Form 10-Q
Sequential Page 1 of 14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)*
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 26, 1996, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ____________ to _____________
Commission file number 333-07601
FRD Acquisition Co.
(Exact name of registrant as specified in its charter)
Delaware 13-3487402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18831 Von Karman Avenue
Irvine, California 92612
(Address of principal executive offices)
(Zip Code)
(864) 597-8000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ ] No [X] (The Registrant became subject to such filing requirements as of
September 10, 1996)
As of November 10, 1996, 1000 shares of the registrant's Common Stock, par value
$0.01 per share, were outstanding.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FRD Acquisition Co.
Condensed Statements of Consolidated and Combined Operations
For the Three Months Ended September 26, 1996 and September 21, 1995
(Unaudited)
<TABLE>
<CAPTION>
FRD FRD
Successor Predecessor
Three Months Three Months
Ended Ended
(In thousands) 9/26/96 9/21/95
----------- ------------
<S> <C> <C>
Operating revenue $122,132 $126,239
---------- ------------
Operating expenses:
Product costs 34,784 34,982
Payroll and benefits 43,064 44,231
Depreciation & amortization 7,544 6,933
Management fees to Flagstar 1,191 --
Other 29,804 30,357
---------- -------------
116,387 116,503
---------- ------------
Operating income 5,745 9,736
---------- ------------
Other charges:
Interest and debt expense - net 7,612 3,688
Other non-operating (income) expense - net (14) 392
--------- -------------
7,598 4,080
---------- ------------
(Loss) income before taxes (1,853) 5,656
Provision for income taxes 264 2,800
---------- -------------
Net income (loss) $ (2,117) $ 2,856
========== ==============
</TABLE>
2
<PAGE>
FRD Acquisition Co.
Condensed Statements of Consolidated and Combined Operations
For the Nine Months Ended September 26, 1996 and September 21, 1995
(Unaudited)
<TABLE>
<CAPTION>
FRD FRD
Successor Predecessor
Four Months Five Months Nine Months
Ended Ended Ended
September 26, May 23, September 21,
1996 1996 1995
------------ ------------ --------------
(In thousands)
<S> <C> <C> <C>
Operating revenue $ 171,408 $195,943 $372,576
----------- ------------ -----------
Operating expense:
Product cost 48,910 54,370 105,385
Payroll and benefits 60,546 74,642 133,280
Depreciation & amortization 10,051 12,371 20,547
Management fees to Flagstar 1,714 -- --
Other 41,095 52,078 92,398
----------- ----------- ----------
162,316 193,461 351,610
----------- ----------- ----------
Operating income 9,092 2,482 20,966
----------- ----------- ----------
Other charges:
Interest and debt expense - net 10,108 4,658 9,617
Other non-operating (income) expenses
net 149 (5,437) 845
----------- ----------- ----------
10,257 (779) 10,462
----------- ----------- ----------
Income (loss) before income taxes (1,165) 3,261 10,504
Provision for income taxes 460 2,160 5,800
----------- ----------- ----------
Net income (loss) $ (1,625) $ 1,101 $ 4,704
=========== ============ ==========
</TABLE>
3
<PAGE>
FRD Acquisition Co.
Condensed Consolidated and Combined Balance Sheets
September 26, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
FRD FRD
Successor Predecessor
September 26, December 31,
1996 1995
--------------- --------------
(In thousands)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $4,888 $ 5,497
Receivables 4,821 5,439
Merchandise and supply inventories 5,232 5,288
Net assets held for sale -- 13,248
Other 2,556 2,240
--------- ----------
17,497 31,712
--------- ----------
Property and equipment 138,442 180,437
Accumulated depreciation (7,274) (34,395)
--------- -----------
131,168 146,042
Goodwill 218,844 --
Reorganization value in excess of amounts
allocable to identifiable assets, net -- 145,352
Other 13,120 9,741
--------- ----------
Total Assets $380,629 $332,847
========== ==========
Liabilities and Equity
Current Liabilities:
Loans payable and current maturities of
long-term debt $16,078 $84,730
Accounts payable 14,211 23,316
Accrued payroll and vacation 14,204 13,894
Accrued insurance 6,675 6,815
Accrued interest 4,306 830
Payable to Flagstar 1,714 --
Other 15,126 13,106
-------- ---------
72,314 142,691
-------- ----------
Long-term Liabilities:
Debt, less current maturities 225,111 27,502
Liability for self-insured claims 9,829 10,053
-------- ----------
234,940 37,555
-------- ----------
Total Liabilities 307,254 180,246
Stockholders' equity 73,375 --
Net combined equity -- 152,601
-------- ----------
Total Liabilities and Equity $380,629 $332,847
======== ==========
4
</TABLE>
<PAGE>
FRD Acquisition Co.
