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$10,000,000 Letter Agreement
among
INTERNATIONAL HOUSE OF PANCAKES, INC.,
IHOP CORP.
and
CONTINENTAL BANK N.A.
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Dated as of June 30, 1993
TABLE OF CONTENTS
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Page
1. Term of Agreement.................................................... 1
2. Making the Loans; Issuance of Letters of Credit...................... 2
3. Note................................................................. 3
4. Interest, etc........................................................ 3
(a) Reference Rate.................................................. 3
(b) Quoted Rate..................................................... 4
(c) Eurodollar Rate................................................. 4
(d) Interest Periods................................................ 4
(e) Default Rate.................................................... 4
(f) Conversion/Continuation Procedures.............................. 5
5. Reduction of the Commitment; Repayment of Loans
and Letter of Credit Drawings........................................ 5
6. Prepayments.......................................................... 6
7. Increased Costs, Funding Losses, etc................................. 7
8. Capital Adequacy..................................................... 8
9. Indemnification...................................................... 9
10. Fees................................................................. 9
11. Representations and Warranties....................................... 10
12. Financial Reporting.................................................. 11
13. Affirmative Covenants................................................ 13
13.1. Payment of Principal, Prepayment Charge
and Interest; Etc............................................ 13
13.2. Payment of Taxes and Claims.................................. 13
13.3. Maintenance of Properties and Corporate Existence............ 14
13.4. Insurance.................................................... 14
14. Negative and Maintenance Covenants................................... 15
14.1. Restrictions on Liens......................................... 15
14.2. Limitation on Consolidated Debt............................... 16
14.3. Consolidated Tangible Net Worth............................... 16
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TABLE OF CONTENTS
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(continued)
Page
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14.4. Limitation on Debt of Subsidiaries.................. 17
14.5. Restricted Payments; Restricted Investments......... 17
14.6. Sale of Assets...................................... 18
14.7. Consolidation or Merger............................. 19
14.8. Maintenance of Fixed Charge Coverage................ 20
14.9. Transactions with Affiliates........................ 20
14.10. Acquisition of Margin Securities.................... 21
14.11. Conduct of Business................................. 21
14.12. Further Undertakings................................ 21
14.13. Ownership of the Borrower........................... 22
15. Conditions Precedent........................................ 22
16. Events of Default........................................... 23
17. IHOP Guarantee.............................................. 24
18. Definitions................................................. 28
19. Miscellaneous............................................... 38
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Dated as of June 30, 1993
International House of Pancakes, Inc.
000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
IHOP Corp.
000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxxxx X. Xxxxx
Vice President - Finance and Treasurer
Re: $10,000,000 Letter Agreement
Gentlemen:
It is our pleasure to confirm that Continental Bank N.A. (the "Bank") will,
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upon the terms and conditions hereinafter set forth, make loans to, and issue
standby letters of credit for the account of, International House of Pancakes,
Inc. (the "Borrower"). All loans made hereunder (the "Loans") and standby
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letters of credit issued hereunder (the "Letters of Credit") will be subject to
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the terms and conditions set forth herein. At no time (a) shall the outstanding
amount of Letters of Credit exceed $2,000,000 (the "L/C Commitment") or (b)
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shall the sum of the outstanding amount of Letters of Credit plus unreimbursed
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drawings under Letters of Credit plus the aggregate principal amount of all
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Loans exceed $10,000,000 (the "Commitment Amount"). Capitalized terms used
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herein and not otherwise defined shall have the meanings ascribed thereto in
Section 18 hereof.
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Section 1. Term of Agreement. So long as the Borrower is in compliance
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with the terms of this letter agreement (the "Agreement"), the commitment of the
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Bank shall terminate on June 30, 1995 (the "Maturity Date"). Between April 1 and
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April 30 of each year, commencing April 1, 1994, the Borrower may request a one-
year extension of the Maturity Date (either beyond the initial Maturity Date
hereunder or beyond a Maturity Date as previously extended pursuant to the terms
hereof). The decision whether to grant the requested extension of the Maturity
Date may be made by the Bank in its sole and absolute discretion. In the
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event that the Maturity Date is extended, at the time of such extension the
Borrower will pay an extension fee of .125% of the Commitment Amount. All
Letters of Credit and Loans shall be used for the Borrower's working capital and
other general corporate purposes.
Section 2. Making the Loans; Issuance of Letters of
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Credit.
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(a) The Bank shall receive written notice, telegraphic notice
or telephonic notice from the Borrower (to be immediately confirmed
in writing) not later than (a) noon, Chicago time, on the date
requested for each proposed Reference Rate Loan of the proposed
amount and date (which must be a Business Day) of such proposed Loan,
(b) noon, Chicago time, two Business Days preceding the date
requested for each Eurodollar Rate Loan specifying the proposed
amount and date (which must be a Business Day) of such Loan and the
Interest Period for such Loan, and (c) noon, Chicago time, on the
date requested for each proposed Quoted Rate Loan specifying the
proposed amount and date (which must be a Business Day) of such Loan
and the Interest Period for such Loan. Not later than 12:30 p.m.,
Chicago time, the Bank shall advise the Borrower by telephone of the
interest rate that would be applicable to the proposed Quoted Rate
Loan. At that time, the Borrower shall accept or reject the interest
rate offered by the Bank for the proposed Quoted Rate Loan.
(b) All Loans shall be in a minimum amount of $100,000 and an
integral multiple of $100,000 and shall be made by crediting the
Borrower's account number 74-02988 maintained at the Bank (herein
called the "Account"), upon receipt of information as to the date,
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type and amount of the proposed Loan and, in the case of Eurodollar
Rate Loans and Quoted Rate Loans, the Interest Period applicable
thereto, communicated to the Bank in a writing in the form of Exhibit
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B hereto (herein called a "Confirmation") or by telephone from any
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one of the individuals listed in Exhibit C hereto (herein
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individually called an "Authorized Officer" and collectively called
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the "Authorized Officers"). The Borrower further agrees to confirm
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any telephonic request for a Loan by delivering to the Bank no later
than the following Business Day a Confirmation indicating the date,
type and the amount of such Loan and, in the case of Eurodollar Rate
Loans and Quoted Rate Loans, the Interest Period applicable thereto
and the revised principal balance of the Note and signed by one of
the Authorized Officers. If a Loan request is made by an
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Authorized Officer by telephone, the Confirmation therefor must come
from a different Authorized Officer.
(c) On any Business Day occurring prior to the Maturity Date, the
Borrower may irrevocably request that a Letter of Credit be issued by
the Bank by delivering to the Bank a Letter of Credit application in
the Bank's then standard form, completed to the reasonable
satisfaction of the Bank, and such other certificates, documents and
papers as the Bank may reasonably request; provided, however, that no
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Letter of Credit shall be issued if after giving effect to the
issuance thereof, the aggregate face amount of outstanding Letters of
Credit would exceed $2,000,000. Each request for a Letter of Credit
and each Letter of Credit shall be subject to the Uniform Customs and
Practice for Documentary Credits (1983 Revision), International
Chamber of Commerce Publication No. 400. No Letter of Credit shall
have an expiration date later than the Maturity Date.
Section 3. Note. All Loans by the Bank to the Borrower pursuant to this
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Agreement shall be evidenced by a note in the form of Exhibit A hereto (the
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"Note"). The date, type, amount and interest rate of each Loan made by the Bank
and of each repayment of principal thereon received by the Bank may be recorded
by the Bank in its records, and all such information so recorded shall be
conclusive and binding upon the Borrower (absent manifest error). The failure to
record, or any error in recording, any such information shall not, however,
limit or otherwise affect the Borrower's obligations under this Agreement or the
Note to repay the principal amount of the Loans under this Agreement together
with all interest accruing thereon.
Section 4. Interest, etc. Interest will accrue on the unpaid principal
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amount of each Loan from the date such Loan is made until such principal amount
is paid in full (after, as well as before, judgment). Interest on each Loan
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days. Payments of accrued interest and the determinations of
applicable interest rates and Interest Periods relative thereto will be made as
set forth below:
(a) Reference Rate. The Borrower may from time to time elect to
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pay interest on any Loan at the Alternative Reference Rate. Interest
on each Loan bearing interest at the Alternative Reference Rate (a
"Reference Rate Loan") will be payable on the last Business Day of
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each calendar month and on the Maturity Date.
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(b) Quoted Rate. Subject to the terms hereof, the Borrower may elect
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to accept the Quoted Rate offered by the Bank for a Quoted Rate Loan. Interest
on each Quoted Rate Loan will be payable on the last day of the Interest Period
for such Loan and, in the case of any Quoted Rate Loan having an Interest Period
longer than 90 days, on the 90th day of such Interest Period.
(c) Eurodollar Rate. The Borrower may from time to time elect to pay
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interest on any Loan at the Eurodollar Rate. Interest on each Loan bearing
interest at the Eurodollar Rate (a "Eurodollar Rate Loan", and together with
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each Quoted Rate Loan, collectively, the "Fixed Rate Loans") will be payable on
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the last day of the Interest Period for such Loan.
(d) Interest Periods. Interest on each Fixed Rate Loan shall be
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determined for a specified period (an "Interest Period") chosen by the Borrower
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in accordance with this Agreement. The first day of any Interest Period for any
Fixed Rate Loan will be
(i) in the case of the initial Interest Period for any such
Loan, the date such Loan is made, and
(ii) for each subsequent Interest Period for any such Loan, the
last day of the then current Interest Period for such Loan.
The duration of each Interest Period shall be
(iii) in the case of a Quoted Rate Loan, not more than 180
days, and
(iv) in the case of a Eurodollar Rate Loan 1, 2, or 3
months,
provided, however, that the Borrower may not select an Interest Period that
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would extend beyond the Maturity Date; and provided, further, that whenever the
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last day of any Interest Period would occur on a day other than a Business Day,
the last day of such Interest Period will be extended to occur on the next
succeeding Business Day, except that, in the case of any Interest Period
relating to a Eurodollar Rate Loan, if such extension would cause the last day
of such Interest Period to occur in the next following calendar month, the last
day of such Interest Period will occur on the next preceding Business Day.
(e) Default Rate. On any overdue principal amount of any Loan, the
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Borrower will pay interest (after, as well as before, judgment) payable on
demand, at a fluctuating
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interest rate per annum (the "Default Rate") equal to 2 1/2% per annum
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over the Alternative Reference Rate in effect from time to time (but not
less than the Alternative Reference Rate in effect at the time of the
applicable default).
(f) Conversion/Continuation Procedures. At the Borrower's election
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pursuant to notice received by the Bank not later than 12:30 p.m.
Chicago time:
(i) all, or any portion in a minimum amount of $100,000 and an
integral multiple of $100,000, of the outstanding principal amount of
any Reference Rate Loan may be converted from a Reference Rate Loan
into a Quoted Rate Loan; and
(ii) on the expiration of the Interest Period applicable to any
Fixed Rate Loan, all, or any portion in a minimum amount of $100,000
and an integral multiple of $100,000, of the outstanding principal
amount of such Fixed Rate Loan may be converted into a Reference Rate
Loan or converted into or continued as a Quoted Rate Loan.
At the Borrower's election pursuant to notice received by the Bank not
later than noon, Chicago time, on not less than two Business Days notice,
all or any portion in a minimum amount of $100,000 and an integral
multiple of $100,000 of the outstanding principal amount of any Reference
Rate Loan or Quoted Rate Loan may be converted into a Eurodollar Rate Loan
or the outstanding principal amount of any Eurodollar Rate Loan may be
continued as a Eurodollar Rate Loan.
Section 5. Reduction of the Commitment; Repayment of Loans and Letter of
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Credit Drawings.
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(a) The Borrower may, upon at least five Business Days' notice,
terminate or permanently reduce the unused portion of the commitment,
provided that each partial reduction must be in a minimum amount of
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$1,000,000 and an integral multiple of $1,000,000. On the Maturity Date,
the then aggregate outstanding principal amount of all Loans will be due
and payable in full.
(b) The Borrower agrees to reimburse the Bank for each draft that is
paid under any Letter of Credit for the amount of (a) such draft and (b)
any reasonable taxes (excluding taxes imposed on the Bank's income), fees,
charges or other costs and expenses incurred by the Bank in connection
with such payment. If the Bank shall notify the
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Borrower prior to 11:30 a.m., Chicago time on any day that payment has
been made under any Letter of Credit, the Borrower shall reimburse the
Bank on the third Business Day following the date of such payment. If
such notice to the Borrower shall be given after 11:30 a.m., Chicago time,
the Borrower shall reimburse the Bank not later than the fourth Business
Day following the date of such payment. Each payment by the Borrower
shall be made to the Bank in immediately available funds and subject to
all other terms of this Agreement. Interest shall be payable on any and
all unreimbursed amounts advanced by the Bank under this Section from the
date such amounts have been advanced by the Bank until payable at the
Alternative Reference Rate. After such amounts have become payable
(whether at stated maturity, by acceleration or otherwise), such amounts
shall accrue interest until paid in full at the Default Rate.
