Exhibit 10.1

 

LEHMAN BROTHERS INC.
LEHMAN BROTHERS COMMERCIAL BANK
LEHMAN COMMERCIAL PAPER INC.
745 SEVENTH AVENUE
NEW YORK, NY  10019

 

July 15, 2007

 

IHOP Corp.

CHLH Corp.

450 North Brand Boulevard

Glendale, CA 91203-2306

Attention:  Tom Conforti

 

$1,950,000,000 First Lien Securitization Bridge Facilities
$189,000,000 Second Lien Securitization Bridge Loan Facility
Commitment Letter

 

Ladies and Gentlemen:

 

You have advised Lehman Brothers Inc. (“Lehman Brothers” or the “Sole
Arranger”), Lehman Brothers Commercial Bank (“LBCB”) and Lehman Commercial Paper
Inc. (“LCPI;” and together with Lehman Brothers and LBCB, the “Commitment
Parties” or “we” or “us”) that CHLH Corp. (“Merger Sub”), a newly formed
Delaware corporation and a wholly owned subsidiary of IHOP Corp., a Delaware
corporation (the “Borrower” or “you”), intends to acquire (the “Acquisition”)
100% of the outstanding capital stock of Applebee’s International, Inc., a
Delaware corporation (the “Target;” and, together with each of its subsidiaries,
the “Acquired Business”) pursuant to an Agreement and Plan of Merger, dated as
of July 15, 2007, by and among the Borrower, Merger Sub and the Target (together
with the schedules and exhibits thereto, the “Acquisition Agreement”). All
references to “dollars” or “$” in this letter agreement and the attachments
hereto (collectively, this “Commitment Letter”) are references to United States
dollars.

 

We understand that the sources of funds required to fund the Acquisition, to
repay all existing indebtedness of the Acquired Business (the “Refinancing”),
other than capital lease obligations to be agreed, to pay fees and expenses in
connection with the Transactions (as defined below) and to provide for ongoing
working capital requirements of the Borrower and its subsidiaries (including the
Acquired Business) following the Transactions will include:

 

•                       securitization bridge facilities consisting of (i) a
first priority securitization bridge term loan facility to the Borrower of up to
$1,850,000,000 (the “First Lien Securitization Bridge Term Loan Facility”),
together with a securitization bridge revolving credit facility to the Borrower
of $100,000,000, of which no more than $50,000,000 may be funded on the Closing
Date (as hereinafter defined) (plus an aggregate face amount to be agreed of
letters of credit posted thereunder) (the “First Lien Securitization Bridge
Revolving Credit Facility” and, together with the First Lien Securitization
Bridge Term Loan Facility, the “First Lien Securitization Bridge Facilities”),
as described in the Summary of Terms of First Lien Securitization Bridge
Facilities attached hereto as

 

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Annex I (the “First Lien Securitization Bridge Term Sheet”), and (ii) a second
priority securitization bridge term loan facility to the Borrower of up to
$189,000,000 (the “Second Lien Securitization Bridge Loan Facility” and,
together with the First Lien Securitization Bridge Facilities, the
“Securitization Bridge Facilities”) as described in the Summary of Terms of
Second Lien Securitization Bridge Loan Facility attached hereto as Annex II (the
“Second Lien Securitization Bridge Term Sheet” and, together with the First Lien
Securitization Bridge Term Sheet, the “Securitization Bridge Term Sheets”); and

 

•                       equity investments in the Borrower, directly or
indirectly, in a form and pursuant to documentation reasonably satisfactory to
the Sole Arranger by one or more investors in an aggregate amount of not less
than $90,000,000 (the “Equity Financing”).

 

No other financing will be required for the uses described above. As used
herein, the term “Transactions” means the Acquisition, the initial borrowings
under the Securitization Bridge Facilities, the Refinancing, the Equity
Financing and the payments of fees and expenses in connection with each of the
foregoing.

 

It is contemplated that if the Securitization Bridge Facilities are drawn, then
they will be repaid in full (and all commitments thereunder terminated) upon the
consummation of one or more subsequent sales of securitized debt securities by
the Acquired Business or any other subsidiary of the Borrower (each, a
“Securitization”) with the net proceeds of such Securitizations. Accordingly,
completion of a Securitization is not a condition precedent to the initial
funding of the Securitization Bridge Facilities.

 

Commitments.

 

You have requested that Lehman Brothers act as the exclusive structuring
advisor, sole arranger and sole bookrunner for the Securitization Bridge
Facilities, that Lehman Brothers agree to arrange and syndicate the
Securitization Bridge Facilities and that LBCB and LCPI commit to provide or
cause one or more of their respective affiliates to provide the Securitization
Bridge Facilities.

 

Lehman Brothers is pleased to advise you that it is willing to act as the
exclusive structuring advisor, sole arranger and sole bookrunner for the
Securitization Bridge Facilities. LBCB and LCPI are pleased to advise you of
their commitment to provide (either individually, collectively or through one or
more of their affiliates) the entire principal amount of the Securitization
Bridge Facilities (in such capacity, collectively, the “Initial Securitization
Bridge Lender”) upon the terms and subject to the conditions set forth in this
Commitment Letter (collectively, the “Commitments”). By signing below, you
hereby agree that (i) Lehman Brothers will act as the exclusive structuring
advisor, sole arranger and sole bookrunner for the Securitization Bridge
Facilities, (ii) LBCB or LCPI will act as sole and exclusive administrative
agent and collateral agent for the Securitization Bridge Facilities, (iii) LBCB,
LCPI or one of their affiliates will act as sole and exclusive syndication agent
for the Securitization Bridge Facilities and (iv) each of the Commitment Parties
will, in such capacities, perform the duties and exercise the authority
customarily associated with such roles.

 

No other agents, co-agents, arrangers or bookrunners will be appointed and no
Securitization Bridge Lender (as defined below) will receive compensation with
respect to any of the Securitization Bridge Facilities outside the terms
contained herein and in the letter or letters of even date herewith addressed to
you providing, among other things, for certain fees relating to the
Securitization Bridge Facilities (the “Fee Letter”) in order to obtain its
commitment to participate in such Securitization Bridge Facilities, in each
case, unless you and we so agree.

 

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The closing date of the Securitization Bridge Facilities (the “Closing Date”)
shall not occur until the conditions described in the paragraphs below under the
heading “Conditions” have been satisfied or waived.

 

Syndication and Cooperation.

 

The Initial Securitization Bridge Lender reserves the right, prior to or after
execution of the Securitization Bridge Documentation (as defined in Annex III
hereto (the “Conditions Annex”)) to syndicate all or a portion of their
Commitments to banks, financial institutions or other institutional lenders
identified by the Sole Arranger in consultation with you (other than certain
financial institutions identified in writing by you to the Sole Arranger prior
to the commencement of syndication of the Securitization Bridge Facilities),
that will become parties to the Securitization Bridge Documentation (the Initial
Securitization Bridge Lender and the banks, financial institutions and other
institutional lenders becoming parties to the Securitization Bridge
Documentation, the “Securitization Bridge Lenders”). Notwithstanding the Initial
Securitization Bridge Lender’s right to syndicate the Securitization Bridge
Facilities and receive commitments with respect thereto, it is understood that
any assignment of the Initial Securitization Bridge Lender’s Commitment prior to
the Closing Date shall not reduce the Initial Securitization Bridge Lender’s
obligations to fund its Commitments in the event the subject assignee shall fail
to do so; provided, that notwithstanding any assignment or participation prior
to the Closing Date, the Sole Arranger shall retain all rights to approve any
amendments, modifications, waivers or other changes to this Commitment Letter.

 

Without limitation of the preceding paragraph, the Sole Arranger will, in
consultation with you, manage all aspects of the syndication of the
Securitization Bridge Facilities, including selection of additional
Securitization Bridge Lenders in consultation with you (other than certain
financial institutions identified in writing by you to the Sole Arranger prior
to the commencement of syndication of the Securitization Bridge Facilities),
determination of when the Sole Arranger will approach potential additional
Securitization Bridge Lenders, any naming rights (except as set forth above),
the final allocations of the Commitments in respect of the Securitization Bridge
Facilities among the additional Securitization Bridge Lenders and the amount and
distribution of fees among the Securitization Bridge Lenders. To assist the Sole
Arranger in its syndication efforts, you agree that you will, and will cause
your representatives and advisors to, and will use commercially reasonable
efforts to cause the Acquired Business and its representatives and advisors to,
(a) prepare and provide all financial and other information as we may reasonably
request with respect to you, your existing securitization facility, the Acquired
Business and the Transactions, (b) use commercially reasonable efforts to ensure
that such syndication efforts benefit from existing lending relationships of the
Borrower and the Acquired Business, (c) make available to prospective
Securitization Bridge Lenders your senior management and use commercially
reasonable efforts to make available the senior management of the Acquired
Business, both at times and in locations to be mutually agreed upon, (d) host,
with the Sole Arranger, one or more meetings (which meetings may be a
teleconference) with prospective Securitization Bridge Lenders under each of the
Securitization Bridge Facilities, (e) assist the Sole Arranger in the
preparation of one or more confidential information memoranda and other
marketing materials to be used in connection with the syndication of each of the
Securitization Bridge Facilities which are customary for syndication of such
facilities, (f) use commercially reasonable efforts to obtain prior to the
commencement of the syndication process (as measured from the date of receipt of
marketing materials satisfactory to the Sole Arranger), at your expense, and to
the extent deemed necessary by the Sole Arranger in its sole discretion,
monitored public ratings of the Borrower and the Securitization Bridge
Facilities from Moody’s Investors Service, Inc. (“Moody’s”) and Standard &
Poor’s Ratings Group (“S&P”), and to participate in the process of securing such
ratings, including having your senior management, and using commercially
reasonable efforts to have senior management of the Acquired Business, meet with
such rating agencies and (g) use commercially reasonable efforts to ensure that
there is a period of not less than fifteen consecutive

 

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business days between the date of completion of the materials described in
clause (e) above and the Closing Date to market and syndicate the Securitization
Bridge Facilities; provided, however, that notwithstanding anything in this
clause (g) to the contrary, your compliance with this clause (g) shall not be
deemed to require that the Closing Date occur later than the date that is two
business days after the date of completion of the “Bridge Marketing Period” (as
defined in the Acquisition Agreement as in effect on the date hereof).

 

Information.