Statements of Consolidated and Combined Cash Flows
For the Nine Months Ended September 26, 1996 and September 21, 1995
(Unaudited)
<TABLE>
<CAPTION>
FRD Successor FRD Predecessor
Four Months Five Months Nine Months
Ended Ended Ended
September 26, May 23, September 21,
1996 1996 1995
------------- ----------- -------------
(In thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (1,625) $ 1,101 $ 4,704
--------- ---------- ---------
Adjustments to reconcile net income (loss) to
cash flows from operating activities:
Depreciation and amortization of property and
intangibles 10,051 12,371 20,547
Amortization of deferred financing costs 425
Loss (gain) on disposition of assets 134 (5,738) 539
Decrease (increase) in assets:
Receivables (1,059) 1,676 1,519
Merchandise and supply inventories (12) 68 1,078
Other current assets (1,871) (485) (621)
Other assets (226) 1,251 1,062
Increase (decrease) in liabilities:
Accounts payable (2,076) (4,762) (355)
Accrued payroll and vacation 112 (1,102)
Payable to Flagstar 1,714
Other accrued liabilities 3,339 (2,290) 9,068
Self insurance reserves 154 2,133
Other non-current liabilities (347) 31
-------- --------- ---------
Total adjustments 10,338 4,224 31,766
-------- --------- ---------
Net cash flows from operating activities 8,713 5,325 36,470
-------- --------- ---------
Cash Flows From (Used In) Investing Activities:
Purchase of property (1,317) (2,216) (18,746)
Proceeds from disposition of property 20,087 815
Acquisition of business (128,056)
--------- --------- --------
Net cash flows from investing activities (129,373) 17,871 (17,931)
--------- --------- ---------
Cash Flows From (Used In) Financing Activities:
Net intercompany and equity activity 54,050 (11,731)
Principal debt borrowings 56,000
Principal debt payments (1,940) (81,755) (4,766)
Equity contribution from Flagstar 75,000
Deferred financing costs (4,500)
--------- ---------- --------
Net cash flows from (used in) financing activities 124,560 (27,705) (16,497)
--------- ---------- ---------
Increase (decrease) in cash and cash equivalents 3,900 (4,509) 2,042
Cash and cash equivalent at:
Beginning of period 988 5,497 4,220
-------- ---------- ---------
End of period $ 4,888 $ 988 $ 6,262
======== ========== =========
</TABLE>
5
<PAGE>
Form 10-Q
FRD ACQUISITION CO.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
September 26, 1996
(Unaudited)
Note 1. Organization and Basis of Presentation
FRD Acquisition Co. ("FRD" or, together with its subsidiary, "the Company") was
incorporated in February 1996 as a wholly-owned subsidiary of Flagstar
Corporation ("Flagstar"). On May 23, 1996, FRD consummated the acquisition of
the Coco's and Carrows restaurant chains consisting of 347 company-owned units
within the family dining segment. The acquisition price of $306.5 million (which
was paid in exchange for all of the outstanding stock of FRI-M Corporation
("FRI-M"), the subsidiary of Family Restaurants, Inc. ("FRI"), which owns the
Coco's and Carrows chains), was financed with $125.0 million in cash ($75.0
million of which was provided from the Company's cash balances and the remaining
$50.0 million from bank term loans which totalled $56.0 million with $6.0
million being used to pay transaction fees), the issuance of $150.0 million in
senior notes of FRD to FRI and the assumption of certain capital lease
obligations of approximately $31.5 million. In addition, on September 4,
1996, an additional $6,897,000 principal amount of Notes was issued by the
Company to FRI pursuant to the purchase price adjustment provisions of the
Stock Purchase Agreement. The acquisition was accounted for using the
purchase method of accounting.
In the financial statements included herein, "FRD Predecessor" refers to the
period of ownership of FRI-M by FRI through May 23, 1996. The FRD Predecessor
Combined financial statements combine the financial position and operations of
FRI-M Corporation and certain subsidiaries including those restaurants that made
up the Family Restaurant Division as well as the FRD Commissary, a former
division of FRI. The Family Restaurant Division primarily represented the Coco's
and Carrows concept restaurants. "FRD Successor" refers to the period of
ownership of FRI-M by FRD subsequent to May 23, 1996. Certain 1995 and 1996
amounts relative to the period of ownership of FRI-M by FRI have been
reclassified to conform to the 1996 presentation for the period of ownership by
FRD.
In accordance with the purchase method of accounting, the purchase price has
been allocated to the underlying assets and liabilities based on their estimated
respective fair values at the date of acquisition. Because the final allocation
of the purchase price is dependent upon certain valuations and other studies not
yet completed, the current allocation and resulting excess of purchase price
over net assets acquired are preliminary in nature. Based on this preliminary
valuation, the excess purchase price over the fair value of net assets acquired
is $221.0 million which is being amortized over a 40-year period on a straight
line basis. The Company anticipates finalizing this allocation by the end of
1996. Based on the valuations and studies currently available the Company
estimates that some portion of the purchase price will be reallocated from
goodwill to property and equipment and to trade names. No other significant
adjustments to the preliminary allocation are expected.
The following unaudited pro forma financial information shows the results of
operations of the Company as though the acquisition occurred as of January 1,
1995. These results include the amortization of the excess of purchase price
over net assets acquired over a 40-year period, a reduction of overhead expenses
due to anticipated cost savings and efficiencies from combining the operations
of Flagstar and the Company and an increase in interest expense as a result of
the debt issued to finance the acquisition.
6
<PAGE>
Form 10-Q
Nine Months Ended
September 26, September 21,
1996 1995
(In thousands)
Revenue $367,351 $372,576
Net Loss (3,466) (1,896)
The pro forma financial information presented above does not purport to be
indicative of either (i) the results of operations, had the acquisition taken
place on January 1, 1995, or (ii) future results of operations.
The consolidated and combined financial statements of the Company and its
predecessor for the three month and nine month periods ended September 26, 1996
and September 21, 1995 are unaudited and include all adjustments management
believes are necessary for a fair presentation of the results of operations for
such interim periods. All such adjustments are of a normal and recurring nature.
