-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NVD5wgliYMZC8USnPYcbjqGvii8XqHDNBb8uHAAm+1H/xVsaKZSZbiw1nj9w2ybc cd3WCcN6Vb+kYlyfqeR/uw== 0000703799-97-000007.txt : 19970317 0000703799-97-000007.hdr.sgml : 19970317 ACCESSION NUMBER: 0000703799-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970314 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VICORP RESTAURANTS INC CENTRAL INDEX KEY: 0000703799 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 840511072 STATE OF INCORPORATION: CO FISCAL YEAR END: 1026 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12343 FILM NUMBER: 97557023 BUSINESS ADDRESS: STREET 1: 400 W 48TH AVE CITY: DENVER STATE: CO ZIP: 80216 BUSINESS PHONE: 3032962121 10-Q 1 FIRST QUARTER 10-Q UNITED STATES SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1997 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________________ Commission file number 0-12343 VICORP Restaurants, Inc. (Exact name of registrant as specified in its charter) Colorado 84-0511072 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 West 48th Avenue, Denver, Colorado 80216 (Address of principal executive offices) (Zip Code) (303) 296-2121 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ ____ The registrant had 9,073,520 shares of its $.05 par value Common Stock outstanding as of March 12, 1997. PART I - FINANCIAL INFORMATION Item 1. Financial Statements VICORP Restaurants, Inc. CONSOLIDATED BALANCE SHEETS (in thousands) January 31, October 31, 1997 1996 __________ __________ (unaudited) ASSETS Current assets Cash $ 1,841 $ 1,406 Receivables 1,719 3,221 Inventories 5,238 6,517 Deferred income taxes 5,000 5,000 Prepaid expenses and other 1,128 1,202 ______ ______ Total current assets 14,926 17,346 ______ ______ Property and equipment, net 129,689 134,653 Deferred income taxes 40,567 41,324 Long-term receivables 2,420 2,541 Other assets 7,929 8,082 _______ _______ Total assets $195,531 $203,946 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt and capitalized lease obligations $ 1,553 $ 1,592 Accounts payable, trade 8,987 11,131 Accrued compensation 3,751 5,686 Accrued taxes 7,780 6,941 Accrued insurance 4,791 4,524 Other accrued expenses 4,445 4,776 _______ _______ Total current liabilities 31,307 34,650 _______ _______ Long-term debt (Note 3) 19,062 24,642 Capitalized lease obligations 8,596 8,943 Non-current accrued insurance 4,871 5,349 Other non-current liabilities and credits 7,435 8,093 Commitments and contingencies Shareholders' equity Series A Junior Participating Preferred Stock, $.10 par value, 200,000 shares authorized, no shares issued Common stock, $.05 par value, 20,000,000 shares authorized, 9,073,520 and 9,055,026 shares issued and outstanding 454 453 Paid-in capital 84,595 84,431 Retained earnings 39,211 37,385 _______ _______ Total shareholders' equity 124,260 122,269 _______ _______ Total liabilities and shareholders' equity $195,531 $203,946 ======= ======= The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three Three Months Months Ended Ended __________ __________ January 31, January 31, 1997 1996 __________ __________ (unaudited) Revenues Restaurant operations $83,102 $88,410 Franchise operations 828 871 ______ ______ Total revenues 83,930 89,281 ______ ______ Costs and expenses Restaurant operations Food 27,287 31,928 Labor 25,829 28,923 Other operating 21,308 23,403 General and administrative 6,047 5,594 ______ ______ Operating profit (loss) 3,459 (567) Interest expense 757 1,130 Other (income) expense, net (151) (232) ______ ______ Income (loss) before income tax expense (benefit) 2,853 (1,465) Income tax expense (benefit) 1,027 (549) ______ ______ Net income (loss) $ 1,826 $ (916) ====== ====== Earnings (loss) per common and dilutive common equivalent share $ .20 $ (.10) ====== ====== Weighted average common shares and dilutive common share equivalents 9,162 9,045 ====== ====== The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Three Months Months Ended Ended _________ _________ January 31, January 31, 1997 1996 _________ _________ (unaudited) Operations Net income (loss) $ 1,826 $ (916) Reconciliation to cash provided by operations Depreciation and amortization 4,989 5,415 Deferred income tax provision 757 (557) Loss on disposition of assets 32 28 Other, net (120) (47) ______ _____ 7,484 3,923 Change in assets and liabilities Trade receivables 1,464 (131) Inventories 1,279 2,548 Accounts payable, trade (2,144) (5,203) Other current assets and liabilities (1,087) (1,556) Non-current accrued insurance (478) (335) _______ _______ Cash provided by (used for) operations 6,518 (754) _______ _______ Investing activities Purchase of property and equipment (1,370) (1,743) Purchase of other assets (37) (1) Disposition of property 954 44 Collection of non-trade receivables 175 230 ______ _______ Cash provided by (used for) investing activities (278) (1,470) ______ _______ Financing activities Issuance of debt 0 10,000 Payment of debt and capitalized lease obligations (5,969) (9,238) Other, net 164 95 ______ ______ Cash provided by (used for) financing activities (5,805) 857 ______ ______ Increase/(Decrease) in cash 435 (1,367) Cash at beginning of period 1,406 3,988 ______ ______ Cash at end of period $1,841 $ 2,621 ====== ====== Supplemental information Cash paid during the period for Interest (net of amount capitalized) $ 451 $ 1,055 Income taxes 35 77 The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. NOTES TO FINANCIAL STATEMENTS (unaudited) _____________________________ 1. The consolidated financial statements should be read in conjunction with the annual report to shareholders for the year ended October 31, 1996. The unaudited financial statements for the three months ended January 31, 1997 and January 31, 1996 contain all adjustments which, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. All of the adjustments included were of a normal and recurring nature. 2. As of January 31, 1997, the Company had $19,000,000 of borrowings outstanding and $4,916,000 of letters of credit placed under its bank credit facility. The Company's bank credit agreement expires on October 31, 1999, but may be extended for one year. 3. In the fourth quarter of 1994, the Company adopted a plan to dispose of 50 restaurant locations in trade areas that are no longer considered appropriate for the Company's existing concepts. As part of the disposal plan, the carrying value of those restaurants' assets were written down to net realizable values. The Company also accrued for expected carrying costs pending disposition and sublease disposition losses. In the third quarter of fiscal 1996, the Company recorded an asset disposal charge related to a decision to close and dispose of six of its Angel's Diners. As of the end of fiscal 1996, the Company had closed all the restaurants related to both disposal plans. Forty stores have been disposed through sublease, lease termination or sale. Operating results for the closed restaurants for first quarter of fiscal 1996 were as follows: Three months ended January 31, 1996 ________________ Sales $2,268,000 Store operating profit (loss) (402,000) During the first quarter of 1997, $479,000 of closure and carrying related costs were charged against the liability established for such costs. Partially offsetting the charges are gains on properties sold. As of January 31, 1997, the Company had $8,861,000 of reserves remaining to provide for the disposal of 22 closed properties and 13 subleased properties. Units classified as subleased may return to closed status upon sublease termination. The reserves consisted of $6,114,000 to reduce the disposal property to net realizable value and $2,747,000 to provide for expected carrying costs and sublease losses. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of operations _____________________ The Company's quarterly financial information is subject to seasonal fluctuation. Restaurant operations The following table sets forth certain operating information for the Company's operating concepts and the Company as a whole. Three months Three months ended ended January 31, 1997 January 31, 1996 ________________ ________________ Bakers Square Restaurant sales $ 50,435,000 $ 54,141,000 Restaurant operating profit 3,356,000 54,000 Restaurant operating profit % 6.7% .1% Divisional administrative costs 1,131,000 854,000 Divisional operating profit (loss) 2,225,000 (800,000) Restaurants at quarter-end 152 158 Village Inn Restaurant sales $ 32,285,000 $ 32,534,000 Restaurant operating profit 5,348,000 4,392,000 Restaurant operating profit % 16.6% 13.5% Franchise income 828,000 871,000 Divisional administrative costs 778,000 593,000 Divisional operating profit 5,398,000 4,670,000 Restaurants at quarter-end 98 99 Angel's Restaurant sales $ 382,000 $ 1,735,000 Restaurant operating profit (loss) (26,000) (290,000) Restaurant