MEMORANDUM OF UNDERSTANDING
                           ---------------------------

         This MEMORANDUM OF  UNDERSTANDING is made effective as of May 12, 2003,
by and between ROBERT T. STEINKAMP  ("Employee")  and APPLEBEE'S  INTERNATIONAL,
INC., a Delaware Corporation ("Company") (collectively "the parties").

         WHEREAS,  the parties  desire to set forth their  understanding  of the
terms and  conditions of (1)  Employee's  continued  full-time  employment  with
Company as Company's General Counsel,  (2) Employee's  continued employment with
Company after conclusion of Employee's full-time employment with Company as Vice
President, General Counsel and corporate Secretary and (3) the general terms and
conditions of Employee's separation from Company.

         NOW,  THEREFORE,  in consideration of the premises and the mutual terms
and conditions hereof, Company and Employee hereby agree as follows:

         1.   Employee's Full-Time Employment With Company. Regarding Employee's
continued full-time employment with Company as Company's General Counsel:

              (a)  Employee shall remain employed full-time through December 31,
         2003 or such later date in 2004 as  determined  by the Company so as to
         give Employee's successor as General Counsel not less than 90 days full
         time access to Employee.  Employee  will continue to serve as Company's
         General Counsel during 2003 and, if  appropriate,  a part of 2004,until
         such  time  as  Company  requests  he  resign  that  position.  At  the
         discretion of Company, following his resignation as General Counsel and
         the termination of his full time  employment,  Employee may provide his
         services while working at home or at the Company's offices;

              (b) During his continued full-time employment,  Employee shall (1)
         receive  a  his  current  base  salary;  (2)  receive  any  2003  bonus
         applicable  to  the  General  Counsel  position  at  the  normal  bonus
         percentages, and prorated for 2004, or a portion thereof, if he remains
         on full time status in 2004 and subject to the terms and  conditions of
         the Company's bonus plan; (3) be eligible for the benefits attendant to
         the General Counsel position, including, but not limited to, applicable
         medical, dental, drug, and vision coverage; and (4) be eligible for any
         and all other benefits or  perquisites  of employment  attendant to the
         General Counsel position; (5) not be eligible to receive option grants;
         and (6) not be eligible for salary increases; and

              (c)  Employee  understands   Employee's  continued  employment  is
         subject to Company's  employment  practices  and  policies  during such
         continued employment and is at all times at-will in all respects, which
         means,  among other things, it is of not of any definite  duration,  it
         can be  terminated  at any time for any lawful reason or for no reason,
         and it remains subject to Employee's continued successful  performance,
         in Company's  sole and  exclusive  discretion,  of the General  Counsel
         duties and  responsibilities  and any other duties and responsibilities
         Employee is assigned from time to time.

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         2.   Employee's Post  Full-Time  Employment  With  Company.   Regarding
Employee's continued employment with Company following the later of December 31,
2003 or not less than 90 days  after the  Company's  employment  of a  successor
General Counsel (the "Commencement Date"):

              (a)  From the Commencement  Date through the last day of the month
         eigthteen (18) full months thereafter (the Part Time Period"), Employee
         shall  continue  to be employed by  Company,  during  which  employment
         Employee  shall (1) perform work for Company,  up to 25 hours per week,
         as requested by Company and as mutually agreed by Employee and Company,
         including  writing  a history  of the  Company;  (2)  receive a monthly
         salary  of  $10,000,   less  applicable  deductions  and  withholdings,
         according to Company's then existing payroll  schedule;  and (3) remain
         eligible to elect coverage under Company's  employee  medical,  dental,
         drug,  and vision  plans as  Employee  is enrolled in such plans on the
         business day immediately  preceding the Commencement Date, with Company
         paying the employer portion of premiums for any such elected  coverage.
         In addition, Employee shall be entitled to be reimbursed for any normal
         business expenses  incurred,  under the Company's expense policies then
         in place,  including  travel,  for  performing his work during the Part
         Time Period;