The interim consolidated financial statements should be read in conjunction with
the FRI-M Combined Financial Statements and notes thereto for the year ended
December 31, 1995 and the related Management's Discussion and Analysis of
Financial Condition and Results of Operations, both of which are contained in
the FRD Acquisition Co. Forms S-1 and S-4 dated as of September 6, 1996
(Registration No. 333-07601) (the "FRD Form S-4"). The results of operations for
the three months and nine months ended September 26, 1996 are not necessarily
indicative of the results for the entire fiscal year ending December 31, 1996.
Note 2. Related Party Transactions
Pursuant to a Management Services Agreement (the "Agreement"), dated as of May
24, 1996, between Flagstar and the Company, Flagstar has agreed to provide
certain management and support services to the Company. The fee for services
performed under the Agreement is equal to 1% of the Company's net revenues.
Actual payment of the fee to Flagstar, however, cannot occur unless certain
financial targets are met (see the FRD Form S-4 for further details). Fees
for the three and four months ended September 26, 1996 totaled approximately
$1.2 and $1.7 million, respectively. Because the Company has not met the
financial targets defined in the agreement, no payments have been made to
Flagstar as of September 26, 1996.
Note 3. Earnings (Loss) Per Common Share
As described in Note 1, FRD is a wholly-owned subsidiary of Flagstar.
Accordingly, per share data is not meaningful and has been omitted for all
periods.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is intended to highlight significant changes in
financial position as of September 26, 1996 and the results of operations for
the three months and nine months ended September 26, 1996 as compared to the
corresponding 1995 periods.
The forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, which reflect management's
best judgment based on factors currently known, involve risks and uncertainties.
Actual results could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including but not
limited to those discussed below. Forward-looking information provided by the
Company pursuant to the safe harbor established under the Private Securities
Litigation Reform Act of 1995 should be evaluated in the context of these
factors.
7
<PAGE>
Results of Operations
Three Months Ended September 26, 1996 Compared to Three Months Ended September
21, 1995
Three Months Ended
Increase/
(In thousands) 9/26/96 9/21/95 (Decrease)
Revenue $122,132 $126,239 $(4,107)
Operating Expenses 116,387 116,503 (116)
-------- -------- --------
Operating Income $ 5,745 $ 9,736 $(3,991)
======== ======== ========
The table below summarizes restaurant unit activity for the three months ended
September 26, 1996.
<TABLE>
<CAPTION>
Ending Ending
Units Units Units
6/27/96 Opened 9/26/96
<S> <C> <C> <C>
Coco's
Company owned 184 - 184
Franchised units 6 - 6
International licensees 261 5 266
--- --- ---
Subtotal 451 5 456
--- --- ---
Carrows 162 - 162
Total Restaurant Activity 613 5 618
=== === ===
</TABLE>
Operating revenues for the third quarter of 1996 decreased $4.1 million (3.3%)
as compared with the comparable 1995 quarter. This decrease is a result of a
decline in comparable store sales at Coco's of 3.3% and Carrows of 4.1%. In this
regard, guest counts decreased 4.7% at Coco's from the prior year quarter and
6.1% at Carrows. Such decrease is attributable to the general softness in the
midscale restaurant segment, as well as to lower media spending due to the
Summer Olympics television coverage in 1996. The Company chose not to advertise
during the Olympics and as a result, in-store promotions which ran during the
third quarter of 1996 were not as successful as the 1995 promotions which had
media support. The guest count decreases were partially offset by an increase in
guest check average of 1.5% and 2.1% at Coco's and Carrows, respectively, as a
result of suggestive selling of promoted dessert items.
Operating expenses for the quarter ended September 26, 1996 decreased $.1
million (.1%) as compared to the quarter ended September 21, 1995, reflecting
the decrease in operating revenue described above as well as reduced payroll and
benefit costs of $1.2 million as a result of increased focus on controlling
in-store labor. These savings were offset in part due to certain fixed costs,
including management salaries, which could not be reduced in proportion to the
sales decrease. A combination of higher product costs equating to .8% points of
sales due to higher dairy, beef and pork prices during the 1996 quarter and an
increase in utility expenses due to a change in the Company's utility rate
structure also partially offset the favorabilities noted above. In addition,
other operating expenses increased primarily due to increases in rent in
connection with several sale/leaseback transactions that occurred in the first
quarter of 1996.
Interest and debt expense increased $3.9 million during the third quarter of
1996 compared to the same quarter last year. This increase is attributable to
the change in the Company's debt structure
8
<PAGE>
related to its acquisition in May 1996. As a result of the acquisition, the
Company obtained a $56.0 million bank term loan and issued $156.9 million in
senior notes.
The decrease in net income of $5.0 million in comparison to the prior year
quarter is due to a combination of the above described items.
Nine Months Ended September 26, 1996 Compared to the Nine Months Ended September
21, 1995
Operating results for the nine months ended September 26, 1996 include the five
months ended May 23, 1996 (FRD Predecessor) and the four months ended September
26, 1996 (FRD Successor).
Nine Months Ended
Increase/
(In thousands) 9/26/96 9/21/95 (Decrease)
----------- ----------- ---------------
Revenue $367,351 $372,576 $(5,225)
Operating Expenses 355,777 351,610 4,167
----------- ----------- ---------------
Operating Income $ 11,574 $ 20,966 $(9,392)
============ =========== ===============
The table below summarizes restaurant unit activity for the nine months ended
September 26, 1996.
