Document:

Exhibit 10.34

 

Execution Copy

 

$1,794,000,000

 

APPLEBEE’S
ENTERPRISES LLC

APPLEBEE’S
IP LLC

AND THE RESTAURANT HOLDERS LISTED HEREIN

$350,000,000 7.2836% Fixed Rate Series 2007-1
Class A-2-I Senior Notes

 

$675,000,000 6.4267% Fixed Rate Series 2007-1
Class A-2-II-A Senior Notes

 

$650,000,000 7.0588% Fixed Rate Series 2007-1
Class A-2-II-X Senior Notes

 

$119,000,000 8.4044% Fixed Rate Series 2007-1
Class M-1 Subordinated Notes

 

PURCHASE AGREEMENT

 

November 29,
2007

 

Lehman Brothers Inc.

745 Seventh Avenue

New York, New York  10019

Ladies and Gentlemen:

 

APPLEBEE’S ENTERPRISES LLC,
a Delaware limited liability company (the “Master Issuer”), APPLEBEE’S
IP LLC, a Delaware limited liability company (the “IP Holder”) and each
of the entities listed on Schedule A-1 herein (collectively, the “Restaurant
Holders”, and together with the Master Issuer and the IP Holder, the “Co-Issuers”
and each a “Co-Issuer”), propose, upon the terms and conditions set
forth in this agreement (the “Agreement”), to issue and sell U.S.
$350,000,000 principal amount of their Series 2007-1 Class A-2-I
Notes, U.S. $675,000,000 principal amount of their Series 2007-1 Class A-2-II-A
Notes, U.S. $650,000,000 principal amount of their Series 2007-1 Class A-2-II-X
Notes and U.S. $119,000,000 principal amount of their Series 2007-1 Class M-1
Subordinated Notes (collectively, the “Securities”), which will be
guaranteed (each, a “Guarantee”) unconditionally and irrevocably by
Applebee’s Holdings LLC, a Delaware limited liability company (“Holdings”),
pursuant to a Guarantee and Collateral Agreement (the “Holdings G&C
Agreement”), to be dated as of the Closing Date (as defined herein) among
Holdings and Wells Fargo Bank National Association, as trustee (the “Trustee”)
and by Applebee’s Franchising, LLC (the “Franchise Holder”, and together
with Holdings, the “Guarantors”) pursuant to a Guarantee and Collateral
Agreement, to be dated as of the Closing Date (the “Franchise Holder G&C
Agreement”, and together with the Holdings G&C Agreement, the “G&C
Agreements”) among the Franchise Holder and the Trustee. The Securities,
together with the Guarantees, are collectively referred to as the “Guaranteed
Securities”. The Securities will be issued pursuant to the Series 2007-1
Supplement, to be dated as of the

 

 

Closing Date (the “Supplement”), by and among
the Co-Issuers and the Trustee, to the Base Indenture, dated as of the Closing
Date (the “Base Indenture” and, together with the Supplement, the “Indenture”),
by and among the Co-Issuers and the Trustee. The Master Issuer is a
wholly-owned subsidiary of Holdings, which is 99%-owned by Applebee’s
International, Inc., a Delaware corporation (“Applebee’s International”),
which will be a wholly-owned subsidiary of IHOP Corp., a Delaware corporation (“IHOP”) and 1%-owned by Applebee’s
Holdings II Corp., a Delaware corporation (“Holdings II”), which is a
wholly-owned subsidiary of Applebee’s International. Applebee’s Services, Inc.,
a Kansas Corporation (the “Servicer”) is a wholly-owned subsidiary of
Applebee’s International. Applebee’s International is entering into this
Agreement as the guarantor of the obligations of the Servicer under the
transaction documents to which it is a party. IHOP is entering into this
Agreement as the guarantor of the obligations of Applebee’s International under
the transaction documents to which it is a party. The Co-Issuers, the
Guarantors and the Parent Companies (as defined below) hereby confirm their
agreement with Lehman Brothers Inc. (the “Initial Purchaser”) concerning
the purchase of the Securities from the Co-Issuers by the Initial Purchaser.

 

Pursuant to an Agreement
and Plan of Merger, dated as of July 15, 2007 (the “Merger Agreement”), by and among
Applebee’s International, IHOP, CHLC Corp., a Delaware corporation (“Merger Sub”, and together with
Applebee’s International, the Servicer, Holdings, Holdings II and IHOP, the “Parent
Companies”), which is a wholly-owned subsidiary of IHOP, Merger Sub will
merge with and into Applebee’s International (the “Merger”), and each outstanding share of common stock of
Applebee’s International (except for shares held by IHOP and certain other
shares), will be automatically converted into the right to receive U.S. $25.50
in cash, without interest, subject to certain adjustments (the “Acquisition”).
Applebee’s International will be the surviving corporation of the Merger and a
wholly-owned subsidiary of IHOP. IHOP expects to finance the Acquisition with (i) the
cash proceeds from the issuance of the Notes and (ii) cash proceeds from
the issuance of U.S. $245.0 million aggregate principal amount of additional
asset-backed securities (the “IHOP Securitization”) of IHOP Franchising,
LLC, a Delaware limited liability corporation (“IHOP Franchising”) and
IHOP IP, LLC, a Delaware limited liability corporation (“IHOP IP” and,
together with IHOP Franchising, the “IHOP Securitization Entities”).

 

The Securities will be
offered and sold to the Initial Purchaser without being registered under the
Securities Act of 1933 (the “Securities Act”), in reliance upon an
exemption therefrom. The Parent Companies, the Co-Issuers and the Guarantors
have prepared a draft preliminary offering memorandum and a term sheet
describing certain terms of the Guaranteed Securities, together attached hereto
as Exhibit 1 (collectively, the “Draft Offering Memorandum”),
materials circulated in connection with the syndication of bridge loans to
finance the Acquisition listed on Schedule B-1 (collectively, the “Bridge
Syndication Materials”) and the preliminary marketing materials listed on Schedule B-2
(collectively, the “Preliminary Marketing Materials”).

 

Pursuant to Sections 4(a) and
(c) of this Agreement, the Co-Issuers intend to prepare an offering
memorandum, setting forth information concerning the Parent Companies, the
Co-Issuers, certain affiliated entities, the Indenture Collateral and the

 

2

 

Securities. Such offering memorandum, as of the
Initial Date (as defined herein), each Supplemental Date (as defined herein)
and each Bringdown Date (as defined herein) is referred to herein as the “Offering
Memorandum”.

 

Any reference to the
Offering Memorandum or the Draft Offering Memorandum shall be deemed to refer
to and include (i) the most recent
Annual Report on Form 10-K, (ii) the Quarterly Reports on Form 10-Q
filed since the most recent Annual Report on Form 10-K and (iii) the
Current Reports on Form 8-K filed since the most recent Annual Report on Form 10-K,
of each of Applebee’s International and IHOP, filed with the United States
Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a) or
15(d) of the United States Securities Exchange Act of 1934 (the “Exchange
Act”), on or prior to the date of the Offering Memorandum, as the case may be.
All documents filed by Applebee’s International under the Exchange Act and so
deemed to be included in the Draft Offering Memorandum or the Offering
Memorandum, as the case may be, or any amendment or supplement thereto are
hereinafter called the “Applebee’s Exchange Act Documents”. All
documents filed by IHOP under the Exchange Act and so deemed to be included in
the Draft Offering Memorandum or the Offering Memorandum, as the case may be,
or any amendment or supplement thereto are hereinafter called the “IHOP
Exchange Act Documents”, and together with the Applebee’s Exchange Act
Documents, the “Exchange Act Documents.”

 

“Free Writing
Communication” means a written communication (as such term is defined in Rule 405
under the Securities Act) that constitutes an offer to sell or a solicitation
of an offer to buy the Securities and is made by means other than the Offering
Memorandum. “Issuer Free Writing Communication” means a Free Writing
Communication prepared by or on behalf of the Parent Companies or the
Co-Issuers, used or referred to by the Parent Companies or the Co-Issuers or
containing a description of the final terms of the Securities or of their
offering, in the form retained in the Parent Companies or the Co-Issuers
records.

 

Copies of the Offering
Memorandum will be delivered by the Co-Issuers, the Guarantors and the Parent
Companies to the Initial Purchaser pursuant to the terms of this Agreement. Any
references herein to the Offering Memorandum shall be deemed to include all
amendments and supplements thereto. The Co-Issuers, the Guarantors and the
Parent Companies hereby confirm that they have authorized the use of the
Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchaser in accordance with Section 2.

 

For purposes of this
Agreement, (a) capitalized terms used but not defined herein shall have
the meanings given to such terms in the Indenture, (b) the term “business
day” means any day on which the New York Stock Exchange, Inc. is open
for trading, (c) except where otherwise expressly provided, the term “affiliate”
has the meaning set forth in Rule 405 under the Securities Act, (d) the
term “Transaction Documents” means the “Transaction Documents” as
defined in the Base Indenture, plus the “IHOP Residual Certificate” (as defined
in the Base Indenture), and (e) the “Relevant Date” means the date
on which representations, warranties and agreements are being made by the

 

3

 

Co-Issuers, the
Guarantors or the Parent Companies (as the case may be) in accordance with
Section 1(c) or 1(d). The Base Indenture is attached hereto as Exhibit 2.
The Supplement is attached hereto as Exhibit 3.

 

1.                                       Representations, Warranties and
Agreements of the Co-Issuers, the Guarantors and the Parent Companies

 

(a)           Each
of the Co-Issuers and the Guarantors, jointly and severally, represents and
warrants to, and agrees with, the Initial Purchaser, as of the Closing Date,
that:

 

(i)                                     As of the Closing Date, the Draft
Offering Memorandum presents fairly, in all material respects, the business,
results of operations and financial condition of the Co-Issuers and the
Guarantors. As of the Relevant Date, the Offering Memorandum does not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;

 

(ii)                                  As of the Relevant Date, the Offering
Memorandum contains all of the information that, if requested by a prospective
purchaser of the Securities, would be required to be provided to such
prospective purchaser pursuant to Rule 144A(d)(4) under the
Securities Act;

 

(iii)                               The Preliminary Marketing Materials and the Offering
Memorandum have been or will have been prepared by the Co-Issuers, the Parent
Companies and the Guarantors
for use by the Initial Purchaser in connection with the Exempt Resales (as
defined below). No order or decree preventing the use of the Preliminary
Marketing Materials or the Offering Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued, and no proceeding for that
purpose has commenced or is pending or, to the knowledge of the Co-Issuers, or
any of the Guarantors is contemplated;

 

(iv)                              As of the Relevant Date, each of the Base
Indenture, the Supplement, the Guaranteed Securities and the G&C Agreements
will conform in all material respects to the description thereof contained
in the Offering Memorandum;

 

(v)                                 Assuming the accuracy of the
representations and warranties of the Initial Purchaser contained in Section 2
and their compliance with the agreements set forth therein, it is not
necessary, in connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the Securities by the
Initial Purchaser in the manner contemplated by this Agreement and the
Indenture, to register the Guaranteed Securities under the Securities Act or to
qualify the Indenture or the G&C Agreements under the Trust Indenture Act
of 1939, as amended;

 

(vi)                              Each of the Co-Issuers and the Guarantors
has been duly incorporated as a corporation or formed as a limited liability
company, as the case may

 

4

 

be, and is validly existing and in good standing under the laws of the
jurisdiction of its formation, is qualified to do business and is in good
standing as a foreign corporation or limited liability company in each
jurisdiction in which the ownership or lease of property or the conduct of its
business requires such qualification except for such failures to qualify to do
business or be in good standing as a foreign corporation or limited liability
company as are not reasonably likely to result in a Material Adverse Effect,
and has the requisite corporate power and authority or the requisite power and
authority under its operating agreement, as the case may be, to own or
hold its properties and to conduct the business in which it is engaged as
described in the Draft Offering Memorandum (as of the Closing Date) or the
Offering Memorandum (as of the Relevant Date);

 

(vii)                           Each of the Co-Issuers and the Guarantors has the
requisite corporate power and authority or the requisite limited liability
company power and authority under its operating agreement, as the case may be,
to execute and deliver this Agreement, the Guaranteed Securities, the Indenture
and any other Transaction Document to which it is a party and perform its
obligations hereunder and thereunder;

 

(viii)                        No Co-Issuer or Guarantor is in violation of (i) its
respective Charter Documents, (ii) any Requirements of Law with respect to
such Co-Issuer or Guarantor or (iii) any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which any of Co-Issuer or
Guarantor is a party or by which either it or its assets is bound (each, a “Contractual
Obligation”) except, solely with respect to clauses (ii) and
(iii), to the extent such violation could not reasonably be expected to
result in a Material Adverse Effect. The execution and delivery of this
Agreement and the other Transaction Documents, the application of the proceeds
from the sale of the Securities as described herein, in the Draft Offering
Memorandum (as of the Closing Date) and in the Offering Memorandum (as of the
Relevant Date) and the incurrence of the obligations and consummation of the
transactions herein and therein contemplated (a) requires no action by or
in respect of, or filing with, any Governmental Authority which has not been
obtained, (b) will not conflict with, or constitute a breach of or default
under, any Charter Documents of any Co-Issuer or Guarantor, and (c) do not
contravene, or constitute a default under, any Requirements of Law with respect
to such Co-Issuer or Guarantor or any Contractual Obligation with respect to
such Co-Issuer or Guarantor or result in the creation or imposition of any Lien
on any property of any Co-Issuer or Guarantor, except for Liens created by the
Transaction Documents and except, in the case of clause (a) and (c),
solely with respect to the Asset Contribution Agreements, the violation of
which could reasonably be expected to have a Material Adverse Effect;

 

(ix)                                Each Transaction Document to which a
Co-Issuer or Guarantor is a party has been duly and validly authorized,
executed and delivered by such Co-Issuer or Guarantor, and, assuming due
authorization, execution and delivery by the other parties thereto, constitutes
the legal, valid and binding obligation of the applicable Co-Issuer or
Guarantor and is enforceable in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors’ rights generally or by general equitable principles, whether
considered in a proceeding at law or in equity and by an implied covenant of
good faith and fair dealing). As of the Relevant Date, each of the

 

5

 

Transaction Documents will conform in all material respects to the
description thereof in the Offering Memorandum;

 

(x)                                   (1) The Transaction Documents are in
full force and effect; (2) there are no outstanding defaults thereunder;
and (3) no events have occurred which, with the giving of notice, the
passage of time or both, would constitute a default thereunder;

 

(xi)                                (a) No Co-Issuer or Guarantor is a
party to any contract or agreement of any kind or nature and (b) no
Co-Issuer or Guarantor is subject to any material obligations or liabilities of
any kind or nature in favor of any third party, including, without limitation,
guarantees, keep-well agreements, dividends, endorsements, letters of credit or
other contingent obligations. No Co-Issuer or Guarantor has engaged in any
activities since its formation (other than those incidental to its formation,
the authorization and the issue of the Guaranteed Securities, the execution of
the Transaction Documents to which such Co-Issuer or Guarantor is a party and
the performance of the activities referred to in or contemplated by such
agreements);

 

(xii)                             This Agreement has been duly authorized, executed and
delivered by the Co-Issuers and the Guarantors and constitutes the legal, valid
and binding obligation of the Co-Issuers enforceable in accordance with its
terms (except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors’ rights generally or by general equitable principles,
whether considered in a proceeding at law or in equity and by an implied
covenant of good faith and fair dealing and except that any indemnification or
contribution provisions herein may be deemed unenforceable);