              (b)  Effective  the day  following the end of the Part Time Period
         until he  reaches  the month in which he turns age 65,  Employee  shall
         remain  eligible to elect coverage under  Company's  employee  medical,
         dental, drug, and vision plans as Employee is enrolled in such plans on
         his  final  day of  full-time  employment  with  Employee  paying  both
         employee  and  company  portion of the  premiums  for any such  elected
         coverage; and

              (c)  Employee understands  Employee's  continued  employment  with
         Company is subject  to  Company's  employment  practices  and  policies
         applicable to such position  during such employment and is at all times
         at-will in all respects,  which means, among other things, it is of not
         of any  definite  duration,  it can be  terminated  at any time for any
         lawful  reason or for no reason,  and it remains  subject to Employee's
         continued  satisfactory  performance,  in Company's  sole and exclusive
         discretion,  of duties and  responsibilities  Employee is assigned from
         time to time.

         3.   Employee's Separation  From  Company.  Provided  Employee  remains
employed by Company as  contemplated by paragraphs 1 and 2 of this Memorandum of
Understanding,  Employee  agrees he will retire from  Company at the end of said
Part Time Period,  and thereby be entitled to any and all applicable  retirement
benefits.  Employee further agrees that, if requested,  upon any separation from
Company,  he will fully  release and forever  discharge  Company by  executing a
separation agreement containing a release similar to that set forth below:

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              Employee (and anyone acting on Employee's  behalf) hereby RELEASES
         AND FOREVER  DISCHARGES  Company  (including  all of its current and/or
         former insurers, current and/or former directors, current and/or former
         officers,  current  and/or former  fiduciaries,  current  and/or former
         employees,   current  and/or  former  agents,   current  and/or  former
         successors,  current  and/or  former  assigns,  current  and/or  former
         related corporations,  current and/or related entities, and any and all
         other entities currently and/or formerly  affiliated with or related to
         it (collectively  hereinafter  "Company  Affiliates")),  to the maximum
         extent permitted by law, from any and all claims,  demands,  and causes
         of  action  ("claims")  Employee  had or may have had  against  Company
         (including  any Company  Affiliates) up to the date Employee signs this
         Agreement,  which claims  include by way of  illustration,  but are not
         limited to, claims for attorney's fees; claims under any local,  state,
         and/or federal statutory or common law, including,  but not limited to,
         claims for  libel,  slander,  defamation,  breach of  contract,  and/or
         wrongful  termination;  claims for discrimination,  harassment,  and/or
         retaliation under any local,  state, and/or federal statutory or common
         law, including,  but not limited to, any and all claims under 42 U.S.C.
         ss.ss.  1981 and 1983,  Title VII of the Civil  Rights  Act of 1964 (as
         amended), the Civil Rights Act of 1991, the Americans With Disabilities
         Act, the Age Discrimination in Employment Act, the Employee  Retirement
         Income  Security  Act, the Family and Medical Leave Act, the Kansas Act
         Against Discrimination, and the Missouri Human Rights Act; claims under
         the U.S.  Constitution  and/or any state  constitution,  including  the
         State of Kansas  and the State of  Missouri;  claims  under any  local,
         state, or federal public policy;  claims under any other local,  state,
         and/or federal  statutory or common law not specifically  referenced in
         this  paragraph;  and claims under any other  agreement with Company or
         under any of Company's policies and/or practices.

         4.   Restrictions on Employee's Activities. Employee agrees immediately
to execute the Confidentiality,  Non-Solicitation, and Non-Competition Agreement
attached hereto.


                             /s/ Robert T. Steinkamp
Dated:  May 12, 2003       -----------------------------------------------------
                           Robert T. Steinkamp




Dated:  May 12, 2003       Applebee's International, Inc.

                                  /s/ Lloyd L. Hill
                           By:  ------------------------------------------------
                           Title:


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