 

You hereby represent that (a) all information (other than financial projections
(the “Projections”), general economic and industry data and other forward
looking statements) that has been or will be made available to the Initial
Securitization Bridge Lender by or on behalf of you in connection with the
Transactions (the “Information”) (to your knowledge, to the extent of
information relating to the Acquired Business), when taken as a whole, is, and
in the case of Information made available after the date hereof will be, when
furnished, true and correct in all material respects and does not and will not,
when furnished, taken as a whole with all other Information, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which such
statements are made, not materially misleading and (b) the Projections that have
been or will be made available to the Commitment Parties by or on behalf of you
in connection with the Transactions have been or, in the case of Projections
made available after the date hereof, will be prepared in good faith based upon
assumptions believed by you to be reasonable at the time made, it being
understood that projections are, by their nature, inherently uncertain and
actual results may vary materially from the Projections. You agree that if at
any time prior to the Closing Date any of the representations in the preceding
sentence would, to the best of your knowledge, be incorrect in any material
respect if the Information or Projections were being furnished, and such
representations were being made, at such time, you will supplement the
Information and the Projections so that such representations will be correct in
all material respects under those circumstances.

 

You hereby acknowledge that (a) the Sole Arranger will make available
Information and Projections (collectively, “Borrower Materials”) to the proposed
syndicate of Securitization Bridge Lenders by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and (b) certain
of the proposed Securitization Bridge Lenders may be “public-side” Lenders
(i.e., Lenders that do not wish to receive material non-public information with
respect to the Borrower or the Target or any of their respective securities)
(each, a “Public Lender”). You hereby agree that, so long as the Borrower or the
Target is the issuer of any outstanding debt or equity securities that are
registered or issued pursuant to a private offering or are actively
contemplating issuing any such securities, (w) you will, and will use
commercially reasonable efforts to cause the Acquired Business to, identify that
portion of the Borrower Materials that may be distributed to the Public Lenders
and that all Borrower Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC,” you shall be deemed to have
authorized the Sole Arranger and the proposed Securitization Bridge Lenders to
treat such Borrower Materials as not containing any material non-public
information with respect to you or the Target or any of your or their respective
securities for purposes of United States federal and state securities laws, it
being understood that certain of such Borrower Materials may be subject to the
confidentiality requirements of the definitive credit documentation; (y) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated “Public Investor;” and (z) the Sole Arranger
shall be entitled to treat any Borrower Materials that are not marked “PUBLIC”
as being suitable only for posting on a portion of the Platform not designated
“Public Investor.”  Notwithstanding the foregoing, you shall be under no
obligation to mark any Borrower Materials “PUBLIC.”

 

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Fees and Expenses.

 

As consideration for the Commitments of the Initial Securitization Bridge Lender
hereunder with respect to the Securitization Bridge Facilities, the agreement of
the Sole Arranger to structure, arrange and syndicate the Securitization Bridge
Facilities, you agree to pay, or cause to be paid, to the Initial Securitization
Bridge Lender the fees and expenses set forth in the Securitization Bridge Term
Sheets and the Fee Letter on the dates set forth in the Securitization Bridge
Term Sheets and the Fee Letter.

 

Conditions.

 

The several commitments of the Initial Securitization Bridge Lender and
obligations of the Commitment Parties hereunder with respect to each of the
Securitization Bridge Facilities are subject to the following conditions:
(i) there not having occurred, since the date of the Acquisition Agreement, a
Material Adverse Effect (as defined in the Acquisition Agreement) and (ii) the
other conditions set forth in either Securitization Bridge Term Sheet under the
heading “Conditions to Initial Borrowing” or in the Conditions Annex having been
satisfied or waived.

 

Notwithstanding anything in this Commitment Letter, the Securitization Bridge
Term Sheets, the Conditions Annex, the Fee Letter, the Securitization Bridge
Documentation or any other letter agreement or other undertaking concerning the
financing of the Transactions to the contrary, (i) the only representations, the
making of which shall be a condition to availability of the Securitization
Bridge Facilities on the Closing Date, shall be (A) the representations and
warranties made by the Target in the Acquisition Agreement material to the
interests of the Securitization Bridge Lenders, and only to the extent any
breach of such representations and warranties shall give you the right to
terminate your obligations under the Acquisition Agreement, and (B) the
Specified Representations (as defined below) and (ii) the terms of the
Securitization Bridge Documentation shall be in a form such that they do not
impair availability of the Securitization Bridge Facilities on the Closing Date
if the conditions described or referred to under this heading “Conditions” are
satisfied (it being understood that, to the extent any Collateral (as defined in
the Annexes hereto) (other than (x) the pledge and perfection of the security
interests in capital stock of U.S. subsidiaries held by the Borrower or any
Guarantor, (y) other assets pursuant to which a lien may be perfected by the
filing of a financing statement under the Uniform Commercial Code and (z) owned
intellectual property registered in the U.S. Copyright Office or the U.S. Patent
and Trademark Office pursuant to which a lien may be perfected by the filing of
an appropriate notice of security interest in such office) is not provided on
the Closing Date after your use of commercially reasonable efforts to do so, the
delivery of such Collateral shall not constitute a condition precedent to the
availability of the Securitization Bridge Facilities on the Closing Date but
shall be required to be delivered after the Closing Date pursuant to
arrangements to be mutually agreed). Without limiting the foregoing, the
Securitization Bridge Documentation shall not contain any conditions precedent
to the initial borrowing other than the conditions precedent described or
referred to under this heading “Conditions.”  For purposes hereof, “Specified
Representations” means the representations and warranties with respect to the
Borrower and its subsidiaries and the Acquired Business set forth in the
Securitization Bridge Term Sheets relating to due authorization, execution,
delivery and enforceability of the Securitization Bridge Documentation (if
applicable), corporate power and authority, Federal Reserve margin regulations,
the Investment Company Act and validity and perfection of security interests in
the Collateral (but subject to the parenthetical at the end of clause (ii) of
the previous sentence).

 

Clear Market.

 

From the date of this Commitment Letter until the earlier of (x) 365 days after
the Closing Date and (y) the repayment in full of the Securitization Bridge
Facilities and the termination of

 

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the commitments thereunder, you will ensure that no debt or equity financing
(other than (i) the Securitization Bridge Facilities, any Securitization and any
other debt or equity financing used to refinance the Securitization Bridge
Facilities and (ii) any purchase money indebtedness, trade payables, capital
leases or letters of credit issued to support insurance policies, in each case
in the clause (ii), incurred in the ordinary course of business) and no debt
securities offering for the Borrower or any of its subsidiaries, and, prior to
the Closing Date, will use commercially reasonable efforts to ensure than no
debt or equity financing for the Acquired Business or any of its subsidiaries,
is announced, syndicated or placed without the prior written consent of the Sole
Arranger if such financing, syndication or placement would have, in the
reasonable judgment of the Sole Arranger, a materially detrimental effect upon
such syndication; provided, that the foregoing provision shall not apply to any
indebtedness permitted to be incurred by the Acquired Business pursuant to the
Acquisition Agreement as in effect on the date hereof.

 

You also agree that from the date of this Commitment Letter until the Closing
Date, neither you nor any of your subsidiaries will issue, incur or otherwise
become liable for any additional indebtedness under the provisions of the
documentation governing the Borrower’s existing securitization facility (the
“IHOP Securitization”) without the prior written consent of the Sole Arranger.

 

Indemnity.

 

The Borrower and Merger Sub hereby jointly and severally agree to indemnify and
hold harmless the Initial Securitization Bridge Lender, the Sole Arranger, the
other Securitization Bridge Lenders and each of their respective affiliates and
all their respective officers, directors, partners, trustees, employees,
shareholders, advisors, agents, attorneys and controlling persons and each of
their respective heirs, successors and assigns (each, an “Indemnified Person”)
from and against any and all losses, claims, damages and liabilities to which
any Indemnified Person may become subject arising out of or in connection with
this Commitment Letter, the Securitization Bridge Facilities, the use of the
proceeds therefrom, the Acquisition, any of the other transactions contemplated
hereby or any claim, litigation, investigation or proceeding relating to any of
the foregoing, regardless of whether any Indemnified Person is a party thereto,
and to reimburse each Indemnified Person promptly upon demand for all documented
reasonable legal and other expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending, or providing evidence in or
preparing to serve or serving as a witness with respect to, any lawsuit,
investigation, claim or other proceeding relating to any of the foregoing
(including, without limitation, in connection with the enforcement of the
indemnification obligations set forth herein); provided, however, that no
Indemnified Person will be entitled to indemnity hereunder in respect of any
loss, claim, damage, liability or expense (i) to the extent that it resulted
from the gross negligence, willful misconduct or bad faith of, or material
breach of this Commitment Letter by, such Indemnified Person or any of its
related parties as determined by a court of competent jurisdiction or (ii)
arising out of or in connection with any claim, litigation, investigation or
proceeding that does not involve an act or omission of you or any of your
affiliates and that is brought by an Indemnified Person against any other
Indemnified Person. In no event will any Indemnified Person be liable on any
theory of liability for indirect, special or consequential damages, lost profits
or punitive damages as a result of any failure to fund any of the Securitization
Bridge Facilities contemplated hereby or otherwise in connection with the
Transactions or the Securitization Bridge Facilities. No Indemnified Person will
be liable for any damages arising from the use by others of information,
projections or other materials sent through electronic, telecommunications or
other information transmission systems, except to the extent such damages
resulted directly from the gross negligence, willful misconduct or bad faith of,
or material breach of this Commitment Letter by, such Indemnified Person or any
of its related parties as determined by a court of competent jurisdiction.

 

The Borrower and Merger Sub each further agrees that, without the prior written
consent of each of the Commitment Parties, which consent will not be
unreasonably withheld or delayed, none of

 

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them will enter into any settlement of a lawsuit, claim or other proceeding
arising out of this Commitment Letter or the transactions contemplated by this
Commitment Letter unless such settlement includes an explicit and unconditional
release from the party bringing such lawsuit, claim or other proceeding of all
Indemnified Persons.

 

The Borrower, Merger Sub and each Commitment Party agree that if any
indemnification or reimbursement sought pursuant to this Commitment Letter is
judicially determined to be unavailable for a reason other than the gross
negligence, willful misconduct or bad faith of, or material breach of this
Commitment Letter by, such Indemnified Person, then you will contribute to the
amount paid or payable by such Commitment Party as a result of such losses,
claims, damages, liabilities and expenses for which such indemnification or
reimbursement is held unavailable (i) in such proportion as is appropriate to
reflect the relative benefits to you, on the one hand, and such Commitment
Party, on the other hand, in connection with the transactions to which such
indemnification or reimbursement relates, or (ii) if the allocation provided by
clause (i) above is judicially determined not to be permitted, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of you, on the one hand, and such
Commitment Party, on the other hand, as well as any other equitable
considerations; provided, however, that upon execution of the Securitization
Bridge Documentation the indemnification provisions contained therein shall
supersede those contained herein.

