EXHIBIT 99.1
Foothill Capital Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
As of June 15, 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
and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRI-
MRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), for purposes of
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., and
each of its Affiliates that are signatories thereto, and, on the other hand,
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill").
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Loan Agreement.
Borrower and FRI-MRD 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"):
1. 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;
2. 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;
3. 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;
4. 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;
5. 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;
6. 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;
7. 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;
8. 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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As a result of the Present Events of Default, Borrower and FRI-MRD
each acknowledge and agree that, among other things, Foothill has no further
obligation to make Advances, issue Letters of Credit or otherwise extend credit
to Borrower under the Loan Agreement.
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 the satisfaction of the
following condition precedent: Foothill shall have received $8,067,982.00 (the
"Funds"), in full in cash, or by wire transfer of immediately available funds,
on or before June 18, 2001, from Borrower to be held by Foothill as security for
the Obligations.
Foothill has previously received from Borrower $4,000,000 in cash (the
"Prior Funds"), which are also being held by Foothill as security for the
Obligations.
During the period that the Funds and the Prior Funds are held by
Foothill, such Funds and Prior Funds 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 the Funds and the Prior
Funds exceed 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
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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
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any time the maximum amount of Foothill's obligations under outstanding Letters
of Credit does not exceed $6,000,000, Foothill shall only be required to return
a portion of the Funds and the Prior Funds to Borrower to the extent that the
aggregate amount of the Funds and the Prior Funds 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 the Funds and the Prior Funds
during such month pursuant to the first sentence of this paragraph.
Borrower agrees that it will immediately repay to Foothill, upon
demand, all outstanding Obligations to Foothill when due. In the event that
Borrower fails to repay such outstanding Obligations to Foothill, the Borrower
authorizes Foothill, in its sole discretion, to satisfy such outstanding
Obligations from the Funds or from the Prior Funds.
Borrower and FRI-MRD each acknowledge and agree that (a) the Funds and
the Prior Funds constitute part of Foothill's existing Collateral, and are being
transferred to Foothill for the sole purpose of enabling Foothill to retain
direct control over the disposition of such Funds and such Prior Funds; and (b)
Foothill shall have no further obligation to make Advances, issue Letters of
Credit or otherwise extend credit to Borrower under the Loan Agreement as a
result of the execution of this letter agreement.
Upon the receipt of the Funds, Foothill agrees to release its liens in
or on the Real Property Collateral, and to execute and deliver any lien
releases, mortgage releases, and other similar discharge or release documents,
prepared by Borrower's counsel at Borrower's expense, as are reasonably
necessary to release, as of record, mortgages and liens on the Real Property
Collateral previously filed or recorded by Foothill.
Borrower and Foothill further agree that upon (a) the release of all
of Foothill's obligations under outstanding Letters of Credit or (b) the
issuance of an irrevocable letter of credit, in form and substance and from an
issuer, that is reasonably acceptable to Foothill, in an amount equal to 105% of
the maximum amount of Foothill's obligations under outstanding Letters of Credit
pursuant to Section 2.2(e) of the Loan Agreement, Foothill shall waive
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Borrower's obligation pursuant to Section 3.6 of the Loan Agreement to pay the
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Applicable Termination Premium.
As used herein, Forbearance Period shall mean the period commencing on
the date when the above referenced condition precedent has been satisfied and
continuing through the earliest to occur of: (i) September 15, 2001 (or such
later date as Foothill may designate in writing in its sole discretion); and
(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 or any of its Affiliates to comply with the requirements set forth in
Sections 7.20 or 7.21 of the Loan Agreement.
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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,
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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
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Acknowledged and Agreed:
FRI-MRD CORPORATION,
a Delaware corporation
By /s/ Xxxxxx X. Xxxxx
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Title Vice President and Treasurer
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CHI-CHI'S, INC.,
a Delaware corporation
By /s/ Xxxxxx X. Xxxxx
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Title Vice President and Treasurer
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cc: Xxxxx Xxxxxx, Esq.
Xxxx Xxxxxxx Hilson, Esq.