 

(xiii)                          The Securities have been duly authorized for issuance,
offer and sale by the Co-Issuers as contemplated by this Agreement and, when
authenticated by the Trustee and issued and delivered against payment of the
purchase price therefor, will constitute legal, valid and binding obligations
of the Co-Issuers enforceable in accordance with their terms (except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors’ rights generally or by general equitable principles, whether
considered in a proceeding at law or in equity and by an implied covenant of
good faith and fair dealing);

 

(xiv)                         The Holdings G&C Agreement has been duly and
validly authorized, executed and delivered by Holdings and, assuming due
authorization, execution and delivery by the other parties thereto, constitutes
a legal, valid and binding obligation of Holdings, enforceable against Holdings
in accordance with its terms (except as such enforceability may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors’ rights generally or by general
equitable principles, whether considered in a proceeding at law or in equity
and by an implied covenant of good faith and fair dealing). As of the Relevant
Date, the Holdings G&C Agreement will conform in all material respects
to the description thereof in the Offering Memorandum;

 

6

 

(xv)                            The Franchise Holder G&C Agreement
has been duly and validly authorized by the Franchise Holder, and, assuming due
authorization, execution and delivery by the other parties thereto, when
executed and delivered by a duly Authorized Officer of the Franchise Holder,
will be a legal, valid and binding obligation of the Franchise Holder,
enforceable against it in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors’ rights generally or by general equitable principles, whether
considered in a proceeding at law or in equity and by an implied covenant of
good faith and fair dealing). As of the Relevant Date, the Franchise Holder
G&C Agreement will conform in all material respects to the description
thereof in the Offering Memorandum;

 

(xvi)                         No consent, action by or in respect of, approval or
other authorization of, or registration, declaration or filing with, any
Governmental Authority or other Person is required for the issuance, offer or
sale of the Guaranteed Securities by the Co-Issuers or the Guarantors in
accordance with the terms of this Agreement, the execution, delivery and
performance by the Co-Issuers and the Guarantors of the Guaranteed Securities,
the Indenture, this Agreement and the Transaction Documents (to the extent they
are parties thereto), the application of the proceeds from the sale of the
Securities as described herein, in the Draft Offering Memorandum (as of the
Closing Date) and in the Offering Memorandum (as of the Relevant Date) or for
the consummation by the Co-Issuers and the Guarantors of the transactions
contemplated by this Agreement and the other Transaction Documents or for the
performance of any of the Co-Issuers’ or the Guarantors’ obligations hereunder
or thereunder other than such consents, approvals, authorizations,
registrations, declarations or filings (a) as have been obtained prior to
the Closing Date or as permitted to be obtained subsequent to the Closing Date
or (b) relating to the performance of any Franchise Document the failure
of which to obtain consent is not reasonably likely to have a Material Adverse
Effect;

 

(xvii)                      There is no action, suit, proceeding or investigation
pending against or, to the knowledge of any Co-Issuer or Guarantor, threatened
against or affecting any Co-Issuer or Guarantor or of which any property or
assets of the Co-Issuers or Guarantors is the subject before any court or
arbitrator or any Governmental Authority that would, individually or in the
aggregate, affect the validity or enforceability of this Agreement or any of
the Transaction Documents, materially adversely affect the performance by the
Co-Issuers or the Guarantors of their obligations hereunder or thereunder or
which is reasonably likely to have a Material Adverse Effect;

 

(xviii)                   The Co-Issuers and Guarantors maintain the insurance coverages
described on Schedule 7.12(v) to the Base Indenture, in such amounts
and covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries. All policies of
insurance of the Co-Issuers and Guarantors are in full force and effect and the
Co-Issuers and Guarantors are in compliance with the terms of such policies in
all material respects. None of the Co-Issuers or Guarantors has any reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be 

 

7

 

necessary to continue its business at a cost that would not reasonably
be expected to have a Material Adverse Effect. All such insurance is primary
coverage, all premiums therefor due on or before the date hereof have been paid
in full, and the terms and conditions thereof are no less favorable to the
Co-Issuers or Guarantors than the terms and conditions of insurance maintained
by their affiliates that are not Co-Issuers or Guarantors;

 

(xix)                           (1)  Each Co-Issuer and Guarantor owns and has
good title to its Indenture Collateral, free and clear of all Liens other than
Permitted Liens. The Co-Issuers’ and Guarantors’ rights under the collateral
documents relating to the security interests held by the Secured Parties
constitute general intangibles under the applicable UCC. The Base Indenture and
the G&C Agreements each constitute a valid and continuing Lien on the
Indenture Collateral in favor of the Trustee on behalf of and for the benefit
of the Secured Parties, which Lien on the Indenture Collateral has been
perfected (except as described on Schedule 7.17 to the Base Indenture) and
is prior to all other Liens (other than Permitted Liens), and is enforceable as
such as against creditors of and purchasers from each Co-Issuer and each
Guarantor in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors’ rights generally or by
general equitable principles, whether considered in a proceeding at law or in
equity and by an implied covenant of good faith and fair dealing. The
Co-Issuers and the Guarantors have received all consents and approvals required
by the terms of the Indenture Collateral to the pledge of the Indenture
Collateral to the Trustee under the Base Indenture and under the G&C
Agreements. All action necessary to perfect such first-priority security
interest has been duly taken, except for the filing of mortgages on real
property; and

 

(2)  Other than the security interest granted to
the Trustee under the Base Indenture, pursuant to the other Transaction Documents
or any other Permitted Lien, none of the Co-Issuers and none of the Guarantors
have pledged, assigned, sold or granted a security interest in the Indenture
Collateral. All action necessary (including the filing of UCC-1 financing
statements and filings with the United States Patent and Trademark Office, the
United States Copyright Office or any applicable foreign intellectual property
office or agency) to protect and evidence the Trustee’s security interest in
the Indenture Collateral in the United States will have been duly and
effectively taken consistent with the obligations of Section 7.17(c) of
the Base Indenture, except as described on Schedule 7.17 to the Base
Indenture). No security agreement, financing statement, equivalent security or
lien instrument or continuation statement authorized by any Co-Issuer and any
Guarantor and listing such Co-Issuer or Guarantor as debtor covering all or any
part of the Indenture Collateral is on file or of record in any
jurisdiction in the United States, except in respect of Permitted Liens or such
as may have been filed, recorded or made by such Co-Issuer or such
Guarantor in favor of the Trustee on behalf of the Secured Parties in
connection with the Base Indenture and the G&C Agreements, and no Co-Issuer
or Guarantor has authorized any such filing;

 

(xx)                              Each of the Co-Issuers and each of the
Guarantors possesses all licenses, permits, orders, patents, franchises,
certificates of need and other governmental

 

8

 

and regulatory approvals to own or lease its properties and conduct its
business in the jurisdictions in which such business is transacted as described
in the Draft Offering Memorandum (as of the Closing Date) and the Offering
Memorandum (as of the Relevant Date) with only such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect, and has not
received any notice of proceedings relating to the revocation or modification
of any such license, permit, order or approval, except for those whose
revocation or modification would not, individually or in the aggregate, have a
Material Adverse Effect;

 

(xxi)                           Except as described in the Draft Offering Memorandum
(as of the Closing Date) and the Offering Memorandum (as of the Relevant Date),
no labor disturbance by the employees of the Co-Issuers or the Guarantors
exists or, to the knowledge of the Co-Issuers or any Guarantor, is imminent
that would reasonably be expected to have a Material Adverse Effect;

 

(xxii)                        None of the Securitization Entities has established or
otherwise has any Plan covered by Title IV of ERISA (other than any Restaurant
Holder that may be required to have employees to comply with applicable
law relating to the sale of alcoholic beverages);

 

(xxiii)                     Neither a Reportable Event nor an “accumulated funding
deficiency” (within the meaning of Section 412 of the Code or Section 302
of ERISA) has occurred during the six year period prior to the date on which
this representation is made or deemed made or is reasonably expected to occur
with respect to any Single Employer Plan, and each Plan of any of the
Co-Issuers (including, to the Actual Knowledge of the Co-Issuers and the
Guarantors, a Multiemployer Plan or a multiemployer welfare plan maintained
pursuant to a collective bargaining agreement) has complied in all respects
with the applicable provisions of ERISA, the Code and the constituent documents
of such Plan, except for instances of non-compliance that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred during such six-year period
or is reasonably expected to occur (other than a termination described in Section 4041(b) of
ERISA), and no Lien in favor of the PBGC or a Plan has arisen during such
six-year period or is reasonably expected to arise. Except to the extent that
any such excess could not reasonably be expected to have a Material Adverse
Effect, the present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Except to the extent that such liability could not
reasonably be expected to have a Material Adverse Effect, none of the
Co-Issuers, the Guarantors nor any affiliate thereof have had a complete or
partial withdrawal from any Multiemployer Plan, and the Co-Issuers and the
Guarantors would not become subject to any liability under ERISA if a
Co-Issuer, a Guarantor or any affiliate thereof were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. To the Actual
Knowledge of the Co-Issuers and the Guarantors, no such Multiemployer Plan is
in Reorganization, insolvent or terminating or is reasonably expected to be in

 

9

 

Reorganization, become insolvent or be terminated. Except to the extent
that any such excess could not reasonably be expected to have a Material
Adverse Effect, the present value (determined using actuarial and other
assumptions which are reasonable in respect of the benefits provided and the
employees participating) of the liability of the Co-Issuers, the Guarantors and
each affiliate thereof for post retirement benefits to be provided to their
current and former employees under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA) other than such liability disclosed
in the financial statements of the Co-Issuers and the Guarantors does not, in
the aggregate, exceed the assets under all such Plans allocable to such
benefits. None of the Co-Issuers, the Guarantors or any affiliate thereof has
engaged in a prohibited transaction under Section 406 of ERISA and/or Section 4975
of the Code in connection with any Plan that would subject either Co-Issuer and
the Guarantor to liability under ERISA and/or Section 4975 of the Code
that could reasonably be expected to have a Material Adverse Effect. There is
no other circumstance which may give rise to a liability in relation to
any Plan that could reasonably be expected to have a Material Adverse Effect;

 

(xxiv)                    Each Co-Issuer and Guarantor has filed, or caused to
be filed, all federal, state, local and foreign Tax returns and all other Tax
returns which, to the knowledge of any Co-Issuer, are required to be filed by,
or with respect to the income, properties or operations of, such Co-Issuer or
Guarantor (whether information returns or not), and has paid, or caused to be
paid, all Taxes due, if any, pursuant to said returns or pursuant to any
assessment received by any Co-Issuer or Guarantor or otherwise, except such
Taxes, if any, as are being contested in good faith and by appropriate
proceedings and for which adequate reserves have been set aside in accordance
with GAAP. Except as would not reasonably be expected to have a Material
Adverse Effect, no tax deficiency has been determined adversely to any
Co-Issuer or Guarantor, nor does any Co-Issuer or Guarantor have any knowledge
of any tax deficiencies. Each Co-Issuer or Guarantor has paid all fees and
expenses required to be paid by it in connection with the conduct of its
business, the maintenance of its existence and its qualification as a foreign
entity authorized to do business in each state and each Foreign Country in
which it is required to so qualify, except to the extent that the failure to pay
such fees and expenses is not reasonably likely to result in a Material Adverse
Effect;

 

(xxv)                       There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Co-Issuers or sale by the
Co-Issuers of the Securities;

 

(xxvi)                    All certificates, reports, statements, notices,
documents and other information furnished to the Trustee, Assured
Guaranty Corp, a Maryland stock insurance corporation (“Assured Guaranty”),
or the Initial
Purchaser by or on behalf of the Co-Issuers or Guarantors pursuant to any
provision of the Indenture or any other Transaction Document, or in connection
with or pursuant to any amendment or modification of, or waiver under, the
Indenture or any other Transaction Document, are, at the time the same are so
furnished, complete and correct in all material respects (when taken together
with all other information furnished by or on behalf of the Co-Issuers,
the Guarantors or the Parent Companies) to the Trustee, Assured Guaranty or the Initial

 

10

 

 

Purchaser, as the case may be, and give the Trustee, Assured
Guaranty or the Initial Purchaser, as the case may be, true and accurate
knowledge of the subject matter thereof in all material respects, and the
furnishing of the same to the Trustee, Assured Guaranty or the Initial
Purchaser, as the case may be, shall constitute a representation and
warranty by each Co-Issuer or Guarantor made on the date the same are furnished
to the Trustee, Assured Guaranty or the Initial Purchaser, as the case may be,
to the effect specified herein;

 

(xxvii)                 No Co-Issuer or Guarantor is, after
giving effect to the issuance of the Guaranteed Securities, the transactions
contemplated by the Transaction Documents and the application of the proceeds
from the sale of the Securities as described herein, in the Draft Offering
Memorandum (as of the Closing Date) and in the Offering Memorandum (as of the
Relevant Date), an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended
(the “1940 Act”);

 

(xxviii)              The proceeds of the Securities will not
be used to purchase or carry any “margin stock” (as defined or used in the
regulations of the Board of Governors of the Federal Reserve System, including
Regulations T, U and X thereof) in such a way that could cause the
transactions contemplated by the Transaction Documents to fail to comply with
the regulations of the Board of Governors of the Federal Reserve System,
including Regulations T, U, and X thereof. No Co-Issuer or Guarantor owns or is
engaged in the business of extending credit for the purpose of purchasing or
carrying any margin stock;

 

(xxix)                      No subsidiary of the Co-Issuers is
currently prohibited, directly or indirectly, from paying any dividends to its
parent Co-Issuer, from making any other distribution on such subsidiary’s
capital stock or limited liability company interests, from repaying its parent
Co-Issuer any loans or advances to such subsidiary from its parent Co-Issuer or
from transferring any such subsidiary’s property or assets to its parent
Co-Issuer or any other subsidiary of the parent Co-Issuer, except as described
in the Draft Offering Memorandum (as of the Closing Date) or in the Offering
Memorandum (as of the Relevant Date);

 

(xxx)                         The representations and warranties of
each Co-Issuer and Guarantor contained in the Transaction Documents to which
such Co-Issuer or Guarantor is a party are true and correct and are repeated
herein as though fully set forth herein;

 

(xxxi)                      None of the Co-Issuers or Guarantors
(after giving effect to the issuance of the Guaranteed Securities and to the
other transactions related thereto as described in the Draft Offering
Memorandum) are insolvent within the meaning of the Bankruptcy Code or any applicable
state law and none of the Co-Issuers or Guarantors are the subject of any
voluntary or involuntary case or proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any bankruptcy or
insolvency law and no Event of Bankruptcy has occurred with respect to any such
Co-Issuer or Guarantor;

 

11

 

(xxxii)   (A)                                        Ninety-nine percent of the issued and
outstanding limited liability company interests of Holdings are owned by
Applebee’s International, all of which limited liability company interests have
been validly issued and are owned of record by Applebee’s International, free
and clear of all Liens other than Permitted Liens, and one percent of the
issued and outstanding limited liability company interests of Holdings is owned
by Holdings II, all of which limited liability company interests have been
validly issued and are owned of record by Holdings II, free and clear of all
Liens other than Permitted Liens;

 

(B)                                All of the issued and outstanding capital
stock of Holdings II is owned by Applebee’s International, all of which capital
stock has been validly issued and are owned of record by Applebee’s
International free and clear of all Liens other than Permitted Liens;

 