 

Confidentiality.

 

This Commitment Letter is furnished for your benefit, and may not be relied on
by any other person or entity. Neither the existence of this Commitment Letter,
the Securitization Bridge Term Sheets, the Conditions Annex, the Fee Letter, nor
any of their contents may be disclosed by you or any of your affiliates,
directly or indirectly, to any other person, except that such existence and
contents (including this Commitment Letter, the Securitization Bridge Term
Sheets, the Conditions Annex and the Fee Letter) may be disclosed (i) as may be
compelled in a judicial or administrative proceeding or as otherwise required by
law or the Securities and Exchange Commission or other governmental authority
having jurisdiction over you or any such affiliate (in which case you agree, to
the extent permitted by law and reasonably practicable, to inform the Sole
Arranger promptly thereof), (ii) to your directors, officers, employees,
affiliates, advisors (including legal advisors) and agents, in each case on a
confidential and “need-to-know” basis and only in connection with the
transactions contemplated hereby and (iii) in connection with any dispute or
adversarial process related to this Commitment Letter, and as reasonably
required for syndication. In addition, this Commitment Letter, the
Securitization Bridge Term Sheets, the Conditions Annex and the Fee Letter (but
only with appropriate redactions to the Fee Letter to delete all fee amounts)
may be disclosed to the Acquired Business and its directors, officers,
employees, advisors (including legal advisors) and agents on a confidential and
“need-to-know” basis and only in connection with the transactions contemplated
hereby. Furthermore, this Commitment Letter and the Fee Letter (but only with
appropriate redactions to the Fee Letter to delete all fee amounts) may be
disclosed by you to any ratings agencies or any monoline insurance company or
other provider of credit enhancement, in each case, on a confidential and
“need-to-know” basis and only in connection with the transactions contemplated
hereby.

 

Other Services.

 

You acknowledge that the Initial Securitization Bridge Lender, the Sole Arranger
and their respective affiliates (the term “Initial Securitization Bridge Lender”
or “Sole Arranger” as used below in this paragraph being understood to include
such affiliates) may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies in respect
of which you, the Acquired Business or any of your or the Acquired Business’
respective subsidiaries may have conflicting interests regarding the
transactions described herein and otherwise. The Initial

 

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Securitization Bridge Lender and the Sole Arranger will not use confidential
information obtained from you by virtue of the transactions contemplated by this
Commitment Letter or its other relationships with you or the Acquired Business
in connection with the performance by the Initial Securitization Bridge Lender
or the Sole Arranger of services for other companies, and the Initial
Securitization Bridge Lender and the Sole Arranger will not furnish any such
information to other companies. The Sole Arranger and its affiliates will use
all confidential information provided to them or such affiliates by or on behalf
of you or the Acquired Business hereunder solely for the purpose of providing
the services which are the subject of this Commitment Letter and shall treat
confidentially all such information. You also acknowledge that the Initial
Securitization Bridge Lender and the Sole Arranger shall not have any obligation
to use in connection with the transactions contemplated by this Commitment
Letter, or to furnish to you, the Acquired Business or any of your or the
Acquired Business’ respective affiliates, confidential information obtained from
other companies. You further acknowledge that the Sole Arranger is a full
service securities firm and it and the Initial Securitization Bridge Lender may
from time to time effect transactions, for their own or their affiliates’
account or the account of customers, and hold positions in loans, securities or
options on loans or securities of the Borrower, Merger Sub or any of their
respective affiliates and other companies that may be the subject of the
transactions contemplated by this Commitment Letter.

 

Governing Law, Etc.

 

This Commitment Letter and the commitment of the Securitization Bridge Lenders
shall not be assignable by you without the prior written consent of the
Commitment Parties, and any purported assignment without such consent shall be
void; provided, however, that you may assign your rights and delegate your
obligations hereunder to one or more affiliates of the Borrower controlled by
the Borrower and formed for the purpose of effecting the Transactions. This
Commitment Letter may not be amended or any provision hereof waived or modified
except by an instrument in writing signed by each Commitment Party and you. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original and all of which, when taken together, shall constitute one
agreement. Delivery of an executed counterpart of a signature page of this
Commitment Letter by facsimile transmission or electronic photocopy (i.e.,
“pdf”) shall be effective as delivery of a manually executed counterpart of this
Commitment Letter. Headings are for convenience only. This Commitment Letter is
intended to be for the benefit of the parties hereto and is not intended to
confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto, the Securitization Bridge Lenders and, with respect to
the indemnification provided under the heading “Indemnity,” each Indemnified
Person. This Commitment Letter shall be governed by, and construed in accordance
with, the laws of the State of New York. Any right to trial by jury with respect
to any claim or action arising out of this Commitment Letter is hereby waived.
The parties hereto hereby submit to the non-exclusive jurisdiction of the
federal and New York State courts located in The City of New York (and appellate
courts thereof) in connection with any dispute related to this Commitment Letter
or any of the matters contemplated hereby. The parties hereto irrevocably and
unconditionally waive any objection to the laying of such venue of any such
suit, action or proceeding brought in any such court and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. A final
judgment in any such suit, action or proceeding brought in any such court may be
enforced in any other courts to whose jurisdiction the party subject to such
judgment is or may be subject by suit upon judgment.

 

Compliance and Patriot Act.

 

We hereby notify you that pursuant to the requirements of the USA Patriot Act,
Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot
Act”), the Commitment Parties and the Securitization Bridge Lenders are required
to obtain, verify and record information that identifies the Borrower, which
information includes the name, address and tax identification number of the
Borrower

 

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and other information regarding the Borrower that will allow such Commitment
Party or such Securitization Bridge Lender to identify the Borrower in
accordance with the Patriot Act. This notice is given in accordance with the
requirements of the Patriot Act and is effective as to the Commitment Parties
and the Securitization Bridge Lenders. The Borrower and each of the Guarantors
(as defined in the Annexes hereto) agree to provide, at least five days prior to
the Closing Date, the documentation and other information to the Administrative
Agent (as defined in the Annexes hereto) that is required by regulatory
authorities under applicable “know your customer” and anti-money-laundering
rules and regulations, including, without limitation, the Patriot Act.

 

*              *              *

 

Please indicate your acceptance of the terms hereof and of the Securitization
Bridge Term Sheets, the Conditions Annex and the Fee Letter by returning to us
executed counterparts of this Commitment Letter and the Fee Letter not later
than 5:00 p.m., New York City time, on July 16, 2007. This Commitment Letter and
the agreement of the Commitment Parties to provide the services described herein
will automatically expire at such time if we have not received such executed
counterparts of this Commitment Letter and the Fee Letter in accordance with the
preceding sentence. If you do so execute and deliver to the Commitment Parties,
this Commitment Letter and the Fee Letter, the Initial Securitization Bridge
Lender agrees to hold its Commitments available for you until the earliest of
(i) the termination of the Acquisition Agreement, (ii) the consummation of the
Acquisition without utilization of the Securitization Bridge Facilities and
(iii) 11:59 p.m., New York City time, on the Outside Date (as defined in the
Acquisition Agreement), at which time the Commitments shall expire. The
compensation, expense reimbursement, confidentiality, indemnification and
governing law and forum provisions hereof and in the Securitization Bridge Term
Sheets and the Fee Letter shall survive termination of this Commitment Letter
(or any portion hereof) or the commitments of the Securitization Bridge Lenders
hereunder; provided, that in the event the Securitization Bridge Documentation
is executed, the expense reimbursement and indemnification provisions hereof
shall be terminated and superseded by the expense reimbursement and
indemnification provisions in the Securitization Bridge Documentation. The
provisions under the headings “Syndication and Cooperation” and “Clear Market”
above shall survive the execution and delivery of the Securitization Bridge
Documentation.

 

9

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We are pleased to have been given the opportunity to assist you in connection
with the financing for the Transactions.

 

Very truly yours,

 

 

 

LEHMAN BROTHERS COMMERCIAL BANK

 

 

 

 

 

By:

/s/ George Janes

 

 

Name: George Janes

 

 

Title: Chief Credit Officer

 

 

 

 

 

LEHMAN BROTHERS INC.

 

 

 

 

 

By:

/s/ Laurie B. Perper

 

 

Name: Laurie B. Perper

 

 

Title: Senior Vice President

 

 

 

 

 

LEHMAN COMMERCIAL PAPER INC.

 

 

 

 

 

By:

/s/ Laurie B. Perper

 

 

Name: Laurie B. Perper

 

 

Title: Senior Vice President

 

Signature page to Commitment Letter

 

--------------------------------------------------------------------------------

 

Accepted and agreed to as of

 

the date first written above:

 

 

 

IHOP CORP.

 

 

 

 

 

By:

/s/ Thomas Conforti

 

 

Name: Thomas Conforti

 

 

Title: Chief Financial Officer

 

 

 

 

 

CHLH CORP.

 

 

 

 

 

By:

/s/ Thomas Conforti

 

 

Name: Thomas Conforti

 

 

Title: Chief Financial Officer

 

 

Signature page to Commitment Letter

 

--------------------------------------------------------------------------------

 

ANNEX I

 

SUMMARY OF TERMS OF FIRST LIEN SECURITIZATION BRIDGE FACILITIES

 

Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Commitment Letter, to which this summary is
attached.

 

Borrower:

 

IHOP Corp.

 

 

 

Exclusive Structuring Advisor:

 

Lehman Brothers Inc. (“Lehman Brothers”).

 

 

 

Sole Arranger and Sole

 

 

Bookrunner:

 

Lehman Brothers.

 

 

 

First Lien

 

 

Securitization Bridge Lenders:

 

The Initial Securitization Bridge Lender or a syndicate of banks, financial
institutions and other entities, arranged by the Sole Arranger (collectively,
the “First Lien Securitization Bridge Lenders”); provided that any such
syndication shall comply with the terms and conditions set forth in the
Commitment Letter.

 

 

 

Administrative Agent and

 

 

Collateral Agent:

 

Lehman Brothers Commercial Bank (“LBCB”) or Lehman Commercial Paper Inc.
(“LCPI”).

 

 

 

Swing Line Lender:

 

LBCB or LCPI.

 

 

 

Letter of Credit Issuing Entity:

 

To be determined.

 

 

 

Syndication Agent:

 

LBCB, LCPI or one of their affiliates.

 

 

 

Type and Amount of Facilities:

 

First Lien Securitization Bridge Term Loan Facility:

 

 

 

 

 

A one-year term securitization bridge term loan facility to be made available to
the Borrower in U.S. dollars in the manner provided herein (the “First Lien
Securitization Bridge Term Loan Facility”; and the loans made under the First
Lien Securitization Bridge Term Loan Facility, the “First Lien Securitization
Bridge Term Loans”) in an aggregate principal amount of up to $1,850,000,000.

