, fail to maintain
EBITDA measured on a fiscal quarter-end basis, of not less than the required
amount set forth in the following table for the applicable period set forth
opposite thereto:

     ---------------------------------------------------------------------------
          Applicable Amount                        Applicable Period
     ---------------------------------------------------------------------------
                $6,710,000                      For the 9 month period
                                           ending September 29, 2002
     ---------------------------------------------------------------------------
                $9,545,000                      For the 12 month period
                                         ending each fiscal quarter thereafter
     ---------------------------------------------------------------------------

               (b)  EBITDA - Chi-Chi's. In the case of Chi-Chi's, fail to
maintain EBITDA measured on a fiscal quarter-end basis, of not less than the
required amount set forth in the following table for the applicable period set
forth opposite thereto:

     ---------------------------------------------------------------------------
          Applicable Amount                       Applicable Period
     ---------------------------------------------------------------------------
               $6,006,000                      For the 9 month period
                                            ending September 29, 2002
     ---------------------------------------------------------------------------
               $8,515,000                      For the 12 month period
     ---------------------------------------------------------------------------

                                      -65-

<PAGE>

                                          ending each fiscal quarter thereafter
     ---------------------------------------------------------------------------

               (c)  EBITDA - KKR. In the case of KKR, fail to maintain EBITDA
measured on a fiscal quarter-end basis, of not less than the required amount set
forth in the following table for the applicable period set forth opposite
thereto:

     ---------------------------------------------------------------------------
          Applicable Amount                          Applicable Period
     ---------------------------------------------------------------------------
               $  739,000                       For the 9 month period
                                           ending September 29, 2002
     ---------------------------------------------------------------------------
               $1,044,000                       For the 12 month period
                                          ending each fiscal quarter thereafter
     ---------------------------------------------------------------------------

               (d)  Indebtedness to EBITDA. A ratio of (a) Total Debt to (b)
EBITDA of Prandium and its Subsidiaries, on a consolidated basis, of not greater
than the ratio set forth in the following table for the applicable period set
forth opposite thereto:

     ---------------------------------------------------------------------------
          Applicable Ratio                           Applicable Date
     ---------------------------------------------------------------------------
               12.06:1.00                        As of September 29, 2002
     ---------------------------------------------------------------------------
                8.56:1.00                        As of December 29, 2002
     ---------------------------------------------------------------------------
                9.03:1.00                           As of March 30, 2003
     ---------------------------------------------------------------------------
                9.02:1.00                           As of June 29, 2003
     ---------------------------------------------------------------------------
                9.41:1.00                        As of September 28, 2003
     ---------------------------------------------------------------------------
                9.40:1.00                        As of December 28, 2003
     ---------------------------------------------------------------------------
                9.81:1.00                           As of March 29, 2004
     ---------------------------------------------------------------------------
                9.81:1.00                           As of June 28, 2004
     ---------------------------------------------------------------------------
               10.25:1.00                        As of September 27, 2004
     ---------------------------------------------------------------------------
               10.24:1.00                        As of December 27, 2004
     ---------------------------------------------------------------------------

                                      -66-

<PAGE>
     ---------------------------------------------------------------------------
               10.71:1.00                           As of March 28, 2005
     ---------------------------------------------------------------------------

     7.21 Inactive Subsidiaries. Permit, except as set forth on Schedule 7.21,
any Inactive Subsidiary to (a) own any material assets, or (b) engage in any
material business activity.

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 any Borrower fails to pay when due and payable, or when declared
due and payable, all or 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 the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations); provided, however, that in the case of Overadvances that are
caused by the charging of interest, fees, or Lender Group Expenses to Borrowers'
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) Prandium or any of its Subsidiaries fails to perform, keep, or
observe in any material respect any term, provision, 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
(Locations of Inventory and Equipment), 6.11 (Compliance with Laws), or 6.12
(Employee Benefits) of this Agreement and such failure continues for a period of
15 days from the date on which any of Prandium or its Subsidiaries first had
knowledge or reasonably should have had knowledge of such failure or neglect, or
(b) Prandium or any of its Subsidiaries fails or neglects to perform, keep, or
observe, in any material respect, any other term, provision, covenant, or
agreement contained in this Agreement or any of the other Loan Documents (other
than any such term, provision, covenant, or agreement that is the subject of
another provision of this Section 8), and, in each such instance, after giving
effect to any notice, grace, or cure periods provided for in such Loan
Documents;