The payment obligations of the Borrower under this Agreement shall be
unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances, including
without limitation, the following circumstances:
(i) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against any beneficiary, or
any transferee, of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Bank or
any other Person, whether in connection with this Agreement, the
transactions contemplated herein, or any unrelated transaction;
(ii) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
unenforceable in any respect or any statement therein being untrue or
inaccurate in any respect; provided that the Bank's reliance thereon
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shall not have constituted gross negligence or wilful misconduct on
the part of the Bank; or
(iii) payment by the Bank under any Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit; provided that such payment shall not
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have constituted gross negligence or willful misconduct on the part
of the Bank.
Section 6. Prepayments The Borrower may, not later than 1:00 p.m.,
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Chicago time, on any Business Day prepay the outstanding principal amount
of any Reference Rate Loan, in whole
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or in part, on such Business Day with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that each partial
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prepayment shall be in a principal amount not less than $100,000 and in an
integral multiple of $100,000. In the event that it becomes unlawful for the
Bank to fund or continue to fund or maintain any Eurodollar Rate Loans or to
perform the Bank's obligations hereunder with respect to Eurodollar Rate Loans,
then upon demand by the Bank the Borrower will prepay in full all Eurodollar
Rate Loans, with accrued interest thereon, and upon such demand the Bank's
obligation to make Eurodollar Rate Loans shall terminate.
Section 7. Increased Costs. Funding Losses. etc. In the event that as
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a result of either
(a) the introduction of, or any change (including, any change by way
of imposition or increase of reserve requirements referred to in the
definition of "Eurodollar Rate Reserve Percentage") in, or in the
interpretation of, any law or regulation; or
(b) the compliance by the Bank with any request from any central bank
or other governmental authority
there is any increase in the Bank's cost of agreeing to issue or maintain any
Letter of Credit or to make, fund or maintain any Loans, then the Borrower will
from time to time, upon demand by the Bank, pay to the Bank additional amounts
sufficient to indemnify the Bank against such increased cost. In the event that
the Bank incurs any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
the Bank to make, continue or maintain any portion of the principal amount of
any Loan as, or to convert any portion of the principal amount of any Loan into,
a Fixed Rate Loan) as a result of
(c) the repayment or prepayment (whether pursuant to Section 6 or for
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any other reason) of the principal amount of any Fixed Rate Loan on a date
other than the scheduled last day of the Interest Period applicable
thereto;
(d) any conversion of all or any portion of the outstanding principal
amount of any Fixed Rate Loans into Reference Rate Loans pursuant to
Section 4 prior to the expiration of the Interest Period then applicable
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thereto;
(e) any Loans not being made as Fixed Rate Loans in accordance with
the borrowing request therefor (other than as a result of a breach by the
Bank of its obligations hereunder); or
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(f) any Loans not being continued as, or converted into, Fixed Rate
Loans in accordance with the request given therefor pursuant to Section 4
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(other than as a result of a breach by the Bank of its
obligations hereunder), then, upon the Bank's written request to the
Borrower, the Borrower will reimburse the Bank for such loss or expense.
A certificate submitted by the Bank to the Borrower as to the amount of any such
increased cost, loss or expense (including calculations thereof in reasonable
detail) will be conclusive and binding, absent manifest error. If the Bank
shall ever determine that
(g) U.S. dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Bank in the Bank's relevant
market;
(h) by reason of circumstances affecting the Bank's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to Eurodollar Rate Loans; or
(i) the introduction of or any change in or in the interpretation of
any law makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for the Bank to make or continue any
Loans as, or to convert any Loans into, Eurodollar Rate Loans,
then, upon notice from the Bank to the Borrower, the Bank's obligations to make
or continue any Loans as, or to convert any Loans into, Eurodollar Rate Loans
shall forthwith be suspended until the Bank shall notify the Borrower that the
circumstances causing such suspension no longer exist.
Section 8. Capital Adequacy. If any change in, or the introduction,
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adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority affects or would affect the amount of capital required or
expected to be maintained by the Bank or any entity controlling the Bank, and
the Bank determines (in its sole and absolute discretion) that the rate of
return on its or such controlling entity's capital as a consequence of its
commitment hereunder, the Letters of Credit issued hereunder, or the Loans made
by the Bank is reduced to a level below that which the Bank or such controlling
entity could have achieved but for the occurrence of any such circumstance,
then, in any such case upon notice from time to time by the Bank to the
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Borrower, the Borrower shall immediately pay directly to the Bank additional
amounts sufficient to compensate the Bank or such controlling
-8-
entity for such reduction in rate of return. A statement of the Bank as to any
such additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount, the Bank may use any method of
averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable.
Section 9. Indemnification. The Borrower agrees that in all events it
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will indemnify and hold harmless the Bank and its affiliates, officers,
directors, employees and agents (each an "Indemnified Person") against all
------------------
losses, claims, damages, liabilities and expenses which may be incurred by or
asserted against any of them in connection with or arising out of this Agreement
or the transactions contemplated hereby, and reimburse each Indemnified Person
upon its demand for any reasonable legal or other expenses incurred in
connection with investigating, defending or participating in any such loss,
claim, damage, liability or action or other proceeding, whether commenced or
threatened (whether or not any such Indemnified Person is a party to any action
or proceeding out of which any such expenses arise), or in any way related to
the extension of the financings contemplated by this Agreement or from any use
or intended use of any of the proceeds thereof except, in the case of any
Indemnified Person, to the extent any such loss, claim, damage or liability
arises from the gross negligence or willful misconduct of such Indemnified
Person. Neither the Bank nor any other Indemnified Person shall be responsible
or liable to the Borrower, any successor, assignee or third party beneficiary of
the Borrower or any other person asserting claims derivatively through the
Borrower, for indirect, punitive, exemplary or consequential damages which may
be alleged as a result of this Agreement or the transactions contemplated
hereby. The foregoing provisions of this Section shall be in addition to any
rights that the Bank or any other Indemnified Person may have at common law or
otherwise, including, without limitation, any rights to contribution.
Section 10. Fees.
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(a) The Borrower agrees to pay to the Bank on the date hereof a fee in
the amount of .25% of the Commitment Amount. The fee shall be
nonrefundable.
(b) The Borrower agrees to pay to the Bank a commitment fee equal to
.50% per annum on the average daily unused portion of the Commitment
Amount. The commitment fee shall commence on the date of this Agreement,
shall be calculated on the actual number of days elapsed on the basis of a
year consisting of 360 days and shall be payable, in arrears, on the first
day of each calendar quarter,
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beginning October 1, 1993, and continuing until termination of the Bank's
commitment hereunder.
(c) The Borrower agrees to pay to the Bank, (a) a letter of credit
fee in respect of each Letter of Credit issued for the account of the
Borrower equal to 1.25% per annum of the undrawn amount of each Letter of
Credit, payable in arrears on the last Business Day of each month; provided
that in no event shall the amount payable by the Borrower under this
subsection during any fiscal quarter be less than $75, and (b) all of the
Bank's usual administrative charges in connection with the issuance and
processing of Letters of Credit as issued from time to time in accordance
with its customary practice.
Section 11. Representations and Warranties. IHOP and the Borrower,
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jointly and severally, warrant to the Bank (and each request from the Borrower
for a Loan under this Agreement shall constitute the Borrower's warranty to the
Bank) that
(a) each of the Borrower and IHOP has been duly incorporated and is a
validly existing corporation under the laws of the State of Delaware, has
full legal right, power and authority to enter into this Agreement and to
carry out and consummate all transactions contemplated by this Agreement;
(b) this Agreement has been duly authorized and is a valid and
binding obligation of the Borrower and IHOP, enforceable in accordance with
its terms, and the Note has been duly authorized and is a valid and binding
obligation of the Borrower enforceable in accordance with its terms;
(c) this Agreement will not conflict with or constitute a breach of
or default under their respective articles of incorporation or by-laws, or
any material agreement to which the Borrower or IHOP is a party or by which
the Borrower or IHOP or any of their respective properties are bound, or
any rule or regulation of any court or governmental agency or body having
jurisdiction over the Borrower or IHOP or any of their respective
activities or properties;
(d) there has been no material adverse change in the financial
condition, operations, assets, business, properties, or prospects of IHOP
or any of its subsidiaries since December 31, 1992;
(e) neither IHOP nor any of its subsidiaries is in default in any
material respect under any material contract, lease, loan agreement,
indenture, mortgage, security
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agreement or other material agreement or obligation to which it is a party
or by which any of its properties is bound;
(f) each of IHOP and its subsidiaries has filed all material tax
returns and reports required by law to have been filed by it and has paid
all taxes and governmental charges thereby shown to be owing, except any
such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted accounting principles shall have been set aside on its
books;
(g) each of IHOP and its subsidiaries has good and marketable title
to all of its properties and assets, real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights) reflected in the consolidated balance
sheet of IHOP and its subsidiaries as at December 31, 1992, free and clear
of all Liens except for (i) assets sold or otherwise disposed of by IHOP or
its subsidiaries subsequent to December 31, 1992 in the ordinary course of
business and (ii) Permitted Liens;
(h) each of IHOP and its subsidiaries has complied with all the
relevant provisions of the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time; and
(i) each of IHOP and its subsidiaries are in material compliance with
all applicable federal, state or local statutes, laws, ordinances, codes,
rules, regulations and guidelines (including consent decrees and
administrative orders) relating to public health and safety and protection
of the environment, except where the failure to so comply would not have a
material adverse effect on the financial condition, operations, assets,
business, properties or prospects of IHOP or such subsidiary.
Section 12. Financial Reporting IHOP agrees with the Bank that, until the
-------------------
Bank's commitment hereunder has been terminated and all indebtedness of the
Borrower to the Bank has been paid in full and all fees and expenses billed by
the Bank to the Borrower have been paid in full, IHOP will furnish, or will
cause to be furnished, to the Bank copies of the following financial statements,
reports, notices and information:
(a) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of
IHOP, as of the end of any such fiscal quarter,
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(i) Form 10-Q for IHOP, consolidated balance sheets of IHOP and
its Subsidiaries as of the end of each such fiscal quarter and consolidated
statements of earnings and cash flow of IHOP and its Subsidiaries for such
fiscal quarter and for the period commencing at the end of the previous
fiscal year and ending with the end of such fiscal quarter, certified by
the chief financial officer of IHOP, together with consolidated cash flow
projections for IHOP and its Subsidiaries for the 9 weeks following the end
of such fiscal quarter; and
(ii) a written statement executed by the chief financial officer of
IHOP and the Borrower setting forth computations or other pertinent
information in reasonable detail showing as at the end of such fiscal
quarter (a) whether or not the financial covenants set forth in Sections
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14.2 through 14.8 hereof, inclusive, have been met, accompanied by
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calculations setting forth the maximum amount of Debt that could have been
incurred pursuant to Section 14.2 hereof, and the maximum amount of
------------
dividends or distributions that could have been declared or paid pursuant
to Section 14.5 hereof, and (b) whether or not Liens on property or assets
------------
of IHOP or its Subsidiaries or securing Debt of IHOP or its Subsidiaries,
as the case may be, exceed the threshold set forth in Section 14.1(i)
--------------
hereof, accompanied by calculations setting forth the maximum amount of
additional Debt secured by Liens that could have been incurred under
Section 14.1(i) hereof, (a "Quarterly Compliance Statement");
-------------- ------------------------------
(b) as soon as available and in any event within 90 days after the end of
each fiscal year-end of IHOP, a Quarterly Compliance Statement as of such
year end and a copy of the annual report to shareholders for such fiscal
year for IHOP and its Subsidiaries, including therein consolidated balance
sheets of IHOP and its Subsidiaries as of the end of such fiscal year and
consolidated statements of operations and cash flow of IHOP and its
Subsidiaries for such fiscal year, in each case certified (without any
material qualification) in a manner reasonably acceptable to the Bank by
Coopers & Xxxxxxx, another of the so-called "Big 6" accounting firms or any
other accounting firm reasonably acceptable to the Bank, and consolidating
balance sheets of IHOP and its Subsidiaries as of the end of such fiscal
year and consolidating statements of operations of IHOP and its
Subsidiaries as of the end of such fiscal year, certified by the chief
financial officer of IHOP;
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(c) as soon as available and in any event within 5 days, any
information filed with the Securities and Exchange Commission;
(d) as soon as available, any other public information released
generally to financial or investment institutions, brokers, investment
bankers or any other entity in the financial community;
(e) not later than 90 days after the end of each fiscal year-end of
IHOP, a budget for IHOP and its Subsidiaries covering their following
fiscal year, in a form reasonably satisfactory to the Bank; and
(f) as soon as possible after an Appropriate Officer (as defined in
the Note Purchase Agreement) of IHOP or the Borrower has knowledge of the
occurrence of an Event of Default or any event which, with the passage of
time and/or the giving of notice, could result in an Event of Default, IHOP
or the Borrower shall furnish the Bank with the details thereof.