(C)                                All of the issued and outstanding limited
liability company interest of Applebee’s International are owned by IHOP, all
of which limited liability company interests have been validly issued and are
owned of record by IHOP free and clear of all Liens other than Permitted Liens;

 

(D)                               All of the issued and outstanding limited
liability company interests of the Master Issuer are owned by Holdings, all of
which limited liability company interests have been validly issued and are
owned of record by Holdings free and clear of all Liens other than Permitted
Liens;

 

(E)                                 All of the issued and outstanding limited
liability company interests of the Franchise Holder, the IP Holder and each of
the Restaurant Holders that is a limited liability company are owned by the
Master Issuer, all of which limited liability company interests have been
validly issued and are owned of record by the Master Issuer, free and clear of
all Liens other than Permitted Liens;

 

(F)                                 All of the issued and outstanding capital
stock of the each of the Restaurant Holders that is a corporation are owned by
the Master Issuer, all of which capital stock has been validly issued, is fully
paid and non-assessable and are owned of record by the Master Issuer, free and
clear of all Liens other than Permitted Liens;

 

(G)                                At least a majority of the issued and
outstanding limited liability company interests of the each of the entities
listed on Schedule A-2 herein (collectively, the “Liquor License
Holders”) are owned by the Master Issuer, all of which limited liability
company interests have been validly issued and are owned of record by the
Master Issuer, free and clear of all Liens other than Permitted Liens; and

 

(H)                               The Master Issuer has no subsidiaries and
owns no Equity Interests in any other Person, other than the Franchise Holder,
the IP Holder, the Restaurant Holders and the Liquor License Holders. The
Franchise Holder, the IP Holder, the Restaurant Holders and the Liquor License
Holders have no subsidiaries and own no Equity Interests in any other Person;

 

12

 

(xxxiii)     The
Guaranteed Securities satisfy the eligibility requirements of Rule 144A(d)(3) under
the Securities Act;

 

(xxxiv)     No
forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) of any of the
Co-Issuers, the Guarantors or the Parent Companies contained in the Preliminary
Marketing Materials, the Draft Offering Memorandum or the Offering Memorandum
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith;

 

(xxxv)      With
respect to those Guaranteed Securities sold in reliance upon Regulation S
of the Securities Act (“Regulation S”) (i) none of the
Co-Issuers or Guarantors or any of their affiliates or any other person acting
on their behalf has engaged in any directed selling efforts within the meaning
of Rule 902 of Regulation S and (ii) the Co-Issuers, the
Guarantors and their affiliates and each person acting on their behalf have complied
with the offering restrictions set forth in Rule 902 of Regulation S;

 

(xxxvi)     Except
pursuant to this Agreement, none of the Co-Issuers or Guarantors or any of
their affiliates or any other person acting on their behalf has, within the
six-month period prior to the date hereof, offered or sold in the United States
or to any U.S. person (as such terms are defined in Rule 902 of
Regulation S) the Guaranteed Securities or
any security of the same class or series as the Guaranteed Securities;

 

(xxxvii)    None of the Co-Issuers or Guarantors or any
of their affiliates have participated in a plan or scheme to evade the
registration requirements of the Securities Act through the sale of the
Guaranteed Securities pursuant to Regulation S;

 

(xxxviii)   Deloitte & Touche LLP (“D&T”),
who have audited or reviewed the consolidated financial statements of Applebee’s
International contained in the Draft Offering Memorandum (as of the Closing
Date) and the Offering Memorandum (as of the Relevant Date), are independent certified
public accountants with respect to Applebee’s International, Holdings II and
the Securitization Entities within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountants
(“AICPA”) and its interpretations and rulings thereunder. The historical
consolidated financial statements (including the related notes and supporting
schedules) of Applebee’s International contained in the Draft Offering
Memorandum (as of the Closing Date) and the Offering Memorandum (as of the
Relevant Date) have been prepared in accordance with generally accepted
accounting principles in the United States consistently applied throughout the
periods covered thereby and fairly present the financial position of the entities
purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective periods
indicated; and the financial information contained in the Draft Offering
Memorandum (as of the Closing Date) and the Offering Memorandum (as of the
Relevant Date) under the headings “Capitalization of Applebee’s International
and its Subsidiaries,” “Capitalization of the Master Issuer and its
Subsidiaries,” “Unaudited Pro Forma Condensed Consolidated Financial
Information of Applebee’s International,” “Selected Historical and Pro Forma
Financial Data of Applebee’s International and its Subsidiaries,” “Applebee’s
Enterprises LLC Unaudited Supplemental Financial

 

13

 

Information,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations of Applebee’s” and in the Applebee’s
Exchange Act Documents under
the heading “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” is derived from the accounting records of Applebee’s
International or the applicable subsidiary of Applebee’s International (each,
an “Applebee’s Entity”) and fairly present the information purported to
be shown thereby. The other historical financial and statistical information
and data of Applebee’s International, the other Applebee’s Entities and the
Securitization Entities contained in the Draft Offering Memorandum (as of the
Closing Date) and the Offering Memorandum (as of the Relevant Date) are, in all
material respects, fairly presented;

 

(xxxix)      Ernst & Young LLP (“E&Y”),
who have audited or reviewed the consolidated financial statements of IHOP
contained in the Draft Offering Memorandum (as of the Closing Date) and the
Offering Memorandum (as of the Relevant Date), are independent certified public
accountants with respect to the IHOP and Merger Sub within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its interpretations and
rulings thereunder. The historical consolidated financial statements (including
the related notes and supporting schedules) of IHOP contained in the Draft
Offering Memorandum (as of the Closing Date) and the Offering Memorandum (as of
the Relevant Date) have been prepared in accordance with generally accepted
accounting principles in the United States consistently applied throughout the
periods covered thereby and fairly present the financial position of the
entities purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective periods
indicated; and the financial information contained in the Draft Offering
Memorandum (as of the Closing Date) and the Offering Memorandum (as of the
Relevant Date) under the headings “Capitalization of IHOP Corp. and its
Subsidiaries,” “Selected Historical and Pro Forma Financial Data of IHOP Corp.
and its Subsidiaries,” “Unaudited Pro Forma Condensed Combined Financial
Information of IHOP Corp.,” “Capitalization of IHOP Franchising, LLC,” “Unaudited
Pro Forma Condensed Consolidated Financial Information of IHOP Franchising,
LLC,” “IHOP Franchising, LLC Unaudited Supplemental Financial Information” and in the IHOP
Exchange Act Documents
under the heading “Management’s Discussion and Analysis of Financial Condition
and Results of Operations of IHOP” is derived from the accounting records of
IHOP or the relevant subsidiary of IHOP (each, an “IHOP Entity”) and
fairly present the information purported to be shown thereby. The other historical
financial and statistical information and data of IHOP and the other IHOP
Entities contained in the Draft Offering Memorandum (as of the Closing Date)
and the Offering Memorandum (as of the Relevant Date) are, in all material
respects, fairly presented;

 

(xl)                                The pro forma financial information
included in the Draft Offering Memorandum (as of the Closing Date) and the
Offering Memorandum (as of the Relevant Date) include assumptions that provide
a reasonable basis for presenting the significant effects directly attributable
to the transactions and events described therein (it being understood that the
securities that are assumed to be issued in the pro forma financial information
that is contained in the Draft Offering Memorandum as of the Closing Date are
different from the securities being issued hereunder and in the IHOP
Securitization), the related pro forma adjustments give appropriate effect to
those

 

14

 

assumptions, and the pro forma adjustments reflect the
proper application of those adjustments to the historical financial statement
amounts in the pro forma financial information included in the Draft Offering
Memorandum (as of the Closing Date) and the Offering Memorandum (as of the
Relevant Date). The pro forma financial information included in the Draft
Offering Memorandum (as of the Closing Date) and the Offering Memorandum (as of
the Relevant Date) comply as to form in all material respects with the
applicable requirements of Regulation S-X under the Securities Act;

 

(xli)                             The Exchange Act Documents did not, when
filed with the Commission, contain an untrue statement of material fact or omit
to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The Exchange Act Documents,
when filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder;

 

(xlii)                          The market-related and customer-related
data and estimates included in the Preliminary Marketing Materials, the Draft
Offering Memorandum (as of the Closing Date) and the Offering Memorandum (as of
the Relevant Date) are based on or derived from sources that the Co-Issuers
believe to be reliable and accurate in all material respects or represent the
Co-Issuers’ good faith estimates made on the basis of data derived from such
sources;

 

(xliii)                       The Co-Issuers and the Guarantors
maintain and have maintained effective internal control over financial
reporting, as defined in Rule 13a-15 under the Exchange Act, and a system
of accounting controls that is sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles in the United States and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences;

 

(xliv)                      (i) Each of the Co-Issuers and
Guarantors has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act), (ii) such
disclosure controls and procedures are designed to ensure that the information
required to be disclosed by each Co-Issuer or Guarantor in the reports it files
or submits under the Exchange Act (assuming each Co-Issuer or Guarantor was
required to file or submit such reports under the Exchange Act) is accumulated
and communicated to management of such Co-Issuer or Guarantor, including their
respective principal executive officers and principal financial officers, as
appropriate, to allow timely decisions regarding required disclosure to be
made; and (iii) such disclosure controls and procedures are effective in
all material respects to perform the functions for which they were
established.

 

15

 

(xlv)                         None of the Co-Issuers, the Guarantors or
any of their affiliates have, directly or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any
security (as such term is defined in the Securities Act), which is or will be
integrated with the sale or resale of the Guaranteed Securities in a manner
that would require registration of the sale or resale of the Guaranteed
Securities under the Securities Act;

 

(xlvi)                      None of the Co-Issuers, the Guarantors or
any of their affiliates or any other person acting on their behalf have
engaged, in connection with the offering of the Guaranteed Securities, in any form of
general solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act (including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising);

 

(xlvii)                   None of the Co-Issuers, the Guarantors or any of their
affiliates or any other person acting on their behalf have offered, sold,
contracted to sell or otherwise disposed of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or disposition
would cause the exemption afforded by Section 4(2) of the Securities
Act or Section 3(c)(7) of the 1940 Act to cease to be applicable to
the offering, sale and resale of the Guaranteed Securities as contemplated by
this Agreement;

 

(xlviii)                None of the Co-Issuers or the Guarantors
or any of their affiliates have taken and none of the Co-Issuers or Guarantors
or any of their affiliates will take any action prohibited by Regulation M
under the Exchange Act, in connection with the offering or resale of the
Securities;

 

(xlix)        (A)          None of the Co-Issuers or Guarantors are
subject to any liabilities or obligations pursuant to any Environmental Law,
which could, individually or in the aggregate, reasonably be expected to result
in the payment of a Material Environmental Amount; and

 

(B)           The Co-Issuers and the Guarantors have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects, except such as are described in
the Draft Offering Memorandum (as of the Closing Date) and the Offering
Memorandum (as of the Relevant Date) and such as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Co-Issuers and the Guarantors; and
all assets held under lease by the Co-Issuers and the Guarantors are held by
them under valid, subsisting and enforceable leases, with such exceptions as do
not materially interfere with the use made and proposed to be made of such
assets by the Co-Issuers and the Guarantors;

 

(l)                                     There is and has been no failure on the part of
the Co-Issuers, the Guarantors or any of the Co-Issuers’ or Guarantors’
managers, directors or officers, in

 

16

 

their capacities as such, to comply with the
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith;

 

(li)                                  The section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations –
Application of Critical Accounting Policies” contained in the Applebee’s
Exchange Act Documents and in the Draft Offering Memorandum (as of the Closing
Date) and the Offering Memorandum (as of the Relevant Date)  accurately and fully describes (A) the
accounting policies that the Co-Issuers and the Guarantors believe are the most
important in the portrayal of Applebee’s International’s financial condition
and results of operations and that require management’s most difficult,
subjective or complex judgments; (B) the judgments and uncertainties
affecting the application of critical accounting policies; and (C) the
likelihood that materially different amounts would be reported under different
conditions or using different assumptions and an explanation thereof;

 

(lii)                               The section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations –
Critical Accounting Policies” contained in the IHOP Exchange Act Documents and
in the Draft Offering Memorandum (as of the Closing Date) and the Offering
Memorandum (as of the Relevant Date) accurately and fully describes (A) the
accounting policies that the Co-Issuers and the Guarantors believe are the most
important in the portrayal of IHOP’s financial condition and results of
operations and that require management’s most difficult, subjective or complex
judgments; (B) the judgments and uncertainties affecting the application
of critical accounting policies; and (C) the likelihood that materially
different amounts would be reported under different conditions or using
different assumptions and an explanation thereof;

 

(liii)                            None of the Co-Issuers or the Guarantors
is in violation of or has received notice of any violation with respect to any
federal or state law relating to discrimination in the hiring, promotion or pay
of employees, or any applicable federal or state wage and hour laws, or any
state law precluding the denial of credit due to the neighborhood in which a
property is situated, the violation of any of which would reasonably be
expected to have a Material Adverse Affect;

 

(liv)                           The operations of the Co-Issuers and the
Guarantors are and have been conducted at all times in compliance with
applicable financial record keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator involving the
Co-Issuers or the Guarantors with respect to the Money Laundering Laws is
pending or, to the knowledge of the Co-Issuers or the Guarantors, threatened,
except, in each case, as would not reasonably be expected to have a Material
Adverse Effect;

 

17

 

(lv)                              None of the Co-Issuers or the Guarantors
or, to the knowledge of the Co-Issuers and the Guarantors, any director,
officer, agent, employee or affiliate of the Co-Issuers, or the Guarantors is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the
Co-Issuers and the Guarantors will not directly or indirectly use the proceeds of
the offering, or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC;

 

(lvi)                           (A)                              All of the material registrations and applications
included in the IP Assets are subsisting, unexpired and have not been abandoned
in any applicable jurisdiction except where such abandonment could not
reasonably be expected to have a Material Adverse Effect;

 

(B)                                Except as set forth on Schedule 7.12(y) to
the Base Indenture, (i) the use of the IP Assets does not infringe or
violate the rights of any third party, (ii) the IP Assets are not being
infringed or violated by any third party in a manner that could reasonably be
expected to have a Material Adverse Effect and (iii) there is no action or
proceeding pending or, to the Co-Issuers’ or Guarantors’ knowledge, threatened
alleging same that could reasonably be expected to have a Material Adverse
Effect;

 

(C)                                Except as set forth on Schedule 7.12(y) to
the Base Indenture, no action or proceeding is pending or, to the Co-Issuers’
or Guarantors’ knowledge, threatened that seeks to limit, cancel or question
the validity of any material IP Assets, or the use thereof, that could
reasonably be expected to have a Material Adverse Effect;

 

(D)                               The IP Holder is the exclusive owner of
the IP Assets, free and clear of all Liens, set-offs, defenses and
counterclaims of whatsoever kind or nature (other than licenses granted in the
ordinary course of business and the rights granted under the IP License
Agreements, the Franchise Agreements and the Permitted Liens);

 

(E)                                 The Co-Issuers and Guarantors have not
made and will not hereafter make any material assignment, pledge, mortgage,
hypothecation or transfer of any of the IP Assets (other than licenses granted
in the ordinary course of business and the rights granted under the IP License
Agreements, the Franchise Agreements and the Permitted Liens);

 

(lvii)                        The Co-Issuers and the Guarantors have
not taken any action or omitted to take any action (such as issuing any press
release relating to any Securities without an appropriate legend) which may result
in the loss by any of the Initial Purchaser of the ability to rely on any
stabilization safe harbor provided by the Financial Services Authority under
the Financial Services and Markets Act 2000 (the “FSMA”). The Co-Issuers
and the Guarantors have been informed of the guidance relating to stabilization
provided by the Financial Services Authority; and

 

18

 

(lviii)                     Since the date as of which information is given in the
Draft Offering Memorandum (as of the Closing Date) or the Offering Memorandum
(as of the Relevant Date), there has not been any development in the condition,
financial or otherwise, of the Securitization Entities, taken as a whole, or in
the earnings, business affairs or management, whether or not arising in the
course of business of the Securitization Entities, taken as a whole, that could
reasonably be expected to result in a Material Adverse Effect.