     8.3  If any material portion of Prandium's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person and the same is not
discharged or bonded before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by Prandium or such Subsidiary, as applicable;

     8.4  If an Insolvency Proceeding is commenced by Prandium or any of its
Subsidiaries;

                                      -67-

<PAGE>

     8.5  If an Insolvency Proceeding is commenced against Prandium or any of
its Subsidiaries, and any of the following events occur: (a) Prandium or the
applicable Subsidiary consents to the institution of such 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, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligations to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
Prandium or any of its Subsidiaries, or (e) an order for relief shall have been
entered therein;

     8.6  If Prandium 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;

     8.7  If a notice of Lien, levy, or assessment is filed of record with
respect to any of Prandium's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or if any taxes
or debts owing at any time hereafter to any one or more of such entities becomes
a Lien, whether choate or otherwise, upon any of Prandium's or any of its
Subsidiaries' assets and the same is not paid before such payment is delinquent;

     8.8  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
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, whether choate or
otherwise, upon any of Prandium'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 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;

     8.9  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 choate or otherwise, upon the Headquarters
Property and, in any such case, such taxes are not the subject of a Permitted
Protest, and the Lien 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;

     8.10 If there is a default in one or more agreements relating to
Indebtedness of Prandium or any of its Subsidiaries involving an aggregate
amount of $250,000, or more, and such default (a) occurs at the final maturity
of the obligations thereunder, or (b) results in a

                                      -68-

<PAGE>

right by the other parties thereto, irrespective of whether exercised, to
accelerate the maturity of Prandium's or its Subsidiaries' obligations
thereunder;

     8.11   If Prandium or any of its Subsidiaries 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 warranty, representation, statement, or Record made to the
Lender Group by Prandium, any of its Subsidiaries, or any officer, employee,
agent, or director of Prandium or any of its Subsidiaries;

     8.13   If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by any such Guarantor thereunder;

     8.14   If this Agreement or any other Loan Document that purports to create
a Lien, shall, as a result of any act or failure to act by Prandium or any of
its Subsidiaries, fail or cease to create a valid and perfected and, except to
the extent permitted by the terms hereof or thereof, first priority Lien on or
security interest in the Collateral covered hereby or thereby; or

     8.15   Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by Prandium or any of its Subsidiaries, or a proceeding shall be
commenced by Prandium or any of its Subsidiaries, or by any Governmental
Authority having jurisdiction over Prandium and its Subsidiaries, seeking to
establish the invalidity or unenforceability thereof, or Prandium or any of its
Subsidiaries shall deny that Prandium or any of its Subsidiaries has any
liability or obligation purported to be created under any Loan Document.

9. THE LENDER GROUP'S RIGHTS AND REMEDIES.

     9.1    Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by Prandium
and Borrowers:

               (a)   Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;

               (b)   Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;

                                      -69-

<PAGE>

               (c)   Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;

               (d)   [Intentionally omitted];

               (e)   [Intentionally omitted];

               (f)   Without notice to or demand upon Borrowers or any
Guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Borrowers agree
to assemble the Personal Property Collateral if Agent so requires, and to make
the Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Borrowers authorize
Agent 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 Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge Borrowers' Loan Account therefor.
With respect to any Obligor's owned or leased premises, each Obligor hereby
grants Agent a license (to the maximum extent permitted by law and the terms of
the applicable lease) 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 the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;

               (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. Each Borrower hereby grants to Agent a
license or other right to use, without charge, such Borrower's labels, patents,
copyrights, 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 completing production of, advertising for sale,
and selling any Personal Property Collateral and such Borrower's rights under
all licenses and all franchise agreements shall inure to the Lender Group'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 each Obligor's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;

               (k)   Agent shall give notice of the disposition of the Personal
Property Collateral as follows:

                                      -70-

<PAGE>

                     (i)   Agent shall give Borrowers 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, the time on or after which
                the private sale or other disposition is to be made; and

                     (ii)  The notice shall be personally delivered or mailed,
                postage prepaid, to Borrowers as provided in Section 12, at
                least 10 days before the earliest time of disposition set forth
                in the notice; 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;

                     (l)   Agent, on behalf of the Lender Group, may credit bid
and purchase at any public sale; and

                     (m)   The Lender Groupshall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document;
and

                     (n)   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 the Guarantors (pursuant to the Guaranty) and
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Borrowers.