In addition to the foregoing, IHOP and the Borrower shall furnish the Bank with
copies of such other statements, reports, notices and information as the Bank
may from time to time reasonably request in writing. The Bank agrees to keep
confidential any nonpublic information furnished by the Borrower to the Bank and
to use such information only for the purposes contemplated under this Agreement.
Section 13. Affirmative Covenants. The Borrower and IHOP covenant and
---------------------
agree that until the Bank's commitment hereunder has been terminated and all
indebtedness of the Borrower to the Bank under this Agreement has been paid in
full and all fees and expenses under this Agreement billed by the Bank to the
Borrower on or prior to the time of the commitment termination have been paid in
full,
13.1. Payment of Principal, Prepayment Charge and Interest; Etc. The
---------------------------------------------------------
Borrower will duly and punctually pay the principal of, prepayment charge (if
any) and interest on the Note in accordance with the terms of the Note and this
Agreement. The Borrower and IHOP will comply with all of the covenants,
agreements and conditions contained in this Agreement.
13.2. Payment of Taxes and Claims. IHOP and the Borrower will, and will
---------------------------
cause each of their respective Subsidiaries to, pay before they become
delinquent:
(a) all taxes (including excise taxes), assessments and governmental
charges or levies imposed upon it or its
-13-
income or profits or upon its Property, real, personal or mixed, or upon
any part thereof;
(b) all claims for labor, materials and supplies which, if unpaid,
might result in the creation of a Lien upon its Property; and
(c) all claims, assessments, or levies required to be paid by any of
them pursuant to any agreement, contract, law, ordinance or governmental
rule or regulation governing any pension, retirement, profit-sharing or
any similar plan;
provided, that the taxes, assessments, charges and levies described in this
--------
Section 13.2 need not be paid while being diligently contested in good faith and
------------
by appropriate proceedings so long as adequate book reserves have been
established with respect thereto in accordance with GAAP. The Borrower and IHOP
will timely file, and will cause their Subsidiaries to file, all tax returns
required to be filed in connection with the payment of taxes required by this
Section 13.2.
------------
13.3. Maintenance of Properties and Corporate Existence. IHOP and the
-------------------------------------------------
Borrower will, and will cause each of their respective Subsidiaries to:
(a) maintain its Property in good condition and make all renewals,
repairs, replacements, additions, betterments, and improvements thereto as
are necessary in the reasonable opinion of management;
(b) keep books, records and accounts in accordance with GAAP;
(c) do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and powers and
franchises including, without limitation thereof, any necessary
qualification or licensing in any foreign jurisdiction; and
(d) comply with all applicable statutes, regulations, franchises, and
Orders of, and all applicable restrictions imposed by, any Governmental
Body (all as now or at any time hereafter may be in effect), in respect of
the conduct of its business and the ownership of its Properties (including,
without limitation, applicable statutes, rules, ordinances, regulations and
Orders relating to Environmental Laws), except where non-compliance could
not reasonably be expected to have a Material Adverse Effect.
13.4. Insurance. IHOP and the Borrower will maintain, and will cause to
---------
be maintained on behalf of each Subsidiary,
-14-
insurance coverage by financially sound and reputable insurers, against such
casualties and contingencies, of such types (including without limitation public
liability, workmens' compensation, larceny and embezzlement or other criminal
misappropriation insurance) and in such amounts as are prudent, and in any event
in such amounts as are adequate to cover foreseeable losses to the business of
IHOP, the Borrower and their Subsidiaries.
Section 14. Negative and Maintenance Covenants. The provisions of this
----------------------------------
Section 14 shall remain in effect until all indebtedness of the Borrower to
----------
the Bank under this Agreement has been paid in full and all fees and expenses
under this Agreement billed by the Bank to the Borrower on or prior to the time
of the commitment termination have been paid in full.
14.1. Restrictions on Liens. IHOP and the Borrower covenant that they
---------------------
will not, nor will they permit any Subsidiary to, directly or indirectly,
create, assume or suffer to exist any Lien upon any of their respective
Properties or assets whether now owned or hereafter acquired, except for:
(a) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 13.2;
------------
(b) Statutory Liens of landlords, and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being diligently contested in good faith, so long as a reserve or other
appropriate provision, if any, shall have been made therefor;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
obligations not due or delinquent with respect to workers' compensation,
unemployment insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(d) Any attachment or judgment Lien (including judgment or appeal
bonds) which shall, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or which shall have
been discharged within 30 days after the expiration of any such stay, or
which is being diligently contested in good faith so long as
-15-
a reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor;
(e) Easements, rights-of-way, restrictions and other similar rights in
land which do not, individually or in the aggregate, materially detract
from the value of such Property and do not interfere with the ordinary
conduct of the business of IHOP, the Borrower or any of their
Subsidiaries;
(f) Liens securing Debt of a Subsidiary to the Borrower or IHOP;
(g) Liens (other than Liens created pursuant to Capitalized Leases)
existing on the date hereof, securing Debt not exceeding $1,000,000 in
the aggregate in principal amount;
(h) Liens pursuant to Capitalized Leases existing on the Closing Date
and Liens created following the Closing Date pursuant to Capitalized
Leases so long as, with respect to Liens pursuant to Capitalized Leases
created following the Closing Date, the Debt represented by such
Capitalized Leases is permitted pursuant to Section 14.2; and
------------
(i) Liens including Liens arising out of purchase money financing not
otherwise permitted by the foregoing clauses of this Section 14.1
------------
securing Debt (without duplication) of IHOP, the Borrower or any
Subsidiary of IHOP or the Borrower, provided that the sum of (i) the
--------
principal amount of such Debt plus (ii) unsecured Debt of Subsidiaries of
IHOP (other than the Borrower) and Subsidiaries of the Borrower not
otherwise permitted under Section 14.4(a) does not exceed at any time
--------------
15% of Consolidated Tangible Net Worth.
The Liens referred to in Section 14.1(a) through (i) are herein collectively
--------------
referred to as "Permitted" Liens," and individually, as a "Permitted Lien."
14.2. Limitation on Consolidated Debt. IHOP and the Borrower shall not
-------------------------------
permit the ratio of (i) Consolidated Debt to (ii) Total Capitalization to
exceed .55 to 1.00 as of the last day of any quarterly accounting period of
IHOP and its Subsidiaries.
14.3. Consolidated Tangible Net Worth. IHOP and the Borrower shall not
-------------------------------
permit Consolidated Tangible Net Worth at any time to be less than the sum
of $50,000,000 plus 50% of Consolidated Net Income on a cumulative basis
from June 30, 1993, to and including any date of determination hereunder.
-16-
14.4. Limitation on Debt of Subsidiaries. IHOP and the Borrower shall not
----------------------------------
permit any of their Subsidiaries (other than the Borrower) to incur any
Debt other than:
(a) Debt owed to IHOP or the Borrower or to a wholly-owned Subsidiary
of IHOP or the Borrower in each case by a direct or indirect wholly-
owned Subsidiary of the creditor thereunder; and
(b) additional Debt, provided that the sum of the aggregate principal
amount of such Debt plus the aggregate principal amount of all other
Debt (without duplication) of IHOP, the Borrower and any of their
Subsidiaries which is secured by Permitted Liens permitted by Section
-------
14.1(i) does not exceed 15% of Consolidated Tangible Net Worth.
------
14.5. Restricted Payments; Restricted Investments. IHOP will not,
-------------------------------------------
directly or indirectly, through any Subsidiary or otherwise, (a) pay or declare
any dividend on any class of its capital stock (but may declare and pay
dividends payable solely in capital stock or warrants, rights or options to
acquire capital stock) or make any other distribution on account of any class of
its capital stock; retire, redeem, purchase or otherwise acquire, directly or
indirectly, any shares of any class of its capital stock or any warrants, rights
or options to acquire any such shares (other than any such redemption,
retirement, purchase or other acquisition in which the consideration paid by
IHOP or such Subsidiary consists solely of shares of capital stock of IHOP); or
make or provide for any mandatory sinking fund payments required in connection
with any class of its capital stock (all of the foregoing being called
"Restricted Payments") or (b) make any Restricted Investment, unless after
giving effect to any Restricted Payment or Restricted Investment the cumulative
aggregate amount of all Restricted Payments and Restricted Investments made by
IHOP and its Subsidiaries after September 30, 1992 would not exceed the sum of:
(i) $2,000,000, plus (ii) 50% of cumulative Consolidated Net Income from
----
September 30, 1992 through the date of determination (or if IHOP and its
Subsidiaries on a consolidated basis have a cumulative Consolidated Net Loss for
such period, then minus 100% of such Consolidated Net Loss), plus (iii) the net
----- ----
proceeds from the issuance or sale of any shares of any class of equity
securities of IHOP which are not mandatorily redeemable or otherwise subject to
repurchase, retirement, call, put or other reacquisition prior to or on the
maturity date of the Fixed Rate Notes (and not subject to acceleration or
redemption, repurchase, retirement, call, put or other reacquisition prior to
the maturity date of the Fixed Rate Notes) received after September 30, 1992;
provided that at the time of any such Restricted Payment or Restricted
--------
Investment, both immediately before and immediately after giving effect thereto,
no Default or Event of Default shall have
-17-
occurred and be continuing. So long as no Default or Event of Default has
occurred or would be continuing after giving effect thereto, this Section 14.5
------------
shall not prevent (a) the payment of any dividend within 60 days after the date
of its declaration if the dividend would have been permitted on the date of its
declaration, or (b) the acquisition, repurchase, retirement, call, put or
redemption of any shares of capital stock of IHOP out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary of IHOP) of, shares of
capital stock of IHOP, provided that any such acquisition, repurchase,
--------
retirement, call, put or redemption shall be deemed to be a Restricted Payment
for the purpose of determining the ability of IHOP and its Subsidiaries to make
future Restricted Payments.
14.6. Sale of Assets. IHOP and the Borrower shall not, and shall not
--------------
permit any of their Subsidiaries to, effect a Disposition of any assets unless
(i) no Default or Event of Default has occurred (except in the case of subclause
(a) below) and is continuing, and (ii) one of the following applies:
(a) such Disposition is in the ordinary course of business,
including, without limitation, sales and leases of operating restaurants in
accordance with the Borrower's ordinary course franchising operations and
is made pursuant to the reasonable business judgment of the Borrower in
accordance with past practice;
(b) in each fiscal year, IHOP, the Borrower and their respective
Subsidiaries may effect Dispositions of assets for Fair Market Value and
which (A) have an aggregate Book Value, together with all other assets
disposed of in that fiscal year (other than Dispositions permitted by
clause (a), (c) or (d) of this Section 14.6), of less than 10% of Gross
------------
Assets on a consolidated basis determined as at the date of such sale; (B)
generate, together with all other assets disposed of in that fiscal year
(other than Dispositions permitted by clause (a), (c) or (d) of this
Section 14.6), net income, which is less than 10% of the Consolidated Net
------------
Income (in each case, determined as of the end of the immediately preceding
fiscal year); and (C) together with all assets previously disposed of since
September 30, 1992 (other than Dispositions permitted by clause (a), (c) or
(d) of this Section 14.6), have an aggregate Book Value of less than 25% of
------------
Gross Assets on a consolidated basis determined as at the date of such
sale, provided that after giving effect to any Disposition described in
--------
this subsection (b), IHOP, the Borrower or any of their Subsidiaries could
incur at least $1 of additional Debt without being in default of their
obligations under Section 14.2;
------------
-18-
(c) such Dispositions are made for Fair Market Value and the proceeds
of such Disposition are used (i) within six months following such
Disposition, to purchase assets ("Business Asset Acquisition") used in the
--------------------------
operations of the Borrower or (ii) to repay Debt of IHOP or its
Subsidiaries which is not junior in right of payment to the Note; provided
--------
that if the aggregate principal amount of all outstanding Loans, Letters of
Credit and unreimbursed drawings under Letters of Credit shall exceed
$4,000,000, then the proceeds of such disposition shall be used to repay
the Note until the aggregate principal amount of all outstanding Loans,
Letters of Credit and unreimbursed drawings under Letters of Credit shall
have been reduced to $4,000,000; or
(d) the assets disposed of were disposed of for Fair Market Value
(taking into consideration the rental rate to be paid by the Borrower in
connection with the Disposition and leaseback of the assets so disposed of)
and were constructed or acquired following September 30, 1992 and are
immediately leased back from the purchaser thereof by IHOP or any of its
Subsidiaries; provided that no assets may be sold and leased back pursuant
--------
to this clause (d) following the third anniversary of the acquisition or
construction of such assets by IHOP, the Borrower or any of their
Subsidiaries.