operating profit % (6.8%) (16.7%) Divisional administrative costs 6,000 110,000 Divisional operating profit (loss) (32,000) (400,000) Restaurants at quarter-end 1 5 Consolidated Restaurant sales $ 83,102,000 $ 88,410,000 Food cost % 32.8% 36.1% Labor cost % 31.1% 32.7% Other operating cost % 25.6% 26.5% Restaurant operating profit % 10.4% 4.7% Restaurant operating profit 8,678,000 4,156,000 Franchise income 828,000 871,000 Divisional general and administrative costs 1,915,000 1,557,000 ___________ ___________ Divisional operating profit 7,591,000 3,470,000 ___________ ___________ Unallocated general and administrative costs 4,132,000 4,037,000 ___________ ___________ Operating profit (loss) $ 3,459,000 $ (567,000) ============ ========== Consolidated restaurant sales decreased $5.3 million, or 6.0%, in the first fiscal quarter of 1997 compared to the first quarter of 1996. Contributing to lower sales was the closure of 11.3 equivalent restaurants. During the first fiscal quarter of 1997, sales decreased 2.9% and guest counts declined 1.4% on a comparable same store basis. Same store sales for Village Inn decreased .2% and Bakers Square's same store sales contracted by 4.6%. Comparable guest counts for Village Inn decreased .2% and Bakers Square declined 2.4%. Improvements in sales and guest counts early in the first quarter over the same period in 1996 were offset by severe weather conditions in the strategic midwest and west coast markets during the later half of the quarter. Consolidated restaurant operating profit increased $4.5 million, or 108.8%, and increased as a percentage of restaurant sales from 4.7% to 10.4% in the first quarter of 1997 versus the first quarter of 1996. Although both Village Inn and Bakers Square contributed to the improvement, Bakers Square went from breakeven to 6.7% and represented the majority of the increase. The improved operating profit was largely due to operating efficiencies in food, labor and other costs. Also, the closure of underperforming restaurants contributed to the improved results. The following presents select quarterly trend data related to the operations of Bakers Square and Village Inn: Bakers Square Village Inn _____________ ___________ Comparable Comparable Comparable Store Store Comparable Store Store Store Guest Operating Store Guest Operating Sales Counts Margin Sales Counts Margin ________________________________ _________________________________ 1996: 1st Qtr -7.6% -0.3% 0.1% 0.0% -0.8% 13.5% 2nd Qtr 1.1% 0.0% 4.0% 4.4% 3.5% 13.7% 3rd Qtr 0.5% -4.5% 6.8% 2.4% 2.9% 15.6% 4th Qtr -3.6% -4.3% 7.7% 0.1% 0.7% 17.7% 1997: 1st Qtr -4.6% -2.4% 6.7% -0.2% -0.2% 16.6% As of January 31, 1997, the Company had closed all of the 56 restaurants scheduled for disposition under plans adopted in fiscal 1994 and fiscal 1996. The following table details sales and operating results for the 56 restaurants for the first quarter of fiscal 1996: Three months 1996 ____ Operating Sales Profit (Loss) _____ _____________ Bakers Square $861,000 $(160,000) Village Inn 221,000 (6,000) Angel's 1,186,000 (236,000) ____________________________________________________ Total $2,268,000 $(402,000) ==================================================== Other revenues and expense __________________________ Franchise revenue decreased in 1997's first quarter by $43,000. The decrease was largely the result of a decrease in royalties related to adoption of a revised franchise agreement by several existing franchisees as well as lower franchise sales income and net sublease and equipment income. General and administration expense increased to 7.2% of revenues in the first quarter of 1997 from 6.3% last year. The percentage increase results from 1) lower revenues, 2) accrued management bonuses due to a profitable first quarter versus a loss last year, and 3) increased severance and relocation expenses. Interest expense declined 33% or $373,000 for the first quarter of 1997 due to reduced credit line borrowings. The Company's effective tax rate for the first quarter of 1997 was 36% representing statutory tax rates offset somewhat by the effect of FICA tax credits. Liquidity and capital resources _______________________________ Operating cash flows increased $7.3 million in the first quarter of 1997 versus 1996 first quarter. The increase resulted primarily from improved operating results and reduced working capital requirements. As of January 31, 