 

(b)                                 Each of the Parent Companies, jointly and
severally, represents and warrants to, and agrees with, the Initial Purchaser,
as of the Closing Date, that:

 

(i)                                     As of the Closing Date, the Draft
Offering Memorandum presents fairly, in all material respects, the business,
results of operations and financial condition of the Co-Issuers and the
Guarantors. As of the Relevant Date, the Offering Memorandum does not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;

 

(ii)                                  The Preliminary Marketing Materials and
the Offering Memorandum have been or will have been prepared by the Co-Issuers,
the Parent Companies and the
Guarantors for use by the Initial Purchaser in connection with the
Exempt Resales (as defined below). No order or decree preventing the use of the
Preliminary Marketing Materials or the Offering Memorandum, or any order
asserting that the transactions contemplated by this Agreement are subject to
the registration requirements of the Securities Act has been issued, and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Parent Companies is contemplated;

 

(iii)                               Each of the Parent Companies (other than
the Servicer) and the IHOP Securitization Entities has been duly formed as a
corporation or limited liability company and is validly existing and in good
standing under the laws of the State of Delaware, is qualified to do business
and is in good standing as a foreign corporation or limited liability company
in each jurisdiction in which the ownership or lease of property or the conduct
of its business requires such qualification except for such failures to qualify
to do business or be in good standing as are not reasonably likely to result in
a Material Adverse Effect, and has the requisite corporate or limited liability
company power and authority to own or hold its properties and to conduct the
business in which it is engaged as described in the Draft Offering Memorandum
(as of the Closing Date) or the Offering Memorandum (as of the Relevant Date);

 

(iv)                              The Servicer been duly formed as a
corporation and is validly existing and in good standing under the laws of the
State of Kansas, is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the ownership or lease of
property or the conduct of its business requires such qualification except for
such failures to qualify to do business or be in good standing as are not
reasonably likely to result in a Material Adverse Effect, and has the requisite
corporate power and authority to own or hold its properties and to conduct the
business in which it 

 

19

 

is engaged as described in the Draft Offering Memorandum (as of the
Closing Date) or the Offering Memorandum (as of the Relevant Date);

 

(v)                                 Each of the Parent Companies has the
requisite corporate or limited liability company power and authority to execute
and deliver this Agreement and all other Transaction Documents to which it is a
party and perform its obligations hereunder and thereunder;

 

(vi)                              None of the Parent Companies or the IHOP
Securitization Entities (collectively the “Other Entities”) is in
violation of (i) its respective Charter Documents, (ii) any
Requirements of Law with respect to such Other Entity or (iii) any
Contractual Obligation with respect to such Other Entity except, solely with
respect to clauses (ii) and (iii), to the extent such
violation could not reasonably be expected to result in a Material Adverse
Effect. The execution and delivery of this Agreement and the other Transaction
Documents, the application of the proceeds from the sale of the Securities as
described as described herein and in the Offering Memorandum (as of the
Relevant Date) and the incurrence of the obligations and consummation of the
transactions herein and therein contemplated (a) will not conflict with,
or constitute a breach of or default under, any Charter Documents of any Other
Entity, and (b) does not contravene, or constitute a default under, any
Requirements of Law with respect to such Other Entity or any Contractual
Obligation with respect to such Other Entity or result in the creation or
imposition of any Lien on any property of any Other Entity, except for Liens
created by the Transaction Documents and except, in the case of clause (b),
solely with respect to the Asset Contribution Agreements, the violation of
which could reasonably be expected to have a Material Adverse Effect;

 

(vii)                           Each of the Transaction Documents to
which any Other Entity is a party has been duly and validly authorized,
executed and delivered by it and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes its legal, valid and binding
obligation enforceable in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors’ rights generally or by general equitable principles, whether
considered in a proceeding at law or in equity and by an implied covenant of
good faith and fair dealing). Each of the Transaction Documents to which an
Other Entity is a party will conform in all material respects to the
description thereof in the Draft Offering Memorandum (as of the Closing Date)
or the Offering Memorandum (as of the Relevant Date);

 

(viii)                        (1) The Transaction Documents to
which an Other Entity is a party are in full force and effect; (2) there
are no outstanding defaults thereunder; and (3) no events shall have
occurred which, with the giving of notice, the passage of time or both, would
constitute a default thereunder;

 

(ix)                                This Agreement has been duly authorized,
executed and delivered by each Parent Company party hereto and constitutes the
legal, valid and binding obligation of each Parent Company enforceable in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance,

 

20

 

 

reorganization, moratorium and other similar laws affecting creditors’
rights generally or by general equitable principles, whether considered in a
proceeding at law or in equity and by an implied covenant of good faith and
fair dealing and except that any indemnification or contribution provisions
herein may be deemed unenforceable);

 

(x)            There is no consent, approval, authorization, order,
registration or qualification of or with any court or any regulatory authority
or other governmental agency or body which is required for, and the absence of
which would materially affect, the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, the
issuance of the Guaranteed Securities, the execution, delivery and performance
by the Parent Companies of this Agreement and by the Other Entities of the
Transaction Documents (to the extent they are parties thereto) or the
application of the proceeds from the sale of the Securities as described herein
and in the Offering Memorandum (as of the Relevant Date);

 

(xi)           Each of the Other Entities possesses all licenses,
permits, orders, patents, franchises, certificates of need and other
governmental and regulatory approvals to own or lease its properties and
conduct its business in the jurisdictions in which such business is transacted
as described in the Draft Offering Memorandum (as of the Closing Date) or the
Offering Memorandum (as of the Relevant Date), with only such exceptions as
would not individually or in the aggregate have a Material Adverse Effect, and
has not received any notice of proceedings relating to the revocation or
modification of any such license, permit, order or approval, except for those
whose revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect;

 

(xii)          Except as described in the Draft Offering Memorandum
(as of the Closing Date) or the Offering Memorandum (as of the Relevant Date),
no labor disturbance by the employees of the Other Entities exists or, to the
knowledge of the Other Entities, is imminent that would reasonably be expected
to have a Material Adverse Effect;

 

(xiii)         No
Other Entity has established or maintains any
Plan covered by Title IV of ERISA(other than any Restaurant Holder that
may be required to have employees to comply with applicable law relating to the
sale of alcoholic beverages);

 

(xiv)        Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412
of the Code or Section 302 of ERISA) has occurred during the six year
period prior to the date on which this representation is made or deemed made or
is reasonably expected to occur with respect to any Single Employer Plan, and
each Plan (including, to the Actual Knowledge of the Other Entities, a Multiemployer
Plan or a multiemployer welfare plan maintained pursuant to a collective
bargaining agreement) has complied in all respects with the applicable
provisions of ERISA, the Code and the constituent documents of such Plan,
except for instances of non-compliance that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.  No termination of a Single Employer Plan has
occurred during such six-year period or is reasonably expected to occur (other
than a termination described in Section 4041(b) of ERISA), and no
Lien in favor of the
PBGC or a Plan has

 

21

 

arisen during such six-year period or is reasonably
expected to arise.  Except to the extent
that any such excess could not reasonably be expected to have a Material
Adverse Effect, the present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits. 
Except to the extent that such liability could not reasonably be
expected to have a Material Adverse Effect, neither the Other Entities nor any
affiliate thereof have had a complete or partial withdrawal from any
Multiemployer Plan, and the Other Entities would not become subject to any
liability under ERISA if an Other Entity or any affiliate thereof were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed
made.  To the Actual Knowledge of the
Other Entities, no such Multiemployer Plan is in Reorganization, insolvent or
terminating or is reasonably expected to be in Reorganization, become insolvent
or be terminated.  Except to the extent
that any such excess could not reasonably be expected to have a Material
Adverse Effect, the present value (determined using actuarial and other assumptions
which are reasonable in respect of the benefits provided and the employees
participating) of the liability of the Other Entities and each affiliate
thereof for post retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA) other than such liability disclosed in the financial statements of the
Other Entities does not, in the aggregate, exceed the assets under all such
Plans allocable to such benefits.  Neither
the Other Entities nor any affiliate thereof has engaged in a prohibited
transaction under Section 406 of ERISA and/or Section 4975 of the
Code in connection with any Plan that would subject either Other Entities to
liability under ERISA and/or Section 4975 of the Code that could
reasonably be expected to have a Material Adverse Effect.  There is no other circumstance which may give
rise to a liability in relation to any Plan that could reasonably be expected
to have a Material Adverse Effect;

 

(xv)         There
is no action, suit, proceeding or
investigation pending against or, to the knowledge of any Parent Company,
threatened against or affecting any Other Entity or of which any property or
assets of the Other Entities is the subject before any court or arbitrator or
any Governmental Authority that would, individually or in the aggregate, affect
the validity or enforceability of this Agreement or any of the Transaction
Documents, materially adversely affect the performance by the Parent Companies
of their obligations hereunder or by the Other Entities thereunder or which is
reasonably likely to have a Material Adverse Effect;

 

(xvi)        None
of the Other Entities is, after giving effect to the issuance of the Guaranteed
Securities, the transactions contemplated by the Transaction Documents and the
application of the proceeds from the sale of the Securities as described
herein, in the Draft Offering Memorandum (as of the Closing Date) and in the
Offering Memorandum (as of the Relevant Date), an “investment company”, or a
company “controlled” by an “investment company”, within the meaning of the 1940
Act;

 

(xvii)       Each
of the Other Entities (after giving effect to the transactions contemplated by
the Transaction Documents) is not insolvent within the meaning of the

 

22

 

Bankruptcy
Code and none of the Other Entities is the subject of any voluntary or
involuntary case or proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy or insolvency
law and no Event of Bankruptcy has occurred with respect to any of the Other
Entities;

 

(xviii)      No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Draft Offering Memorandum (as of the Closing Date) or the Offering
Memorandum (as of the Relevant Date) has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith;

 

(xix)         Since the date as of which information is given in
the Draft Offering Memorandum (as of the Closing Date) or the Offering
Memorandum (as of the Relevant Date), there has not been any development in the
condition, financial or otherwise, of the Securitization Entities, taken as a
whole, or in the earnings, business affairs or management, whether or not
arising in the course of business of the Securitization Entities, taken as a
whole, that could reasonably be expected to result in a Material Adverse
Effect;

 

(xx)          D&T, who have audited or reviewed the
consolidated financial statements of Applebee’s International contained in the
Draft Offering Memorandum (as of the Closing Date) and the Offering Memorandum
(as of the Relevant Date), are independent certified public accountants with
respect to Applebee’s International, Holdings II and the Securitization
Entities within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder.  The historical consolidated financial
statements (including the related notes and supporting schedules) of Applebee’s
International contained in the Draft Offering Memorandum (as of the Closing
Date) and the Offering Memorandum (as of the Relevant Date) have been prepared
in accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods covered thereby and fairly
present the financial position of the entities purported to be covered thereby
at the respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial information
contained in the Draft Offering Memorandum (as of the Closing Date) and the
Offering Memorandum (as of the Relevant Date) under the headings “Capitalization
of Applebee’s International and its Subsidiaries,” “Capitalization of the
Master Issuer and its Subsidiaries,” “Unaudited Pro Forma Condensed
Consolidated Financial Information of Applebee’s International,” “Selected
Historical and Pro Forma Financial Data of Applebee’s International and its
Subsidiaries,” “Applebee’s Enterprises LLC Unaudited Supplemental Financial
Information,” “Management’s Discussion and Analysis of Financial Condition and
Results of Operations of Applebee’s” and in
the Applebee’s Exchange Act Documents under the heading “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” is derived from the accounting records of the
applicable Applebee’s Entities and fairly present the information purported to
be shown thereby.  The other historical
financial and statistical information and data of Applebee’s International, the
other Applebee’s Entities and the Securitization Entities contained in

 

23

 

the
Draft Offering Memorandum (as of the Closing Date) and the Offering Memorandum
(as of the Relevant Date) are, in all material respects, fairly presented;

 

(xxi)         E&Y,
who have audited or reviewed the consolidated financial statements of IHOP
contained in the Draft Offering Memorandum (as of the Closing Date) and the
Offering Memorandum (as of the Relevant Date), are independent certified public
accountants with respect to IHOP and Merger Sub within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its interpretations and
rulings thereunder.  The historical
consolidated financial statements (including the related notes and supporting
schedules) of IHOP contained in the Draft Offering Memorandum (as of the Closing
Date) and the Offering Memorandum (as of the Relevant Date) have been prepared
in accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods covered thereby and fairly
present the financial position of the entities purported to be covered thereby
at the respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial information
contained in the Draft Offering Memorandum (as of the Closing Date) and the Offering
Memorandum (as of the Relevant Date) under the headings “Capitalization
of IHOP Corp. and its Subsidiaries,” “Selected Historical and Pro Forma
Financial Data of IHOP Corp. and its Subsidiaries,” “Unaudited Pro Forma
Condensed Combined Financial Information of IHOP Corp.,” “Capitalization of
IHOP Franchising, LLC,” “Unaudited Pro Forma Condensed Consolidated Financial
Information of IHOP Franchising, LLC,” “IHOP Franchising, LLC Unaudited
Supplemental Financial Information” and in the IHOP Exchange Act Documents under the heading “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of
IHOP” is derived from the accounting records of
the applicable IHOP Entities and fairly present the information purported to be
shown thereby.  The other historical
financial and statistical information and data of IHOP and the other IHOP
Entities contained in the Draft Offering Memorandum (as of the Closing Date)
and the Offering Memorandum (as of the Relevant Date) are, in all material respects,
fairly presented;

 

(xxii)        The
pro forma financial information included in the Draft Offering Memorandum (as of the Closing Date) and the Offering
Memorandum (as of the Relevant Date) include assumptions that provide a
reasonable basis for presenting the significant effects directly attributable
to the transactions and events described therein (it being understood that the
securities that are assumed to be issued in the pro forma financial information
that is contained in the Draft Offering Memorandum as of the Closing Date are
different from the securities being issued hereunder and in the IHOP Securitization), the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma adjustments
reflect the proper application of those adjustments to the historical financial
statement amounts in the pro forma financial information included in the Draft Offering Memorandum (as of the Closing
Date) and the Offering Memorandum (as of the Relevant Date).  The pro forma financial information included in the Draft Offering Memorandum (as of the Closing
Date) and the Offering Memorandum (as of the Relevant Date) comply as to
form in all material respects with the applicable requirements of
Regulation S-X under the Securities Act;

 

24

 

(xxiii)       The
Exchange Act Documents did not, when filed with the Commission, contain an
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The Exchange Act Documents,
when filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder;

 