14.7. Consolidation or Merger. IHOP and the Borrower covenant that
-----------------------
neither of them will, nor will they permit any of their respective Subsidiaries
to, enter into any transaction of merger or consolidation, whether in one
transaction or a series of related or unrelated transactions and whether at the
same time or over a period of time, provided that:
--------
(a) (i) the Borrower may merge with IHOP or any of IHOP's other
Subsidiaries, (ii) IHOP may merge with the Borrower or any of IHOP's other
Subsidiaries and (iii) any Subsidiary may merge with IHOP, the Borrower or
any other Subsidiary, so long as, with respect to any mergers of IHOP, the
Borrower or IHOP Realty in which such party is not the surviving Person,
(a) the surviving Person of such transaction shall be a solvent U.S. or
Canadian corporation, and such surviving Person shall have assumed in
writing all of the obligations of the Borrower, IHOP or IHOP Realty, as the
case may be, under this Agreement, the Note and the Subsidiary Guarantee,
as the case may be, a copy of which writing shall be provided to the Bank
not less than 10 Business Days prior to any such transaction and which
shall be acceptable in form and substance to the Bank, (b) at the time of,
and immediately after giving effect to, any such consolidation or merger,
no Default or Event of Default
-19-
shall have occurred and be continuing, and (c) immediately after any such
consolidation or merger, the surviving Person could incur an additional $1
of Debt pursuant to Section 14.2 hereof; and
------------
(b) IHOP or the Borrower may merge with any other Person so long as
(i) the surviving Person of such transaction shall be a solvent U.S. or
Canadian corporation, and such surviving Person shall have assumed in
writing all of the obligations of the Borrower under the Note and this
Agreement or of IHOP under this Agreement, as the case may be, a copy of
which writing shall be provided to the Bank not less than 10 Business Days
prior to any such transaction and which shall be acceptable in form and
substance to the Bank, (ii) at the time of, and immediately after giving
effect to, any such consolidation or merger, no Default or Event of Default
shall have occurred and be continuing, and (iii) immediately after any such
consolidation or merger, the surviving or continuing Person could incur an
additional $1 of Debt pursuant to Section 14.2 hereof.
------------
14.8. Maintenance of Fixed Charge Coverage. IHOP and the Borrower
------------------------------------
covenant that on the last day of any quarterly accounting period of IHOP and its
Subsidiaries, the ratio of Consolidated Income Available for Fixed Charges to
Fixed Charges for the period consisting of any four of the immediately preceding
five quarterly accounting periods shall not be less than:
Ratio Fiscal Quarter Ending in the Period
----- -----------------------------------
1.40:1.00 from Closing Date through September 29,
1993; and
1.50:1.00 from September 30, 1993 and thereafter.
14.9. Transactions with Affiliates. Each of IHOP and the Borrower
----------------------------
covenants that it will not, and will not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
Property or the rendering of any service), with any Affiliate on terms that are
less favorable to IHOP, the Borrower or such Subsidiary, as the case may be,
than those that would be obtainable at the time in an arms' length transaction
with any Person who is not such an Affiliate; provided, however, that this
-----------------
Section shall not prohibit the payment of compensation and benefits to directors
and officers of IHOP, the Borrower and their Subsidiaries in the ordinary course
of business and consistent with past practices.
-20-
14.10. Acquisition of Margin Securities. Each of IHOP and the Borrower
--------------------------------
covenants that it will not, and will not permit any of its Subsidiaries to, own,
purchase or acquire (or enter into any contract to purchase or acquire) any
"margin security" as defined by any regulation of the Board of Governors of the
United States Federal Reserve System as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, the Bank shall have received an opinion of
counsel satisfactory to the Bank to the effect that such purchase or acquisition
will not cause this Agreement or the Note to be in violation of Regulation G or
any other regulation of such Board then in effect.
14.11. Conduct of Business. Each of IHOP and the Borrower covenants that
-------------------
it will not, and will not permit any of its Subsidiaries to, engage in any
business activity if, such business activity would result in a substantial
change in the general nature of the business of IHOP and its Subsidiaries, taken
as a whole, from that engaged in as of November 19, 1992.
14.12. Further Undertakings. The Borrower will not, without prior
--------------------
written approval of the Bank:
(a) incur capital expenditures in excess of $30,000,000 per fiscal
year;
(b) expend more than $5,000,000 in any fiscal year in connection with
the purchase of the capital stock of, or the acquisition of all or
substantially all of the assets of, any other Person; provided, however
-------- -------
that to the extent that IHOP's capital stock is given in connection with
any such acquisition, the value of such stock shall be excluded from this
calculation and provided, further that expenditures incurred by the
-------- -------
Borrower in connection with the acquisition of restaurants or leasehold
interests for restaurants or with the reacquisition of franchises in the
ordinary course of the Borrower's business shall also be excluded from this
calculation;
(c) amend the amortization schedule in Section 3.1 of the Note
Purchase Agreement to require payments of principal thereunder prior to the
Maturity Date;
(d) make any optional prepayment of the principal of any indebtedness
outstanding under the Note Purchase Agreement prior to the Maturity Date
unless, after giving effect thereto, the aggregate principal amount of all
outstanding Loans, Letters of Credit and unreimbursed drawings under
Letters of Credit does not exceed $4,000,000; or
-21-
(e) notwithstanding the provisions of Section 14.6 hereof, make any
------------
Disposition of any of its accounts receivable or general intangibles.
14.13. Ownership of the Borrower. IHOP agrees with the Bank that, until
-------------------------
the Bank's commitment hereunder has been terminated and all indebtedness of
the Borrower to the Bank under this Agreement has been paid in full and all
fees and expenses under this Agreement billed by the Bank to the Borrower
on or prior to the time of the commitment termination have been paid in
full, IHOP will continue to own of record and beneficially all of the
issued and outstanding capital stock of the Borrower.
Section 15. Conditions Precedent.
--------------------
(a) The effectiveness of this Agreement is conditioned upon receipt
by the Bank of all the following documents, each in form and substance
satisfactory to the Bank:
(i) The Note;
(ii) A certificate, substantially in the form set forth in
Exhibit C hereto, of the Secretary or the Assistant Secretary of
---------
Borrower;
(iii) A certificate, substantially in the form set forth in
Exhibit D hereto, of the Secretary or the Assistant Secretary of
---------
Borrower;
(iv) The Subsidiary Guarantee;
(v) A certificate, substantially in the form set forth in Exhibit
-------
F hereto, of the Secretary or the Assistant Secretary of IHOP;
-
(vi) A certificate, substantially in the form set forth in
Exhibit G hereto, of the Secretary or the Assistant Secretary of
---------
IHOP Realty;
(vii) The opinion of Xxxxx Xxxx Xxx, Esq., counsel to IHOP, IHOP
Realty and the Borrower, covering the matters described in
Exhibit H hereto; and
---------
(viii) Such other documents as the Bank shall have reasonably
requested in writing.
(b) The obligation of the Bank to make any Loan (including the
initial Loan) or to issue any Letter of Credit shall be subject to the
condition precedent that, both before and after giving effect to such Loan
(i) the representations and warranties of the Borrower set forth in
-22-
this Agreement shall be true and correct with the same effect as if then
made and (ii) no Event of Default, and no event which, with the passage of
time and/or the giving of notice, could result in an Event of Default,
shall have occurred and be continuing.
Section 16. Events of Default. The Borrower agrees that if any of the
-----------------
following events of default (an "Event of Default") shall occur:
----------------
(a) Default in the payment when due of any interest on the Note, and
the continuance of such default for five business days; or default in
the payment when due of any principal of the Note or of any amount
payable under this Agreement (other than interest on the Note);
(b) Any representation, warranty or statement made by or on behalf of
IHOP or the Borrower in this Agreement or by or on behalf of IHOP Realty in
the Subsidiary Guarantee or in any certificate, instrument, financial
statement or other document now or hereafter delivered hereunder or
thereunder or pursuant to or in connection with any provision hereof or
thereof shall prove to be false or incorrect or breached in any material
respect on the date as of which made;
(c) The Borrower shall default in the performance or observance of
any covenant, agreement or condition contained in Section 14 hereof;
----------
(d) The Borrower shall default in the performance or observance of
any other covenant, agreement or condition contained in this Agreement and
such default shall continue for a period of 30 days following the earlier
to occur of (i) notice of such default from the Bank or (ii) the date on
which any Authorized Officer of Borrower otherwise becomes aware of the
existence of such default;
(e) IHOP or any of its subsidiaries becomes insolvent or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due; IHOP or any of its subsidiaries applies for a trustee, receiver
or other custodian for it or a substantial part of its property; a trustee,
receiver or other custodian is appointed for IHOP or any of its
subsidiaries or for a substantial part of the property of any thereof, and
is not discharged within 90 days after such appointment; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding,
is commenced by IHOP or any of its subsidiaries; or any bankruptcy,
reorganization, debt arrangement, or other case or
-23-
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced, without the application or consent of
IHOP or any its subsidiaries, in any court of competent jurisdiction and
such proceeding shall continue undismissed, or unstayed and in effect, for
a period of 90 days;
(f) A default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
obligation of IHOP or any of its subsidiaries now or hereafter existing and
having a principal amount in the aggregate in excess of $2,000,000; or a
default shall occur in the performance or observance of any covenant or
condition with respect to such obligation if the effect of such default is
to cause, or to permit the holder or holders of such obligation, or any
trustee or agent for such holders, to cause, such obligation to become due
and payable prior to its expressed maturity; or
(g) If either of the Subsidiary Guarantee or the Guarantee of IHOP
contained herein shall cease to be in full force and effect or either of
IHOP Realty or IHOP or any person acting by or on behalf of either of them
shall deny or disaffirm their respective obligations under such documents;
then, if any Event of Default set forth in the preceding clause (e) shall
----
occur, the commitment of the Bank to make Loans and to issue Letters of Credit
hereunder shall automatically terminate and all of the Borrower's obligations
under this Agreement shall automatically become due and payable, and, if any
other Event of Default shall occur and be continuing, the Bank may declare all
of the Borrower's obligations under this Agreement (including, without
limitation, all reimbursement obligations of the Borrower for any outstanding
Letters of Credit) to be due and payable and the commitment of the Bank to make
Loans and to issue Letters of Credit hereunder (if not theretofore terminated)
to be terminated, whereupon such obligations shall become immediately due and
payable and such commitment shall terminate, without notice of any kind.
Section 17. IHOP Guarantee.
--------------
(a) IHOP, in consideration of the Bank's entering into this
Agreement, unconditionally and irrevocably guarantees to the Bank and each
and every holder from time to time of the Note the due and punctual payment
of all sums which may become due or be stated in the Note or in this
Agreement to become due under the terms and provisions of the Note and this
Agreement in respect of the principal of and prepayment charge, if any, and
interest on the Note (including interest
-24-
on any overdue principal, prepayment charge, if any, and, to the extent
permitted by applicable law, on any overdue interest), and in respect of all
obligations of the Borrower under, or in connection with, any Letter of Credit
issued under this Agreement, whether at stated maturity, by acceleration, by
notice of prepayment or otherwise, and all other sums which may become due from
the Borrower or be stated to be or become so due under the Note or this
Agreement. IHOP further guarantees to the Bank and each holder as aforesaid the
due performance and observance by the Borrower of all covenants, agreements and
conditions on the Borrower's part to be performed under this Agreement and any
other document from time to time delivered by the Borrower pursuant to this
Agreement. IHOP further guarantees to the Bank and each holder as aforesaid
payment of all other amounts payable by the Borrower under this Agreement or the
Note, including costs, expenses (including fees and expenses of counsel) and
taxes (such principal, prepayment charge if any, interest and other obligations
guaranteed as aforesaid being hereinafter collectively called the "Obligations")
------------
and to the extent lawful agrees to pay any and all expenses (including fees and
expenses of counsel) incurred by the Bank in enforcing any rights in connection
with this Section.
(b) IHOP hereby waives notice of acceptance of this Agreement by the Bank,
of any action taken or omitted in reliance hereon or of any default in the
payment of any of the Obligations or in the performance of any covenants and
agreements of the Borrower contained in this Agreement or the Note, and any
diligence, presentment, demand, protest, dishonor or notice of any kind.
