FIRST AMENDMENT TO LETTER AGREEMENT
------------------------- ---------
THIS FIRST AMENDMENT TO LETTER AGREEMENT is made and dated as of
December 31, 1994 (the "AMENDMENT") among INTERNATIONAL HOUSE OF PANCAKES, INC.,
(the "BORROWER"), IHOP CORP, as Guarantor (the "GUARANTOR") and BANK OF
AMERICA ILLINOIS, a state chartered banking association, as successor by merger
to Continental Bank N.A. ("Bank") and amends that certain $10,000,000 Letter
Agreement dated as of June 30, 1993 (as amended or modified from time to time,
the "AGREEMENT").
RECITALS
--------
WHEREAS, the Borrower has requested, and the Bank has agreed, on the
terms and conditions set forth herein, to amend the Agreement to modify certain
financial covenants, all as more fully described herein, and the Bank is willing
to do so, on the terms and conditions set forth herein;
WHEREAS, certain other modifications to the Agreement are necessary to
reflect the merger of Continental Bank N.A. into Bank of America Illinois;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All capitalized terms used herein shall have the same
-----
meanings as in the Agreement unless otherwise defined herein.
2. Amendments to Agreement. The parties hereto agree that the
-----------------------
Agreement is amended as follows:
2.1 All references to Continental Bank N.A. in the Agreement, the
Letters of Credit, Subsidiary Guarantee, the Note, and all other documents or
instruments delivered pursuant to any of them, shall be amended, and shall
hereinafter be deemed to be, references to Bank.
2.2 The first paragraph of the Agreement is hereby amended by
deleting "$2,000,000" and inserting "$5,000,000" in lieu thereof.
2.3 Section 1 is hereby amended by deleting "June 30, 1995" and
inserting "June 30, 1996"; provided however, that any Letter of Credit issued
-------- -------
hereunder shall have an expiry date not later than December 31, 1996" in lieu
thereof.
2.4 Section 2(a) is hereby amended by deleting the references to
"noon, Chicago time" therein and inserting "10:00 a.m., San Francisco time" in
lieu thereof, and deleting the reference to "12:30 p.m., Chicago time" and
inserting "10:30 a.m., San Francisco time" in lieu thereof.
-1-
2.5 Section 2(c) is hereby amended by deleting "$2,000,000" and
inserting "$5,000,000", by deleting "1983" and inserting "1993" in lieu thereof,
and by deleting "Publication No. 400" and inserting "Publication No.500" in lieu
thereof.
2.6 Section 4(f) is hereby amended by deleting the reference to "12:30
p.m. Chicago time" in the first sentence thereof and inserting "10:00 a.m., San
Francisco time" in lieu thereof, and deleting the reference to "noon, Chicago
time" in the second sentence thereof and inserting "10:30 a.m., San Francisco
time" in lieu thereof.
2.7 Section 5(b) is amended by deleting the references to "11:30
a.m., Chicago time" and inserting "9:30 a.m., San Francisco time" in lieu
thereof.
2.8 Section 6 is amended by deleting the reference to "1:00 p.m.,
Chicago time" and inserting 10:30 a.m., San Francisco time" in lieu thereof.
2.9 Section 14.3 is hereby amended and restated in its entirety as
follows:
"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 $60,000,000 plus 50% of the
----
Consolidated Net Income on a cumulative basis from December 31,
1994, to and including any date of determination, less intangible
----
assets booked after December 31, 1994."
2.10 Section 14.8 is hereby amended and restated in its entirety
as follows:
"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 (excluding
extraordinary losses or gains or non-recurring charges) to Fixed
Charges for the immediately preceding four quarterly accounting
periods shall not be less than 1.50:1.00."
2.11 Section 14.12(a) is hereby amended by deleting "$30,000,000"
and inserting "$35,000,000, net of all expenditures relating to sale leaseback
transactions" in lieu thereof.
2.12 Section 18 is hereby amended by deleting the definition of
"Alternative Reference Rate" and amending and restating such definition in its
entirety as follows:
"Alternative Reference Rate" shall mean, for any day, the higher
of:
(a) the rate of interest in effect for such day as publicly
announced from time to time by the Bank in San Francisco,
California, as its "reference rate." It is a rate set by the Bank
based upon various factors including the Bank's costs and desired
return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate; and
(b) 0.50% per annum above the latest Federal Funds Effective
Rate.
-2-
Any change in the reference rate announced by the Bank shall take
effect at the opening of business on the day specified in the
public announcement of such change."
2.13 Section 18 is hereby amended by deleting "Chicago, Illinois" from
the definition of "Business Day" and inserting "San Francisco, California" in
lieu thereof.
2.14 Section 18 is hereby amended by deleting "1.50%" in clause (i) of
the definition of "Eurodollar Rate" and inserting "1.25%" in lieu thereof, and
deleting the reference to "10:00 a.m., Chicago time" and inserting "10:00 a.m.,
San Francisco time".