     9.2    Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10.  TAXES AND EXPENSES.

            If Prandium 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, then, to
the extent that Agent determines that such failure by Prandium or any of its
Subsidiaries could reasonably be expected to result in a Material Adverse Change
with respect to the Collateral, without prior notice to Prandium or any of its
Subsidiaries, Agent may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves in the Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with Section 6.8 hereof,
obtain and maintain insurance policies of the type described in Section 6.8 and
take any action with respect to such policies as Agent reasonably deems prudent.

                                      -71-

<PAGE>

Any such amounts paid by Agent shall constitute Lender Group Expenses and any
such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of
Default under this Agreement. Agent 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 be conclusive evidence that the
same was validly due and owing. Agent agrees to endeavor in good faith promptly
to provide notice to Prandium or Borrowers of any action taken by Agent under
this Section 10, but the failure of Agent to do so (except if such failure is
the result of Agent's bad faith) shall not create any liability whatsoever on
the part of Agent.

11.  WAIVERS; INDEMNIFICATION.

     11.1 Demand; Protest; etc. Each of the Obligors 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 the Lender Group
on which such Obligor may in any way be liable.

     11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.

     11.3 Indemnification. Each of the Obligors, jointly and severally, shall
pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons with respect to each Lender, each Participant, and each of their
respective officers, directors, employees, 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 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 (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) 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"). No
Obligor shall have any 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

                                      -72-

<PAGE>

settlement in excess of $250,000 made without Borrowers' consent (which shall
not be unreasonably withheld, conditioned, or delayed and which consent need not
be obtained if any Obligor is in default of its obligations under this Section
11.3); or (c) without Borrowers' consent (which shall not be unreasonably
withheld, conditioned, or delayed and which consent need not be obtained if any
Obligor is in default of its obligations under this Section 11.3), for fees and
disbursements of more than one separate firm of attorneys for all Indemnified
Persons relative to a particular Indemnified Liability. This provision shall
survive the termination of this Agreement and the repayment of the Obligations
for a period of 2 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 Borrowers or Agent to the other 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, electronic mail (at such
email addresses as Borrowers or Agent, as applicable, may designate to each
other in accordance herewith), or telefacsimile to the Obligors or Agent, as the
case may be, at its address set forth below:

           If to any Obligor:  PRANDIUM, INC.
                               2701 Alton Parkway
                               Irvine, California  92606
                               Attn: Mr. Robert T. Trebing, Jr.
                               Fax No. 949.724.9914

           with copies to:     SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
                               300 South Grand Avenue
                               Los Angeles, California  90071
                               Attn: David Reamer, Esq.
                               Fax No. 213.687.5600

           If to Agent:        FOOTHILL CAPITAL CORPORATION
                               2450 Colorado Avenue
                               Suite 3000 West
                               Santa Monica, California 90404
                               Attn: Structured Finance Division Manager
                               Fax No. 310.453.7442

                                      -73-

<PAGE>

        with copies to:  BROBECK, PHLEGER & HARRISON LLP
                         550 South Hope Street, Suite 2100
                         Los Angeles, California  90071
                         Attn: John Francis Hilson, Esq.
                         Fax No. 213.745.3345

         Agent and the Obligors may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each of the Obligors acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.

13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

                 (a)   THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH 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.

                 (b)   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 AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND
THE LENDER GROUP WAIVE, 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(b).