 

 

 

 

 

First Lien Securitization Bridge Revolving Credit Facility:

 

 

 

 

 

A one-year revolving credit facility to be made available to the Borrower in the
manner provided herein (the “First Lien Securitization Bridge Revolving Credit
Facility”, and the loans thereunder, the “Securitization Bridge Revolving Credit
Loans”) with aggregate commitments (the “Securitization Bridge Revolving

 

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Credit Commitments”) of $100,000,000. Each First Lien Securitization Bridge
Lender holding a Securitization Bridge Revolving Credit Commitment shall be
referred to herein as a “First Lien Securitization Bridge Revolving Credit
Lender.”

 

 

 

 

 

The First Lien Securitization Bridge Term Loan Facility and the First Lien
Securitization Bridge Revolving Credit Facility are referred to herein
collectively as the “First Lien Securitization Bridge Facilities” and the First
Lien Securitization Bridge Term Loans and the Securitization Bridge Revolving
Credit Loans are referred to herein collectively as the “First Lien
Securitization Bridge Loans”.

 

 

 

Purpose:

 

Proceeds of the First Lien Securitization Bridge Term Loan Facility will be used
on the Closing Date (as defined below) to finance a portion of the Acquisition,
to effect the Refinancing, to fund one or more interest reserve accounts and to
pay fees and expenses in connection therewith. The First Lien Securitization
Bridge Revolving Credit Facility will be used by the Borrower for working
capital and general corporate purposes.

 

 

 

Closing Date:

 

The date of consummation of the Acquisition and the initial funding under the
First Lien Securitization Bridge Facilities.

 

 

 

Definitive Documentation:

 

The terms of the definitive documentation governing the First Lien
Securitization Bridge Facilities (the “First Lien Securitization Bridge
Documentation”) shall be consistent with the terms and conditions of the
Commitment Letter.

 

 

 

Maturity Dates:

 

First Lien Securitization Bridge Term Loan Facility: First anniversary of the
Closing Date (“Initial Maturity Date”).

 

 

 

 

 

First Lien Securitization Bridge Revolving Credit Facility: Initial Maturity
Date.

 

 

 

 

 

If any First Lien Securitization Bridge Term Loans (the “Senior Initial Loans”
and, together with the Second Lien Initial Loans, the “Initial Loans”) have not
been paid in full on or prior to the date that is one year following the Closing
Date (the “Conversion Date”), subject to the conditions outlined below under
“Conditions to Conversion of Senior Initial Loans,” such Senior Initial Loans
shall be converted into a senior term

 

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loan (each, a “Senior Term Loan”) maturing on the fourth anniversary of the
Conversion Date (the “Senior Term Loan Maturity Date”). Other than the maturity
date, all other terms and conditions set forth herein applicable to the First
Lien Securitization Bridge Facilities shall apply to the Senior Term Loan.

 

 

 

 

 

If the Senior Initial Loans are converted into Senior Term Loans as provided
above, then the maturity date of the First Lien Securitization Bridge Revolving
Credit Facility will be extended to the Senior Term Loan Maturity Date.

 

 

 

Conditions to Conversion of

 

 

Senior Initial Loans:

 

On the Conversion Date, unless a payment or bankruptcy default has occurred and
is continuing under the First Lien Securitization Bridge Documentation, the
Senior Initial Loans shall, upon payment of the Conversion Fee (as defined in
the Fee Letter), be converted into Senior Term Loans.

 

 

 

Availability:

 

First Lien Securitization Bridge Term Loan Facility: A single drawing may be
made on the Closing Date of up to the full amount of the First Lien
Securitization Bridge Term Loan Facility; provided, that if (i) securitized debt
securities (the “Additional IHOP Securitization Securities”) under the IHOP
Securitization are issued on the Closing Date, the amount of the First Lien
Securitization Bridge Term Loan Facility shall be reduced by an amount equal to
the greater of (A) the aggregate amount of gross cash proceeds received from the
issuance of such Additional IHOP Securitization Securities and (B) * (ii) a
Securitization with respect to the Acquired Business (an “Applebee’s
Securitization”) is consummated on the Closing Date, the amount of the First
Lien Securitization Bridge Term Loan Facility shall be reduced by *, (iii) the
Borrower or any of its subsidiaries receives proceeds from the unwind of the
interest rate derivative described in item 5 of Annex III or any replacement
thereof on or prior to the Closing Date, the amount of the First Lien
Securitization Bridge Term Loan Facility shall be reduced by the aggregate gross
proceeds of such unwind or (iv) the Borrower or any of its subsidiaries receives
proceeds from any sale-leaseback transaction on or prior to the Closing Date,
the amount of the First Lien Securitization Bridge Term Loan Facility shall be
reduced by the aggregate net proceeds of such sale-leaseback transaction.

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-3

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First Lien Securitization Bridge Revolving Credit Facility: Borrowings may be
made (i) on the Closing Date in an aggregate amount not to exceed $50,000,000
(plus an aggregate face amount to be agreed of letters of credit posted
thereunder) and (ii) at any time after the Closing Date to but excluding the
business day preceding the maturity date of the First Lien Securitization Bridge
Revolving Credit Facility; provided, that if an Applebee’s Securitization is
consummated pursuant to which securities are issued in a principal amount equal
to or greater than * (which for the avoidance of doubt, includes the amount of
any variable funding note regardless of whether such note is funded), the
commitments under the First Lien Securitization Bridge Revolving Credit Facility
shall terminate.

 

 

 

Letters of Credit:

 

$50,000,000 of the First Lien Securitization Bridge Revolving Credit Facility
will be available for letters of credit, on customary terms and conditions to be
set forth in the First Lien Securitization Bridge Documentation.

 

 

 

 

 

Each letter of credit shall expire not later than the third day prior to the
maturity date of the First Lien Securitization Bridge Revolving Credit Facility;
provided that, subject to the terms of the First Lien Securitization Bridge
Documentation, a letter of credit may provide that it shall automatically renew
for additional periods.

 

 

 

Swing Line Facility:

 

A portion of the First Lien Securitization Bridge Revolving Credit Facility in
an amount to be determined will be available for swingline loans on same day
notice and on terms and conditions to be set forth in the First Lien
Securitization Bridge Documentation.

 

 

 

Amortization:

 

First Lien Securitization Bridge Term Loan Facility: The First Lien
Securitization Bridge Term Loan Facility will amortize in equal quarterly
installments in an aggregate annual amount equal to 1.0% of the aggregate
principal amount of the First Lien Securitization Bridge Term Loans as of the
Closing Date, with the balance thereof due at maturity.

 

 

 

 

 

First Lien Securitization Bridge Revolving Credit Facility: None.

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-4

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Interest on First Lien Securitization

 

 

Bridge Term Loans and Securitization

 

 

Bridge Revolving Credit Loans:

 

At the Borrower’s option, First Lien Securitization Bridge Term Loans and
Securitization Bridge Revolving Credit Loans will bear interest based on the
Base Rate or LIBOR; provided that until the date that is 30 days following the
Closing Date, the First Lien Securitization Bridge Loans shall be made and
maintained as Base Rate Loans or LIBOR Loans having an interest period of one
month, as selected by the Borrower, as described below:

 

 

 

 

 

A. Base Rate Option

 

 

 

 

 

Interest will be at the Base Rate plus the applicable Interest Margin (as
defined below), calculated on the basis of the actual number of days elapsed in
a year of 365/66 days and payable quarterly in arrears. The Base Rate is defined
as the higher of (i) the Federal Funds Rate, as published by the Federal Reserve
Bank of New York, plus 1/2 of 1% and (ii) the prime commercial lending rate as
set forth on Reuters’ Telerate Page 5. First Lien Securitization Bridge Loans
bearing interest based on the Base Rate shall be referred to herein as “Base
Rate Loans.”

 

 

 

 

 

Base Rate borrowings will require one business day’s prior notice and will be in
minimum amounts to be agreed upon.

 

 

 

 

 

B. LIBOR Option

 

 

 

 

 

Interest will be determined for periods (“Interest Periods”) of one, two, three
or six months (as selected by the Borrower) and will be at an annual rate equal
to the London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of
U.S. dollars, plus the applicable Interest Margin. LIBOR will be determined by
the Administrative Agent at the start of each Interest Period and will be fixed
through such period. Interest will be paid at the end of each Interest Period
or, in the case of Interest Periods longer than three months, quarterly, and
will be calculated on the basis of the actual number of days elapsed in a year
of 360 days. LIBOR will be adjusted for maximum statutory reserve requirements
(if any). First Lien Securitization Bridge Loans bearing interest based on LIBOR
shall be referred to herein as “LIBOR Loans.”

 

 

I-5

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LIBOR borrowings will require three business days’ prior notice and will be in
minimum amounts to be agreed upon.

 

 

 

Default Interest:

 

Upon the occurrence and during the continuance of a payment default, interest
will accrue on any overdue amount of a loan or other overdue amount payable
under the First Lien Securitization Bridge Facilities at a rate of 2% per annum
in excess of the rate (including the applicable Interest Margin (as defined
below)) otherwise applicable to such loan or other amount and will be payable on
demand.

 

 

 

Interest Margins:

 

The interest margins applicable to each of the First Lien Securitization Bridge
Term Loans and the Securitization Bridge Revolving Credit Loans will be the
percentages set forth in the following table *

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-6

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*

 

 

 

 

 

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-7

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*

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-8

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*

 

 

 

Revolving Credit

 

 

Commitment Fees:

 

A Revolving Credit Commitment Fee shall accrue on the unused amounts of the
commitments under the First Lien Securitization Bridge Revolving Credit Facility
at a rate equal to 0.50% per annum. Accrued Revolving Credit Commitment Fees
will be payable quarterly in arrears (calculated on a 360-day basis) for the
account of the First Lien Securitization Bridge Revolving Credit Lenders from
the Closing Date.

 

 

 

Letter of Credit Fees:

 

The Borrower will pay (i) the Letter of Credit Issuing Entity a fronting fee in
an amount to be agreed on the face amount of each letter of credit issued by
such Letter of Credit Issuing Entity and (ii) letter of credit participation
fees to the First Lien Securitization Bridge Revolving Credit Lenders in an
amount equal to the Interest Margin for LIBOR Loans under the First Lien
Securitization Bridge Revolving Credit Facility, in each case, on the undrawn
amount of all such outstanding letters of credit. In addition, the Borrower will
pay the Letter of Credit Issuing Entity customary and market rate issuances
fees, which may not be rebated.