2.15 Section 19 is hereby amended by deleting the sixth sentence
thereof in its entirety and amending and restating such sentence in its entirety
as follows:
"The Borrower shall pay on demand all reasonable fees and
expenses of the Bank's counsel (including, without limitation,
the allocated fees and expenses of in-house staff counsel and the
reasonable fees and out-of pocket expenses of outside counsel) in
connection with the execution and delivery of the 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 in connection with the administration, "workout" or
enforcement of this Agreement, the Note or any such other
instruments or documents."
2.16 The Subsidiary Guarantee is hereby amended by deleting the third
sentence thereof and amending and restating such sentence in its entirety as
follows:
"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
(including, without limitation, the allocated fees and expenses
of in-house staff counsel and the reasonable fees and out-of
pocket expenses of outside counsel) 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."
3. Reaffirmation of IHOP Guaranty. IHOP does hereby reaffirm and
------------------------------
restate that the terms and provisions of Section 17 of the Agreement, as amended
and modified by this Amendment, continue in full force and effect and are
ratified and confirmed in all respects on and as of the date hereof, after
giving effect to this Amendment.
4. Reaffirmation of Guaranty. IHOP Realty does hereby reaffirm and
-------------------------
restate that the terms and provisions of that certain Guaranty, dated as of June
30, 1993 as amended and modified by this Amendment, continue in full force and
effect and are ratified and confirmed in all respects on and as of the date
hereof, after giving effect to this Amendment.
-3-
5. Representations and Warranties. IHOP and the Borrower do hereby
------------------------------
represent and warrant as follows:
(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 Amendment and to carry
out and consummate all transactions contemplated by the Agreement and this
Amendment;
(b) This Amendment has been duly authorized and is a valid and
binding obligation of the Borrower and IHOP, enforceable in accordance with its
terms;
(c) This Amendment 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) No Event of Default under the Agreement has occurred and is
continuing.
(e) The representations and warranties in Section 11 of the
Agreement are true and correct in all respects on and as of the date hereof as
though made on and as of the date hereof.
6. Conditions, Effectiveness. The effectiveness of this
-------------------------
Amendment and the obligations of Bank to make any credits pursuant to the
Agreement shall be subject to the compliance by Borrower with the agreements
herein and therein contained, and the receipt by Bank of the extension fee in
the amount of $12,500.00 in immediately available funds.
7. Miscellaneous.
-------------
(a) Except as hereby expressly amended, the Agreement shall
remain in full force and effect and is hereby ratified and confirmed in all
respects.
(b) This Amendment is specific in time and in intent and does not
constitute, nor should it be construed as, a waiver of any other right, power or
privilege under the Agreement, or under any agreement, contract, indenture,
document or instrument mentioned in the Agreement; nor does it preclude other or
further exercise hereof or the exercise of any other right, power or privilege,
nor shall any waiver of any right, power, privilege or default hereunder, or
under any agreement, contract, indenture, document or instrument mentioned in
the Agreement, constitute a waiver of any other default of the same or of any
other term or provision.
(c) This amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument. This amendment shall not become effective until
Borrower, IHOP and IHOP Realty shall each have signed a copy hereof, whether the
same or counterparts, and the same shall have been delivered to Bank.
8. Governing Law. This Amendment shall be a contract made under
-------------
and governed by the internal laws of the state of Illinois.
-4-
IN WITNESS WHEREOF, each of the parties hereto has caused its
respective duly authorized officer to execute and deliver this Amendment as of
the date first written above.
BANK OF AMERICA ILLINOIS
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Name: XXXXXX X. XXXXXX
-----------------------------
Title: VICE PRESIDENT
----------------------------
By: /s/ XXXXX XXXXX
-------------------------------
Name: XXXXX XXXXX
-----------------------------
Title: ASSISTANT VICE PRESIDENT
----------------------------
INTERNATIONAL HOUSE OF PANCAKES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx President and Chief
Executive Officer
IHOP CORP.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx President and Chief
Executive Officer
-5-
CONSENT BY GUARANTORS
Each of the undersigned Guarantors does hereby consent to the foregoing First
Amendment dated as of December 31, 1994 to Letter Agreement dated as of June 30,
1993 and hereby reaffirms, ratifies and confirms its respective Guarantee, which
continues in full force and effect on and as of the date hereof, after giving
effect to such First Amendment.
Date: Feb. 23, 1995
--------
IHOP REALTY CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx President and Chief
Executive Officer
IHOP CORP.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx President and Chief
Executive Officer
-6-
INDEX
-----
FIRST AMENDMENT TO
$10,000,000 LETTER AGREEMENT
DATED AS OF
DECEMBER 31, 1994
INTERNATIONAL HOUSE OF PANCAKES, INC.
1. First Amendment to Letter Agreement made and dated as of December 31, 1994
2. Evidence of payment of extension fee pursuant to Section 6 of First
Amendment to Letter Agreement