<TABLE>
<CAPTION>
Ending Ending
Units Units Units Units
12/31/95 Opened Closed 9/26/96
-------- ------ ------ -------
<S> <C> <C> <C> <C>
Coco's
Company owned 188 - (4) 184
Franchised units 6 - - 6
International licensees 252 14 - 266
--- ----- ----- -----
Subtotal 446 14 (4) 456
----- ----- ----- -----
Carrows 161 2 (1) 162
----- ----- ----- -----
Total Restaurant Activity 607 16 (5) 618
===== ======= ====== =====
</TABLE>
Operating revenue for the nine month period ended September 26, 1996 decreased
$5.2 million (1.4%) as compared to the same period in 1995 as a result of a
decline in comparable store sales for Coco's of 2.1% and Carrows of 0.4%. The
sales decline at Coco's during the nine month period is primarily due to the
general softness in the midscale restaurant segment. Customer counts for Coco's
decreased during the 1996 period by 4.2% as compared to the prior year period.
This decrease was partially offset by an increase in guest check average of 2.2%
mainly driven by suggestive selling of promoted dessert items. Customer counts
at Carrows for the 1996 period decreased 2.4% as compared to the 1995 period.
This decrease was partially offset by an increase in guest check average of
2.0%.
Operating expenses for the nine month period ended September 26, 1996 increased
$4.2 million (1.2%) as compared to the comparable 1995 period. This increase is
attributable to several factors as described below. The increase in payroll and
benefits reflects an increase in workers' compensation self insurance reserves
($2.0 million) based on revised claim loss estimates and an increase in certain
employee benefit accruals ($0.8 million) to conform FRD accounting for such
accruals with the accounting treatment used by Flagstar. These increases were
offset, in part, by a decline in recurring payroll and benefits expenses
corresponding to the Company's decline in revenue. The decline in such recurring
9
<PAGE>
Form 10-Q
expenses, however, was less than the revenue decrease due to certain fixed costs
which could not be reduced in proportion to the sales decline. Other operating
expenses increased primarily due to increases in rent in connection with several
sale/leaseback transactions that occurred in the first quarter of 1996 and a
litigation reserve ($1.1 million) established during the period. The operating
expense increases were partially offset by a $2.1 million decrease in product
costs due to the decrease in revenues and a $.7 million decrease due to the
higher margin items being promoted in 1996. These savings were somewhat offset
by the higher dairy, beef and pork prices in the third quarter of 1996.
Interest and debt expense during the nine month period ended September 26, 1996
increased $5.1 million as compared to the comparable 1995 period attributable
to the change in the Company's debt structure related to its acquisition in May
1996. As a result of the acquisition, the Company obtained a $56.0 million bank
term loan and issued $156.9 million in senior notes.
Other non-operating expenses during the nine month period ended September 26,
1996 included a gain on the sale of one Carrows restaurant in Las Vegas, Nevada
of $5.9 resulting in net non-operating income as compared to net expense in the
1995 period.
The decrease in net income of $5.2 million in comparison to the prior nine month
period is due to a combination of the above described items.
Liquidity and Capital Resources
At September 26, 1996 and December 31, 1995, the Company had working capital
deficits of $54.8 million and $111.0 million, respectively. The decrease in such
deficit is attributable primarily to the fact that the predecessor company had
significant current notes payable to banks that were used to fund the operating
cash flow needs of all FRI subsidiaries. Conversely, FRD's debt at September 26,
1996 (the majority of which is acquisition related) is primarily noncurrent. The
Company is able to operate with a substantial working capital deficiency
because: (i) restaurant operations are conducted primarily on a cash (and cash
equivalent) basis with a low level of accounts receivable, (ii) rapid turnover
allows a limited investment in inventories and (iii) accounts payable for food,
beverages, and supplies usually become due after the receipt of cash from
related sales.
The Company intends to continue to operate with working capital deficiencies and
to rely upon internally generated funds and borrowings under its credit facility
to finance its daily restaurant operations. The Company is continuing its
evaluations regarding the nature and scope of its restaurant operations and
various short-term and long-term strategic considerations to assess whether, and
to what extent, integration, consolidation or other modification of its
restaurant operations are appropriate in view of the acquisition.
Other
The Minimum Wage Bill recently enacted by Congress was signed into law during
the third quarter of 1996 and became effective October 1, 1996. The Company will
attempt to offset any increases in the minimum wage through a combination of
pricing and cost control efforts; however, there can be no assurance that the
Company will be able to pass such cost increases on to the customer.
10
<PAGE>
Form 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Certain of the exhibits to this report, indicated by asterisk, are
hereby incorporated by reference to other documents physically on
file with the Commission, to be a part hereof as of their
respective dates.
Exhibit
No. Description
*3.1 Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to Registration Statements on Forms S-1
and S-4 dated as of September 6, 1996 (No. 333-07601) of FRD
Acquisition Co. (the "FRD Form S-4")).
*3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to
the FRD Form S-4).
*4.1 Indenture dated as of May 23, 1996 between the Company and the Bank
of New York, as Trustee (the "Indenture") (incorporated by
reference to Exhibit 4.1 to the FRD Form S-4).
*4.1.1 Form of First Supplemental Indenture to the Indenture dated as of
August 23, 1996 (incorporated by reference to Exhibit 4.1.1 to the
FRD Form S-4).
*4.2 Stock Purchase Agreement dated as of March 1, 1996 by and among
Flagstar, Flagstar Companies, Inc., the Company, and Family
Restaurants, Inc. (incorporated by reference to Exhibit 4.2 to the
FRD Form S-4).
*4.3 Registration Rights Agreement dated as of May 23, 1996 between the
Company and Family Restaurants, Inc. (the "Registration Rights
Agreement") (incorporated by reference to Exhibit 4.3 to the FRD
Form S-4).