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-9

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Mandatory Prepayments:

 

An amount equal to (a) 100% of the net proceeds (including insurance and
condemnation proceeds) received from the sale or other disposition of all or any
part of the assets (other than sales of assets in the ordinary course of
business to be agreed) of the Borrower or any of its subsidiaries after the
Closing Date other than in the ordinary course and other than amounts reinvested
within 6 months of the sale or other disposition and subject to other exceptions
to be agreed and otherwise consistent with recent credit documentation governing
securitization bridge facilities of this type, provided, that the net proceeds
of any sale-leaseback transaction shall be applied as a mandatory prepayment
without any such reinvestment option, (b) 100% of the gross proceeds received by
the Borrower or any of its affiliates in connection with the closing of an
Applebee’s Securitization, (c) 100% of the gross proceeds received by the
Borrower or any of its affiliates in connection with the sale of the Additional
IHOP Securitization Securities, (d) 100% of the net cash proceeds received by
the Borrower or any of its subsidiaries from any other Securitization or the
issuance of other debt (other than certain debt permitted to be incurred or
assumed under the First Lien Securitization Bridge Documentation) or the
issuance of any equity after the Closing Date (other than exceptions to be
agreed), (e) 100% of the gross proceeds received by the Borrower or any of its
subsidiaries from the unwind of the interest rate derivative described in item 5
of Annex III or any replacement thereof and (f) beginning with fiscal year 2008,
50% of excess cash flow of the Borrower and its subsidiaries (to be defined in a
mutually satisfactory manner); provided, that any voluntary prepayments of loans
under the Securitization Bridge Facilities (including Securitization Bridge
Revolving Credit Loans to the extent the aggregate Securitization Bridge
Revolving Credit Commitments are permanently reduced (ratably among the
Securitization Bridge Revolving Credit Lenders) by the amount of such
prepayments), other than prepayments funded with the proceeds of indebtedness,
asset sales or other financing transactions, shall be deducted from excess cash
flow for purposes of calculating amounts available for the excess cash flow
mandatory prepayment.

 

 

 

 

 

There will be no prepayment penalties (except LIBOR breakage costs) for
mandatory prepayments.

 

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Optional Prepayments:

 

Permitted in whole or in part and, in the case of the First Lien Securitization
Bridge Term Loans, may not be reborrowed, with one business day’s prior notice
in the case of Base Rate Loans and three business day’s prior notice in the case
of LIBOR Loans, but without premium or penalty (except LIBOR breakage costs in
the case of a prepayment other than on the last day of the relevant interest
period) and including accrued and unpaid interest, subject to limitations as to
minimum amounts of prepayments to be agreed. There will be no prepayment
penalties (except LIBOR breakage costs) for optional prepayments.

 

 

 

Application of Prepayments:

 

All mandatory prepayments will be applied, first, to the prepayment of the First
Lien Securitization Bridge Term Loans, second, to the repayment of the First
Lien Securitization Bridge Revolving Credit Facility (but with no permanent
reduction in the commitments thereof) and third, to the prepayment of the Second
Lien Securitization Bridge Term Loans; provided, that a mandatory prepayment
described in clause (b) of “Mandatory Prepayments” above in connection with a
release of the Collateral Agent’s lien on the assets of the Acquired Business
(as described in “Release of Acquired Business Collateral” below) will be
applied, first, to the prepayment of the First Lien Securitization Bridge Term
Loans, second, to the repayment of the First Lien Securitization Bridge
Revolving Credit Facility (with a corresponding permanent reduction in the
commitments thereof), and third, to the prepayment of the Second Lien
Securitization Bridge Term Loans. Optional prepayments may be applied to the
First Lien Securitization Bridge Term Loan or the First Lien Securitization
Bridge Revolving Credit Facility as directed by the Borrower. No optional or
mandatory prepayments may be applied to the Second Lien Securitization Bridge
Term Loans until all extensions of credit under the First Lien Securitization
Bridge Facilities shall have been paid in full and all commitments thereunder
shall have been terminated. Each prepayment of the First Lien Securitization
Bridge Term Loans may not be reborrowed. Prepayments of Securitization Bridge
Revolving Credit Loans may be reborrowed.

 

 

 

 

 

Each mandatory and optional prepayment of the First Lien Securitization Bridge
Term Loans will be applied to the remaining amortization payments of the First
Lien

 

I-11

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Securitization Bridge Term Loan Facility in the manner directed by the Borrower.

 

 

 

Guarantees:

 

The obligations of the Borrower under the First Lien Securitization Bridge Term
Loan Facility and the First Lien Securitization Bridge Revolving Credit Facility
and any exposure under hedging agreements and, at the Borrower’s option, cash
management arrangements, entered into with a person that was, at the time of
such entry, a Securitization Bridge Lender (or an affiliate thereof) under the
First Lien Securitization Bridge Term Loan Facility or the First Lien
Securitization Bridge Revolving Credit Facility (collectively, the
“Obligations”) will be fully and unconditionally guaranteed on a joint and
several basis by all existing and future direct and indirect domestic
subsidiaries of the Borrower, other than any subsidiaries that are or are
intended to become bankruptcy remote securitization entities (and such entities’
bankruptcy remote subsidiaries) under the Securitization or the IHOP
Securitization (the “Guarantors”, and, together with the Borrower, the “Loan
Parties”).

 

 

 

Security:

 

As security for the Obligations of each Loan Party, each Loan Party shall grant
to the Collateral Agent, for the benefit of the First Lien Securitization Bridge
Lenders and each other holder of the Obligations, valid and perfected first
priority liens and security interests in all of the following (collectively, the
“Collateral”), subject to the terms of the Conditions Annex:

 

 

 

 

 

(a) a first-priority pledge of (i) all notes owned by the Loan Parties,
including, without limitation, all intercompany notes owing to the Loan Parties
(and any collateral pledged as security therefor) and (ii) all capital stock
held by the Loan Parties in their respective subsidiaries (whether existing or
subsequently acquired or organized, or domestic or foreign); provided, that in
the case of any first-tier foreign subsidiary, not more than 66% of the voting
stock of such foreign subsidiary shall be pledged by the applicable Loan Party
as security for the Obligations; and

 

 

 

 

 

(b) perfected first-priority security interests in, and mortgages on, all owned,
leased or licensed material tangible and intangible assets (including, without
limitation, accounts receivable, inventory, equipment, vehicles, general
intangibles, insurance policies, investment property, intellectual property,
cash and deposit accounts, the interest reserve accounts (which

 

I-12

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shall be at LBCB pursuant to documentation reasonably satisfactory to the
Collateral Agent) and funded with an estimated three months’ aggregate interest
under the Applebee’s Securitization and IHOP Securitization) and owned real
property) and proceeds of the foregoing of the Loan Parties, wherever located,
now or hereafter owned; provided, however, that the Loan Parties shall not be
required to perfect such security interests in (x) vehicles, (y) deposit
accounts until 90 days following the Closing Date or, if an Event of Default has
occurred and is continuing, upon the request of the Collateral Agent, and
(z) owned real property until 180 days following the Closing Date or, if an
Event of Default has occurred and is continuing, upon the reasonable request of
the Collateral Agent. The foregoing notwithstanding, the Collateral shall not
include (i) assets as to which the Administrative Agent shall reasonably
determine that the costs of obtaining such a security interest are excessive in
relation to the value of the security to be afforded thereby, (ii) assets to the
extent that the granting of such security interest would violate any applicable
law or the enforceable anti-assignment provisions of any contract,
(iii) leasehold interests in real property, (iv) off-the-shelf software licenses
and (v) other exceptions to be agreed.

 

 

 

The obligations under the Second Lien Securitization Bridge Loan Facility will
be secured by a second-priority security interest in the Collateral. The
priority of the security interests and the related creditor rights among the
First Lien Securitization Bridge Facilities and the Second Lien Securitization
Bridge Loan Facility will be set forth in an intercreditor agreement
(“Intercreditor Agreement”) to be agreed upon.

 

 

 

The Borrower may designate certain interest hedging and cash management
obligations in respect of the Securitization Bridge Facilities or the
corresponding Securitization securities on terms and with counterparties
acceptable to the Administrative Agent to share in the first-priority security
interest in the Collateral.

 

 

Conditions to Initial Borrowings:

Conditions precedent to initial borrowings under the First Lien Securitization
Bridge Facilities will be limited to those described or referred to under the
heading “Conditions” in the Commitment Letter, and those conditions set forth in
Annex III to the Commitment Letter and the following: (1) the accuracy of the
Specified Representations and (2) delivery of a duly

 

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executed notice of borrowing under the First Lien Securitization Bridge
Facilities.

 

 

 

Conditions to Each Borrowing
(other than the Initial Borrowings):

 

Conditions precedent to each borrowing or issuance (other than the initial
borrowings) under the First Lien Securitization Bridge Facilities will be
limited to the following: (1) the absence of any continuing default or event of
default, (2) the accuracy of representations and warranties in all material
respects and (3) delivery of a duly executed notice of borrowing.

 

 

 

Representations and Warranties:

 

Representations and warranties will be subject to materiality thresholds and
exceptions to be agreed, apply to the Borrower and its subsidiaries (including,
without limitation, the Acquired Business) and will be limited to the following:
financial statements (including pro forma financial statements); absence of
undisclosed liabilities; no material adverse change; corporate existence;
compliance with law; corporate power and authority; enforceability of the First
Lien Securitization Bridge Documentation; no conflict with law or contractual
obligations; no material litigation; no default; ownership of property; liens;
intellectual property; real property; taxes; permits; governmental and other
approvals; subsidiaries; governmental regulations (including Federal Reserve
regulations; ERISA; the Investment Company Act and the Patriot Act);
environmental matters; solvency; labor matters; employment and management
agreements; accuracy of disclosure; insurance; creation and perfection of
security interests; capitalization; use of proceeds; delivery of documents; and
fees and expenses.

 

 

 

Affirmative Covenants:

 

Affirmative covenants will be subject to materiality thresholds and exceptions
to be agreed, apply to the Borrower and its subsidiaries (including, without
limitation, the Acquired Business) and will be limited to the following:
delivery of financial statements, management reports, accountants’ letters,
business plan, officers’ certificates and other customary information; payment
of taxes and other obligations; continuation of business and maintenance of
existence and material rights and privileges; compliance with material laws and
regulations (including, without limitation, environmental, ERISA and tax laws
and regulations); maintenance of property and insurance; maintenance of books
and records; inspection rights; notices of defaults, litigation and other
material events; environmental

 

I-14

--------------------------------------------------------------------------------

 

 

 

matters; use of proceeds; fiscal year; material contracts; interest rate
protection; transfer of assets to special purpose entity; and further assurances
with respect to guarantees, security interests and related matters.