(xxiv)       The
market-related and customer-related data and estimates included in the
Preliminary Marketing Materials, in the Draft
Offering Memorandum (as of the Closing Date) and the Offering Memorandum (as of
the Relevant Date) are based on or derived from sources that the Parent
Companies believe to be reliable and accurate in all material respects or
represent the Parent Companies’ good faith estimates made on the basis of data
derived from such sources;

 

(xxv)        The Other Entities
maintain and have maintained effective
internal control over financial reporting, as defined in Rule 13a-15 under
the Exchange Act, and a system of accounting controls that is sufficient to
provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles in the United States
and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences;

 

(xxvi)       (i) Each of the
Parent Companies and each of their respective subsidiaries have established and
maintain disclosure controls and procedures (as such term is defined in Rule 13a-15
under the Exchange Act), (ii) such disclosure controls and procedures are
designed to ensure that the information
required to be disclosed by the Parent Companies in the reports they file or
submit under the Exchange Act (assuming the Parent Companies were required to
file or submit such reports under the Exchange Act) is accumulated and
communicated to management of the Parent Companies, including their respective
principal executive officers and principal financial officers, as appropriate,
to allow timely decisions regarding required disclosure to be made; and (iii) such
disclosure controls and procedures are effective in all material respects to
perform the functions for which they were established;

 

(xxvii)      Since
the date of the most recent balance sheet of Applebee’s International and its
consolidated subsidiaries reviewed or audited by D&T and the audit
committee of the board of directors of Applebee’s International, (i) Applebee’s
International has not been advised of (A) any significant deficiencies in
the design or operation of internal control over financial reporting that would
adversely affect the ability of Applebee’s International or any of its
subsidiaries to record, process, summarize and report financial data, or any
material weaknesses in internal control over financial reporting and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the internal controls of Applebee’s

 

25

 

International and each of
its subsidiaries, and (ii) since that date, there have been no significant
changes in internal control over financial reporting or in other factors that
would significantly affect internal control over financial reporting, including
any corrective actions with regard to significant deficiencies and material
weaknesses;

 

(xxviii)     Since
the date of the most recent balance sheet of IHOP and its consolidated
subsidiaries reviewed or audited by E&Y and the audit committee of the
board of directors of IHOP, (i) IHOP has not been advised of (A) any
significant deficiencies in the design or operation of internal control over
financial reporting that would adversely affect the ability of IHOP or any of
its subsidiaries to record, process, summarize and report financial data, or
any material weaknesses in internal control over financial reporting and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the internal controls of IHOP and each of its
subsidiaries, and (ii) since that date, there have been no significant
changes in internal control over financial reporting or in other factors that
would significantly affect internal control over financial reporting, including
any corrective actions with regard to significant deficiencies and material
weaknesses;

 

(xxix)       The
representations and warranties of each of the Other Entities, contained in the
Transaction Documents to which it is a party are true and correct and are
repeated as though fully set forth herein;

 

(xxx)        With
respect to those Guaranteed Securities sold in reliance upon Regulation S,
(i) none of the Other Entities or any of their affiliates or any other
person acting on their behalf has engaged in any directed selling efforts
within the meaning of Rule 902 of Regulation S and (ii) the
Other Entities and their affiliates and each person acting on their behalf have
complied with the offering restrictions set forth in Regulation S;

 

(xxxi)       None
of the Other Entities or any of their affiliates or any other person acting on
their behalf have engaged, in connection with the offering of the Guaranteed
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the Securities Act (including, but
not limited to, advertisements, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising);

 

(xxxii)      None
of the Other Entities or any of their affiliates or any other person acting on
their behalf have offered, sold, contracted to sell or otherwise disposed of,
directly or indirectly, any securities under circumstances where such offer,
sale, contract or disposition would cause the exemption afforded by Section 4(2) of
the Securities Act or Section 3(c)(7) of the 1940 Act to cease to be
applicable to the offering, sale and resale of the Guaranteed Securities as
contemplated by this Agreement, the Draft Offering Memorandum (as of the
Closing Date) and the Offering Memorandum (as of the Relevant Date);

 

26

 

(xxxiii)     There is and has been
no failure on the part of the Other
Entities or any of the Other Entities’ managers, directors or officers, in
their capacities as such, to comply with the provisions of the Sarbanes-Oxley
Act of 2002 and the rules and regulations promulgated in connection
therewith;

 

(xxxiv)     The section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations –
Application of Critical Accounting Policies” in the Applebee’s Exchange Act
Documents in the Draft Offering Memorandum (as of the Closing Date) and the
Offering Memorandum (as of the Relevant Date) accurately and fully describes (A) the
accounting policies that Applebee’s International believes are the most
important in the portrayal of Applebee’s International’s financial condition
and results of operations and that require management’s most difficult,
subjective or complex judgments; (B) the judgments and uncertainties
affecting the application of critical accounting policies; and (C) the
likelihood that materially different amounts would be reported under different
conditions or using different assumptions and an explanation thereof;

 

(xxxv)      The section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations –Critical
Accounting Policies” in the IHOP Exchange Act Documents, the Draft Offering
Memorandum (as of the Closing Date) and
the Offering Memorandum (as of the Relevant
Date) accurately and fully describes (A) the accounting policies
that IHOP believes are the most important in the portrayal of IHOP’s financial
condition and results of operations and that require management’s most
difficult, subjective or complex judgments; (B) the judgments and
uncertainties affecting the application of critical accounting policies; and (C) the
likelihood that materially different amounts would be reported under different
conditions or using different assumptions and an explanation thereof;

 

(xxxvi)     None
of the Other Entities is in violation of
or has received notice of any violation with respect to any federal or state
law relating to discrimination in the hiring, promotion or pay of employees, or
any applicable federal or state wage and hour laws, or any state law precluding
the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which would reasonably be expected to have a Material
Adverse Affect;

 

(xxxvii)            The
operations of the Other Entities are and have been conducted at all times in
compliance with the Money Laundering
Laws and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Other
Entities with respect to the Money Laundering Laws is pending or, to the
knowledge of the Other Entities, threatened, except, in each case, as would not
reasonably be expected to have a Material Adverse Effect;

 

(xxxviii)           None
of the Other Entities or, to the knowledge of the Other Entities, any director,
officer, agent, employee or affiliate of the Other Entities is currently
subject to any U.S. sanctions administered by OFAC; and the Other Entities will
not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other

 

27

 

person or entity,
for the purpose of financing the activities of any person currently subject to
any U.S. sanctions administered by OFAC;

 

(xxxix)      The Other Entities have not taken any action or omitted to take any action (such as issuing
any press release relating to any Securities without an appropriate legend) which may result in the loss by the Initial Purchaser of the
ability to rely on any stabilization
safe harbor provided by the FSMA.  The
Other Entities  have been informed of
the guidance relating to stabilization provided by the Financial Services
Authority;

 

(xl)           As of the Closing Date, except as set forth on Schedule 7.12(z) to the Base
Indenture, no Parent Company is aware of any proposed Tax assessments against
any Applebee’s Entity or any IHOP Entity, except for those Tax
assessments that would not have a Material Adverse Effect;

 

(c)           Each of
the Co-Issuers and the Guarantors, jointly and severally, shall make the
representations and warranties to the Initial Purchaser and agreements with the
Initial Purchaser contained in Section 1(a) as of the Initial Date
and each Bringdown Date; and

 

(d)           Each of
the Parent Companies, jointly and severally, shall make the representations and
warranties to the Initial Purchaser and agreements with the Initial Purchaser
contained in Section 1(b) as of the Initial Date and each Bringdown
Date.

 

2.             Purchase and Resale of the Securities

 

(a)           On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions set forth
herein, each of the Co-Issuers and the Guarantors, jointly and severally, agree
to issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Co-Issuers and the Guarantors: (i) $350,000,000
aggregate principal amount of Class A-2-I Notes at a purchase price of 99.999961% of the aggregate principal amount thereof, (ii) $675,000,000
aggregate principal amount of Class A-2-II-A Notes at a purchase price of 99.999836%
of the aggregate principal amount thereof, (iii) $650,000,000
aggregate principal amount of Class A-2-II-X Notes at a purchase price of 99.999707% of the aggregate principal amount thereof, (iv) $119,000,000
aggregate principal amount of Class M-1 Notes at a purchase price of 99.999943% of the aggregate principal amount thereof.  The Co-Issuers and the Guarantors shall not
be obligated to deliver any of the Guaranteed Securities except upon payment
for all of the Guaranteed Securities to be purchased as provided herein.  The Series 2007-1 Class A-2-I Notes
will accrue interest at an annual rate of 7.2836%, the Series 2007-1 Class A-2-II-A
Notes will accrue interest at an annual rate of 6.4267%, the Series 2007-1
Class A-2-II-X Notes will accrue interest at an annual rate of 7.0588% and
the Series 2007-1 Class M-1 Notes will accrue interest at an annual
rate of 8.4044%.  In connection with the
above purchase and sale, the Co-Issuers shall pay, on the Closing Date, to the
Initial Purchaser $38,800,879, in immediately available funds, provided
that payment of up to $20,000,000 of such fee may be paid by IHOP at any time
on or prior to May 29, 2008 instead of on the Closing Date.

 

28

 

(b)           The
Initial Purchaser has advised the Co-Issuers and the Guarantors that it proposes
to offer the Guaranteed Securities for resale upon the terms and subject to the
conditions set forth herein.  The Initial
Purchaser represents and warrants to, and agrees with, the Co-Issuers and the
Guarantors, on the basis of the representations, warranties and
agreement of the Co-Issuers, the Guarantors, the Parent Companies and the IHOP
Securitization Entities that (i) it is
purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) neither it nor any of its affiliates, nor
any person acting on the Initial Purchaser’s behalf, has solicited offers for,
or offered or sold, and neither it, nor any of its affiliates, nor any person
acting on the Initial Purchaser’s behalf, will solicit offers for, or offer or
sell, the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D
under the Securities Act (“Regulation D”) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act, and (iii) it has solicited and will solicit offers (the “Exempt
Resales”) for the Securities only from, and have offered or sold and will
offer, sell or deliver the Guaranteed Securities, as part of its initial
offering, only to persons whom it reasonably believes to be: (A) (i) qualified
institutional buyers (“Qualified Institutional Buyers”) as defined in Rule 144A
under the Securities Act (“Rule 144A”), or if any such person is
buying for one or more institutional accounts for which such person is acting
as fiduciary or agent, only when such person has represented to it that each
such account is a Qualified Institutional Buyer to whom notice has been given
that such sale or delivery is being made in reliance on Rule 144A and, in
each case in transactions in accordance with Rule 144A and (ii) qualified
purchasers (“Qualified Purchasers”) within the meaning of Section 2(a)(51)
of the 1940 Act or (B) solely with respect to the Series 2007-1 Class A
Notes, (i) neither “U.S. Persons”(as such term is defined in
Regulation S) nor U.S. Residents (within the meaning of the 1940 Act) who
acquire the Guaranteed Securities outside the U.S. in a transaction meeting the requirements of Regulation S or (ii) Qualified
Purchasers.  Those persons
specified in clauses (A) and (B) above are referred to herein as the
(“Eligible Purchasers”).  In addition to the foregoing, the Initial Purchaser
acknowledges and agrees that the Co-Issuers and the Guarantors and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to Section 5,
counsel for the Co-Issuers and the Guarantors and for the Initial Purchaser,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchaser and its compliance with its agreements contained in
this Section 2 (except clause (i) of this subsection (b)), and the
Initial Purchaser hereby consents to such reliance.

 

(c)           The
Co-Issuers and the Guarantors acknowledge and agree that the Initial Purchaser
may sell Guaranteed Securities to any affiliate of the Initial Purchaser and
that any such affiliate may sell Guaranteed Securities purchased by it to the
Initial Purchaser.  The Co-Issuers and
the Guarantors acknowledge and agree that the Initial Purchaser may, from time
to time, make one or more Exempt Resales following the Closing Date, with
respect to which the Initial Purchaser may deliver a copy of the Offering
Memorandum.

 

(d)           The
Initial Purchaser also represents and agrees that (i) it has complied and
will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Securities in, from or otherwise involving the
United Kingdom, and (ii) it has only communicated or caused to be
communicated and it will

 

29

 

only communicate
or cause to be communicated any invitation or inducement to engage in
investment activity (within the meaning of section 21 of the FSMA) received by
it in connection with the issue or sale of any Securities, in circumstances in
which section 21(1) of the FSMA does not apply to the Co-Issuers.

 

(e)           The
Initial Purchaser also represents and agrees that, in relation to each Member
State of the European Economic Area which has implemented the Prospectus Directive
(each, a “Relevant Member State”), with effect from and including the
date on which the Prospectus Directive is implemented in that Relevant Member
State (the “Relevant Implementation Date”), it has not made and will not
make an offer of the Guaranteed Securities to the public in that Relevant
Member State prior to the publication of a prospectus in relation to the
Guaranteed Securities which has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that Relevant Member
State, all in accordance with the Prospectus Directive, except that it may,
with effect from and including the Relevant Implementation Date, make an offer
of the Guaranteed Securities to the public in that Relevant Member State at any
time:

 

(i)            to legal entities
which are authorized or regulated to operate in the financial markets or, if
not so authorized or regulated, whose corporate purpose is solely to invest in
securities;

 

(ii)           to any legal entity
which has two or more of (A) an average of at least 250 employees during
the last financial year; (B) a total balance sheet of more than
€43,000,000 and (C) an annual net turnover of more than €50,000,000, as
shown in its last annual or consolidated accounts; or

 

(iii)          in any other
circumstances which do not require the publication by the issuer of a
prospectus pursuant to Article 3 of the Prospectus Directive.

 

For the purposes of this representation, the
expression an “offer of the Guaranteed Securities to the public” in any
Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the Guaranteed Securities
to be offered so as to enable an investor to decide to purchase or subscribe
the Guaranteed Securities, as the same may be varied in that Relevant Member
State by any measure implementing the Prospectus Directive in that Relevant
Member State and the expression “Prospectus Directive” means Directive
2003/71/EC and includes any relevant implementing measure in each Relevant
Member State.

 

(f)            The
Initial Purchaser also represents and
agrees that that it will not offer or sell any Guaranteed Securities, directly
or indirectly, in Japan or to, or for the benefit of, any resident of Japan
(which term as used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan), or to others
for re-offering or resale, directly or indirectly, in Japan or to a resident of
Japan, except pursuant to an exemption from the registration requirements of,
and otherwise in compliance with, the Securities and Exchange Law and any other
applicable laws, regulations and ministerial guidelines of Japan.

 

30

 

(g)           The
Initial Purchaser also represents and
agrees that it has not made and, unless it obtains the prior consent of the
Parent Companies and the Co-Issuers, will not make any offer relating to the
Guaranteed Securities that would constitute a Free Writing Communication, it
being understood that a Free Writing Communication that (i) contains only
information that describes the final terms of the Guaranteed Securities or
their offering and that is included in the Offering Memorandum or (ii) does
not contain any material information about the Co-Issuers and the Guarantors or
their securities that was provided by or on behalf of the Co-Issuers and the
Guarantors, shall not be an Issuer Free Writing Communication for purposes of
this Agreement.

 

3.             Delivery of and Payment for the Guaranteed Securities

 

(a)           Delivery of and payment for the Guaranteed Securities
shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York, New York, 10036 or at such other place
as shall be agreed upon by the Initial Purchaser and the Co-Issuers, at 10:00 A.M.,
New York City time, on November 29, 2007 or at such other time or
date as shall be agreed upon by the Initial Purchaser and the Co-Issuers (such
date and time of payment and delivery being referred to herein as the “Closing
Date”).