*4.3.1 First Amendment to Registration Rights Agreement, dated as of
August 23, 1996 (incorporated by reference to Exhibit 4.3.1 to the
FRD Form S-4).
*10.1 Credit Agreement dated as of May 23, 1996 by and among the Company,
as Guarantor, FRI-M as Borrower, the Financial Institutions listed
therein, as lenders, Bankers Trust Company, Chemical Bank and
Citicorp USA, Inc., as co-syndication agents, and Credit Lyonnais
New York Branch, as administrative agent (the "Credit Agreement")
(incorporated by reference to Exhibit 10.1 to the FRD Form S-4).
10.1.1 First Amendment to the Credit Agreement, dated as of July 1, 1996.
*10.2 Tax Sharing and Allocation Agreement dated as of May 23, 1996 among
Flagstar Companies, Inc., the Company and the subsidiaries of the
Company (incorporated by reference to Exhibit 10.2 to the FRD Form
S-4).
*10.3 Management Services Agreement dated as of May 24, 1996 between the
Company and Flagstar Corporation (incorporated by reference to
Exhibit 10.3 to the FRD Form S-4).
*10.4 Flagstar Companies, Inc. 1989 Non-Qualified Stock Option Plan
(incorporated by reference to Exhibit 10.9 to Flagstar Companies,
Inc.'s 1995 Form 10-K, File No. 0-18051).
11
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Form 10-Q
*10.5 Technical Assistance and License Agreement, dated as of April 14,
1995, between Coco's Restaurant, Inc. and Coco's Japan Co., Ltd
(incorporated by reference to Exhibit 10.5 to the FRD Form S-4).
*10.6 Memorandum regarding employment arrangement between the Company and
Mark Shipman (incorporated by reference to Exhibit 10.6 to the FRD
Form S-4).
27 Financial Data Schedule
- -----------------------
* Certain of the exhibits to this Quarterly Report on Form 10-Q, indicated by
an asterisk, are hereby incorporated by reference to other documents
physically on file with the Commission.
(b) No reports on Form 8-K were filed during the quarter ended September 26,
1996.
12
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Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRD ACQUISITION CO.
Date: November 12, 1996 By: /s/ C. Robert Campbell
----------------------------------
C. Robert Campbell
Executive Vice President
13
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FRI-M CORPORATION
FIRST AMENDMENT
TO CREDIT AGREEMENT, GUARANTIES AND
CERTAIN COLLATERAL DOCUMENTS
This FIRST AMENDMENT TO CREDIT AGREEMENT, GUARANTIES AND
CERTAIN COLLATERAL DOCUMENTS (this "Amendment") is dated as of July 1, 1996 and
entered into by and among FRD ACQUISITION CO., a Delaware corporation
("Holdings"), FRI-M CORPORATION, a Delaware corporation ("Company"), the other
Credit Support Parties (as defined in Section 4 hereof), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), BANKERS TRUST COMPANY,
CHEMICAL BANK and CITICORP USA, INC., as co-syndication agents for Lenders (in
such capacity, each individually referred to herein as a "Co-Syndication Agent"
and collectively as "Co-Syndication Agents"), and CREDIT LYONNAIS NEW YORK
BRANCH, as administrative agent for Lenders (in such capacity, "Administrative
Agent"), and is made with reference to that certain Credit Agreement dated as of
May 23, 1996 (the "Credit Agreement"), by and among Holdings, Company, Lenders,
Co- Syndication Agents and Administrative Agent, and to the other Loan
Documents. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Loan Parties and Lenders desire to (i) amend the
Credit Agreement to, among other things, permit Company to enter into daylight
overdraft protection agreements and make certain other changes as set forth
below and (ii) amend the Guaranties and certain of the Collateral Documents as
set forth below;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
1
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Section 1. AMENDMENTS TO THE CREDIT AGREEMENT,
GUARANTIES AND CERTAIN COLLATERAL DOCUMENTS
1.1 Amendment to Section 1: Provisions Relating to
Certain Defined Terms
A. Additional Defined Term. Subsection 1.1 of the Credit
Agreement is hereby amended by adding thereto the following definition, which
shall be inserted in proper alphabetical order:
"`Daylight Overdraft Protection Agreement' means any agreement
pursuant to which any Person provides bank account overdraft protection
to Company for account deficiencies occurring during a Business Day as
a result of checks written or wire transfers or other electronic
transfers initiated by Company clearing on such Business Day and which
account deficiencies are expected to be cured with proceeds of wire
transfers or checks to be deposited later during such Business Day."
B. Contingent Obligations. Subsection 1.1 of the Credit
Agreement is hereby amended by adding to the end of the first sentence of the
definition of "Contingent Obligations" the following:
"or Daylight Overdraft Protection Agreements."
C. Indebtedness. Subsection 1.1 of the Credit Agreement is
hereby amended by adding to the end of the definition of "Indebtedness" the
following:
"Obligations under Daylight Overdraft Protection Agreements,
unless and until such obligations become matured obligations actually
arising pursuant thereto, do not constitute Indebtedness."