 

 

 

Negative Covenants:

 

Negative covenants will be subject to materiality thresholds and exceptions to
be agreed, apply to the Borrower and its subsidiaries (including, without
limitation, the Acquired Business) and will be limited to the following:
limitation on asset sales and changes of business; limitation on mergers,
liquidations, dissolutions and other fundamental changes; prohibition on cash
dividends, stock repurchases and redemptions (including, without limitation,
with respect to any preferred stock) (other than *); and provided, further,
that, no payment may be made under clause (i), (ii) or (iii) above unless both
immediately before and after giving effect to such payment, no Default or Event
of Default exists); limitation on indebtedness (including preferred stock of
subsidiaries and guarantees and other contingent obligations); limitation on
investments; limitation on liens and negative pledge with respect to unperfected
collateral; limitation on transactions with affiliates;

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-15

--------------------------------------------------------------------------------

 

 

 

limitation on hedging agreements; prohibition on prepayments of subordinated
indebtedness; limitation on prepayments under the Second Lien Securitization
Bridge Facility; no modification, amendment or waiver of the terms of
constituent documents or the documents governing the IHOP Securitization in any
manner materially adverse to the First Lien Securitization Bridge Lenders
without the consent of the Requisite First Lien Securitization Bridge Lenders
(as defined below); limitation on sale-leaseback transactions; limitation on
restrictions on distributions from subsidiaries and granting of negative pledge
clauses; limitation on change to line of business; limitation on changes in
accounting treatment or reporting practices (with exceptions relating to
accounting changes necessitated by, or desirable in light of, the Acquisition);
limitation on changes in fiscal year; limitation on use of proceeds in
contravention of margin regulations; and limitation on capital expenditures per
fiscal year (to be set at * cushion over forecast).

 

 

 

 

 

“Loan Year” means an annual period commencing on an anniversary of the Closing
Date and ending on the day immediately preceding the next anniversary of the
Closing Date.

 

 

 

*

 

 

 

 

 

Events of Default:

 

Events of Default will apply to the Borrower and its subsidiaries (including,
without limitation, the Acquired Business) and will be limited to: nonpayment,
inaccuracy of representations and warranties, breach of covenants, cross
defaults, loss of material lien on collateral, actual or asserted invalidity of
any guarantee or security document provisions, bankruptcy and insolvency events,
dissolution, ERISA events, material environmental events, material judgments and
change of control (to be defined), in certain cases to be agreed

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-16

--------------------------------------------------------------------------------

 

 

 

subject to grace periods and materiality thresholds or exceptions to be agreed.

 

 

 

Assignments and Participations:

 

Each First Lien Securitization Bridge Lender may assign all or a portion of its
loans and commitments under one or more of the First Lien Securitization Bridge
Facilities. Assignments will require the consent of the Administrative Agent,
the Letter of Credit Issuing Entity (with respect to Securitization Bridge
Revolving Credit Loans and Securitization Bridge Revolving Credit Commitments),
the Swing Line Lender (with respect to Securitization Bridge Revolving Credit
Loans and Securitization Bridge Revolving Credit Commitments) and the Borrower,
which consents shall not be unreasonably withheld; provided that no consent of
the Borrower shall be required during the first twelve months following the
Closing Date or during the occurrence and continuance of a payment or bankruptcy
Event of Default, except for assignments to certain financial institutions
identified in writing by the Borrower to the Sole Arranger prior to the
commencement of syndication of the Securitization Bridge Facilities; and
provided further, that no consents (except from the Letter of Credit Issuing
Entity and the Swing Line Lender (with respect to Securitization Bridge
Revolving Credit Loans and Securitization Bridge Revolving Credit Commitments))
shall be required for an assignment to an existing First Lien Securitization
Bridge Lender or an affiliate of an existing First Lien Securitization Bridge
Lender. Each assignment (except to other First Lien Securitization Bridge
Lenders or their affiliates) will be in a minimum amount of (i) $5,000,000 in
respect of Securitization Bridge Revolving Credit Loans and Securitization
Bridge Revolving Credit Commitments and (ii) $1,000,000 in respect of First Lien
Securitization Bridge Term Loans. In addition, each First Lien Securitization
Bridge Lender may sell participations in all or a portion of its loans and
commitments under one or more of the First Lien Securitization Bridge
Facilities; provided that no purchaser of a participation shall have (a) the
right to exercise or to cause the selling First Lien Securitization Bridge
Lender to exercise voting rights in respect of the First Lien Securitization
Bridge Facilities (except as to certain customary issues) or (b) the right to
yield protection in an amount exceeding that available to the relevant First
Lien Securitization Bridge Lender.

 

I-17

--------------------------------------------------------------------------------

 

Release of Acquired
Business/Collateral:

 

Concurrently with the consummation of the Applebee’s Securitization, provided
that (i) the aggregate principal amount of securities issued thereunder is not
less than * (which for the avoidance of doubt, includes the amount of any
variable funding note regardless of whether such note is funded) and the gross
proceeds therefrom are applied directly to repay the Securitization Bridge
Facilities in accordance with “Application of Prepayments” above and (ii) the
commitments under the First Lien Securitization Bridge Revolving Credit Facility
have been terminated, the Collateral Agent shall be authorized to release its
lien on the assets of the Acquired Business that will be transferred into the
Applebee’s Securitization in connection therewith.

 

 

 

Expenses and Indemnification:

 

All reasonable out-of-pocket expenses (including but not limited to reasonable
legal fees and expenses of counsel and expenses incurred in connection with due
diligence and travel, courier, reproduction, printing and delivery expenses, but
excluding any such legal fees and expenses of Paul, Weiss, Rifkind, Wharton &
Garrison LLP in connection with its due diligence investigation of the assets
and business of the Borrower and its existing subsidiaries (which, for the
avoidance of doubt, excludes the Acquired Business)) of the Sole Arranger, the
Administrative Agent and the Collateral Agent associated with the syndication of
the First Lien Securitization Bridge Facilities and with the preparation,
execution and delivery, administration, amendment, waiver or modification
(including proposed amendments, waivers or modifications) of the documentation
contemplated hereby are to be paid by the Borrower on demand whether or not the
Closing Date shall occur. In addition, all out-of-pocket expenses (including but
not limited to legal fees and expenses of counsel) of the Securitization Bridge
Lenders, the Administrative Agent and the Collateral Agent for workout
proceedings, enforcement costs and documentary taxes associated with the First
Lien Securitization Bridge Facilities are to be paid by the Borrower on demand.

 

 

 

 

 

The Borrower will indemnify the First Lien Securitization Bridge Lenders, the
Sole Arranger, the Administrative Agent and the Collateral Agent and their
respective affiliates, and hold them harmless from and against all documented
reasonable out-of-pocket costs,

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-18

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expenses (including but not limited to documented reasonable legal fees and
expenses of not more than one counsel plus, if necessary, one local counsel per
jurisdiction) and liabilities arising out of or relating to the transactions
contemplated hereby and any actual or proposed use of the proceeds of any loans
made under the First Lien Securitization Bridge Facilities; provided, however,
that no such person will be indemnified for costs, expenses or liabilities
(i) to the extent determined by a court of competent jurisdiction to have been
incurred by reason of the gross negligence, willful misconduct or bad faith of,
or material breach of the Securitization Bridge Documentation by, such person or
(ii) arising out of or in connection with any claim, litigation, investigation
or proceeding that does not involve an act or omission of the Borrower or any of
its affiliates and that is brought by an indemnified person against any other
indemnified person.

 

 

 

Yield Protection, Taxes
and Other Deductions:

 

The First Lien Securitization Bridge Documentation will contain yield protection
provisions, customary for facilities of this nature, protecting the First Lien
Securitization Bridge Lenders in the event of breakage losses, reserve and
capital adequacy requirements.

 

 

 

 

 

All payments are to be free and clear of any present or future taxes,
withholdings or other deductions whatsoever (other than income and franchise
taxes in the jurisdiction of the First Lien Securitization Bridge Lender’s
applicable lending office). The First Lien Securitization Bridge Lenders will
use reasonable efforts to minimize to the extent possible any applicable taxes
and the Borrower will indemnify (subject to customary exceptions) the relevant
First Lien Securitization Bridge Lenders and the Administrative Agent for such
taxes paid by such First Lien Securitization Bridge Lenders or the
Administrative Agent.

 

 

 

Requisite First Lien Securitization
Bridge Lenders:

 

First Lien Securitization Bridge Lenders holding at least a majority of total
loans and commitments under the First Lien Securitization Bridge Facilities (the
“Requisite First Lien Securitization Bridge Lenders”), with certain amendments
requiring the consent of First Lien Securitization Bridge Lenders holding a
greater percentage (or each First Lien Securitization Bridge Lender affected) of
the total loans and commitments under the First Lien Securitization

 

I-19

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Bridge Facilities (subject to a customary “yank-a-bank” provision).

 

 

 

Certain Securitization
Related Provisions:

 

If (1) the Applebee’s Securitization will result in the repayment of * (less any
undrawn commitment amounts under the Securitization Bridge Facilities at the
time the Applebee’s Securitization closes) in aggregate principal amount of the
Securitization Bridge Facilities or (2) 100% of the Securitization Bridge
Lenders shall have otherwise consented to the closing of the Applebee’s
Securitization, then and only then each First Lien Securitization Bridge Lender
covenants, for itself and for the express benefit of the secured parties under
the Applebee’s Securitization:

 

 

 

 

 

(i) that it shall have no recourse whatsoever to any of the collateral
underlying the Applebee’s Securitization;

 

 

 

 

 

(ii) that it will not (and hereby waives any right to) contest or support any
other person in contesting, in any proceeding (including any insolvency or
liquidation proceeding), (x) the priority, validity, perfection or
enforceability of the first priority perfected security interest held by or on
behalf of the secured parties under the Applebee’s Securitization, as the case
may be, and/or (y) the validity or enforceability of the provisions of any of
the transaction documents underlying the Applebee’s Securitization; and

 

 

 

 

 

(iii) so long as any amounts are outstanding under the Applebee’s
Securitization, and for a period of one year plus one day (or, if longer, the
applicable preference period then in effect) after payment in full of all
amounts payable in connection with the transaction documents underlying the
Applebee’s Securitization, including but not limited to the notes issued under
the Applebee’s Securitization, such First Lien Securitization Bridge Lenders,
agents and letter of credit issuers shall not institute against any of the
subsidiaries of the Borrower that are bankruptcy remote securitization entities
(or are intended to be bankruptcy remote securitization entities) under the
Applebee’s Securitization or their bankruptcy remote subsidiaries (such actual
or intended bankruptcy remote entities and their bankruptcy remote subsidiaries,
the “Applebee’s Securitization Entities”) , or join or assist any other person
in instituting against any of the Applebee’s Securitization Entities, any
bankruptcy, reorganization, arrangement, insolvency or liquidation

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

I-20

--------------------------------------------------------------------------------

 

 

 

proceedings, or other proceedings under any applicable federal or state
bankruptcy or similar law.

