EXHIBIT 10(d)
Foothill Capital Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
As of October 18, 2001
FRI-MRD CORPORATION
Attn: Xx. Xxxxxx X. Xxxxx
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Foothill Capital Corporation; Chi-Chi's, Inc., as Borrower,
FRI-MRD Corporation, as a Guarantor, Prandium, Inc., as a
Guarantor, and each of their Subsidiaries, as Guarantors
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Ladies and Gentlemen:
Reference hereby is made to that certain Amended and Restated Loan and
Security Agreement, dated as of July 19, 2000 (as amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"), by
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and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRI-
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MRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), and for purposes of
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acknowledging and agreeing to Section 15.11 of the Loan Agreement, by PRANDIUM,
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INC., a Delaware corporation, formerly known as Family Restaurants, Inc.
("Prandium"), and each of its Affiliates that are signatories thereto, and, on
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the other hand, FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"). Capitalized terms used but not otherwise defined herein shall
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have the meanings ascribed to them in the Loan Agreement.
Borrower, Prandium, FRI-MRD, and each of their undersigned Affiliates
each acknowledge and agree that unwaived Events of Default have occurred. The
Events of Default currently known by Foothill include the following Events of
Default (the "Present Events of Default"):
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A. In violation of the financial covenant contained in Section
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7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period
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of four consecutive fiscal quarters ending December 31, 2000 was $557,000, which
fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for
such period;
B. In violation of the financial covenant contained in Section
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7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period
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of four consecutive fiscal quarters ending April 1, 2001 was ($1,500,000), which
fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for
such period;
C. In violation of the financial covenant contained in Section
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7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period
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of four consecutive fiscal quarters ending July 1, 2001 was ($1,551,000), which
fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for
such period;
D. In violation of the financial covenant contained in Section
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7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and
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FRI-Admin, on a combined basis for the period of four consecutive fiscal
quarters ending December 31, 2000 was $1,970,000, which fails to satisfy the
required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined
basis, of $6,000,000 for such period;
E. In violation of the financial covenant contained in Section
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7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and
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FRI-Admin, on a combined basis for the period of four consecutive fiscal
quarters ending April 1, 2001 was ($1,825,000), which fails to satisfy the
required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined
basis, of $6,000,000 for such period;
F. In violation of the financial covenant contained in Section
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7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and
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FRI-Admin, on a combined basis for the period of four consecutive fiscal
quarters ending July 1, 2001 was ($3,665,000), which fails to satisfy the
required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined
basis, of $6,000,000 for such period;
G. In violation of the financial covenant contained in Section
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7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four
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consecutive fiscal quarters ending December 31, 2000 was ($675,000), which fails
to satisfy the required minimum EBITDA for KKR of $0 for such period;
H. In violation of the financial covenant contained in Section
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7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four
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consecutive fiscal quarters ending April 1, 2001 was ($1,162,000), which fails
to satisfy the required minimum EBITDA for KKR of $500,000 for such period;
I. In violation of the financial covenant contained in Section
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7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four
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consecutive fiscal quarters ending July 1, 2001 was ($1,818,000), which fails to
satisfy the required minimum EBITDA for KKR of $500,000 for such period;
J. In violation of the financial covenant contained in Section
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7.20(d) of the Loan Agreement, the actual EBITDA of KKR and HGI on a combined
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basis for the period of four consecutive fiscal quarters ending April 1, 2001
was $2,559,000, which fails to satisfy the required minimum EBITDA for KKR and
HGI on a combined basis of $3,000,000 for such period;
K. In violation of the financial covenant contained in Section
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7.20(d) of the Loan Agreement, the actual EBITDA of KKR and HGI on a combined
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basis for the period of four consecutive fiscal quarters ending July 1, 2001 was
$1,824,000, which fails to satisfy the required minimum EBITDA for KKR and HGI
on a combined basis of $3,000,000 for such period;
L. FRI-MRD is in default with respect to its payment obligations
under the Senior Discount Notes and the Senior Secured Discount Notes, which
constitutes an Event of Default pursuant to Section 8.10 of the Loan Agreement.