1.2 Amendments to Section 7: Provisions Relating to
Negative Covenants
A. Liens and Related Matters. Subsection 7.2A of the Credit
Agreement is hereby amended by deleting clause (ii) thereof in its entirety and
substituting therefor the following:
"(ii) Liens granted pursuant to the Collateral Documents,
including Liens granted in favor of a Lender or an Affiliate of such Lender
which is (a) a counterparty to an Interest Rate Agreement permitted under
subsection 7.4(iii) or (b) a counterparty to a Daylight Overdraft Protection
Agreement permitted under subsection 7.4(vii);"
B. Contingent Obligations. Subsection 7.4 of the Credit
Agreement is hereby amended by (i) deleting the word "and" from the end of
clause (v) thereof and (ii) adding to the end of such subsection immediately
prior to the period the following:
2
<PAGE>
"; and
(vii) Company may become and remain liable with
respect to Contingent Obligations under Daylight Overdraft
Protection Agreements; provided that the aggregate amount of
overdraft protection available under all Daylight Overdraft
Protection Agreements shall not exceed at any time
$5,000,000."
1.3 Amendments to Section 9: Provisions Relating to Holdings
Guaranty.
A. Guarantied Obligations. Subsection 9.1 of the Credit
Agreement is hereby amended by deleting the first sentence of such subsection in
its entirety and substituting therefor the following:
"9.1 Guarantied Obligations.
As consideration for Lenders agreeing to
enter into this Agreement and extend the Commitments, make the
Loans hereunder and issue the Letters of Credit, Holdings
hereby unconditionally and irrevocably guaranties, as a
primary obligor and not merely as a surety, the due and
punctual payment when due (whether at stated maturity, by
required prepayment, declaration, demand or otherwise)
(including amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss. 362(a)) of all Obligations of Company
(including, without limitation, interest which, but for the
filing of a petition in bankruptcy with respect to Company
would accrue on such Obligations, whether or not allowable as
a claim) and all obligations of Company under Interest Rate
Agreements permitted under subsection 7.4(iii) or under
Daylight Overdraft Protection Agreements permitted under
subsection 7.4(vii) (all such Interest Rate Agreements and
Daylight Overdraft Protection Agreements, collectively, the
`Lender Interest Rate Agreements'), in each case to which a
Lender or an Affiliate of such Lender (in such capacity under
such Lender Interest Rate Agreements, collectively, `Interest
Rate Exchangers') is a counterparty (the `Guarantied
Obligations')."
1.4 Amendment to Company Pledge Agreement.
Preliminary Statements. The Company Pledge Agreement
is hereby amended by deleting paragraph C of the Preliminary Statements thereto
in its entirety and substituting therefor the following:
"C. Pledgor may from time to time enter into one or
more Interest Rate Agreements or Daylight Overdraft Protection
Agreements (all such Interest Rate Agreements and Daylight
Overdraft Protection Agreements, collectively, the `Lender
Interest Rate Agreements') with one or more Lenders or their
Affiliates
3
<PAGE>
(in such capacity under all such Lender Interest Rate
Agreements, collectively, `Interest Rate Exchangers') in
accordance with the terms of the Credit Agreement, and it is
desired that the obligations of Pledgor under the Lender
Interest Rate Agreements, including without limitation the
obligation of Pledgor to make payments under Lender Interest
Rate Agreements that are Interest Rate Agreements in the
event of early termination thereof (all such obligations in
respect of the Lender Interest Rate Agreements being the
`Interest Rate Obligations'), together with all obligations
of Pledgor under the Credit Agreement and the other Loan
Documents, be secured hereunder."
1.5 Amendments to Holdings Pledge Agreement, Subsidiary Pledge
Agreement, Holdings Security Agreement, Subsidiary Security Agreement and
Subsidiary Trademark Security Agreement. The Holdings Pledge Agreement, the
Subsidiary Pledge Agreement, the Holdings Security Agreement, the Subsidiary
Security Agreement and the Subsidiary Trademark Security Agreement are each
hereby amended by deleting the text of paragraph C of the Preliminary Statements
of each of the Holdings Pledge Agreement and the Subsidiary Pledge Agreement,
and the text of paragraph B of the Preliminary Statements of each of the
Holdings Security Agreement, the Subsidiary Security Agreement and the
Subsidiary Trademark Security Agreement, in each case, in its entirety and
substituting therefor the following:
"Company may from time to time enter, or may from
time to time have entered, into one or more Interest Rate
Agreements or Daylight Overdraft Protection Agreements (all
such Interest Rate Agreements and Daylight Overdraft
Protection Agreements, collectively, the `Lender Interest Rate
Agreements') with one or more Lenders or their Affiliates (in
such capacity under all such Lender Interest Rate Agreements,
collectively, `Interest Rate Exchangers')."
1.6 Amendments to Company Security Agreement and Company
Trademark Security Agreement. The Company Security Agreement and the Company
Trademark Security Agreement are each hereby amended by deleting paragraph B of
the respective Preliminary Statements of each such document in their entirety
and substituting therefor the following:
"B. Grantor may from time to time enter into one or
more Interest Rate Agreements or Daylight Overdraft Protection
Agreements (all such Interest Rate Agreements or Daylight
Overdraft Protection Agreements, collectively, the `Lender
Interest Rate Agreements') with one or more Lenders or their
Affiliates (in such capacity under all such Lender Interest
Rate Agreements, collectively, `Interest Rate Exchangers') in
accordance with the terms of the Credit Agreement, and it is
desired that the obligations of Grantor under the Lender
Interest Rate Agreements, including without limitation the
obligation of Grantor to make payments under Lender Interest
Rate Agreements that are Interest Rate Agreements in the event
of early termination thereof (all such obligations under all
such Lender Interest Rate Agreements being the `Interest Rate
Obligations'),
4
<PAGE>
together with all obligations of Grantor under
the Credit Agreement and the other Loan Documents, be secured
hereunder."