 

 

 

 

 

Each First Lien Securitization Bridge Lender covenants, for itself and for the
express benefit of the secured parties under the IHOP Securitization (which for
all purposes of this provision, includes the Additional IHOP Securitization
Securities):

 

 

 

 

 

(i) that it shall have no recourse whatsoever to any of the collateral
underlying the IHOP Securitization;

 

 

 

 

 

(ii) that it will not (and hereby waives any right to) contest or support any
other person in contesting, in any proceeding (including any insolvency or
liquidation proceeding), (x) the priority, validity, perfection or
enforceability of the first priority perfected security interest held by or on
behalf of the secured parties under the IHOP Securitization, as the case may be,
and/or (y) the validity or enforceability of the provisions of any of the
transaction documents underlying the IHOP Securitization; and

 

 

 

 

 

(iii) so long as any amounts are outstanding under the IHOP Securitization, and
for a period of one year plus one day (or, if longer, the applicable preference
period then in effect) after payment in full of all amounts payable in
connection with the transaction documents underlying the IHOP Securitization,
including but not limited to the notes issued under the IHOP Securitization,
such First Lien Securitization Bridge Lenders, agents and letter of credit
issuers shall not institute against any of the subsidiaries of the Borrower that
are bankruptcy remote securitization entities (or are intended to be bankruptcy
remote securitization entities) under the IHOP Securitization or their
bankruptcy remote subsidiaries (such actual or intended bankruptcy remote
entities and their bankruptcy remote subsidiaries, the “IHOP Securitization
Entities”) , or join or assist any other person in instituting against any of
the IHOP Securitization Entities, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any applicable
federal or state bankruptcy or similar law.

 

 

 

Governing Law and Forum:

 

The laws of the State of New York. Each party to the First Lien Securitization
Bridge Documentation will waive the right to trial by jury and will consent to
jurisdiction of the state and federal courts located in The City of New York.

 

I-21

--------------------------------------------------------------------------------

 

Counsel to the Sole Arranger
and the Administrative Agent:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP.

 

I-22

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ANNEX I

 

SUMMARY OF TERMS OF SECOND LIEN SECURITIZATION BRIDGE LOAN FACILITY

 

Borrower:

 

IHOP Corp.

 

 

 

Exclusive Structuring Advisor:

 

Lehman Brothers Inc. (“Lehman Brothers”).

 

 

 

Sole Arranger and Sole
Bookrunner:

 

Lehman Brothers.

 

 

 

Second Lien Securitization
Bridge Lenders:

 

The Initial Securitization Bridge Lender or a syndicate of banks, financial
institutions and other entities arranged by the Sole Arranger (collectively, the
“Second Lien Securitization Bridge Lenders”); provided that any such syndication
shall comply with the terms and conditions set forth in the Commitment Letter.

 

 

 

Administrative Agent and
Collateral Agent:

 

Lehman Brothers Commercial Bank (“LBCB”) or Lehman Commercial Paper Inc.
(“LCPI”).

 

 

 

Syndication Agent:

 

LBCB, LCPI or one of their affiliates.

 

 

 

Type and Amount of
Facilities:

 

Second Lien Securitization Bridge Loan Facility:

 

A one-year term securitization bridge term loan facility to be made available to
the Borrower in U.S. dollars in the manner provided herein (the “Second Lien
Securitization Bridge Loan Facility”; and the loans made under the Second Lien
Securitization Bridge Facility, the “Second Lien Securitization Bridge Loans”)
in an aggregate principal amount of up to $189,000,000.

 

 

 

Purpose:

 

Proceeds of the Second Lien Securitization Bridge Loan Facility will be used on
the Closing Date (as defined below) to finance a portion of the Acquisition, to
effect the Refinancing and to pay fees and expenses in connection therewith.

 

 

 

Closing Date:

 

Same as the First Lien Securitization Bridge Facilities.

 

II-1

--------------------------------------------------------------------------------

 

Definitive Documentation:

 

The terms of the definitive documentation governing the Second Lien
Securitization Bridge Loan Facility (the “Second Lien Securitization Bridge
Documentation”) shall be consistent with the terms and conditions of the
Commitment Letter.

 

 

 

Maturity Dates:

 

Second Lien Securitization Bridge Loan Facility: One year from the Closing Date.

 

If any Second Lien Securitization Bridge Loans (the “Second Lien Initial Loans”)
have not been previously paid in full the date that is one year after the
Closing Date (the “Conversion Date”), subject to the conditions outlined below
under “Condition to Conversion of Second Lien Initial Loans,” such Second Lien
Initial Loans shall be converted into a second lien term loan (each, a “Second
Lien Term Loan” and, together with the Senior Term Loans, the “Term Loans”)
maturing on the fourth anniversary of the Conversion Date (the “Second Lien
Final Maturity Date”). Other than the maturity date, all terms and conditions
set forth herein applicable to the Second Lien Securitization Bridge Loan
Facility shall apply to the Second Lien Term Loan.

 

 

 

Conditions to Conversion of
Second Lien Initial Loans:

 

On the Conversion Date, unless a payment or bankruptcy default has occurred and
is continuing under the Second Lien Initial Loans, the Second Lien Initial Loans
shall be converted into Second Lien Term Loans upon payment of the Conversion
Fee (as defined in the Fee Letter).

 

 

 

Prepayment Premium
on Converted Loans:

 

Any optional prepayment of the Second Lien Term Loans prior to the first
anniversary of the Conversion Date shall be accompanied by a prepayment premium
equal to 2% of the aggregate principal amount prepaid, and any optional
prepayment occurring on or after the first anniversary and before the second
anniversary of the Conversion Date shall be accompanied by a prepayment premium
equal to 1% of the aggregate principal amount prepaid.

 

 

 

Availability:

 

A single drawing may be made on the Closing Date of up to the full amount of the
Second Lien Securitization Bridge Facility; provided, that if the Applebee’s
Securitization is consummated on the Closing Date, the amount of the Second Lien
Securitization Bridge Facility shall be reduced by the greater of (x) * and
(y) the extent to which the aggregate principal amount of securities issued in
the Applebee’s Securitization exceeds * (which for the avoidance of doubt,
includes the amount of any variable funding note regardless of whether such note
is funded).

 

 

 

Amortization:

 

None.

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

II-2

--------------------------------------------------------------------------------

 

Interest on Second Lien
Securitization Bridge Loans:

 

At the Borrower’s option, Second Lien Securitization Bridge Term Loans will bear
interest based on the Base Rate or LIBOR; provided that until the date that is
30 days following the Closing Date, the Second Lien Securitization Bridge Loans
shall be made and maintained as Base Rate Loans or LIBOR Loans having an
interest period of one month, as selected by the Borrower, as described below:

 

A. Base Rate Option

 

Interest will be at the Base Rate plus the applicable Interest Margin (as
defined below), calculated on the basis of the actual number of days elapsed in
a year of 365/66 days and payable quarterly in arrears. The Base Rate is defined
as the higher of (i) the Federal Funds Rate, as published by the Federal Reserve
Bank of New York, plus 1/2 of 1% and (ii) the prime commercial lending rate as
set forth on Reuters’ Telerate Page 5. Second Lien Securitization Bridge Loans
bearing interest based on the Base Rate shall be referred to herein as “Base
Rate Loans.”

 

Base Rate borrowings will require one business day’s prior notice and will be in
minimum amounts to be agreed upon

 

B. LIBOR Option

 

Interest will be determined for periods (“Interest Periods”) of one, two, three
or six months (as selected by the Borrower) and will be at an annual rate equal
to the London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of
U.S. dollars, plus the applicable Interest Margin. LIBOR will be determined by
the Administrative Agent at the start of each Interest Period and will be fixed
through such period. Interest will be paid at the end of each Interest Period
or, in the case of Interest Periods longer than three months, quarterly, and
will be calculated on the basis of the actual number of days elapsed in a year
of 360 days. LIBOR will be adjusted for maximum statutory reserve requirements
(if any). Second Lien Securitization Bridge Loans bearing interest based on
LIBOR shall be referred to herein as “LIBOR Loans.”

 

LIBOR borrowings will require three business days’ prior notice and will be in
minimum amounts to be agreed upon.

 

 

 

Default Interest:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Interest Margins:

 

The Interest Margins applicable to the Second Lien Securitization Bridge Loans
will be the percentages set forth in the following table *

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

II-3

--------------------------------------------------------------------------------

 

 

 

*

 

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

II-4

--------------------------------------------------------------------------------

 

 

 

*

 

 

 

*

 

 

 

 

 

Mandatory Prepayments:

 

Same as the First Lien Securitization Bridge Facility, but subject to the
Intercreditor Agreement.

 

 

 

Optional Prepayments:

 

Permitted in whole or in part only after the First Lien Securitization Bridge
Facilities shall have been repaid in full and the commitments thereunder
terminated, with one business day’s prior notice in the case of Base Rate Loans
and three business day’s prior notice in the case of LIBOR Loans, but without
premium or penalty (except LIBOR breakage costs in the case of a prepayment
other than on the last day of the relevant interest period and except as set
forth above under the heading “Prepayment Premium on Converted Loans”), and
including accrued and unpaid interest, subject to limitations as to minimum
amounts of prepayments to be agreed.

 

 

 

Application of Prepayments:

 

All mandatory prepayments will be applied, first, to the prepayment of the First
Lien Securitization Bridge Term Loans, second, to the repayment of the First
Lien Securitization Bridge Revolving Credit Facility (with no permanent
reduction in the commitments thereof) and third, to the prepayment of the Second
Lien Securitization Bridge Loans; provided, that a mandatory prepayment
described in clause (b) of “Mandatory Prepayments” in Annex I to the Commitment
Letter in connection with a release of the Collateral Agent’s lien on the assets
of the Acquired Business (as described in “Release of Acquired Business
Collateral” in Annex I to the Commitment Letter) will be applied, first, to the
prepayment of the First Lien Securitization Bridge Term Loans, second, to the
repayment of the First Lien Securitization Bridge Revolving Credit Facility
(with a corresponding permanent reduction in the commitments thereof) and third,
to the prepayment of the Second Lien Securitization Bridge Term Loans. No
optional prepayments may be applied to the Second Lien Securitization Bridge
Term Loans until all extensions of credit under the First Lien Securitization
Bridge Facilities shall have been paid in full and all commitments thereunder
shall have been terminated. Prepayments of the Second Lien Securitization Bridge
Loans may not be reborrowed.