1997, $19,000,000 of advances were outstanding under the Company's bank credit facility and approximately $16,100,000 was available for additional direct advances, subject to limitations on combined direct advances and letters of credit. In the first quarter of 1997, the Company reduced its outstanding borrowings by $5.5 million. The Company's bank credit agreement expires on October 31, 1999, but may be extended for one year. During the first quarter of 1997, the Company disposed of five properties, two through sale, and three through sublease. Also in that quarter, closure and carrying costs of $479,000 were charged against the liability established for such and cash proceeds of $1,433,000 were realized from the disposition of properties. At January 31, 1997, the Company had 22 closed properties remaining which it was trying to sell or sublease. Seven of those properties were owned in fee and the rest were leased. The Company also had 13 subleased properties. The Company hopes to sell the fee properties over the next year and $5.3 million of proceeds are expected to be realized from their sale. The Company does not anticipate significant proceeds from the disposition of the leased properties. It is expected that the majority of the leased properties will be subleased over the next twelve to eighteen months. Cash carrying costs of approximately $2.7 million are expected to be incurred over that period. The Company expects to sublease five of the properties at rentals lower than the Company's obligations under the prime leases. Those sublease losses will be incurred over the remaining years of the leases and the Company does not anticipate that the losses will materially affect the Company's liquidity. As of January 31, 1997, authorizations granted by the Board of Directors for the purchase of 300,500 common shares of the Company's common stock remained available. No shares were purchased in the first quarter of 1997. Future purchases with respect to the authorizations may be made from time to time in the open market or through privately negotiated transactions and will be dependent upon various business and financial considerations. Capital expenditures approximating $16.6 million are expected during the remainder of the fiscal year. The level of planned expenditures may be reduced if expected operating improvements do not occur. Cash provided by operations, the unused portion of the Company's bank credit facility and other financing sources are expected to be adequate to fund these expenditures and any cash outlays for the purchase of the Company's common stock as authorized by the Board. VICORP has guaranteed certain leases for (25) restaurant properties sold to others in 1986 and (20) restaurant leases of certain franchisees and others. Minimum future rental payments remaining under these leases were approximately $11.5 million as of October 31, 1996. These guarantees are included in the definition of financial instruments with off-balance-sheet risk of accounting loss; however, the Company has not been required to make any payments with respect to these guarantees and presently has no reason to believe any payments will be required in the future. The Company believes it is impracticable to estimate the fair value of these financial guarantees (e.g., amounts the Company could pay to remove the guarantees) because the Company has no present intention or need to attempt settlement of any of the guarantees. Outlook - ------- The Company is evaluating various alternative investment strategies for utilizing cash flow from operations. These alternatives include, but may not be limited to, new Village Inn restaurant properties, paydown of credit facility debt, repurchase of common stock, and acquisition of restaurant concerns in the family style segment. Certain matters disucssed in this report are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those currently anticipated. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward- looking statements and are cautioned not to place undue reliance on such forward-looking statements. The Forward-looking statements made herein are only made as of the date of this report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. PART II - OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits (10) Material Contracts. (i) First Amendment and Waiver to Multi-Bank Agreement and Single Bank Agreement dated March 3, 1997 to U. S. $35,000,000 Credit Agreement dated October 31, 1996, between VICORP Restaurants, Inc. and NationsBank of Texas, N.A. and Colorado National Bank, and U. S. $5,000,000 Credit Agreement dated October 31, 1996, between VICORP Restaurants, Inc. and NationsBank of Texas, N.A. (27) Financial data schedule. (b) Reports on Form 8-K. None. SIGNATURES __________ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VICORP Restaurants, Inc. ------------------------ (Registrant) March 14, 1997 By: /s/ J. Michael Jenkins __________________ J. Michael Jenkins, President and Chief Executive Officer March 14, 1997 By: /s/ Richard E. Sabourin ___________________ Richard E. Sabourin, Executive Vice President/CFO EX-27 2 FINANCIAL DATA SCHEDULE - 1ST QTR
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VICORP RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS AS OF JANUARY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000703799 VICORP RESTAURANTS, INC 1,000 3-MOS OCT-31-1997 JAN-31-1997 1,841 0 1,719 0 5,238 14,926 281,660 146,106 195,531 31,307 27,658 0 0 454 123,806 195,531 83,102 83,930 27,287 27,287 47,137 0 757 2,853 1,027 1,826 0 0 0 1,826 .20 .20
EX-10 3 AMENDMENT #1 TO CREDIT AGREEMENTS March 3, 1997 Vicorp Restaurants, Inc. 400 West 48th Avenue Denver, Colorado 80216 Attention: Stanley Ereckson, Jr. Re: First Amendment and Waiver to Multi-Bank Agreement and Single Bank Agreement Ladies and Gentlemen: Reference is made to (a) that certain $35,000,000 Credit Agreement dated as of October 31, 1996 (the "Multi- Bank Agreement"), among Vicorp Restaurants, Inc. ("Borrower"), the financial institutions named therein as lenders ("Lenders"), and NationsBank of Texas, N.A. ("NationsBank"), as Agent for Lenders, and (b) that certain $5,000,000 Credit Agreement dated as of October 31, 1996 (the "Single Bank Agreement") between Borrower and NationsBank. Unless otherwise indicated, all capitalized terms herein are used as defined in the Multi-Bank Agreement. Borrower has advised NationsBank and Lenders that (a) Borrower has established a payroll account (the "Payroll Account") with Wells Fargo Bank, N.A., pursuant to documentation which provides that Wells Fargo Bank, N.A., has a security interest in the monies in the Payroll Account (the "Subject Transaction"), and (b) certain real property owned by Borrower has been the subject of an eminent domain condemnation proceeding (the "Condemnation Proceeding") which resulted in compensation to Borrower in the approximate amount of $1,100,000. Borrower has asked NationsBank and Lenders to consent to the Subject Transaction, and to amend, modify and waive certain provisions of Section 7.02 of the Multi-Bank Agreement and Section 6.02 of the Single-Bank Agreement relating to the Subject Transaction, the Condemnation Proceeding and certain other matters. Therefore, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower, NationsBank and Lenders agree as follows: 1. Amendments. a. Section 7.02(a)(ii)(D) of the Multi-Bank Agreement and Section 6.02 of the Single Bank Agreement regarding Liens, is hereby amended by deleting "$20,000,000" in the last line of such Section and inserting in lieu thereof "$24,000,000". b. Section 7.02(e) of the Multi-Bank Agreement and Section 6.02 of the Single Bank Agreement regarding Guarantees is hereby amended by deleting the word "and" prior to subclause (ii) thereof, and adding a new subclause (iii) at the end of such section, as follows: "and (iii) existing guarantees as disclosed on Schedule 7.02(b)." c. Schedule 7.02(b) of the Multi-Bank Agreement is hereby amended by deleting such schedule in its entirety and inserting in lieu thereof the new Schedule 7.02(b) attached hereto. 2. Consent and Waivers. a. NationsBank and Lenders consent to the Subject Transaction and agree not to enforce any of their rights or remedies under Section 7.02(a)(ii) of the Multi-Bank Agreement and Section 6.02 the Single Bank Agreement relating to a prohibition against certain Liens on Borrower's property that will be created as a result of Borrower's entry into the Subject Transaction; provided that on any given day the balance in the Payroll Account may never exceed $500,000, and the total amount on deposit less the amount subject to payment orders issued by Borrower shall never exceed $10,000. b. NationsBank and Lenders agree not to enforce any of their rights and remedies under Section 7.02(h)(ii)(C) of the Multi-Bank Agreement and Section 6.02 of the Single Bank Agreement relating to a mandatory prepayment in the event of certain asset dispositions that will otherwise be required as a result of the Condemnation Proceeding. 