1.7 Amendment to Subsidiary Guaranty. The Subsidiary Guaranty
is hereby amended by deleting paragraph B of the Recitals thereto in its
entirety and substituting therefor the following:
"B. Company may from time to time enter into one or
more Interest Rate Agreements or Daylight Overdraft Protection
Agreements (such Interest Rate Agreements or Daylight
Overdraft Protection Agreements, collectively, the `Lender
Interest Rate Agreements') with one or more Lenders or their
Affiliates (in such capacity under all such Lender Interest
Rate Agreements, collectively, `Interest Rate Exchangers') in
accordance with the terms of the Credit Agreement, and it is
desired that the obligations of Company under the Lender
Interest Rate Agreements, including without limitation the
obligation of Grantor to make payments under Lender Interest
Rate Agreements that are Interest Rate Agreements in the event
of early termination thereof (all such obligations under all
such Lender Interest Rate Agreements, being the `Interest Rate
Obligations'), together with all obligations of Company under
the Credit Agreement and the other Loan Documents, be
guarantied hereunder."
1.8 Additional Amendments to Company Pledge Agreement,
Holdings Pledge Agreement, Subsidiary Pledge Agreement, Company Security
Agreement, Holdings Security Agreement, Subsidiary Security Agreement, Company
Trademark Security Agreement, Subsidiary Trademark Security Agreement and
Subsidiary Guaranty. Subsection 16 of each of the Company Pledge Agreement, the
Holdings Pledge Agreement and the Subsidiary Pledge Agreement, subsection 20 of
the Company Security Agreement, subsection 21 of each of the Company Trademark
Security Agreement, the Holdings Security Agreement, the Subsidiary Security
Agreement and the Subsidiary Trademark Security Agreement, and subsection 3.14
of the Subsidiary Guaranty are each hereby amended by deleting clause (ii) of
each such subsection in its entirety and, in each case, substituting therefor
the following:
"(ii) after payment in full of all Obligations under
the Credit Agreement and the other Loan Documents, (x) the
holders of a majority of the aggregate notional amount (or,
with respect to any Lender Interest Rate Agreement which is an
Interest Rate Agreement that has been terminated in accordance
with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early
termination payments then due) under such Lender Interest Rate
Agreement) under all Lender Interest Rate Agreements which are
Interest Rate Agreements and (y) the holders of a majority of
the aggregate amount then due and payable under all Lender
Interest Rate Agreements that are Daylight Overdraft
Protection Agreements (Requisite Lenders or, if applicable,
such holders being referred to herein as `Requisite
Obligees')."
5
<PAGE>
Section 1.9 Amendments to Exhibits.
Exhibits XV through XXIII of the Credit Agreement are hereby
amended to the extent necessary to make the provisions therein consistent with
the amendments made to the executed Collateral Documents and Guaranties pursuant
to Sections 1.4 through 1.8 above.
Section 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon
the prior or concurrent satisfaction of all of the following conditions
precedent (the date of satisfaction of such conditions being referred to herein
as the "First Amendment Effective Date"):
A. On or before the First Amendment Effective Date, Company
shall deliver to Lenders (or to Administrative Agent for Lenders) the following,
each, unless otherwise noted, dated as of the First Amendment Effective Date:
1. Resolutions of the Board of Directors of each Loan
Party party to this Amendment approving and authorizing the execution,
delivery and performance of this Amendment, certified as of the First
Amendment Effective Date by such Loan Party's secretary or assistant
secretary as being in full force and effect without modification or
amendment;
2. Signature and incumbency certificates of officers
of each Loan Party executing this Amendment certified by such Loan
Party's secretary or assistant secretary; and
3. Counterparts of this Amendment executed by
Requisite Lenders and each of the other parties hereto.
B. On or before the First Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Administrative Agent, acting on behalf of
Lenders, and its counsel shall be satisfactory in form and substance to
Administrative Agent and such counsel, and Administrative Agent and such counsel
shall have received all such counterpart originals or certified copies of such
documents as Administrative Agent may reasonably request.
6
<PAGE>
Section 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement, certain of the Collateral Documents, the Holdings
Guaranty, and the Subsidiary Guaranty in the manner provided herein, each of
Holdings, Company and each other Loan Party party hereto represents and warrants
to each Lender that the following statements are true, correct and complete:
A. Corporate Power and Authority. Each Loan Party party hereto
has all requisite corporate power and authority to enter into this Amendment and
to carry out the transactions contemplated hereby and each of Holdings, Company
and each other Loan Party party hereto has all requisite corporate power and
authority to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement as amended by this Amendment (the
"Amended Agreement") and each Loan Party has all requisite corporate power and
authority to carry out the transactions contemplated by, and perform its
obligations under, the Collateral Documents or the Holdings Guaranty or the
Subsidiary Guaranty to which it is a party as amended by this Amendment
(collectively, the "Amended Collateral Documents and Guaranties").
B. Authorization of Agreements. The execution and delivery of
this Amendment and the performance of the Amended Agreement and the Amended
Collateral Documents and Guaranties have been duly authorized by all necessary
corporate action on the part of Holdings, Company and each of the other Loan
Parties party hereto, as the case may be.
C. No Conflict. The execution and delivery by each Loan Party
party hereto of this Amendment and the performance by such Loan Party of this
Amendment and the performance by Holdings and Company of the Amended Agreement
and performance by Loan Parties of the applicable Amended Collateral Documents
and Guaranties do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Holdings or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Holdings
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Holdings or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Holdings or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Holdings or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of
Administrative Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Holdings or any of its Subsidiaries.