 

Subject to the foregoing, optional and mandatory prepayments shall be applied
pursuant to usual and customary provisions for applications of prepayments.

 

 

 

Guarantees:

 

Same as First Lien Securitization Bridge Facilities, subject to the
Intercreditor Agreement.

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

II-5

--------------------------------------------------------------------------------

 

Security:

 

Same as First Lien Securitization Bridge Facilities, provided that the Second
Lien Securitization Bridge Loan Facility will be secured by a second-priority
security interest in the Collateral.

 

The priority of the security interests and the related creditor rights among the
First Lien Securitization Bridge Facilities and the Second Lien Securitization
Bridge Loan Facility will be set forth in the Intercreditor Agreement to be
agreed upon.

 

 

 

Conditions to Initial
Borrowings:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Conditions to Each Borrowing
(other than the
Initial Borrowings):

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Representations and
Warranties:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Affirmative Covenants:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Negative Covenants *:

 

Same as the First Lien Securitization Bridge Facilities, but less restrictive in
certain respects to be agreed.

 

 

 

Events of Default:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Assignments and
Participations:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Release of Securitization
Collateral:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Expenses and
Indemnification:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Yield Protection, Taxes
and Other Deductions:

 

The Second Lien Securitization Bridge Documentation will contain yield
protection provisions, customary for facilities of this nature, protecting the
Second Lien Securitization Bridge Lenders in the event of breakage losses,
reserve and capital adequacy requirements.

 

All payments are to be free and clear of any present or future taxes,
withholdings or other deductions whatsoever (other than income and franchise
taxes in the jurisdiction of the Second Lien Securitization Bridge Lender’s
applicable lending office). The Second Lien Securitization Bridge Lenders will
use reasonable efforts to minimize to the extent possible any applicable taxes
and the Borrower will indemnify (subject to customary exceptions) the relevant
Second Lien Securitization Bridge Lenders and the Administrative Agent for such
taxes paid by such Second Lien Securitization Bridge Lenders or the

 

__________________

*  This information has been omitted based on a request for confidential
treatment. The omitted portions have been separately filed with the Securities
and Exchange Commission.

 

II-6

--------------------------------------------------------------------------------

 

 

 

Administrative Agent.

 

 

 

Requisite Second Lien
Securitization Bridge
Lenders:

 

Second Lien Securitization Bridge Lenders holding at least a majority of total
loans under the Second Lien Securitization Bridge Loan Facility (the “Requisite
Second Lien Securitization Bridge Lenders”), with certain amendments requiring
the consent of Second Lien Securitization Bridge Lenders holding a greater
percentage (or each Second Lien Securitization Bridge Lender affected) of the
total loans under the Second Lien Securitization Bridge Loan Facility (subject
to a customary “yank-a-bank” provision).

 

 

 

Certain Securitization
Related Provisions:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Governing Law and Forum:

 

Same as the First Lien Securitization Bridge Facilities.

 

 

 

Counsel to the Sole Arranger and the
Administrative Agent:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP.

 

II-7

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ANNEX III

 

CONDITIONS TO CLOSING

 

The commitments of the Initial Securitization Bridge Lender under the Commitment
Letter and the agreement of the Sole Arranger to perform the services described
in the Commitment Letter with respect to each of the Securitization Bridge
Facilities are subject to the conditions described or referred to under the
heading “Conditions” in the Commitment Letter, including the satisfaction or
waiver of each of the conditions precedent set forth below, it being understood
that there shall be no conditions to closing or the initial funding of the
Securitization Bridge Facilities other than those expressly described or
referred to under the heading “Conditions” in the Commitment Letter, including
those set forth below.

 

1.             As a condition to the availability of the Securitization Bridge
Facilities (but subject to the second paragraph under the heading “Conditions”
in the Commitment Letter), there shall have occurred the negotiation, execution
and delivery of definitive documentation, including guarantees, security
documents, customary opinions, certificates and other closing documentation and
deliveries as the Sole Arranger shall reasonably request with respect to the
Securitization Bridge Facilities, in each case, reflecting and consistent with
the terms and conditions set forth herein and in Annex I and Annex II hereto, as
applicable, and otherwise mutually agreed by the Sole Arranger and the Borrower
(such documentation, together with the Commitment Letter and the Fee Letter,
collectively, the “Securitization Bridge Documentation”).

 

2.             The Equity Financing shall have been completed. The Acquisition
and the other Transactions shall be consummated concurrently with the initial
funding of the Securitization Bridge Facilities in accordance with the
Acquisition Agreement (and no provision of the Acquisition Agreement shall have
been waived or amended in a manner that is material and adverse to the Sole
Arranger or the Securitization Bridge Lenders unless consented to by the Sole
Arranger, which consent shall not be unreasonably withheld, conditioned or
delayed; it being agreed that (i) any amendment or waiver of Section 2.02, the
provisions of the first two sentences of Section 6.09(a) and Section 6.09(b) of
the Acquisition Agreement would be material and adverse to the Securitization
Bridge Lenders, (ii) the Borrower shall not consent to a Closing Date under
Section 2.02 of the Acquisition Agreement that would occur earlier than the
second business day after the date of completion of the “Bridge Marketing
Period” (as defined in the Acquisition Agreement) without the prior written
consent of the Sole Arranger, such consent not to be unreasonably withheld,
conditioned or delayed and (iii) the Borrower shall consult with the Sole
Arranger prior to determining whether an early commencement of the Bridge
Marketing Period is reasonably practicable in accordance with Section 6.09(b) of
the Acquisition Agreement).

 

3.             The Sole Arranger shall have received reasonably satisfactory
evidence that all loans outstanding under, and all other amounts due in respect
of, existing indebtedness of the Borrower and its subsidiaries shall have been
repaid in full (or satisfactory arrangements shall have been made for such
repayment) and the commitments under all such indebtedness shall have been
permanently terminated and all liens and security interests related thereto have
been permanently released (other than the indebtedness and related liens (if
any) described in the next sentence). After giving effect to the Transactions,
none of the Borrower or any of its subsidiaries shall have outstanding any
indebtedness other than (a) the loans and other extensions of credit under the
Securitization Bridge Facilities, (b) capital lease obligations of the Borrower
and its subsidiaries to be agreed, (c) indebtedness in respect of the IHOP
Securitization incurred in connection with Series 2007-1, Series 2007-2 and
Series 2007-3 and (d) purchase money indebtedness, trade payables, capital
leases or letters of credit issued to support insurance policies, in each case,
in the ordinary course of business and other indebtedness permitted to be
incurred by the Acquired Business pursuant to the Acquisition Agreement as in
effect on the date hereof.

 

4.             The Borrower shall have obtained all necessary consents and
waivers in order for the Borrower and its subsidiaries to consummate the
Securitization Bridge Facilities (including the

 

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contemplated borrowings thereunder) and issue the Additional IHOP Securitization
Securities, each in form and substance reasonably satisfactory to the Sole
Arranger, and such consents and waivers shall be in full force and effect. The
Sole Arranger acknowledges that if FGIC provides consent to the amendments and
waivers to the IHOP Securitization on terms substantially consistent with the
terms of the Commitment Letter dated July 15, 2007 between IHOP and FGIC as in
effect on the date of the Commitment Letter (which letter has previously been
provided to the Sole Arranger), then such FGIC consent shall be satisfactory to
the Sole Arranger.

 

5.             The Borrower shall have entered into one or more interest rate
derivatives each with an expiration date of not less than 12 months from the
Closing Date in form and substance acceptable to the Sole Arranger. The Sole
Arranger acknowledges that the form of derivative attached as Exhibit I to this
Commitment Letter is acceptable to the Sole Arranger.

 

6.             [Reserved.]

 

7.             The Borrower shall have delivered to the Sole Arranger (a)
audited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of each of the Borrower and the Target for
the three most recently completed fiscal years ended at least 90 days prior to
the Closing Date, in each case, prepared in accordance with GAAP, (b) unaudited
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of each of the Borrower and the Target for each subsequent
fiscal quarter ended at least 45 days prior to the Closing Date (which shall
have been reviewed by the independent registered public accountants of the
Borrower or the Target, as applicable, as provided in Statement of Auditing
Standards 100 and prepared in accordance with GAAP) and (c) a pro forma
consolidated balance sheet and related pro forma consolidated statement of
income of the Borrower as of and for the four fiscal quarter period ending on
the last day of the most recently completed fiscal quarter ended at least 45
days prior to the Closing Date, prepared after giving effect to the Transactions
as if the Transactions had occurred as of such date (in the case of such balance
sheet) or at the beginning of such period (in the case of the statement of
income), in each case including such adjustments as the Borrower and the Sole
Arranger mutually agree are appropriate.

 

8.             [Reserved.]

 

9.             The Sole Arranger shall have received a customary solvency
certificate from the chief financial officer for the Borrower.

 

10.           The Sole Arranger, the Administrative Agent and the Initial
Securitization Bridge Lender shall have received all fees and expenses required
to be paid on or before the Closing Date.

 

11.           The Collateral Agent shall have (or shall substantially
simultaneously with the Closing Date and the initial funding of the
Securitization Bridge Facilities be granted) (i) a first priority (subject to
permitted encumbrances) lien on and security interest in the Collateral with
respect to the First Lien Securitization Bridge Facilities and (ii) a second
priority (subject to permitted encumbrances, including the lien securing the
First Lien Securitization Bridge Facilities) lien on and security interest in
the Collateral with respect to the Second Lien Securitization Bridge Facility,
in each case as required in the Securitization Bridge Term Sheets under the
heading “Security”, all documents and instruments required to perfect such
security interests shall have been executed and be in proper form for filing;
provided, however, that with respect to any collateral (other than (x) the
pledge and perfection of the security interests in capital stock of U.S.
subsidiaries held by the Borrower or any Guarantor, (y) other assets pursuant to
which a lien may be perfected by the filing of a financing statement under the
Uniform Commercial Code and (z) owned intellectual property registered in the
U.S. Copyright Office or the U.S. Patent and Trademark Office pursuant to which
a lien may be perfected by the filing of an appropriate

 

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notice of security interest in such office) that is not provided on the Closing
Date after the Borrower’s use of commercially reasonable best efforts to do so,
the delivery of such collateral shall not constitute a condition precedent to
the availability of the Securitization Bridge Facilities on the Closing Date but
shall be required to be delivered after the Closing Date in accordance with the
Securitization Bridge Term Sheets or pursuant to other arrangements to be
mutually agreed.

 

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