 

(b)           On the Closing Date, payment of the purchase price
for the Securities shall be made to the Co-Issuers by wire or book-entry
transfer of same-day funds to such account or accounts as the Co-Issuers shall specify
prior to the Closing Date or by such other means as the parties hereto shall
agree prior to the Closing Date against delivery to the Initial Purchaser of
the Guaranteed Securities through the facilities of The Depository Trust
Company (“DTC”).  Time shall be of
the essence and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of the Initial Purchaser
hereunder.  Upon delivery, the Securities
shall be in global form, registered in such names and in such denominations as
the Initial Purchaser shall have requested.

 

4.             Further Agreements of the Co-Issuers, the Guarantors
and the Parent Companies and the IHOP Securitization Entities

 

Each of the Parent Companies, each
of the Co-Issuers and each of the Guarantors, jointly and severally, agrees
with the Initial Purchaser:

 

(a)           to provide, as soon as practicable after the Closing
Date, a final Offering Memorandum for the Guaranteed Securities, to be dated as
of a date to be specified by the Initial Purchaser (the “Initial Date”),
(i) which shall not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (ii) which
shall contain all financial statements and other data, including audited
financial statements, all unaudited financial statements (which shall have been
reviewed by independent registered public accountants as provided in Statement
on Auditing Standards No. 100) and all appropriate pro forma financial
statements prepared in accordance with Regulation S-X under the Securities Act
of 1933, as amended (to the extent deemed reasonably necessary by the Initial

 

31

 

Purchaser), and all other data (including selected financial data), in each
case, that the Commission would require in a registered offering of any or all
of the Guaranteed Securities (in each case, except as otherwise agreed) or that
would be necessary for the Initial Purchaser to receive customary “comfort”
(including, without limitation, “negative assurance” comfort) from independent
registered public accountants (collectively, the “Required Financial Information”);

 

(b)           on the Initial Date, to use its best efforts:

 

(i)            to cause to be furnished to the Initial Purchaser a
letter (the “D&T Initial Comfort Letter”) of D&T, in form and
substance satisfactory to the Initial Purchaser, addressed to the Initial
Purchaser and dated the Initial Date, (1) concerning the accounting,
financial and certain of the statistical information with respect to Applebee’s
International, Holdings II and the Securitization Entities set forth in the
Offering Memorandum and (2) covering such other matters as are ordinarily
covered by accountants’ “comfort letters” to initial purchasers in connection
with such offerings of securities;

 

(ii)           to cause to be furnished to the Initial Purchaser a
letter (the “E&Y Initial Comfort Letter”) of E&Y, in form and
substance satisfactory to the Initial Purchaser, addressed to the Initial
Purchaser and dated the Initial Date, (i) concerning the accounting,
financial and certain of the statistical information with respect to IHOP, IHOP
Franchising and the Merger Sub set forth in the Offering Memorandum and (ii) covering
such other matters as are ordinarily covered by accountants’ “comfort letters”
to initial purchasers in connection with such offerings of securities;

 

(iii)          to cause to be furnished to the Initial Purchaser a
letter (the “Initial AUP Letter”) of FTI Consulting, Inc.,
addressed to the Initial Purchaser and dated the Initial Date, in form and
substance satisfactory to the Initial Purchaser, concerning certain agreed-upon
procedures performed in respect of the information presented in the Preliminary
Marketing Materials, the Supplemental Materials (if any), the Offering
Memorandum and the Investor Model Runs;

 

(iv)          to cause Skadden, Arps, Slate, Meagher &
Flom LLP, special counsel to the Co-Issuers, to furnish to the Initial
Purchaser (1) a “10b-5” disclosure letter, substantially in the form
attached hereto as Exhibit 4 and (2) customary opinions
with respect to (A) the exemption from registration under the Securities
Act of the offer and sale of the Guaranteed Securities by the Co-Issuers and
the initial resale of the Guaranteed Securities by the Initial Purchaser and (B) the
conformity of the Transaction Documents (as defined herein) to the descriptions
thereof and certain tax disclosures in the Offering Memorandum, in a form to be
agreed reasonably between Applebee’s International and the Initial Purchaser,
in each case, dated as of the Initial Date; and

 

(v)           to cause to be furnished to the Initial Purchaser
certificates with respect to the Initial Date that are substantially similar to
those to be furnished on the Closing Date pursuant to Sections 5(aa), (bb),
(cc) and (dd), except that such certificates shall pertain to the Offering
Memorandum rather than the Draft Offering Memorandum,

 

32

 

and
shall state that the relevant officer has no reason to believe that (A) the
Offering Memorandum, as of the Initial Date, included any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading or (B) since the date of the Offering
Memorandum, any event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum;

 

(c)           if
the Exempt Resales of the Guaranteed Securities by the Initial Purchaser as
contemplated by this Agreement has not been completed by the date on which the
independent registered public accountants for Applebee’s International are no
longer able to deliver a comfort letter with respect to the financial
information for the quarter ended September 30, 2007 contained in the
Offering Memorandum, to provide, as soon as practicable after the filing of
IHOP’s annual report on Form 10-K for the year ended December 31,
2007, an updated version of the Offering Memorandum, (i) which shall not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, and (ii) which shall contain all Required
Financial Information;

 

(d)           (i) to
advise the Initial Purchaser promptly and, if requested, confirm such advice in
writing, of the happening of any event which makes any statement of a material
fact made in the Offering Memorandum untrue or which requires the making of any
additions to or changes in the Offering Memorandum in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (ii) to advise the Initial Purchaser promptly of any order
preventing or suspending the use of the Preliminary Materials, the Supplemental
Materials (as defined herein) or the Offering Memorandum, of any suspension of
the qualification of the Guaranteed Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding for any
such purpose and (iii) to use commercially reasonable efforts to prevent
the issuance of any such order preventing or suspending the use of the
Preliminary Materials, the Supplemental Materials or the Offering Memorandum or
suspending any such qualification and, if any such suspension is issued, to
obtain the lifting thereof at the earliest possible time;

 

(e)           to
prepare the Offering Memorandum in a form reasonably acceptable to the Initial
Purchaser and to furnish promptly to the Initial Purchaser and counsel for the
Initial Purchaser, without charge, as many copies of the Offering Memorandum
(and any amendments or supplements thereto) as may be reasonably requested;

 

(f)            prior
to making any amendment or supplement to the Offering Memorandum, to furnish a
copy thereof to the Initial Purchaser and counsel for the Initial Purchaser and
not to effect any such amendment or supplement without the consent of the
Initial Purchaser, which consent shall not be unreasonably withheld or delayed;

 

(g)           if,
at any time prior to completion of the resale of the Securities by the Initial
Purchaser (it being agreed that upon request by the Co-Issuers, the
Initial Purchaser will promptly advise the Co-Issuers as to when such resale
has been

 

33

 

completed), any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel for the Initial
Purchaser or counsel for the Co-Issuers, to amend or supplement the Offering
Memorandum in order that the Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, or if it is necessary,
in the opinion of such counsel, at any such time to amend or supplement the
Offering Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue statement or
omission or so that the Offering Memorandum, as so amended or supplemented,
will comply with applicable law;

 

(h)           on the
date of each supplement furnished in accordance with Section 4(g) hereof
and on each date requested by the Initial Purchaser in connection with the
resale of the Guaranteed Securities (each of the foregoing, a “Bringdown
Date”), to use its best efforts:

 

(i)            to cause to be
furnished to the Initial Purchaser a letter of D&T, in form and substance
satisfactory to the Initial Purchaser, addressed to the Initial Purchaser and
dated such Bringdown Date (i) confirming that it is a firm of independent
public accountants with respect to Applebee’s International, Holdings II and
the Securitization Entities within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of such Bringdown Date (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Offering Memorandum, as
of a date not more than three business days prior to such Bringdown Date), that
the conclusions and findings of such accountants with respect to the financial
information and other matters covered by the D&T Initial Comfort Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the D&T Initial Comfort Letter;

 

(ii)           to cause to be
furnished to the Initial Purchaser a letter of E&Y, in form and substance
satisfactory to the Initial Purchaser, addressed to the Initial Purchaser and
dated such Bringdown Date (i) confirming that it is a firm of independent
public accountants with respect to IHOP, IHOP Franchising and the Merger Sub
within the meaning of Rule 101 of the Code of Professional Conduct of the
AICPA and its interpretations and rulings thereunder and are in compliance with
the applicable requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the SEC, (ii) stating, as of such Bringdown Date (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to such
Bringdown Date), that the conclusions and findings of such accountants with
respect to the financial information and other matters covered by the E&Y
Initial Comfort Letter are accurate and (iii) confirming in all material
respects the conclusions and findings set forth in the E&Y Initial Comfort
Letter;

 

34

 

(iii)          to cause to be
furnished to the Initial Purchaser a letter of FTI Consulting, Inc., in
form and substance satisfactory to the Initial Purchaser, addressed to the
Initial Purchaser and dated such Bringdown Date (i) stating, as of such
Bringdown Date (or, with respect to matters involving changes or developments
since the respective dates as of which specified information is given in the
Offering Memorandum, as of a date not more than three business days prior to
such Bringdown Date), that the conclusions, procedures and findings of such
company with respect to the information and other matters covered by the
Initial AUP Letter are accurate and (ii) confirming in all material
respects the conclusions, procedures and findings set forth in the Initial AUP
Letter;

 

(iv)          to cause Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Co-Issuers, to
furnish to the Initial Purchaser a (1) a “10b-5” disclosure letter,
substantially in the form attached hereto as Exhibit 4 and (2) customary
opinions with respect to (A) the exemption from registration under the
Securities Act of the offer and sale of the Guaranteed Securities by the
Co-Issuers and the initial resale of the Guaranteed Securities by the Initial
Purchaser and (B) the conformity of the Transaction Documents (as defined
herein) to the descriptions thereof and certain tax disclosures in the Offering
Memorandum, in a form to be agreed reasonably between Applebee’s International
and the Initial Purchaser, in each case dated as of such Bringdown Date, and

 

(v)           to cause to be furnished to the Initial Purchaser
certificates with respect to such Bringdown Date that are substantially similar
to those to be furnished on the Closing Date pursuant to Sections 5(aa), (bb),
(cc) and (dd), except that such certificates shall pertain to the Offering Memorandum rather than the Draft Offering
Memorandum, and shall state that nothing has come to each relevant officer’s
attention that would lead such officer to believe that that (A) the
Offering Memorandum, as of such Bringdown Date, included any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading or (B) since the date of the Offering
Memorandum, any event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum;

 

(i)            to cause
the senior executive officers of IHOP, Applebee’s and the Co-Issuers
(including, without limitation, Julia Stewart and Thomas Conforti) to be
available to participate in such investor presentations and roadshows as the
Initial Purchaser may reasonably request in connection with the resale of the
Guaranteed Securities;

 

(j)            to
provide such other supplemental marketing material (the “Supplemental
Materials”) as may be reasonably requested by the Initial Purchaser in
connection with the resales of the Guaranteed Securities and agreed reasonably
in writing by IHOP;

 

(k)           for a
period commencing on the date hereof and ending on the 180th day after the
completion of the resale of the Securities by the Initial Purchaser, not to,
directly or indirectly, (A) offer for sale, sell, or otherwise dispose of
(or enter into any transaction or device that is designed to, or would be
expected to, result in the disposition by any person at any time in the future
of) any debt securities of the Co-Issuers, the Parent Companies or the
Guarantors substantially similar to the Securities or securities convertible
into or exchangeable for such debt securities of the Co-Issuers, the Parent 

 

35

 

Companies or the
Guarantors, or sell or grant options, rights or warrants with respect to such
debt securities of the Co-Issuers, the Parent Companies or the Guarantors or
securities convertible into or exchangeable for such debt securities of the
Co-Issuers, the Parent Companies or the Guarantors, (B) enter into any
swap or other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such debt securities
of the Co-Issuers, the Parent Companies or the Guarantors, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of debt securities of the Co-Issuers, the Parent Companies or the
Guarantors or other securities, in cash or otherwise, (C) file or cause to
be filed a registration statement, including any amendments, with respect to
the registration of debt securities of the Co-Issuers, the Parent Companies or
the Guarantors substantially similar to the Securities or securities
convertible, exercisable or exchangeable into debt securities of the
Co-Issuers, the Parent Companies or the Guarantors or (D) publicly
announce an offering of any debt securities of the Co-Issuers, the Parent
Companies or the Guarantors substantially similar to the Securities or
securities convertible or exchangeable into such debt securities, in each case
without the prior written consent of the Initial Purchaser;

 

(l)            for
so long as the Securities are outstanding, to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Parent Companies after the date hereof pursuant to
the Exchange Act;

 

(m)          for
so long as the Securities are outstanding and are “restricted securities”
within the meaning of Rule 144(a)(3) under the Securities Act, to
furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless the Co-Issuers are then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the Securities and
prospective purchasers of the Securities designated by such holders);

 

(n)           to
promptly take from time to time such actions as the Initial Purchaser may
reasonably request to qualify the Guaranteed Securities for offering and sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may designate and to continue such qualifications in effect for so
long as required for the resale of the Guaranteed Securities; and to arrange
for the determination of the eligibility for investment of the Guaranteed
Securities under the laws of such jurisdictions as the Initial Purchaser may
reasonably request; provided that none of the Co-Issuers or Guarantors
shall be obligated to qualify as foreign corporations in any jurisdiction in
which they are not so qualified or to file a general consent to service of
process in any jurisdiction;

 

(o)           to
assist the Initial Purchaser in arranging for the Guaranteed Securities to be
eligible for clearance and settlement in the United States through DTC and in
Europe through Euroclear Bank, S.A./N.V., or Clearstream Banking, société
anonyme;

 

36

 

(p)           to comply
with all the terms and conditions of all agreements set forth in the
representation letters of the Co-Issuers and
the Guarantors to DTC relating to the approval of the Securities by DTC
for “book entry” transfer;

 

(q)           not to
take any action or omit to take any action (such as issuing any press release
relating to the Securities without an appropriate legend) which may result in
the loss by the Initial Purchaser of the ability to rely on any stabilization
safe harbor provided by the Financial Services Authority under the FSMA;

 

(r)            not to, and to cause their affiliates not to, sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which could
reasonably be expected to be integrated with the sale of the Guaranteed
Securities in a manner which would require registration of the Guaranteed
Securities under the Securities Act;

 

(s)           not to, and to cause its affiliates not to, engage in
any directed selling efforts within the meaning of Regulation S;

 

(t)            to comply, and to cause its affiliates to comply,
with the offering restrictions set forth in Regulation S;

 

(u)           not to, and to cause their affiliates not to,
authorize or knowingly permit any person acting on their behalf to solicit any
offer to buy or offer to sell the Guaranteed Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer,
sell, contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or disposition
would cause the exemption afforded by Section 4(2) or of Rule 144A
of the Securities Act or Section 3(c)(7) of the 1940 Act to cease to be
applicable to the offering and sale of the Guaranteed Securities as
contemplated by this Agreement, the Draft Offering Memorandum and the Offering
Memorandum;

 

(v)           in connection with the offering of the Guaranteed
Securities, until the Initial Purchaser shall have notified the Co-Issuers of
the completion of the resale of the Guaranteed Securities, not to, and to cause
their affiliated purchasers (as defined in Regulation M under the Exchange
Act) not to, either alone or with one or more other persons, bid for or
purchase, for any account in which they or any of their affiliated purchasers
have a beneficial interest, any Guaranteed Securities, or attempt to induce any
person to purchase any Guaranteed Securities; and not to, and to cause their
affiliated purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Securities;