                                      -74-

<PAGE>

               (c) EACH OF THE OBLIGORS AND THE LENDER GROUP 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 THE OBLIGORS AND THE LENDER GROUP
REPRESENT THAT EACH 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.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

     14.1  Assignments and Participations.

               (a) Any Lender may, with the written consent of Agent (provided
that no written consent of Agent shall be required in connection with any
assignment and delegation by a Lender to an Eligible Transferee unless required
under clause (e) or (f) of the definition thereof)), assign and delegate to one
or more assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000;
provided, however, that the Obligors and Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Borrowers and Agent by such Lender and the Assignee, (ii)
such Lender and its Assignee have delivered to Borrowers and Agent an Assignment
and Acceptance in form and substance satisfactory to Agent, and (iii) the
assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.

               (b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrowers) that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the

                                      -75-

<PAGE>

case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and thereto),
and such assignment shall affect a novation between the Obligors and the
Assignee.

               (c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Prandium or its Subsidiaries or the performance or observance by the Obligors of
any of their respective obligations under this Agreement or any other Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (4) such Assignee will,
independently and without reliance upon Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement, (5) such Assignee appoints and
authorizes Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with such
powers as are reasonably incidental thereto, and (6) such Assignee agrees that
it will perform all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.

               (d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.

               (e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee (unless required under clause (e) or (f) of the definition thereof));
provided, however, that (i) the Originating Lender shall remain a "Lender" for
all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating

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<PAGE>

interest in the Obligations, the Commitments, and the other rights and interests
of the Originating Lender hereunder shall not constitute a "Lender" hereunder or
under the other Loan Documents and the Originating Lender's obligations under
this Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Obligors,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
the Obligors, the Collections, the Collateral, the Guarantor Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.

                (f)  In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to the Obligors or the
Obligors' businesses if the potential Assignee or Participant agrees to be bound
by Section 17.7.

                (g)  Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.

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<PAGE>

      14.2  Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that no Obligor may assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release the Obligors from their respective Obligations. A Lender may assign this
Agreement and the other Loan Documents and its rights and duties hereunder and
thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by the Obligors is
required in connection with any such assignment.

15.   AMENDMENTS; WAIVERS.

      15.1  Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by any Obligor therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by Agent at the written
request of the Required Lenders) and each Obligor and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders affected
thereby, and each Obligor, do any of the following:

                  (a)   increase or extend any Commitment of any Lender,

                  (b)   postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,

                  (c)   reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,

                  (d)   change the percentage of the Commitments that is
required to take any action hereunder,

                  (e)   amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,

                  (f)   release Collateral other than as permitted by Section
16.12,

                  (g)   change the definition of "Required Lenders",

                  (h)   contractually subordinate any of the Agent's Liens,

                  (i)   release any Borrower or any Guarantor from any
obligation for the payment of money, or

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<PAGE>

                  (j)   change the definitions of Borrowing Base, Maximum
Revolver Amount, Liquidity Reserve, or Maximum Amount, or change Section 2.1(b),
or

                  (k)   amend any of the provisions of Section 16,

and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
the Obligors, shall not require consent by or the agreement of any Obligor.

     15.2   Replacement of Holdout Lender.

                  (a)   If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders reasonably acceptable to Borrowers
(each, a "Replacement Lender"), and the Holdout Lender shall have no right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.

                  (b)   Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance Agreement, subject only to the Holdout Lender being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance Agreement prior to the
effective date of such replacement, the Holdout Lender shall be deemed to have
executed and delivered such Assignment and Acceptance Agreement. The replacement
of any Holdout Lender shall be made in accordance with the terms of Section
14.1. Until such time as the Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances
and to purchase a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.

     15.3   No Waivers; Cumulative Remedies. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the

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<PAGE>

extent specifically stated. No waiver by Agent or any Lender on any occasion
shall affect or diminish Agent's and each Lender's rights thereafter to require
strict performance by the Obligors of any provision of this Agreement. Agent's
and each Lender's rights under this Agreement and the other Loan Documents will
be cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.

16.    AGENT; THE LENDER GROUP.

       16.1   Appointment and Authorization of Agent. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent and the
Lenders, and no Borrower shall have any rights as a third party beneficiary of
any of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay

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<PAGE>

such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.