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Xxxxxxxx, Xxxxxxxx, XXX-XXX, and each of their undersigned Affiliates
each acknowledge and agree that, as a result of the Present Events of Default,
among other things, Foothill's obligation to make Advances, issue Letters of
Credit or otherwise extend credit to Borrower under the Loan Agreement has been
terminated.
To provide FRI-MRD with additional time to negotiate a restructuring
of its Indebtedness under the Senior Secured Discount Notes and the Senior
Discount Notes, among other Indebtedness, Foothill agrees to forbear from
exercising its remedies relative to the Present Events of Default during the
Forbearance Period (as hereinafter defined), subject to satisfaction of the
following conditions precedent: (a) Foothill shall have received a fully
executed counterpart of this agreement, (b) Foothill shall have received a
reaffirmation and consent, in the form of Exhibit A hereto, which shall be duly
executed by each Guarantor, dated as of the date hereof, and in full force and
effect, and (c) Foothill shall have received a forbearance fee, in full in cash,
in the amount of $50,000, which forbearance fee shall be fully earned and non-
refundable as of the date hereof. The foregoing to the contrary
notwithstanding, Foothill shall have no obligation to forbear from satisfying
any Obligations which may be outstanding as of any date of determination from
any cash or Cash Equivalents held by or on behalf of Foothill or its Affiliates
to secure the Obligations.
FRI-MRD, Prandium, Borrower and each of their undersigned Affiliates
each covenants and agrees as follows:
1. FRI-MRD, Prandium, Borrower and each such undersigned Affiliate
(collectively, the "Releasing Parties") each hereby releases and discharges
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absolutely and forever, Foothill, Foothill's predecessors, assigns and their
respective officers, directors, shareholders, partners, agents, employees,
servants, related corporations, subsidiaries, affiliates, partnerships, or other
entities related thereto, whether controlled by or related to Foothill and their
attorneys (collectively, the "Released Parties") of and from any and all claims,
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rights, demands, injuries, debts, damages, liabilities, omissions, accounts,
contracts, agreements, promissory notes, obligations, causes of action, costs,
expenses, liens, things, matters, and defenses, whether known or unknown,
suspected or unsuspected, of every kind and nature which now exist, and/or
heretofore have existed in the favor of the Releasing Parties against the
Released Parties arising or in any way connected with the financial relationship
between the parties arising from the underlying Loan Documents and documents
related thereto.
Each of the Releasing Parties acknowledges that Section 1542 of the
Civil Code of California provides:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his-favor at the time of executing a release,
which "if known by him must have materially affected his settlement with the
debtor."
Each of the Releasing Parties have been advised by counsel with
respect to the release contained herein. Each such Releasing Party also
acknowledges that it may hereafter discover facts in addition to or different
from those which each such party know or believe to be true with respect to the
subject matter of the release given hereby, but that it is the intention of each
such Releasing Party to, and each such Releasing Party does hereby, fully,
finally and
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forever waive any and all rights and defenses as set forth hereinabove. Upon
advice of such counsel, and in furtherance of such intention, each Releasing
Party waives all rights granted to each such Releasing Party by Section 1542 of
the Civil Code of California and acknowledges that the release herein given
shall be and remain in effect as a full and complete general release as to the
matters released herein, notwithstanding the subsequent discovery or existence
of any such additional or different facts.
2. FRI-MRD, Prandium, Borrower, and each such undersigned Affiliate
each agrees that Foothill and its Affiliates may continue to hold any cash or
Cash Equivalents which were previously provided to Foothill as additional
security for the Obligations until such time as (a) all Obligations have been
satisfied in full in cash, and (b) (i) Foothill has received an irrevocable
letter of credit from a financial institution acceptable to Foothill in its
discretion, in form and substance acceptable to Foothill in its discretion, in
favor of Foothill in an amount equal to 105% of the maximum amount of Foothill's
obligations under all outstanding Letters of Credit, or (ii) all Letters of
Credit have expired or have been released.