(c) The guarantee of IHOP under this Agreement constitutes the present and
continuing guarantee of payment and not of collectibility of the Obligations,
and shall be absolute, primary, present and unconditional, and to the extent
permitted by applicable law, the Obligations shall not be subject to any
counterclaim, setoff, reduction or defense based upon any claim IHOP may have
against the Borrower, or any other person, and shall remain in full force and
effect without regard to, and shall not be released, discharged or in any way
affected or impaired by any thing, event, happening, matter, circumstance or
condition whatsoever (whether or not IHOP shall have any knowledge or notice
thereof or shall consent thereto), including, without limitation: (1) any
amendment or other modification of or supplement to any provision of this
Agreement or the Subsidiary Guarantee or the Note, or any assignment or transfer
thereof, including without limitation any renewal or extension of the terms of
payment of the Note
-25-
or the granting of time in respect of any payment thereof, or any furnishing or
acceptance of security or any release of any security furnished or accepted for
the Note or in respect of the Obligations of IHOP hereunder; (2) any waiver,
consent, extension, granting of time, forbearance, indulgence or other action or
inaction under or in respect of this Agreement or the Subsidiary Guarantee or
the Note, or any exercise or nonexercise of any right, remedy or power in
respect hereof or thereof; (3) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceedings with
respect to IHOP, the Borrower or any other person, or the properties or
creditors of any of them; (4) the occurrence of any Event of Default or event
which, with the giving of notice and/or lapse of time, would become an Event of
Default, or any invalidity or any unenforceability of, or any misrepresentation,
irregularity or other defect in, this Agreement or the Note or any other
agreement; (5) any transfer of any assets to or from IHOP or the Borrower,
including without limitation any transfer or purported transfer to IHOP or the
Borrower from any Person, any invalidity, illegality of, or inability to
enforce, any such transfer or purported transfer, any consolidation or merger of
IHOP or the Borrower with or into any other corporation or entity, or any change
whatsoever in the objects, capital structure, constitution or business of IHOP
or the Borrower or any affiliate or subsidiary of IHOP or the Borrower; (6) any
disposition by IHOP of any capital stock of the Borrower; (7) any failure on the
part of the Borrower or any other Person to perform or comply with any term of
the Note, this Agreement, or any other agreement; (8) any suit or other action
brought by any stockholder or creditor of, or by, IHOP, the Borrower or any
other Person for any reason whatsoever, including without limitation any suit or
action in any way attacking or involving any issue, matter or thing in respect
of the Note, this Agreement or any other agreement; (9) any lack or limitation
of status or power, incapacity or disability of IHOP or the Borrower or of any
officer, director or agent of IHOP or the Borrower or any of their respective
stockholders; (10) the cessation from any cause whatsoever (other than payment
of the Obligations) of liability of the Borrower; (11) the termination of, or
release or compromise of this Agreement, the Note, any Letter of Credit or any
other agreement (other than as a result of payment of the Obligations); (12) any
lack or limitation of the genuineness, validity, regularity or enforceability of
the Note, this Agreement, any Letter of Credit, any other documents and
agreements executed or delivered in connection therewith or pursuant thereto, or
any other agreement; (13) any failure by any holder of the Note to take any
steps to preserve their rights with respect
-26-
to the Obligations; (14) any election by any holder of the Note, in any
proceeding instituted under Chapter 11 of Title 11 of the United States Code (11
U.S.C.(S) 101 et seq.) (the "Bankruptcy Code"), of the application of Section
-- ---
1111(b)(2) of the Bankruptcy Code; (15) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of any of the Bank's claims for
repayment of the Obligations; or (16) any other thing, event, happening, matter,
circumstance or condition whatsoever, not in any way limited to the foregoing,
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor.
(d) The obligations of IHOP and the Borrower under the Note and the other
Sections of this Agreement (other than this Section 17) are independent of
----------
the Obligations of IHOP under this Section 17, and a separate action or
----------
actions may be brought or prosecuted against IHOP irrespective of whether action
is brought against the Borrower and/or any other guarantor or whether the
Borrower and/or any other guarantor is joined in any action or actions.
(e) IHOP expressly waives any right it may have to require any person
seeking enforcement of its Obligations under this Section 17 and the guarantee
----------
in respect of the Note to (1) proceed against the Borrower or any other Person,
(2) proceed against or exhaust any security or (3) pursue any other remedy in
the power of the person seeking such enforcement. The Borrower waives the right
to have any security first applied to the discharge of the Obligations. The Bank
and the other holders from time to time of the Note may, at their election,
exercise any right or remedy they may have against the Borrower or IHOP
including without limitation the right to foreclose upon any such security by
judicial or non-judicial sale, without affecting or limiting in any way the
liability of IHOP hereunder, except to the extent the Obligations have been
paid. IHOP waives any defense arising out of the absence, impairment or loss of
any right of reimbursement, contribution or subrogation or any other rights or
remedy of IHOP against the Borrower, or any such security, whether resulting
from such election by the holder of the Note or otherwise.
(f) IHOP agrees that its obligations under this Agreement shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of the Borrower or IHOP or IHOP Realty is rescinded or must be
otherwise restored by the holder of the Note, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise. IHOP further agrees
that, without limiting the generality of such obligations, if an Event of
Default shall have occurred and be continuing and the Bank or the holder
-27-
of the Note is prevented by applicable law from exercising any remedy under this
Agreement or under the Note, the holder of the Note shall be entitled to receive
from IHOP upon demand therefor, the sums which would have otherwise been due
from the Borrower had such remedies been exercised.
(g) IHOP hereby expressly waives any and all benefits under California
Civil Code Sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and
3433 and California Code of Civil Procedure Sections 580(a), 580(b), 580(d) and
726.
(h) IHOP waives and releases any claim (within the meaning of 11 U.S.C (S)
101) which it may have against the Borrower and agrees not to assert or take
advantage of any subrogation rights or any right to proceed against the Borrower
for reimbursement. It is expressly understood that the waivers and agreements of
IHOP set forth above constituted additional and cumulative benefits given to the
Bank as further inducement for the Bank to enter into this Agreement.
Section 18. Definitions.
-----------
(a) For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Account" is defined in Section 2.
---------
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly controls, or is controlled by, or is under common control
with, IHOP, (ii) which beneficially owns or holds 10% or more of any class of
the Voting Stock of IHOP, (iii) 10% or more of the Voting Stock of which is
beneficially owned or held by IHOP or a Subsidiary of IHOP or (iv) any officer
or director of IHOP or any of its Subsidiaries. For purposes of this definition,
"control" of a Person shall mean the power, direct or indirect, (i) to vote or
direct the voting of a majority of the Voting Stock of such Person, or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Agreement" is defined in Section 1.
---------
"Alternative Reference Rate" shall mean, for any day a fluctuating rate
per annum (rounded to the nearest 1/8 of 1% if not already an integral multiple
of 1/8 of 1%) equal to the greater of (i) the rate of interest then most
recently announced by the Bank at its principal office in Chicago, Illinois as
its "reference rate" or (ii) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% per
----
-28-
annum. "Federal Funds Effective Rate" shall mean, for any day, an interest rate
----------------------------
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a business day,
the average of the quotations for such day on such transactions received by the
Bank from three Federal funds brokers of recognized standing selected by it. In
the case of a day which is not a business day, the Federal Funds Effective Rate
for such day shall be the Federal Funds Effective Rate for the next preceding
business day. For purposes of this Agreement, any change in the Alternative
Reference Rate due to a change in the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Federal Funds Effective
Rate.
"Appropriate Officer" shall mean, with respect to any corporation, such
corporation's President, Vice President, Chief Executive Officer, Chief
Financial Officer, Treasurer or Controller.
"Authorized Officers" is defined in Section 2.
---------
"Bank" is defined in the preamble.
"Board" means the Board of Directors of any corporation or a committee of
said corporation having authority to exercise, when the Board of Directors is
not in session, the powers of the Board of Directors (subject to any designated
limitations) in the management of the business and affairs of said corporation.
"Book Value" of an asset of any Person means the value of such asset as
reported in the books and records of such Person in accordance with GAAP.
"Borrower" is defined in the preamble.
"Business Asset Acquisition" is defined in Section 14.6 hereof.
------------
"Business Day" means any day except a Saturday, a Sunday or a legal holiday
in Chicago, Illinois.
"Capitalized Lease" means a lease of Property which in accordance with GAAP
should be capitalized on the balance sheet of any Person.
-29-
"Capitalized Lease Obligations" shall mean the aggregate rentals due and to
become due under all Capitalized Leases which any Person, as a lessee, would be
required to reflect as a liability on the consolidated balance sheet of such
Person in accordance with GAAP.
"Closing Date" means November 19, 1992.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Amount" is defined in the preamble.
"Confirmation" is defined in Section 2.
---------
"Consolidated Debt" shall mean the Debt of IHOP, the Borrower and their
Subsidiaries, as determined on a consolidated basis in accordance with GAAP.
"Consolidated Income Available for Fixed Charges" means the sum of (a)
Consolidated Net Income, (b) consolidated income tax expense of IHOP and its
Subsidiaries in accordance with GAAP and (c) Fixed Charges.
"Consolidated Net Income or Loss" shall mean the Net Income or Loss of
IHOP, the Borrower and their Subsidiaries, as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean shareholders' equity of IHOP
and its Subsidiaries less intangible assets booked after the Closing Date,
----
less Restricted Investments in excess of 10% of shareholders' equity of IHOP
----
and its Subsidiaries at any date of determination, all as determined for IHOP
and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Debt" with respect to any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the liability of such
Person created by granting a Lien to which the property or assets of such Person
are subject whether or not such Person has assumed or become legally liable for
the payment of any obligation (provided that, if such obligation has not been
assumed or become the legal liability of such Person, the amount of the
liability shall be deemed to be in an amount not to exceed the Fair Market Value
of the property to which the Lien relates, as determined in good faith by such
Person), (iii) Capitalized Lease Obligations of such Person, to the extent such
obligations exceed accounts receivable by such Person
-30-
as lessor under direct financing leases with franchisees so long as such direct
financing leases are, at the time of determination to the best knowledge of the
lessor thereunder, valid and enforceable against their lessees and are current
as to payment and not otherwise in default to the extent that there is a
reasonable likelihood that any such lease would be terminated by the lessor
prior to its stated expiration and (iv) the aggregate amount of all Guarantees
given by such Person with respect to any of the foregoing.
"Default" means any event or condition which, with due notice or lapse of
time or both, would become an Event of Default.
"Default Rate" is defined in Section 4.
---------
"Disposition" shall mean any sale, transfer, assignment, lease, conveyance
or other disposition of any asset except for sales, transfers, assignments,
leases conveyances or other dispositions solely between IHOP, the Borrower
and/or IHOP Realty.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S)(S) 9601 to 9675, the Resource
Conservation and Recovery Act, 42 U.S. C. (S)(S) 6901 to 6992, the Emergency
Planning and Community Right to Know Act, 42 U.S.C. (S)(S) 11001 to 11050, the
Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f to 300j-26, the Hazardous
Materials Transportation Act, 49 U.S.C.A. (S)(S) 1801 to 1819, the Clean Air
Act, 42 U.S.C. (S)(S) 7401 to 7671q, the Clean Water Act, 33 U.S.C. (S)(S) 1251
to 1387, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S)(S)
136 to 136y, the Noise Control Act, 42 U.S.C.(S)(S) 4901 to 4918, the
Occupational Safety and Health Act, 29 U.S.C.A. (S)(S) 651 to 678, the Toxic
Substances Control Act, 15 U.S.C. (S)(S) 2601 to 2671, any so-called "Superfund"
or "Superlien" law, any regulation promulgated under any of the foregoing or any
other Federal, state, or local statute, law, ordinance, code, rule, regulation,
order, decree, common law or other requirement of any Governmental Body
regulating or imposing liability or standards of conduct concerning the
environment, health and safety, or any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as from
time to time amended.
"Eurodollar Rate" means, for any Interest Period for any Eurodollar Rate
Loan, an interest rate per annum equal at all times during such Interest
Period to the sum of (i)
-31-
1.50% per annum, plus (ii) the rate per annum obtained by dividing (x) the rate
----
of interest per annum equal to the average (rounded upward, if necessary, to the
nearest 1/16 of 1%) of the rates per annum at which deposits in United States
dollars in immediately available funds are offered to the Bank's principal
office in Chicago, Illinois as at or about 10:00 a.m., Chicago time, two
Business Days before the first day of such Interest Period, in an amount
approximately equal to the amount of such Loan and for a period approximately
equal to such Interest Period, by (y) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Reserve Percentage" for any Interest Period for any
Eurodollar Rate Loan is the reserve percentage equal to the maximum aggregate
reserve requirements (including all basic, emergency, supplemental, marginal and
other reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements) specified under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (and
any successor thereto) and then applicable to assets or liabilities consisting
of and including "Eurocurrency Liabilities", as currently defined in Regulation
D of the Board of Governors of the Federal Reserve System (and any successor
thereto), having a term approximately equal or comparable to such Interest
Period.
"Event of Default" is defined in Section 16.
----------
"Fair Market Value" means what a willing buyer would pay to a willing
seller in an arm's-length transaction.