       16.2  Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

       16.3  Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Obligor, or any officer or
director thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Books or properties of
the Obligors.

       16.4  Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.

       16.5  Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be

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<PAGE>

paid to Agent for the account of the Lenders and except with respect to Events
of Default of which Agent has actual knowledge, unless Agent shall have received
written notice from a Lender, or any Obligor referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a
"notice of default." Agent promptly will notify the Lenders of its receipt of
any such notice or of any Event of Default of which Agent has actual knowledge.
If any Lender obtains actual knowledge of any Event of Default, such Lender
promptly shall notify the other Lenders and Agent of such Event of Default. Each
Lender shall be solely responsible for giving any notices to its Participants,
if any. Subject to Section 16.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.

       16.6   Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of the
Obligors, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document. Except
for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.

       16.7   Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not any Obligor is obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.

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<PAGE>

Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of any Obligor and without limiting the obligation of any Obligor
to do so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
the Obligors. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.

       16.8   Agent in Individual Capacity. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding the
Obligors or any of their Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.

       16.9   Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material

                                      -83-

<PAGE>

provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and replace Agent with a successor Agent from among the
Lenders. In any such event, upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers,
and duties of the retiring Agent and the term "Agent" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.

       16.10   Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with any of
the Obligors or their Subsidiaries or Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents as though such Lender were
not a Lender hereunder without notice to or consent of the other members of the
Lender Group. The other members of the Lender Group acknowledge that, pursuant
to such activities, such Lender and its respective Affiliates may receive
information regarding the Obligors or their Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of the Obligors or such other Person and
that prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.

       16.11   Withholding Taxes.

               (a)  If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Borrowers:

               (i)  if such Lender claims an exemption from withholding tax
           pursuant to its portfolio interest exception, (a) a statement of the
           Lender, signed under penalty of perjury, that it is not a (I) a
           "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
           shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
           or (III) a controlled foreign corporation described in Section
           881(c)(3)(C) of the IRC, and (B) a properly completed

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            IRS Form W-8BEN, before the first payment of any interest under this
            Agreement and at any other time reasonably requested by Agent or
            Borrowers;

               (ii)  if such Lender claims an exemption from, or a reduction of,
            withholding tax under a United States tax treaty, properly completed
            IRS Form W-8BEN before the first payment of any interest under this
            Agreement and at any other time reasonably requested by Agent or
            Borrowers;

               (iii) if such Lender claims that interest paid under this
            Agreement is exempt from United States withholding tax because it is
            effectively connected with a United States trade or business of such
            Lender, two properly completed and executed copies of IRS Form
            W-8ECI before the first payment of any interest is due under this
            Agreement and at any other time reasonably requested by Agent or
            Borrowers;

               (iv)  such other form or forms as may be required under the IRC
            or other laws of the United States as a condition to exemption from,
            or reduction of, United States withholding tax.

Such Lender agrees promptly to notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

               (b)   If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.

               (c)   If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

               (d)   If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys

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fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.

               (e)   All payments made by Borrowers hereunder or under any note
will be made without setoff, counterclaim, or other defense, except as required
by applicable law other than for Taxes (as defined below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than of the United States) with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of a Lender, or (ii) to the extent that such tax
results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, Borrowers agree to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrowers shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this Section 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Borrowers will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by Borrowers.

       16.12   Collateral Matters.

               (a)   The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Borrowers certify to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which no Borrower owned any interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting
property leased to any Borrower under a lease that has expired or is terminated
in a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by

                                      -86-

<PAGE>

Agent or Borrowers at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

               Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.

      16.13    Restrictions on Actions by Lenders; Sharing of Payments.

               (a)   Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.

               (b)   If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this

                                      -87-

<PAGE>

Agreement, or (2) purchase, without recourse or warranty, an undivided interest
and participation in the Obligations owed to the other Lenders so that such
excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

      16.14   Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.