3. FRI-MRD, Prandium, Borrower, and each such undersigned Affiliate
each waives any right to seek authority from the bankruptcy court in which an
Insolvency Proceeding is pending to obtain the use of any cash or Cash
Equivalents held by or on behalf of Foothill or its Affiliates to secure the
Obligations. In addition, FRI-MRD, Prandium, Borrower and each of their
undersigned Affiliates each covenants and agrees that such Person shall not seek
authority of such bankruptcy court to use such cash or Cash Equivalents. Such
cash collateral will bear interest at the per annum rate applicable from time to
time with respect to ninety (90) day certificates of deposit offered by Xxxxx
Fargo Bank, National Association, a national banking association. If at any
time the aggregate amount of such collateral exceeds 105% of the maximum amount
of Foothill's obligations under outstanding Letters of Credit by more than
$50,000, Foothill shall promptly (and in any event within five (5) Business Days
of Foothill's receipt of a written notice from Borrower of the existence of such
excess) pay such excess to Borrower, to the extent that such excess is greater
than $50,000; provided, however, that if at any time the maximum amount of
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Foothill's obligations under outstanding Letters of Credit does not exceed
$6,000,000, Foothill shall only be required to return a portion of such
collateral to Borrower to the extent that the aggregate amount of such
collateral exceeds 105% of the maximum amount of Foothill's obligations under
outstanding Letters of Credit by more than $250,000. Foothill also agrees to
pay to Borrower, on the last Business Day of each month, all accrued and unpaid
interest on such collateral during such month pursuant to the first sentence of
this paragraph.
4. On or before the earlier to occur of (a) October 18, 2001, and (b)
the date when an Insolvency Proceeding is commenced with respect to FRI-MRD,
Prandium, Borrower or any of their Affiliates, FRI-MRD, Prandium, Borrower and
such Affiliates shall cause the releases of the mortgages and deeds of trust
previously executed and delivered in favor of Foothill with respect to the Real
Property Collateral, which releases were executed by Foothill prior to the date
hereof, to be recorded in each jurisdiction where the Real Property Collateral
is located.
5. Before the date when an Insolvency Proceeding is commenced with
respect to FRI-MRD, Prandium, Borrower or any of their Affiliates, Foothill
shall have received
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a copy of a commitment letter, which shall provide for, among other things, (a)
the delivery to Foothill of an irrevocable letter of credit from a financial
institution acceptable to Foothill in its discretion, in form and substance
acceptable to Foothill in its discretion, in favor of Foothill in an amount
equal to 105% of the maximum amount of Foothill's obligations under all
outstanding Letters of Credit, or (b) the issuance of replacement letters of
credit in connection with the release of all existing Letters of Credit.
FRI-MRD, Prandium, Borrower, each of their undersigned Affiliates and
Foothill each agree that Section 2.6(c) of the Loan Agreement is hereby amended
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and restated in its entirety as follows:
"(c) Letter of Credit Fees. On the first day of each month, Borrower
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will pay Foothill a fee (in addition to the charges, commissions, fees, and
costs set forth in Section 2.2(d)) equal to 5.0% per annum times the actual
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Daily Balance of the undrawn Letters of Credit that were outstanding during the
immediately preceding month (it being understood that Borrower will not be
charged default interest based on the Present Events of Default or an Event of
Default which occurs as a result of any failure by Borrower, any Guarantor or
any of their Affiliates to comply with the requirements set forth in Sections
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7.20 or 7.21 of the Loan Agreement)."
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As used herein, Forbearance Period shall mean the period commencing on
the date when the above referenced conditions precedent have been satisfied and
continuing through the earliest to occur of: (i) January 10, 2002 (or such later
date as Foothill may designate in writing in its sole discretion); (ii) the
occurrence of any Event of Default other than a Present Event of Default or an
Event of Default which occurs as a result of any failure by Borrower, any
Guarantor or any of their Affiliates to comply with the requirements set forth
in Sections 7.20 or 7.21 of the Loan Agreement; or (iii) the first date when
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FRI-MRD, Prandium, Borrower, or any of their undersigned Affiliates have failed
to comply with any of the covenants set forth above in paragraphs 3, 4, 5 and 6.
The forbearance referenced herein is limited to the specifics hereof,
shall not apply with respect to any facts or occurrences other than those on
which the same are based, shall not excuse future non-compliance with the Loan
Agreement (as it may from time to time be amended), and, except as expressly set
forth herein, shall not operate as a waiver or an amendment of any right, power
or remedy of Foothill, nor as a consent to any further or other matter, under
the Loan Documents.