D. Governmental Consents. The execution and delivery by each
Loan Party party hereto of this Amendment and the performance by such Loan Party
of this Amendment and the performance by Holdings and Company of the Amended
Agreement and performance by Loan Parties of the applicable Amended Collateral
Documents and Guaranties do not and will not
7
<PAGE>
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body.
E. Binding Obligation. This Amendment has been duly executed
and delivered by each Loan Party party hereto and this Amendment, the Amended
Agreement and the Amended Collateral Documents and Guaranties are the legally
valid and binding obligations of such Loan Party, enforceable against such Loan
Party in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. Absence of Default. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
Section 4. ACKNOWLEDGEMENT AND CONSENT
Company is a party to certain Collateral Documents, in each
case as amended through the First Amendment Effective Date, pursuant to which
Company has created Liens in favor of Administrative Agent on certain Collateral
to secure the Obligations. Each of the other Loan Parties party hereto is a
party to certain Collateral Documents, the Subsidiary Guaranty or the Holdings
Guaranty, in each case as amended through the First Amendment Effective Date,
pursuant to which each such Loan Party has (i) guarantied the Obligations and
(ii) created Liens in favor of Administrative Agent on certain Collateral to
secure the obligations of such Loan Party under the Subsidiary Guaranty or the
Holdings Guaranty, as the case may be. The Loan Parties party hereto are
collectively referred to herein as the "Credit Support Parties", and the
Collateral Documents, the Subsidiary Guaranty and the Holdings Guaranty are
collectively referred to herein as the "Credit Support Documents".
Each Credit Support Party hereby acknowledges that it has
reviewed the terms and provisions of the Credit Agreement, the Collateral
Documents and Guaranties and this Amendment and consents to the amendment of the
Credit Agreement and Guaranties and the Collateral Documents effected pursuant
to this Amendment. Each Credit Support Party hereby confirms that each Credit
Support Document to which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guaranty or secure, as the case may be, to
the
8
<PAGE>
fullest extent possible the payment and performance of all "Obligations,"
"Guarantied Obligations" and "Secured Obligations," as the case may be (in each
case as such terms are defined in the applicable Credit Support Document),
including without limitation the payment and performance of all such
"Obligations," "Guarantied Obligations" or "Secured Obligations," as the case
may be, in respect of the Obligations of Company now or hereafter existing under
or in respect of the Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of
the Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement, the Amended Collateral Documents and Guaranties and the other
Credit Support Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the First Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
Each Credit Support Party (other than Holdings and Company)
acknowledges and agrees that (i) notwithstanding the conditions to effectiveness
set forth in this Amendment, such Credit Support Party is not required by the
terms of the Credit Agreement or any other Loan Document to consent to the
amendments to the Credit Agreement effected pursuant to this Amendment and (ii)
nothing in the Credit Agreement, this Amendment or any other Loan Document shall
be deemed to require the consent of such Credit Support Party to any future
amendments to the Credit Agreement.
9
<PAGE>
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the
Other Loan Documents.
(i) On and after the First Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the
"Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement. On and after the First Amendment Effective Date,
each reference in any Collateral Document, the Holdings Guaranty or the
Subsidiary Guaranty to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to such Collateral Document,
the Holdings Guaranty or the Subsidiary Guaranty, and each reference in
the other Loan Documents to such "Pledge Agreement", "Security
Agreement", "Guaranty", "thereunder", "thereof" or words of like import
referring to such Collateral Document, Holdings Guaranty or Subsidiary
Guaranty shall mean and be a reference to such Collateral Document,
Holdings Guaranty or Subsidiary Guaranty, as applicable, as amended by
this Amendment.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power
or remedy of Agent or any Lender under, the Credit Agreement or any of
the other Loan Documents.
B. Fees and Expenses. Company acknowledges that all reasonable
costs, fees and expenses as described in subsection 11.2 of the Credit Agreement
incurred by Administrative Agent and its counsel with respect to this Amendment
and the documents and transactions contemplated hereby shall be for the account
of Company.
C. Headings. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE
10
<PAGE>
STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1, which shall become effective upon the satisfaction of
each of the conditions set forth in Section 2) shall become effective upon the
execution of a counterpart hereof by all Requisite Lenders and each of the other
parties hereto and receipt by Company and Administrative Agent of written or
telephonic notification of such execution and authorization of delivery thereof.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FRD ACQUISITION CO.
By:
Title:
FRI-M CORPORATION
By:
Title:
FRI-FRD CORPORATION
By:
Title:
CFC FRANCHISING COMPANY
By:
Title:
FRI-J CORPORATION
By:
Title:
JOJOS RESTAURANTS, INC.
By:
Title:
S-12
<PAGE>
JOJOS CALIFORNIA FAMILY RESTAURANTS,
INC.
By:
Title:
COCO'S RESTAURANTS, INC.
By:
Title:
FRI-C CORPORATION
By:
Title:
CARROWS RESTAURANTS, INC.
By:
Title:
CARROWS CALIFORNIA FAMILY
RESTAURANTS, INC.
By:
Title:
FRI-DHD CORPORATION
By:
Title:
FAR WEST CONCEPTS, INC.
By:
Title:
S-13
<PAGE>
FRI-NA CORPORATION
By:
Title:
LENDERS: CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Administrative Agent
By:
Title:
BANKERS TRUST COMPANY,
individually and as
Co-Syndication Agent
By:
Title:
CHEMICAL BANK, individually and
as Co-Syndication Agent
By:
Title:
CITICORP USA, INC., individually and
as Co-Syndication Agent
By:
Title:
S-14
<PAGE>
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