"Fixed Charges" means the sum of (a) Interest Expense and (b) rental
expense under operating leases, all as determined for IHOP and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"Fixed Rate Loans" is defined in Section 4.
---------
"Fixed Rate Notes" means the Borrower's 7.79% senior notes due in 2002 in
the original aggregate principal amount of $32,000,000 issued on November 19,
1992 pursuant to the Note Purchase Agreements.
"GAAP" means generally accepted accounting principles in the United States
in effect from time to time.
"Governmental Body" means any federal, state, Canadian provincial, county,
city, town, village, municipal or other
-32-
governmental department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Gross Assets" means the total assets and Properties of IHOP and its
Subsidiaries less accumulated depreciation, as indicated on the audited
balance sheets of IHOP and its Subsidiaries for the fiscal year end
immediately prior to the date of any determination.
"Guarantee" means any guarantee or other contingent liability (other than
any endorsement for collection or deposit in the ordinary course of business),
direct or indirect, with respect to any obligations of another Person, through
an agreement or otherwise, including, without limitation, (a) any other
endorsement or discount with recourse or undertaking substantially equivalent to
or having economic effect similar to a guarantee in respect of any such
obligations and (b) any agreement (i) to purchase, or to advance or supply funds
for the payment or purchase of, any such obligations, (ii) to purchase, sell or
lease Property, products, materials or supplies, or transportation or services,
in respect of enabling such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or nondelivery of the
Property, products, materials or supplies or transportation or services or (iii)
to make any loan, advance or capital contribution to or other investment in, or
to otherwise provide funds to or for, such other Person in respect of enabling
such Person to satisfy any obligation (including any liability for a dividend,
stock liquidation payment or expense) or to assure a minimum equity, working
capital or other balance sheet condition in respect of any such obligation. The
amount of liability of any Person attributable to any Guarantee shall be equal
to the maximum amount for which such Person could be liable under such
Guarantee.
"Hazardous Material" and "Hazardous Materials" shall mean as follows:
(1) any "hazardous substance" as defined in, or for purposes of, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.A.(S)(S) 9601 & 9602, as may be amended from time to time, or any other
so-called "superfund" or "superlien" law and any judicial interpretation of
any of the foregoing;
(2) any "regulated substance" as defined pursuant to 40 C.F.R. Part 280;
-33-
(3) any "pollutant or contaminant" as defined in 42
XX.XX.(S) 9601(33);
(4) any "hazardous waste" as defined in, or for purposes of, the Resource
Conservation and Recovery Act;
(5) any "hazardous chemical" as defined in 29 C.F.R. Part 1910;
(6) any "hazardous material" as defined in, or for purposes of, the
Hazardous Materials Transportation Act; and
(7) any other substance, regardless of physical form, or form of energy or
pathogenic agent that is subject to any Environmental Law.
Without limiting the generality of the foregoing, the term "Hazardous
Material" thus includes, but is not limited to, any material, waste or substance
that contains petroleum or any fraction thereof, asbestos, or polychlorinated
biphenyls, or that is flammable, explosive or radioactive that is subject to any
Environmental Law.
"IHOP" means IHOP Corp., a Delaware corporation, or any successor thereto.
"IHOP Realty" means IHOP Realty Corp., a Delaware corporation which is a
wholly-owned Subsidiary of the Borrower.
"Indemnified Person" is defined in Section 9.
---------
"Interest Expense" shall mean interest expense, determined for IHOP and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"Interest Period" is defined in Section 4.
---------
"Investment" when used with reference to any investment of IHOP, the
Borrower or any of their Subsidiaries, means any investment so classified under
GAAP (and, specifically, shall not include trade receivables which are
classified as current assets under GAAP), and, whether or not so classified,
includes (a) any loan or advance made by IHOP, the Borrower or any of their
Subsidiaries to any other Person, and (b) any ownership or similar interest in
any other Person; and the amount of any Investment shall be the original
principal or capital amount thereof less all cash returns of principal or equity
thereof (and without adjustment by reason of the financial condition of such
other Person).
-34-
"L/C Commitment" is defined in the preamble.
"Letters of Credit" is defined in the preamble.
"Lien" means any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, conditional sale or title retention agreement, lessor's interest
under a Capitalized Lease or analogous instrument, in, of or on any of a
Person's Property (whether held on the date hereof or hereafter acquired), or
any signed or filed financing statement which names such Person as the debtor,
or the execution of any security agreement or the like authorizing any other
Person as the secured party thereunder to file such a financing statement;
provided that neither (a) the interest of a lessee or a sublessee in its
--------
capacity as lessee or sublessee under a lease or sublease entered into by IHOP,
the Borrower or any of their Subsidiaries in the ordinary course of business nor
(b) the rights of franchisees in their capacities as franchisees to use and
possession of certain properties and rights pursuant to franchise documentation
entered into by IHOP, the Borrower or any of their Subsidiaries in the ordinary
course of business shall be deemed to constitute a Lien for purposes hereof.
"Loan" is defined in the preamble.
"Material Adverse Effect" means any change or changes or effect or effects
that individually or in the aggregate are or are likely to be materially adverse
to (i) the assets, business, operations, income, prospects or condition
(financial or otherwise) of IHOP and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries taken as a whole, (ii) the transactions
contemplated by this Agreement, or (iii) taken as a whole, the ability of the
Borrower and IHOP to fulfill their respective obligations under this Agreement
and the Note.
"Maturity Date" is defined in Section 1.
---------
"Net Income or Loss" of any Person, with respect to any period, shall mean
the net income or net loss of such Person after excluding the sum of (i) any net
loss or any undistributed net income of any Person other than a Subsidiary of
such Person, (ii) the net income or net loss of any Subsidiary of such Person
earned or incurred prior to the date on which it became a Subsidiary of such
Person, (iii) the gain or loss (net of any tax effect) resulting from the sale
of any capital assets other than in the ordinary course of business, and (iv)
extraordinary or
-35-
nonrecurring gains or losses (net of any tax effect), all as determined for the
relevant period in accordance with GAAP.
"Note" is defined in Section 3.
---------
"Note Purchase Agreements" means the several Senior Note Purchase
Agreements dated as of November 19, 1992 among the Borrower, IHOP and the
purchasers identified in Schedule I thereto.
"Obligations" is defined in Section 17.
----------
"Order" means any order, writ, injunction, decree, judgment, award,
determination or written direction or demand of any court, arbitrator or
Governmental Body.
"Permitted Lien" is defined in Section 14.1.
------------
"Person" means and includes an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"Property" with respect to any Person, means any interest in any kind of
property or asset, whether real, personal or mixed, tangible or intangible, of
such Person.
"Quoted Rate" shall mean, with respect to any Quoted Rate Loan for any
Interest Period, the rate per annum quoted by the Bank to the Borrower for
delivery on the first day of such Interest Period, for the number of days
comprised in such Interest Period and in an amount equal to the amount of such
Quoted Rate Loan to be outstanding during such Interest Period.
"Quoted Rate Loan" shall mean any Loan which bears interest at a Quoted
Rate.
"Reference Rate Loan" shall mean any Loan which bears interest at or by
reference to the Alternative Reference Rate.
"Restricted Investments" shall mean all Investments made by IHOP, the
Borrower or their Subsidiaries in or to any Person except (i) Investments in
notes of franchisees and receivables of franchisees in the ordinary course of
business other than notes and receivables held in settlement of franchise
obligations, and in Property of :HOP or its Subsidiaries to be used in the
ordinary course of business, (ii) Investments in Subsidiaries, (iii) Investments
in obligations issued or unconditionally guarantied by the U.S.
-36-
or any agency thereof, in each case maturing within one year from the date of
acquisition thereof; (iv) Investments in obligations issued by any political
subdivision of the U.S. or any public instrumentality thereof maturing within
one year from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc. or some other mutually agreeable
rating system if either of these entities no longer exists; (v) commercial paper
maturing no more than 270 days from the date of creation thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc. or some
other mutually agreeable rating system if either of these entities no longer
exists; (vi) certificates of deposit, repurchase agreements or bankers'
acceptances maturing within one year from the date of acquisition thereof issued
by the Borrower's cash management concentration bank (provided that such bank is
rated investment grade or better by either Standard & Poor's Corporation or
Xxxxx'x Investors Services, Inc. or some other mutually agreeable rating system
if either of these entities no longer exists), Continental Bank NA., or other
commercial banks located in the U.S. and Canada having combined capital, surplus
and undivided profits of not less than $100,000,000 and who have a rating at all
times from Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc., or
some other mutually agreeable rating system if either of these entities no
longer exists, of "A-" or better; (vii) Investments in mutual funds and money
market accounts, which funds or accounts are traded on a national exchange or
are managed by a commercial bank and which invests solely in Investments which
satisfy the criteria set forth in the foregoing clauses (iii) through (vi); and
(viii) other Investments existing on the Closing Date.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (a) organized under the laws of the United States, the District of
Columbia or Canada or any state or political subdivision of any thereof, (b) all
or substantially all of whose assets and business operations are located or
conducted within the United States or Canada and (c) of which at least 51% of
the outstanding Voting Stock is at the time directly or indirectly owned or
controlled by such Person or by one or more of such Person's wholly-owned
Subsidiaries.
"Subsidiary Guarantee" shall mean the Subsidiary Guarantee from IHOP Realty
in the form of Exhibit E hereto.
---------
-37-
"Total Capitalization" shall mean the sum of (i) Consolidated Debt of
IHOP, the Borrower and their Subsidiaries and (ii) Consolidated Tangible
Net Worth.
"U.S." means the United States of America.
"Voting Stock" with respect to any Person shall mean capital stock of
such Person of any class or classes, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of
members of the Board (or Persons performing similar functions) of such
Person.
(b) Accounting Terms. All accounting terms used in this Agreement
----------------
shall be applied on a consolidated basis for IHOP, the Borrower and their
Subsidiaries, unless otherwise specifically indicated herein. Any
accounting terms not specifically defined herein shall have the meanings
customarily given them in accordance with GAAP.
Section 19. Miscellaneous. No delay on the part of the Bank or on the
-------------
part of any other holder of the Note in the exercise of any right, power or
remedy shall operate as a waiver thereof, nor shall any single or partial
exercise by the Bank or such holder of any right, power or remedy preclude other
or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Note shall in any event be effective unless
the same shall be in writing and signed and delivered by IHOP, the Borrower and
the Bank. This Agreement shall be a contract made under and governed by the
internal laws of the State of Illinois. All obligations of IHOP and the Borrower
and rights of the Bank and the rights of any other holder of the Note expressed
herein or in the Note shall be in addition to and not in limitation of those
provided by applicable law. This Agreement shall be binding upon IHOP and the
Borrower, and shall inure to the benefit of the Bank and its successors and
assigns. The Borrower shall pay on demand all the reasonable fees and out-of-
pocket expenses of the Bank's counsel in connection with the execution and
delivery of this Agreement, the Note and all other instruments or documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith and in connection with all waivers hereof and amendments hereto, and
all reasonable attorneys' fees and legal expenses incurred by the Bank in
connection with the enforcement of this Agreement, the Note or any such other
instruments or documents. In addition, the Borrower agrees to pay, and to save
the Bank harmless from all liability for, any stamp or other transfer taxes
which may be payable in connection with the execution or delivery of this
Agreement, the borrowings hereunder, or the issuance of the Note or of any other
-38-
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. All obligations provided for in this
Section and in Section 9 shall survive any termination of this Agreement and all
---------
obligations of the Borrower provided under Sections 7 and 8 shall survive for a
---------- -
period of six months after any termination of the Agreement; provided that if
--------
the Bank shall have made a claim for compensation thereunder within 6 months
after the termination of this Agreement, then the obligations with respect to
such claim shall survive until such claim has been resolved. The Borrower and
IHOP waive any right to a trial by jury in any action or proceeding to enforce
or defend any rights under this Agreement or any instrument, document or
agreement delivered in connection herewith or arising from any banking
relationship existing in connection with this Agreement, and agree that any such
action or proceeding shall be tried before a court and not before a jury.
If the foregoing correctly sets forth our understanding kindly sign and
return to us one copy of this letter.
Very truly yours,
CONTINENTAL BANK N.A.
By /s/ X. X. Xxxxx
--------------------------
Its Vice President
-----------------------
Confirmed and agreed to:
INTERNATIONAL HOUSE OF PANCAKES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Its: President
----------------------------
IHOP CORP.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Its: President
----------------------------
-39-
EXHIBIT A
---------
NOTE
$10,000,000 June 30, 0000
Xxxxxxx, Xxxxxxxx
For value received, the undersigned INTERNATIONAL HOUSE OF PANCAKES, INC.
promises to pay to the order of CONTINENTAL BANK N.A. (herein called the "Bank")
on the Maturity Date (as such term is defined in the hereinafter defined Credit
Agreement) at its offices in Chicago, Illinois, TEN MILLION DOLLARS, or if less,
the aggregate unpaid principal amount of all loans made by the Bank to the
undersigned from time to time under the letter agreement dated as of June 30,
1993 among the undersigned, IHOP Corp. and the Bank (herein, as amended or
modified from time to time, the "Credit Agreement").