      16.15   Payments by Agent to the Lenders. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.

      16.16   Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

      16.17   Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information. By becoming a party to this
Agreement, each Lender:

              (a)   is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,

              (b)   expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,

                                      -88-

<PAGE>

               (c)  expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Prandium and its Subsidiaries and will rely significantly upon the Books, as
well as on representations of Prandium's and its Subsidiaries' personnel, and

               (d)  without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Agent,
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by the Obligors to Agent that has not been contemporaneously
provided by the Obligors to such Lender, and, upon receipt of such request,
Agent promptly shall provide a copy of same to such Lender, (y) to the extent
that Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from the Obligors, any Lender may, from time
to time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of the Obligors
the additional reports or information reasonably specified by such Lender, and,
upon receipt thereof from the Obligors, Agent promptly shall provide a copy of
same to such Lender, and (z) any time that Agent renders to Borrowers a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.

     16.18     Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts

                                      -89-

<PAGE>

of any other member of the Lender Group. No Lender shall be responsible to any
Obligor or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.

     16.19     Legal Representation of Agent. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Brobeck, Phleger & Harrison LLP ("Brobeck") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that Brobeck does not represent it in connection with any
such matters.

17.  GENERAL PROVISIONS.

     17.1  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.

     17.2  Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or any Obligor,
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
accomplish fairly the purposes and intentions of all parties hereto.

     17.3  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.

     17.4  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 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. The foregoing shall apply to each other Loan Document mutatis
mutandis.

     17.5  Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrowers or any Guarantor or the transfer to the
Lender Group of any property 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, or other voidable or recoverable payments of

                                      -90-

<PAGE>

money or transfers of property (collectively, a "Voidable Transfer"), and if the
Lender Group 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 the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of any Borrower or any Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.

     17.6  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.

     17.7  Confidentiality. The Lender Group agrees that material, non-public
information regarding Prandium and its Subsidiaries, their operations, assets,
and existing and contemplated business plans shall be treated by each member of
the Lender Group 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 any member of the Lender Group, (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 Borrowers, (d) as to
any such information that is or becomes generally available to the public (other
than as a result of prohibited disclosure by the Lender Group), and (e) in
connection with any assignment, prospective assignment, sale, prospective sale,
participation or prospective participations, or pledge or prospective pledge of
any Lender's interest 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 17.9 shall
survive for 2 years after the full and final repayment of the Obligations.

     17.8  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 a party and whose terms and conditions are by this reference
incorporated herein mutatis mutandis.

                           [Signature page to follow.]

                                      -91-

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                                              CHI-CHI'S, INC.,
                                              a Delaware corporation

                                              By: /s/ R. T. Trebing, Jr.
                                              Title: VP & Treasurer

                                              KOO KOO ROO, INC.,
                                              a Delaware corporation

                                              By: /s/ R. T. Trebing, Jr.
                                              Title: VP & Treasurer

                                              FOOTHILL CAPITAL CORPORATION,
                                              a California corporation

                                              By: /s/ Amelie Yehros
                                              Title: Vice President

                                      -92-

<PAGE>

Acknowledgement and Agreement
of Guarantors under Section
17.8 of the Agreement:

PRANDIUM, INC.,
a Delaware corporation

By: /s/ R. T. Trebing, Jr.
Title: EVP/CFO

FRI-MRD CORPORATION,
a Delaware corporation

By: /s/ R. T. Trebing, Jr.
Title: President

FRI-ADMIN CORPORATION,
a Delaware corporation

By: /s/ R. T. Trebing, Jr.
Title: President

CCMR OF TIMONIUM, INC.,
a Delaware corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

CCMR OF MARYLAND, INC.,
a Delaware corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

                                      -93-

<PAGE>

CCMR OF CATONSVILLE, INC.,
a Kentucky corporation

By: /s/ Michael Rule
Title: Secretary

CCMR OF GREENBELT, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

CCMR OF RITCHIE HIGHWAY, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

CCMR OF CUMBERLAND, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

CCMR OF HARFORD COUNTY, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

                                      -94-

<PAGE>

MAINTENANCE SUPPORT GROUP, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

CCMR OF FREDERICK, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

CHI-CHI'S OF WEST VIRGINIA, INC.,
a Kentucky corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

THE HAMLET GROUP, INC.,
a California corporation

By: /s/ R. T. Trebing, Jr.
Title: VP & Treasurer

                                      -95-

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