 

(w)          in connection with the offering of the Guaranteed
Securities, to make their officers, employees, independent accountants and
legal counsel available upon reasonable request by the Initial Purchaser;

 

37

 

(x)            to furnish to the Initial Purchaser, prior to the
date of each Offering Memorandum, a copy of each signed independent accountants’
report to be included in such Offering Memorandum;

 

(y)           to apply the net proceeds from the sale of the
Guaranteed Securities as set forth in herein (as of the Closing Date) and the
Offering Memorandum under the heading “Use of Proceeds” (as of the Initial Date
and each Bringdown Date);

 

(z)            to the extent that the ratings to be provided with
respect to the Securities by Moody’s Investors Service, Inc. (“Moody’s”),
Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. (“S&P”) and Fitch, Inc. (“Fitch”,
and together with Moody’s and S&P, the “Rating Agencies”) are
conditional upon the furnishing of documents or the taking of any other actions
by the Co-Issuers, the Parent Companies, the Guarantors or any of their
affiliates, to furnish such documents and take any such other action that is
reasonably requested by the Rating Agencies;

 

(aa)         for a period from the date of this Agreement until
the retirement of the Guaranteed Securities, or until such time as the Initial
Purchaser shall cease to maintain a secondary market in the Guaranteed
Securities, whichever occurs first, to furnish to the Initial Purchaser, as
soon as available, (i) copies of each report and certificate and any
financial information delivered to the holders of the Guaranteed Securities or
filed with any stock exchange or regulatory body and (ii) from time to
time such other information concerning the Co-Issuers, the Parent Companies and
the Guarantors as the Initial Purchaser may reasonably request;

 

(bb)         unless it
obtains the prior consent of the Initial Purchaser, not to make (and each such
party represents that it has not made) any offer relating to the Guaranteed
Securities that would constitute a Free Writing Communication; if at any time
following issuance of a Free Writing Communication any event occurred or occurs
as a result of which such Free Writing Communication conflicts with the
information in the Offering Memorandum or, when taken together with the
information in the Offering Memorandum, includes an untrue statement of a
material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstances then prevailing, not
misleading, as promptly as practicable after becoming aware thereof, to give
notice thereof to the Initial Purchaser and, if requested by the Initial
Purchaser, to prepare and furnish without charge to the Initial Purchaser a
Free Writing Offering Communication or other document which will correct such
conflict, statement or omission;

 

(cc)         to consent
to the use by the Initial Purchaser of (1) the Offering Memorandum, (2) the
Preliminary Marketing Materials, (3) the Supplemental Materials and (4) additional
marketing materials to be provided to prospective investors, consisting of
model runs (“Investor Model Runs”), which will be subject to the procedures set
forth in the Initial AUP Letter (as defined below);

 

(dd)         to use its
best efforts to assist the Initial Purchaser in marketing the Guaranteed
Securities after the Closing Date;

 

38

 

(ee)         to cooperate
reasonably in any due diligence investigations by representatives of the
Initial purchaser that may be required in connection with the use of the
Offering Memorandum; and

 

(ff)           to
promptly update the Offering Memorandum, upon the request of the Initial
Purchaser, until such time as the Initial
Purchaser shall cease to own any of the Securities.

 

5.             Conditions of Initial Purchaser’s Obligations

 

The obligations of the Initial
Purchaser hereunder are subject (i) to the accuracy, on and as of the date
hereof, of the representations and warranties of the Co-Issuers, the
Guarantors, IHOP and the Merger Sub contained herein, and on and as of the
Closing Date of the representations and warranties of the Co-Issuers, the
Guarantors, the Parent Companies and the IHOP Securitization Entities contained
herein, (ii) to the accuracy of the statements of each of the Co-Issuers,
the Guarantors, the Parent Companies and their respective officers made in any
certificates delivered pursuant hereto, (iii) to the performance by the
Co-Issuers, the Guarantors, the Parent Companies and the IHOP Securitization
Entities of their obligations hereunder and (iv) to each of the following
additional terms and conditions:

 

(a)           No stop order suspending the sale of the Guaranteed
Securities in any jurisdiction shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.

 

(b)           The Initial Purchaser shall not have discovered and
disclosed to the Co-Issuers or the Parent Companies on or prior to the Closing
Date that the Draft Offering Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in the opinion
of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

(c)           All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Guaranteed Securities, each of the Transaction Documents and the Offering
Memorandum, and all other legal matters relating to this Agreement, the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchaser, and the
Co-Issuers, the Guarantors and the Parent Companies shall have furnished to the
Initial Purchaser all documents and information that the Initial Purchaser or
its counsel may reasonably request to enable it to pass upon such matters.

 

(d)           The Supplement shall have been duly executed and
delivered by the Co-Issuers and the Trustee, and the Securities shall have been
duly executed and delivered by the Co-Issuers and duly authenticated by the
Trustee.

 

39

 

(e)           Each of the Transaction Documents shall have been
duly executed and delivered by the respective parties thereto and the
Initial Purchaser shall have received an original copy of each Transaction
Document, duly executed and delivered by the respective parties thereto.

 

(f)            The Initial Purchaser shall have received a letter from
each Rating Agency stating that each series of the Securities has received the
ratings indicated in the table below:

 

	
  Security

  	
   

  	
  Moody’s Rating

  	
   

  	
  S&P Rating

  	
   

  	
  Fitch Rating

  	
   

  
	
  Series 2007-1
  Class A-2-I Notes

  	
   

  	
  Baa3

  	
   

  	
  BBB-

  	
   

  	
  BBB-

  	
   

  
	
  Series 2007-1
  Class A-2-II-A Notes

  	
   

  	
  Aaa

  	
   

  	
  AAA

  	
   

  	
  AAA

  	
   

  
	
  Series 2007-1
  Class A-2-II-X Notes

  	
   

  	
  Baa3

  	
   

  	
  BBB-

  	
   

  	
  BBB-

  	
   

  
	
  Series 2007-1
  Class M-1 Notes

  	
   

  	
  NR

  	
   

  	
  BB

  	
   

  	
  BB

  	
   

  

 

(g)           Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following:  (i) trading
in securities generally on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Global Market or in the over-the-counter market, or
trading in any securities of Applebee’s International, IHOP or IHOP Franchising
on any exchange or in the over-the-counter market, shall have been suspended or
materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction (except that a
suspension of trading in the securities of Applebee’s International as a result
of the completion of the Merger shall be permitted), (ii) a banking
moratorium shall have been declared by federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been
an escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States, (iv) a
material disruption in securities settlement or clearing or payment systems
shall have occurred or (v) there shall have occurred such a material
adverse change in general economic, political or financial conditions,
including, without limitation, as a result of terrorist activities after the
date hereof (or the effect of international conditions on the financial markets
in the United States shall be such), as to make it, in the judgment of the Initial
Purchaser, impracticable or inadvisable to proceed with the offering or
delivery of the Guaranteed Securities being delivered on the Closing Date on
the terms and in the manner contemplated hereby or that, in the judgment of the
Initial Purchaser, would materially and adversely affect the financial markets
or the markets for the Guaranteed Securities and other debt securities.

 

(h)           None
of (i) the issuance and sale of the Guaranteed Securities pursuant to this
Agreement, (ii) the transactions contemplated by the Transaction Documents
or (iii) the use of the Preliminary Marketing Materials, the Supplemental
Materials or the Offering Memorandum shall be subject to an injunction
(temporary or permanent) and no

 

40

 

restraining order
or other injunctive order shall have been issued; and there shall not have been
any legal action, order, decree or other administrative proceeding instituted
or threatened against the Co-Issuers, the Guarantors or the Parent Companies or
the Initial Purchaser that would be reasonably likely to adversely impact the
issuance or resale of the Guaranteed Securities or the Initial Purchaser’s activities in connection therewith or
any other transactions contemplated hereby or by the Transaction Documents.

 

(i)            The
Initial Purchaser shall have received evidence satisfactory to the Initial
Purchaser and its counsel that all conditions precedent to the issuance of the
Guaranteed Securities under the Indenture and the G&C Agreements have been
satisfied.

 

(j)            The
Initial Purchaser shall have received evidence satisfactory to the Initial
Purchaser and its counsel, that on or before the Closing Date, all
existing liens (other than Permitted Liens) on the Indenture Collateral shall
have been released and UCC-1 financing
statements and all assignments and other instruments required to be filed on or
prior to the Closing Date pursuant to the Transaction Documents have been or
are being filed.

 

(k)           The
Initial Purchaser shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel to the Co-Issuers, the Guarantors
and the Parent Companies, dated the Closing Date and addressed to the Initial
Purchaser, substantially in the form attached hereto as Exhibit 5.

 

(l)            The
Initial Purchaser shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel
to the Co-Issuers, the Guarantors and the Parent Companies, dated the Closing
Date and addressed to the Initial Purchaser, substantially in the form attached
hereto as Exhibit 6 regarding the substantive nonconsolidation of
the assets and liabilities of the Co-Issuers, the other Securitization Entities
and their affiliates.

 

(m)          The
Initial Purchaser shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel
to the Co-Issuers, the other Securitization Entities and the Parent Companies,
dated the Closing Date and addressed to the Initial Purchaser, substantially in
the form attached hereto as Exhibit 7 regarding the treatment of
the transfers of assets as “true contributions” or other absolute transfers.

 

(n)           The
Initial Purchaser shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel
to the Co-Issuers, dated the Closing Date and addressed to the Initial
Purchaser, substantially in the form attached hereto as Exhibit 8
regarding the U.S. federal income tax treatment of the Securities, among other
things.

 

(o)           The
Initial Purchaser shall have received an opinion of Blackwell Sanders LLP, as
franchise counsel to the Co-Issuers, the Guarantors and the Parent Companies,
dated the Closing Date and addressed to the Initial Purchaser, regarding
compliance with applicable franchising laws and regulations and such other
matters as the Initial Purchaser may request, in form and substance
satisfactory to the Initial Purchaser and its counsel.

 

41

 

(p)           The
Initial Purchaser shall have received an opinion of in-house counsel to the
Co-Issuers, the Guarantors and the Parent Companies dated the Closing Date and
addressed to the Initial Purchaser, regarding compliance with applicable
franchising laws and regulations and such other matters as the Initial
Purchaser may request, in form and substance satisfactory to the Initial
Purchaser and its counsel.

 

(q)           The
Initial Purchaser shall have received an opinion of in-house counsel to the
IHOP and the IHOP Securitization Entities dated the Closing Date and addressed
to the Initial Purchaser, regarding such matters as the Initial Purchaser may
request, in form and substance satisfactory to the Initial Purchaser and its
counsel.

 

(r)            The
Initial Purchaser shall have received an opinion of Blackwell Sanders LLP,
special Kansas counsel to the Servicer, Applebee’s Restaurants Kansas LLC (“Applebee’s
Kansas”) and Applebee’s Restaurants Inc. (“Applebee’s Restaurants”),
dated the Closing Date and addressed to the Initial Purchaser, regarding the
due organization of the Servicer, Applebee’s Kansas and Applebee’s Restaurants,
the enforceability of (i) the Charter Documents of the Servicer against
the Servicer, (ii) the Charter Documents of Applebee’s Kansas against
Applebee’s Kansas and (iii) the Charter Documents of Applebee’s
Restaurants against Applebee’s Restaurants in form and substance satisfactory
to the Initial Purchaser and its counsel.

 

(s)           The
Initial Purchaser shall have received an opinion of Witten, Woolmington,
Campbell & Boepple, P.C., special Vermont counsel to Applebee’s
Restaurants Vermont, Inc. and Apple Vermont Restaurants, Inc.
(collectively, “Applebee’s Vermont”), dated the Closing Date and
addressed to the Initial Purchaser, regarding the due organization of Applebee’s
Vermont, the enforceability of the Charter Documents of Applebee’s Vermont
against Applebee’s Vermont, in form and substance satisfactory to the Initial
Purchaser and its counsel.

 

(t)            The
Initial Purchaser shall have received an opinion of Blackwell Sanders LLP,
special New Mexico counsel to Applebee’s of New Mexico Inc. (“Applebee’s New
Mexico”), dated the Closing Date and addressed to the Initial Purchaser,
regarding the due organization of Applebee’s New Mexico, the enforceability of
the Charter Documents of Applebee’s New Mexico against Applebee’s New Mexico,
in form and substance satisfactory to the Initial Purchaser and its counsel.

 

(u)           The
Initial Purchaser shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware
counsel to the Co-Issuers and the Guarantors organized in Delaware, dated the
Closing Date and addressed to the Initial Purchaser, regarding the
applicability of Delaware law to the determination of what persons have the
authority to file a voluntary bankruptcy petition on behalf of the Co-Issuers
and the Guarantors organized in Delaware, in form and substance satisfactory to
the Initial Purchaser and its counsel.

 

(v)           The
Initial Purchaser shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware
counsel to the Co-Issuers and the Guarantors organized in Delaware, dated the
Closing Date and addressed to the Initial

 

42

 

Purchaser,
regarding the filing of UCC-1 financing statements, the perfection and priority
of the security interests created under the Indenture and the absence of any
prior financing statements of record against any of the Co-Issuer or any of the
Guarantors organized in Delaware identifying any of the Indenture Collateral
(based on a review of UCC filings), in form and substance satisfactory to the
Initial Purchaser and its counsel.

 

(w)           The
Initial Purchaser shall have received an opinion of in-house counsel to Assured Guaranty with respect to the Series 2007-1
Class A-2-II-A Notes, dated the Closing Date and addressed to the
Initial Purchaser, in form and substance satisfactory to the Initial Purchaser
and its counsel.

 

(x)            The
Initial Purchaser shall have
received an opinion of Chapman and Cutler LLP, counsel to the Trustee, dated
the Closing Date and addressed to the Initial Purchaser, in form and substance
satisfactory to the Initial Purchaser and its counsel.

 

(y)            The
Initial Purchaser shall have
received an opinion of inhouse counsel to the Back-Up Manager, dated the
Closing Date and addressed to the Initial Purchaser, in form and substance
satisfactory to the Initial Purchaser and its counsel.

 

(z)            The
Initial Purchaser shall have received an opinion of Paul, Weiss, Rifkind,
Wharton & Garrison LLP, dated the Closing Date and addressed to the
Initial Purchaser, with respect to the validity of the Securities and such
other matters as the Initial Purchaser may reasonably request.

 

(aa)          The Initial Purchaser shall have received a certificate from each Co-Issuer executed on behalf
of such Co-Issuer by any two of the
President, any Manager, the Chief Executive Officer, any Vice President, the
Chief Financial Officer, the Secretary, the General Counsel or the Treasurer of
such Co-Issuer, dated the Closing Date, to the effect that, to the best of each
such officer’s knowledge (i) the representations and warranties of such
Co-Issuer in this Agreement are true and correct on and as of the date hereof
and the Closing Date and the representations and warranties of such Co-Issuer
in any other Transaction Documents to which such Co-Issuer is a party are true
and correct on and as of the date hereof and the Closing Date; (ii) that
such Co-Issuer has complied in all material respects with all agreements and
satisfied all conditions on such Co-Issuer’s part to be performed or satisfied
hereunder or under the Transaction Documents at or prior to the Closing Date; (iii) subsequent
to the date as of which information is given in the Draft Offering Memorandum,
there has not been any development in the general affairs, business,
properties, capitalization, condition (financial or otherwise) or results of
operation of such Co-Issuer except as set forth or contemplated in the Draft
Offering Memorandum or as described in such certificate or certificates that
could reasonably be expected to result in a Material Adverse Effect; and (iv) nothing
has come to such officer’s attention that would lead such officer to believe
that (A) as of the Closing Date, the Draft Offering Memorandum did
not present fairly, in all material respects, the business, results of
operations and financial condition of the Co-Issuers and the Guarantors or (B) since
the date of the Draft Offering Memorandum, any event has occurred which should
have been set forth in a supplement or amendment to the Draft Offering
Memorandum so that it would present fairly, in all material respects,

 

43

 

the business,
results of operations and financial condition of the Co-Issuers and the
Guarantors.