3. No Waiver of Defaults. Borrower agrees that this letter does not constitute a wavier of, or a consent to, any present or future violation of or noncompliance with any provision of any Loan Document, or a wavier of NationsBank's and Lender's right to insist upon future compliance with each term, covenant, condition and provision of the Loan Documents, and the Loan Documents shall continue to be binding upon, and inure to the benefit of, Borrower, NationsBank and Lenders and their respective successors and assigns. 4. Representations and Warranties. Borrower represents and warrants to NationsBank and Lenders that (a) the execution and delivery of this letter have been authorized by all requisite corporate action on its part and will not violate its organization documents, (b) the representations and warranties in each Loan Document to which it is a party are true and correct in all material respects on and as of the date hereof as though made on and as of the date hereof (except to the extent that (i) such representations and warranties speak to a specific date or (ii) the facts on which such representations and warranties are based have been changed by transactions contemplated by the Loan Documents or this letter), and (c) it is in full compliance with all covenants and agreements contained in each Loan Document to which it is a party (except for noncompliance permitted by this letter). 5. Loan Document; Effect. This letter is a Loan Document, and, therefore, this letter is subject to the applicable provisions of Article IX of the Multi-Bank Agreement and Article VIII of the Single Bank Agreement, all of which applicable provisions are incorporated herein by reference the same as if set forth herein verbatim. Except as affected by this letter, the Loan Documents are unchanged and continue in full force and effect. Borrower agrees that all Loan Documents to which it is a party remain in full force and effect and continue to evidence its legal, valid, and binding obligations enforceable in accordance with their terms (as the same are affected by this letter). Borrower hereby releases NationsBank and Lenders from any liability for actions or failures to act in connection with the Loan Documents prior to the date hereof. This letter shall be binding upon and inure to the benefit of each of the undersigned and their respective successors and permitted assigns. 6. Multiple Counterparts. This letter may be executed in more than one counterpart, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. 7. Fees and Expenses. Borrower agrees to pay the reasonable fees and expenses of counsel to NationsBank and Lenders rendered in connection with the preparation, negotiation and execution of this letter. 8. Final Agreement. THE LOAN DOCUMENTS, AS AMENDED HEREBY, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES. This letter shall not become effective unless and until NationsBank receives copies executed by Borrower, NationsBank and each Lender in the spaces provided below. If you are in agreement with the foregoing, please so indicate by executing the enclosed counterparts of this letter in the spaces provided below and returning them to NationsBank to the attention of the officer named below. Very truly yours, NATIONSBANK OF TEXAS, N.A. COLORADO NATIONAL BANK By: /s/ Kimberly Knop By: /s/ Andres C. Koeneke _________________________ _______________________________ Kimberly Knop Andres C. Koeneke Vice President Vice President AGREED AND ACCEPTED: VICORP RESTAURANTS, INC. By: /s/ Michael R. Kinnen ____________________________________ Name: Michael R. Kinnen __________________________________ Title: Vice President/Treasurer _________________________________ SCHEDULE 7.02(b) PERMITTED EXISTING DEBT ______________________________ 1. Promissory note of VICORP Restaurants, Inc. in the original principal amount of $249,642.00 dated January 16, 1996 payable to the Morton A. Ives Trust. 2. Existing capital lease obligations totaling $10,928,000 as of 7/31/96 (per attached) 3. Existing Guarantees totaling $5,976,727 (per attached) 4. Existing Guarantees of obligations relating to properties previously disposed of not exceeding $4,000,000 -----END PRIVACY-ENHANCED MESSAGE-----