----------------
The date, type, amount, interest period and interest rate of each loan made
by the Bank under the Credit Agreement and of each repayment of principal
received thereon may, at the option of the Bank, be recorded by the Bank in its
records and all such information so recorded shall be conclusive and binding
upon the Borrower (absent manifest error). The failure to record any such
information shall not, however, limit or otherwise affect the obligations of the
undersigned hereunder to repay the principal amount of all loans under the
Credit Agreement together with all interest accruing thereon.
The aggregate unpaid principal amount from time to time outstanding of
loans made by the Bank to the undersigned under the Credit Agreement shall bear
interest at such rates as provided in the Credit Agreement. Interest on this
Note shall be computed and paid as provided in the Credit Agreement.
This Note evidences indebtedness incurred under the Credit Agreement.
Reference is made to the Credit Agreement for a statement of the prepayment
rights of the undersigned, and for a statement of the terms and conditions upon
which the due date of the amounts outstanding hereunder may be accelerated. Upon
the occurrence of any Event of Default as specified in the Credit Agreement, the
principal balance hereof and the interest accrued hereon may be declared to be
forthwith due and payable.
Payments of both principal and interest hereon shall be made in lawful
money of the United States of America in immediately available funds.
Notwithstanding anything to the contrary herein or in the Credit Agreement,
the undersigned further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder of this Note in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
This Note is made under and governed by the internal laws of the State of
Illinois.
Address: INTERNATIONAL HOUSE OF
PANCAKES, INC.
000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
By: _________________________
Its: ____________________
-2-
EXHIBIT B
---------
_______________, 199_
Continental Bank N.A.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: __________________
Reference is made to that certain letter agreement, dated as of June 30,
1993 (as the same may be amended from time to time, the "Agreement"), among
---------
the undersigned, IHOP Corp. and you. All terms used herein which are defined in
the Agreement shall have the same meaning herein.
Pursuant to the terms of the Agreement, we hereby confirm the following:
1. A [Reference/Eurodollar/Quoted] Rate Loan in the amount of $___________
was requested on _______________, 199_. [Such Loan shall have an Interest Period
of __ days/__ months].
2. A repayment of principal on the Note in the amount of $_____________
was authorized on _____________, 199_. Such repayment shall be applied to
[outstanding Reference Rate Loans) [the Quoted Rate/the Eurodollar Rate Loan
having an Interest Period expiring on such date].
[Complete number 1 and/or 2 above as applicable.)
3. After giving effect to the foregoing transactions, the unpaid principal
balance of the Note will be $__________________.
Very truly yours,
INTERNATIONAL HOUSE OF
PANCAKES, INC.
By: _______________________
Its: ___________________
EXHIBIT C
---------
CERTIFICATE
IDENTIFYING AUTHORIZED OFFICERS
I, Xxxxx Xxxx Xxx, Secretary of International House of Pancakes, Inc.
hereby certify as follows:
Pursuant to the letter agreement dated as of June 30, 1993 (the "Credit
------
Agreement") among Continental Bank N.A. (the "Bank"), IHOP Corp. and
---------- ----
International House of Pancakes, Inc. (the "Borrower"), each of the persons
--------
named in Section 1 below is authorized to request Loans from the Bank and to
execute Confirmations (in the form of Exhibit B as referred to in the Credit
Agreement) called for under the Credit Agreement and each of the persons named
in Section 2 below is authorized only to request Loans from the Bank. The
signatures set forth opposite their respective names below are their genuine
signatures.
Section 1.
----------
Name Title Signature
---- ----- ---------
Xxxxxxx X. Xxxxxx President __________________________
Xxxxx Xxxx Xxx Executive V.P. - __________________________
Administration
Xxxxxxxxx X. Xxxxx V.P. - Finance __________________________
Xxxx X. Xxxxx Controller __________________________
Xxxxx X. Xxxxxxxx Director of __________________________
Financial Planning
Section 2.
---------
Xxxxxx X. Xxxxxxx Assistant Director __________________________
of Financial
Planning
INTERNATIONAL HOUSE OF
PANCAKES, INC.
By: ________________________
Its: Secretary
Date: June 30, 1993
-2-
EXHIBIT D
---------
Certificate of Xxxxx Xxxx Xxx
I, the undersigned, Secretary of INTERNATIONAL HOUSE OF PANCAKES, INC. (the
"Borrower"), DO HEREBY CERTIFY that:
--------
1. This Certificate is furnished pursuant to Section 15 of that certain
----------
letter agreement dated as of June 30, 1993 (the "Agreement"), among the
---------
Borrower, IHOP Corp. and Continental Bank N.A. (the "Bank"). Unless otherwise
----
defined herein, capitalized terms used in this Certificate have the meanings
assigned to such terms in the Agreement.
2. Attached hereto as Exhibit I are true, correct and complete copies of
---------
the certificate of incorporation of the Borrower and the by-laws of the
Borrower as in effect on the date hereof.
3. Attached hereto as Exhibit II is a true, correct and complete copy of
----------
resolutions duly adopted by the Board of Directors of the Borrower, which
resolutions have not been revoked, modified, amended or rescinded and are still
in full force and effect.
4. The persons named in Exhibit III attached hereto have been duly
-----------
elected, have duly qualified as and at all times since June 1, 1993 (to and
including the date hereof) have been officers of the Borrower holding the
respective offices set forth therein opposite their names.
5. I know of no proceeding for the dissolution or liquidation of the
Borrower or threatening its existence.
WITNESS my hand this 30th day of June, 1993.
_______________________________
Secretary
I, the undersigned, President of the Borrower, DO HEREBY CERTIFY that Xxxxx
Xxxx Xxx is the duly elected and qualified Secretary of the Borrower and
the signature above is his genuine signature.
WITNESS my hand on this 30th day of June, 1993.
________________________________
President
-2-
EXHIBIT E
---------
SUBSIDIARY GUARANTEE
IHOP REALTY CORP.
FOR VALUE RECEIVED and in consideration of the agreement by Continental
Bank N.A. (the "Bank") to extend credit to International House of Pancakes,
----
Inc., a Delaware corporation (herein called, together with its successors and
assigns, the "Borrower"), pursuant to the letter agreement dated as of June 30,
--------
1993, by and among the Bank, IHOP Corp., a Delaware corporation ("IHOP"), and
----
the Borrower, which is the wholly-owned Subsidiary of IHOP (the "Credit
------
Agreement"), the undersigned (the "Guarantor"), a wholly-owned Subsidiary of the
--------- ---------
Borrower, unconditionally guarantees (a) the full and prompt payment, when due,
whether at maturity or earlier by reason of acceleration or otherwise, and at
all times thereafter of all obligations of the Borrower with respect to payment
of the principal of, prepayment charges (if any), and interest on the promissory
note (the "Note") executed pursuant to the Credit Agreement (including interest
----
on any overdue principal and prepayment charges, if any, and, to the extent
permitted by law, on any overdue interest), and all other amounts due, and (b)
the prompt and faithful performance, discharge and observance of all other
obligations, covenants, agreements, conditions, representations, warranties,
indemnities and liabilities of the Borrower and IHOP to be performed, discharged
or observed by the Borrower and IHOP, under or pursuant to the Credit Agreement
and all agreements, instruments and documents executed or delivered in
connection therewith or pursuant thereto (all such obligations of the Borrower
and IHOP guaranteed by the Guarantor herein being hereinafter called the
"Obligations"). In the event the Borrower or IHOP defaults in the payment or
-----------
performance, when due, of any of the Obligations (whether at their stated
maturity, by acceleration, or otherwise), the Guarantor shall pay to the Bank,
on demand, the full amount of such Obligations in immediately available funds at
the place provided in the Credit Agreement or shall, on demand, fully perform
such Obligations. The Guarantor further agrees to pay (a) all costs and expenses
including, without limitation, all court costs and reasonable attorneys' fees
and expenses paid or incurred by the Bank in endeavoring to collect all or any
part of the Obligations from, or in prosecuting any action against, IHOP, the
Borrower, the Guarantor, or any other guarantor of all or any part of the
Obligations, and (b) to the extent permitted by law, interest on the Obligations
and such costs and expenses at the applicable per annum rate set forth in the
Credit Agreement. Unless otherwise
defined herein, the capitalized terms used herein which are defined in the
Credit Agreement shall have the meanings specified therein.
The Guarantor hereby represents and warrants that:
(a) The Guarantor has full power, authority and legal right to execute
this Guarantee.
(b) This Guarantee has been duly authorized, executed and delivered by
the Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms.
(c) No consent, approval or authorization of or filing with any
governmental body or other person on the part of the Guarantor is required in
connection with this Guarantee.
(d) The execution, delivery and performance of this Guarantee will not
violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental body,
domestic or foreign, or of the charter or by-laws of the Guarantor or of any
securities issued by the Guarantor or of any mortgage, indenture, lease,
contract, or loan agreement to which the Guarantor is a party, or any other
agreement, instrument or undertaking to which the Guarantor is a party or which
purports to be binding upon the Guarantor or upon any of its assets, and will
not result in the creation or imposition of any Lien on any of the assets of the
Guarantor except as contemplated by this Guarantee.
The Guarantor hereby waives notice of acceptance of this Guarantee by the
Bank, of any action taken or omitted in reliance hereon or of any default in the
payment of any of the Obligations or in the performance of any covenants and
agreements of the Borrower contained in the Credit Agreement or the Note, and
any diligence, presentment, demand, protest, dishonor or notice of any kind.
This Guarantee constitutes a present and continuing Guarantee of payment
and performance and not of collectability of the Obligations, and shall be
absolute, primary, present and unconditional, and to the extent permitted by
applicable law, shall not be subject to any counterclaim, setoff, reduction or
defense based upon any claim the Guarantor may have against the Borrower, or any
other person, and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected or impaired by any
thing, event, happening, matter, circumstance or condition whatsoever (whether
-2-
or not the Guarantor shall have any knowledge or notice thereof or shall consent
thereto), including, without limitation:
(i) any amendment or other modification of or supplement to any
provision of the Credit Agreement, any other agreements or documents
executed or delivered in connection therewith or pursuant thereto or the
Note or any assignment or transfer thereof, including without limitation
any renewal or extension of the terms of payment of the Note or the
granting of time in respect of any payment thereof, or any furnishing or
acceptance of security or any release of any security furnished or accepted
for the Note or in respect of the obligations of the Guarantor hereunder;
(ii) any waiver, consent, extension, granting of time,
forbearance, indulgence or other action or inaction under or in respect of
this Guarantee or the Note or any exercise or nonexercise of any right,
remedy or power in respect hereof or thereof;
(iii) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect
to the Guarantor, the Borrower or any other person, or the properties or
creditors of any of them;
(iv) the occurrence of any Default or Event of Default, or any
invalidity or unenforceability of, or any misrepresentation, irregularity
or other defect in, the Credit Agreement, any other agreement or document
executed or delivered in connection therewith or pursuant thereto, the Note
or any other agreement;
(v) any transfer of any assets to or from the Guarantor, IHOP or
the Borrower, including without limitation any transfer or purported
transfer to the Guarantor, IHOP or the Borrower from any person, any
invalidity, illegality of, or inability to enforce, any such transfer or
purported transfer, any consolidation or merger of the Guarantor, IHOP or
the Borrower with or into any other corporation or entity, or any change
whatsoever in the objects, capital structure, constitution or business of
the Guarantor, IHOP or the Borrower or any affiliate or Subsidiary of the
Guarantor, IHOP or of the Borrower;
(vi) any failure on the part of the Borrower or any other person to
perform or comply with any term of the Note, the Credit Agreement, or any
other agreement;
-3-
(vii) any suit or other action brought by the Guarantor, IHOP, the
Borrower or any other Person, or by any stockholder or creditor of any of such
Persons, for any reason whatsoever, including without limitation any suit or
action in any way attacking or involving any issue, matter or thing in respect
of the Note, the Credit Agreement or any other agreement;
(viii) any lack or limitation of status or power, incapacity or
disability of the Guarantor, IHOP or the Borrower or of any officer, director or
agent of the Guarantor, IHOP or the Borrower or any of their respective
stockholders;
(ix) the cessation from any cause whatsoever (other than payment of
the Obligations) of liability of the Borrower;
(x) the termination of, or release or compromise of the Credit
Agreement, any other agreement or document executed or delivered in connection
therewith or pursuant thereto, the Note or any other agreement, including,
without limitation, the guarantee of IHOP set forth in Section 17 of the Credit
Agreement (other than as a result of payment of the Obligations);
(xi) any lack or limitation of the genuineness, validity,
regularity or enforceability of the Note, the Credit Agreement, any other
agreement or document executed or delivered in connection therewith or pursuant
thereto, or any other agreement;
(xii) any failure by the Bank to take any steps to perfect or
maintain their security interest (if any) in or Liens (if any) upon, or to
preserve their rights to, any security or collateral for the Obligations;
(xiii) any election by the Bank, in any proceeding instituted under
Chapter 11 of Title 11 of the United States Code (11 U.S.C. (S) 101 et seq.)