This letter agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this letter agreement by signing any such
counterpart. Delivery of an executed counterpart of this letter agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this letter agreement. Any party delivering an executed
counterpart of this letter agreement by telefacsimile also shall deliver an
original executed counterpart of this letter agreement but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this letter agreement.
This letter agreement is a Loan Document.
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Please indicate your agreement with the foregoing by signing this
letter agreement in the space provided for your signature below and returning it
to the undersigned.
FOOTHILL CAPITAL CORPORATION
By /s/ Xxxxxx X. Xxxxxx
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Title Vice President
Acknowledged and Agreed:
FRI-MRD CORPORATION,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title President
CHI-CHI'S, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
PRANDIUM, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title EVP/CFO
FRI-ADMIN CORPORATION,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title President
CCMR OF TIMONIUM, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF MARYLAND, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF CATONSVILLE, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF GREENBELT, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF XXXXXXX HIGHWAY, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF CUMBERLAND, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF HARFORD COUNTY, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
MAINTENANCE SUPPORT GROUP, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF XXXXXXXXX, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF INNER HARBOR, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CHI-CHI'S OF WEST VIRGINIA, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
XXX XXX ROO, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
THE HAMLET GROUP, INC.,
a California corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
cc: Xxxxx Xxxxxx, Esq.
Xxxx Xxxxxxx Hilson, Esq.
EXHIBIT A
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Reaffirmation and Consent
Reference hereby is made to (a) that certain Amended and Restated Loan and
Security Agreement, dated as of July 19, 2000 (as amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"), by
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and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRI-
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MRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), and for purposes of
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acknowledging and agreeing to Section 15.11 of the Loan Agreement, by PRANDIUM,
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INC., a Delaware corporation, formerly known as Family Restaurants, Inc.
("Prandium"), and each of its Affiliates that are signatories thereto, and, on
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the other hand, FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"); and (b) that certain letter agreement dated as of October __, 2001
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(the "Letter Agreement"), by and among, on the one hand, FRI-MRD, Borrower,
Prandium and each of its Affiliates that are signatories thereto, and on the
other hand, Foothill. Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement.
Each of the undersigned hereby (a) represents and warrants to Foothill that
the execution, delivery, and performance of this Reaffirmation and Consent are
within its corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of any law, rule, or regulation,
or any order, judgment, decree, writ, injunction, or award of any arbitrator,
court, or governmental authority, or of the terms of its charter or bylaws, or
of any contract or undertaking to which it is a party or by which any of its
properties may be bound or affected; (b) consents to the amendment of the Loan
Agreement by the Letter Agreement; (c) acknowledges and reaffirms its
obligations owing to Foothill under the Guaranty and any other Loan Documents to
which it is party; and (d) agrees that each of the Guaranty and any other Loan
Documents to which it is a party is and shall remain in full force and effect.
Although each of the undersigned has been informed of the matters set forth
herein and has acknowledged and agreed to same, it understands that Foothill has
no obligation to inform it of such matters in the future or to seek its
acknowledgement or agreement to future amendments, and nothing herein shall
create such a duty. This Reaffirmation and Consent may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Reaffirmation and Consent. Delivery of an executed counterpart of this
Reaffirmation and Consent by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Reaffirmation and Consent.
Any party delivering an executed counterpart of this Reaffirmation and Consent
by telefacsimile also shall deliver an original executed counterpart of this
Reaffirmation and Consent but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Reaffirmation and Consent.
This Reaffirmation and Consent shall be governed by internal laws of the
State of California as more fully set forth in Section 13 of the Loan Agreement.
FRI-MRD CORPORATION,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title President
PRANDIUM, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title EVP/CFO
FRI-ADMIN CORPORATION,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title President
CCMR OF TIMONIUM, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF MARYLAND, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF CATONSVILLE, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF GREENBELT, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF XXXXXXX HIGHWAY, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF CUMBERLAND, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF HARFORD COUNTY, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
MAINTENANCE SUPPORT GROUP, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF XXXXXXXXX, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CCMR OF INNER HARBOR, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
CHI-CHI'S OF WEST VIRGINIA, INC.,
a Kentucky corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
XXX XXX ROO, INC.,
a Delaware corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
THE HAMLET GROUP, INC.,
a California corporation
By /s/ X. X. Xxxxxxx, Xx.
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Title Vice President