-- ---
(the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(xiv) the disallowance, under Section 502 of the Bankruptcy Code, of
all or any portion of any of the Bank's claims for repayment of the Obligations;
or
(xv) any other thing, event, happening, matter, circumstance or
condition whatsoever, not in any way limited
-4-
to the foregoing, which might otherwise constitute a legal or equitable
discharge or defense of a guarantor.
The liability of the undersigned Guarantor under this Guarantee shall not
exceed at any time the greater of (i) 95% of the Adjusted Net Assets (as
hereinafter defined) of the Guarantor at the time of delivery hereof and (ii)
95% of the Adjusted Net Assets of the Guarantor at the time of any payment
hereunder. As used herein, the term "Adjusted Net Assets" means at any time the
lesser of (x) the amount by which the fair market value of the assets of the
Guarantor exceeds the total amount of liabilities (including, without
limitation, contingent liabilities, but excluding liabilities under this
Guarantee) of the Guarantor at such time, and (y) the amount by which the
present fair market value of the assets of the Guarantor at such time exceeds
the amount that will be required to pay the probable liability of the Guarantor
on its debts (excluding debt in respect of this Guarantee), as they become
absolute and matured. Contingent liabilities of the Guarantor (including,
without limitation, liabilities in respect of guarantees, pension and other
employee benefit plans and pending or threatened litigation and claims), shall
be valued at amounts which, in light of all the facts and circumstances existing
at the time, represent amounts which can reasonably be expected to become actual
or matured liabilities.
Notwithstanding anything to the contrary contained herein or in any other
agreement, document or instrument, the Guarantor hereby irrevocably waives all
rights of subrogation (whether such rights arise under common law, contract or
Federal law, including, without limitation, Section 509 of the Bankruptcy Code)
to the claims of the Bank against the Borrower, and waives all contractual,
statutory and common law rights of contribution, reimbursement, indemnification
and similar rights and claims (as such term is defined in the Bankruptcy Code)
against the Borrower which may arise in connection with, or as a result of, this
Guarantee.
The Guarantor expressly waives any right it may have to require any Person
seeking enforcement of its obligations hereunder to (a) proceed against the
Borrower, IHOP or any other Person, (b) proceed against or exhaust any security,
or (c) pursue any other remedy in the power of the Person seeking such
enforcement, including without limitation, its remedies pursuant to the IHOP
guarantee set forth in Section 17 of the Credit Agreement. The Bank from time to
time may, at its election, exercise any right or remedy it may have against the
Guarantor, including, without limitation, the right to foreclose upon any such
security by judicial or non-judicial sale, without affecting or limiting in any
way the liability of the Guarantor
-5-
hereunder, except to the extent the Obligations have been paid. The Guarantor
waives any defense arising out of the absence, impairment or loss of any right
of reimbursement, contribution or subrogation or any other right or remedy of
the Guarantor against the Borrower, IHOP or any such security, whether resulting
from such election by the Bank or otherwise.
The Guarantor agrees that its obligations hereunder shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of the Borrower, IHOP or the Guarantor is rescinded or must be otherwise
restored by the Bank, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise. The Guarantor further agrees that, without limiting
the generality of the foregoing, if an Event of Default shall have occurred and
be continuing and the Holder is prevented by applicable law from exercising any
remedy under this Guarantee or under the Note, the Bank shall be entitled to
receive from the Guarantor upon demand therefor, the sums which would otherwise
have been due from the Borrower had such remedies been exercised.
The Guarantor hereby expressly waives any and all benefits under California
Civil Code Sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and
3433 and California Code of Civil Procedure Sections 580(a), 580(b), 580(d) and
726.
The Guarantor agrees that this Guarantee shall continue in full force and
effect and may not be terminated or otherwise revoked by the Guarantor until the
Obligations shall have been fully discharged.
This Guarantee shall be binding upon the Guarantor and upon the successors
and assigns of the Guarantor and shall inure to the benefit of the Bank and its
successors and assigns; all references herein to the Borrower, IHOP and to the
Guarantor shall be deemed to include their respective successors and assigns,
including, without limitation, a receiver, trustee or debtor-in-possession of or
for the Borrower, IHOP or the Guarantor. All references to the singular shall be
deemed to include the plural where the context so requires.
THIS GUARANTEE SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES OF SUCH STATE).
THE GUARANTOR CONSENTS AND AGREES TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT SITTING IN THE COUNTY OF XXXX, STATE OF ILLINOIS, AND WAIVES ANY
OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION
----- --- ----------
INSTITUTED THEREIN, AND
-6-
AGREES THAT ANY DISPUTE CONCERNING THE RELATIONSHIP BETWEEN ANY PURCHASER OR
HOLDER OF NOTE, ON THE ONE HAND, AND THE GUARANTOR, ON THE OTHER HAND, OR THE
CONDUCT OF ANY PARTY IN CONNECTION WITH THIS GUARANTEE OR OTHERWISE SHALL BE
HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
THE GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY OR
MAIL TO THE GUARANTOR AT ITS ADDRESS SET FORTH BELOW. THE GUARANTOR HEREBY
CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
NOTHING IN THIS GUARANTEE SHALL AFFECT THE RIGHT OF THE BANK TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE BANK TO
BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION.
Wherever possible each provision of this Guarantee shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Guarantee shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guarantee.
THE GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS GUARANTEE OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE GUARANTOR IN RESPECT TO THIS GUARANTEE OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS GUARANTEE WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
-7-
IN WITNESS WHEREOF, this Guarantee has been duly executed by the Guarantor
as of the 30th day of June, 1993.
IHOP REALTY CORP.
By: __________________________
Title:
000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
-8-
EXHIBIT F
---------
Certificate of Xxxxx Xxxx Xxx
I, the undersigned, Secretary of IHOP CORP. ("IHOP"), DO HEREBY CERTIFY
----
that:
1. This Certificate is furnished pursuant to Section 15 of that certain
----------
letter agreement dated as of June 30, 1993 (the "Agreement"), among IHOP,
---------
International House of Pancakes, Inc. and Continental Bank N.A. (the "Bank").
----
Unless otherwise defined herein, capitalized terms used in this Certificate have
the meanings assigned to such terms in the Agreement.
2. Attached hereto as Exhibit I are true, correct and complete copies of
---------
the certificate of incorporation of IHOP and the by-laws of IHOP as in effect on
the date hereof.
3. Attached hereto as Exhibit II is a true, correct and complete copy of
----------
resolutions duly adopted by the Board of Directors of IHOP, which resolutions
have not been revoked, modified, amended or rescinded and are still in full
force and effect.
4. The persons named in Exhibit III attached hereto have been duly
-----------
elected, have duly qualified as and at all times since June 1, 1993 (to and
including the date hereof) have been officers of IHOP holding the respective
offices set forth therein opposite their names.
5. I know of no proceeding for the dissolution or liquidation of IHOP or
threatening its existence.
WITNESS my hand this 30th day of June, 1993.
_________________________________
Secretary
I, the undersigned, President of IHOP, DO HEREBY CERTIFY that Xxxxx Xxxx
Xxx is the duly elected and qualified Secretary of IHOP and the signature above
is his genuine signature.
WITNESS my hand on this 30th day of June, 1993.
_________________________________
President
EXHIBIT G
---------
Certificate of Xxxxx Xxxx Xxx
I, the undersigned, Secretary of IHOP REALTY CORP. ("Realty"), DO HEREBY
------
CERTIFY that:
1. This Certificate is furnished pursuant to Section 15 of that certain
----------
letter agreement dated as of June 30, 1993 (the "Agreement"), among IHOP,
---------
International House of Pancakes, Inc. and Continental Bank N.A. (the "Bank").
----
Unless otherwise defined herein, capitalized terms used in this Certificate have
the meanings assigned to such terms in the Agreement.
2. Attached hereto as Exhibit I are true, correct and complete copies of
---------
the certificate of incorporation of Realty and the by-laws of Realty as in
effect on the date hereof.
3. Attached hereto as Exhibit II is a true, correct and complete copy of
----------
resolutions duly adopted by the Board of Directors of Realty, which resolutions
have not been revoked, modified, amended or rescinded and are still in full
force and effect.
4. The persons named in Exhibit III attached hereto have been duly
-----------
elected, have duly qualified as and at all times since June 1, 1993 (to and
including the date hereof) have been officers of Realty holding the respective
offices set forth therein opposite their names.
5. I know of no proceeding for the dissolution or liquidation of Realty or
threatening its existence.
WITNESS my hand this 30th day of June, 1993.
____________________________________
Secretary
I, the undersigned, President of Realty, DO HEREBY CERTIFY that Xxxxx Xxxx
Xxx is the duly elected and qualified Secretary of Realty and the signature
above is his genuine signature.
WITNESS my hand on this 30th day of June, 1993.
____________________________________
President
EXHIBIT H
---------
[Opinion of counsel to IHOP, the Borrower and
IHOP Realty Corp. addressed to the Bank
and Xxxxx, Xxxxx & Xxxxx)
1. IHOP, the Borrower and each of their subsidiaries are corporations duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and each has the requisite corporate
power and authority to own, lease and operate its respective properties and to
carry on its respective businesses as presently owned and conducted, and each is
duly qualified and in good standing in the jurisdictions in which the character
of the properties owned or leased by it or the nature of the business transacted
by it makes such qualification necessary.
2. The Credit Agreement, the Note and the Subsidiary Guarantee have been
duly authorized, executed and delivered by IHOP, the Borrower and IHOP Realty
Corp., to the extent each is a party thereto and such documents constitute the
legal, valid and binding agreements of IHOP, the Borrower and IHOP Realty Corp,
to the extent each is a party thereto, enforceable against IHOP, the Borrower
and IHOP Realty Corp., to the extent each is a party thereto, in accordance with
their terms.
3. The execution of the Note, the execution and delivery of, and
performance by IHOP and the Borrower of their respective contractually required
obligations and undertakings under, the Credit Agreement and the execution and
delivery of, and performance by IHOP Realty Corp. of its contractually required
obligations and undertakings under, the Subsidiary Guarantee, do not conflict
with or result in any breach of any provision of, constitute a default under, or
result in the creation or imposition of any Lien upon any of the respective
Properties of IHOP, the Borrower or IHOP Realty Corp. or any of their
Subsidiaries pursuant to the provisions of the charter documents of any of them,
or any agreement, order, decree, indenture, judgment or other instrument or
document to which any of them is a party or by which any of them or their
respective properties may be bound.
4. There are no proceedings pending or threatened against IHOP, the
Borrower or any of their subsidiaries in any court or before any governmental
body or arbitration board or tribunal which could materially and adversely
affect the properties, business, profits or condition (financial or otherwise)
of IHOP, the Borrower or any of their subsidiaries or the ability of IHOP
or the Borrower to perform their respective obligations under the Credit
Agreement or the Note or the ability of IHOP Realty Corp. to perform its
obligations under the Subsidiary Guarantee.
5. No consent, approval, authorization, or order of, or other action by
or filing with, any governmental body is required in connection with the
execution, delivery or performance of the Credit Agreement or the Subsidiary
Guarantee, the execution and delivery of the Note or Compliance by IHOP, the
Borrower and IHOP Realty Corp., to the extent each is a party thereto, with the
terms and provisions thereof.
6. None of IHOP, the Borrower nor any of their subsidiaries is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any franchising arrangement, material
lease, agreement, indenture or loan document to which it is a party, and no
condition exists which, with the giving of notice or the lapse of time or
both, would constitute such a default.
7. None of IHOP, the Borrower nor any of their subsidiaries is, nor are
any of them directly or indirectly controlled by or acting on behalf of any
person which is, an "investment company" within the meaning of the
Investment Company Act of 1940, and none of IHOP, the borrower nor any of
their subsidiaries is subject to any law, statute, rule or regulation
limiting its ability to incur indebtedness for money borrowed.
8. All of the shares of issued and outstanding capital stock of the
Borrower are owned of record and, to our knowledge, beneficially, by IHOP
and all of the shares of issued and outstanding capital stock of IHOP
Realty Corp. are owned of record and, to our knowledge, beneficially, by
the Borrower, in each case free and clear of liens.
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