 

(bb)         The
Initial Purchaser shall have received a certificate from each Parent Company
executed on behalf of such Parent Company by any two of the President, any Manager, the Chief
Executive Officer, any Vice President, the Chief Financial Officer, the
Secretary, the General Counsel or the Treasurer of such Parent Company, dated the Closing
Date, to the effect that, to the best of each such officer’s knowledge (i) the
representations and warranties of such Parent Company in this Agreement are
true and correct on and as of the date hereof (to the extent made on and as of
the date hereof) and the Closing Date, and the representations and warranties
of such Parent Company in any other Transaction Documents to which such Parent
Company is a party are true and correct on and as of the date hereof (to the
extent made on and as of the date hereof) and the Closing Date; (ii) the
representations and warranties of each Securitization Entity in any Transaction
Documents to which such Securitization Entity is a party are true and correct
on and as of the date hereof and the Closing Date; (iii) the representations
and warranties with respect to each Applebee’s Entity and each IHOP
Entity that is neither a Securitization Entity
nor a Parent Company (each a “Pre-Securitization Entity”) in any Transaction Documents to which such
Pre-Securitization Entity is a party are true and correct on and as of the date
hereof and the Closing Date; (iv) that such Parent Company has complied in
all material respects with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder or under the Transaction Documents
at or prior to the Closing Date; (v) subsequent to the date as of which information is given in the Draft
Offering Memorandum, there has not been any development in or affecting
particularly the business or assets of such Parent Company and their
subsidiaries considered as a whole or in the financial position or results of
operations of such Parent Company and its subsidiaries considered as a whole,
otherwise than as set forth or contemplated in the Draft Offering Memorandum or
as described in such certificate or certificates that could reasonably be
expected to result in a Material Adverse Effect and (vi) nothing has come
to such officer’s attention that would lead such officer to believe that (A) as
of the Closing Date, the Draft Offering Memorandum did not present fairly, in
all material respects, the business, results of operations and financial
condition of the Co-Issuers and the Guarantors or (B) since the date of
the Draft Offering Memorandum, any event has occurred which should have been
set forth in a supplement or amendment to the Draft Offering Memorandum so that
it would present fairly, in all material respects, the business, results of
operations and financial condition of the Co-Issuers and the Guarantors.

 

(cc)         The
Initial Purchaser shall have received a certificate from each Securitization
Entity that is not a Co-Issuer signed by any two of the President, any Manager, the Chief
Executive Officer, any Vice President, the Chief Financial Officer, the
Secretary, the General Counsel or the Treasurer of such Securitization Entity, dated the Closing Date, in which each such
officer shall state that, to the best of each such officer’s knowledge (i) the
representations and warranties of such Securitization Entity in this Agreement
are true and correct on and as of the Closing Date and the representations and
warranties of such Securitization Entity in any other Transaction Documents to
which such Securitization Entity is a party are true and correct on and as of
the Closing

 

44

 

Date; (ii) that such Securitization Entity has complied in all
material respects with all agreements and satisfied all conditions on such
Securitization Entity’s part to be performed or satisfied hereunder or under
the Transaction Documents at or prior to the Closing Date and (iii) subsequent
to the date as of which information is given in the Draft Offering Memorandum,
there has not been any development in the general affairs, business,
properties, capitalization, condition (financial or otherwise) or results of
operation of such Securitization Entity except as set forth or contemplated in
the Draft Offering Memorandum or as described in such certificate or
certificates that could reasonably be expected to result in a Material Adverse
Effect.

 

(dd)         The
Initial Purchaser shall have received a certificate from each
Pre-Securitization Entity executed on behalf of such entity by any two of the President, any Manager, the Chief
Executive Officer, any Vice President, the Chief Financial Officer, the
Secretary, the General Counsel or the Treasurer of such entity, dated the Closing Date, to the effect that, to the best of
each such officer’s knowledge (i) the representations and warranties of
such Pre-Securitization Entity in this Agreement are true and correct on and as
of the Closing Date and the representations and warranties of such
Pre-Securitization Entity in any other Transaction Documents to which such
Pre-Securitization Entity is a party are true and correct on and as of the
Closing Date; (ii) that such Pre-Securitization Entity has complied in all
material respects with all agreements and satisfied all conditions on such
Pre-Securitization Entity’s part to be performed or satisfied hereunder or
under the Transaction Documents at or prior to the Closing Date and (iii) subsequent
to the date as of which information is given in the Draft Offering Memorandum,
there has not been any development in the general affairs, business,
properties, capitalization, condition (financial or otherwise) or results of
operation of such Pre-Securitization Entity except as set forth or contemplated
in the Draft Offering Memorandum or as described in such certificate or
certificates that could reasonably be expected to result in a Material Adverse
Effect.

 

(ee)         The
Trustee shall have received a fully effective financial guaranty policy issued
by Assured Guaranty
in form and substance satisfactory to the Initial Purchaser and its counsel.

 

(ff)           The
Co-Issuers shall have delivered the Series 2007-1 Class A-1 Senior
Notes in the amounts agreed upon by the Initial Purchaser simultaneously with
the delivery to the Initial Purchaser of the
Guaranteed Securities on the Closing Date.

 

(gg)         The
Merger shall have been completed on the Closing Date on the terms specified in
the Merger Agreement and as contemplated by the Draft Offering Memorandum.

 

(hh)         The
IHOP Securitization shall have been completed on the Closing Date as
contemplated by the Draft Offering Memorandum.

 

(ii)           All
necessary waivers, consents and approvals for the issuance of the Guaranteed
Securities and the completion of the transactions contemplated by the
Transaction Documents shall have been obtained, including, without limitation, (i)

 

45

 

waivers and
consents by Financial Guaranty Insurance Company, a New York stock insurance
corporation and (ii) confirmations and approvals by the Rating Agencies
with respect to such waivers and consents.

 

All opinions, letters, evidence and
certificates mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Initial Purchaser.

 

6.             Termination.

 

The obligations of the Initial Purchaser hereunder may
be terminated at the sole discretion of the Initial Purchaser by notice given
to and received by the Co-Issuers prior to delivery of and payment for the
Securities if, prior to that time, any of the events described in
Sections 5(g) and 5(h) shall have occurred and be continuing,
any of the certifications in Sections 5(aa)(iii), (bb)(v), (cc)(iii) and
(dd)(iii) cease to be true and correct, or if the Initial Purchaser shall
decline to purchase the Securities for any reason permitted under this
Agreement, including, but not limited to, the failure, refusal or inability by
any of the Co-Issuers, the Guarantors or the Parent Companies to satisfy all
conditions on its part to be performed or satisfied hereunder on or prior to
the Closing Date.

 

7.             Indemnification

 

(a)           Each of the Co-Issuers, the Guarantors and the Parent
Companies shall, jointly and severally, indemnify and hold harmless the Initial
Purchaser, its affiliates, its officers, directors, shareholders, partners, trustees,
employees, representatives and agents, and each person, if any, who controls
the Initial Purchaser within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of Sections 7(a) and 8 as
the Initial Purchaser), from and against any loss, claim, damage or liability,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of the
Securities), to which the Initial Purchaser may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in (A) the Bridge Syndication Materials, the Preliminary
Marketing Materials, the Supplemental Materials or the Offering Memorandum or
in any amendment or supplement thereto, or in any Issuer Free Writing
Communication, (B) any other information provided pursuant to Section 4(j) or
4(cc) hereof or (C) other materials provided to potential investors with
the prior written consent of the Co-Issuers, Parent Companies or Guarantors
(collectively, the items in (A), (B) and (C) above, the “Offering
Materials”), (ii) the omission or alleged omission to state in the
Offering Materials a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or (iii) any
act or failure to act or any alleged act or failure to act by the Initial
Purchaser in connection with, or relating in any manner to, the Securities or
the offering contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage, liability 

 

46

 

or action arising out of or based upon matters covered by clause (i) or
(ii) above (provided that the Co-Issuers, the Guarantors and the Parent
Companies shall not be liable under this clause (iii) to the extent that
it is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by the Initial
Purchaser through its gross negligence or willful misconduct), and shall
reimburse the Initial Purchaser and each such director, officer,
employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by the Initial
Purchaser, director, officer, employee or controlling person in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Co-Issuers, the Guarantors and the Parent Companies shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the Offering
Materials, in reliance upon and in conformity with written information
concerning the Initial Purchaser furnished to the Co-Issuers by the Initial
Purchaser specifically for inclusion therein, which information consists solely
of the information specified in Section 13 (the “Initial Purchaser’s Information”).

 

(b)           The
Initial Purchaser shall indemnify and hold harmless each of the Parent
Companies, each of the Guarantors and each of the Co-Issuers, and their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls any of the Parent Companies, the Guarantors or any
of the Co-Issuers within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of Sections 7(b) and 8 as the “IHOP/Applebee’s
Parties”), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the IHOP/Applebee’s Parties
may become subject, whether commenced or threatened, under the Securities Act,
the Exchange Act, any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Offering Materials
or (ii) the omission or alleged omission to state in the Offering
Materials a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with the information relating to
the Initial Purchaser furnished to the Co-Issuers by the Initial Purchaser
specifically for use therein (as set forth in Section 13 below), and shall
reimburse the IHOP/Applebee’s Parties, for any legal or other expenses
reasonably incurred by the IHOP/Applebee’s Parties in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred.

 

(c)           Promptly
after receipt by an indemnified party under this Section 7 of notice of
any claim or the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party pursuant
to

 

47

 

Section 7(a) or 7(b), notify the indemnifying party in writing of
the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that
it has been materially prejudiced (through the forfeiture of substantive or
procedural rights or defenses) by such failure; and, provided, further,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this Section 7.  If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. 
Except as otherwise set forth in this Section 7(c), after notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.  Any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying parties and an indemnified
party and the indemnified party has reasonably concluded that representation of
both parties by the same counsel would be inappropriate due to material actual
or potential differing interests between them. 
It is understood that the indemnifying parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all indemnified parties, and that all such reasonable fees
and expenses shall be reimbursed as they are incurred and paid.  In the case of any such separate firm for the
indemnified parties, such firm shall be designated in writing by the
indemnified parties. No indemnifying party shall be liable for any settlement
of any such action or claim effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with its written consent or
if there be a final judgment for the plaintiff in any such action or claim, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment
in accordance with the terms hereof.  No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement (i) includes an explicit and unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any indemnified
party.

 

(d)           The obligations of the Parent Companies, the
Guarantors, the Co-Issuers and the Initial Purchaser in this Section 7 and
in Section 8 are in addition to any other liability that the Parent
Companies, the Guarantors, the Co-Issuers or the Initial

 

48

 

Purchaser, as the case may be, may otherwise have, including in respect of
any breaches of representations, warranties and agreements made herein by any
such party.

 

8.             Contribution

 

If the indemnification provided for
in Section 7 is unavailable or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b), then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received by
the IHOP/Applebee’s Parties on the one hand and the Initial Purchaser on the
other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the IHOP/Applebee’s
Parties on the one hand and the Initial Purchaser on the other with respect to
the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations.  The relative
benefits received by the IHOP/Applebee’s Parties on the one hand and the
Initial Purchaser on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Co-Issuers on the one hand, and the total discounts and
commissions received by the Initial Purchaser with respect to the Securities
purchased under this Agreement, on the other, bear to the total gross proceeds
from the sale of the Securities under this Agreement as set forth on the cover page of
the Offering Memorandum.  The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to IHOP/Applebee’s Parties or
information supplied by the IHOP/Applebee’s Parties on the one hand or to the
Initial Purchaser’s Information on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. 
For purpose of the preceding two sentences, the net proceeds
deemed to be received by the Co-Issuers shall be deemed to be also for the
benefit of the Parent Companies and the Guarantors, and information supplied by
the Co-Issuers shall also be deemed to have been supplied by the Parent Companies
and the Guarantors.  The Parent Companies, the Guarantors, the
Co-Issuers and the Initial Purchaser agree that it would not be just and
equitable if contributions pursuant to this Section 8 were to be
determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to herein. 
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to above
in this Section 8 shall be deemed to include, for purposes of this Section 8,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim.  Notwithstanding the
provisions of this Section 8, the Initial Purchaser shall not be required
to contribute any amount in excess of the amount by which the total discounts
and commissions received by the Initial Purchaser with respect to the
Securities

 

49

 

purchased by it under this Agreement
exceeds the amount of any damages which the Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. 
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.

 

9.             Persons Entitled to Benefit of Agreement

 

This Agreement shall inure to the
benefit of and be binding upon the Initial Purchaser, the Co-Issuers, the
Guarantors, the Parent Companies and their respective successors.  This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 7 and 8 with respect to controlling persons of the Co-Issuers and
the Initial Purchaser and in Section 4(k) with respect to holders and
prospective purchasers of the Securities. 
Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 9, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.

 

10.           Expenses, Fees and Swap Termination

 

(a)           The
Co-Issuers and the Guarantors, jointly
and severally, in accordance with this Agreement, agree to pay (i) the
costs incident to the authorization, issuance, sale, resale, preparation and
delivery of the Guaranteed Securities and any taxes payable in that connection;
(ii) the costs incident to the preparation, printing and distribution of
the Preliminary Marketing Materials, the Supplemental Materials and the
Offering Memorandum and any amendments or supplements thereto; (iii) the
costs of reproducing and distributing each of the Transaction Documents; (iv) the
costs incident to the preparation, printing and delivery of the global
certificates evidencing the Guaranteed Securities, including stamp duties and
transfer taxes, if any, payable upon issuance of the Securities; (v) the
fees and expenses of counsel to the Co-Issuers and the Guarantors; (vi) the
fees and expenses of qualifying the Guaranteed Securities under the securities
laws of the several jurisdictions and of preparing, printing and distributing
Blue Sky memoranda (including related fees and expenses of counsel for the
Initial Purchaser); (vii) any fees charged by the Rating Agencies in
connection with their rating of the Guaranteed Securities; (viii) the fees
and expenses of the Trustee and any paying agent (including related fees and
expenses of any counsel to such parties); (ix) all expenses and
application fees incurred in connection with the approval of the Guaranteed
Securities for book-entry transfer by DTC; (x) fees and expenses incurred
by the Co-Issuers and the Guarantors in connection with any “roadshow”
presentations to investors, including, without limitation, expenses related to
the use of any aircraft in connection therewith; and (xi) all other costs
and expenses incident to the performance of the obligations of the Co-Issuers
and the Guarantors under this Agreement which are not otherwise specifically
provided for in this Section 10.

 

(b)           The
Parent Companies, in accordance with this Agreement, agree to pay (i) the
fees and expenses of counsel to the Parent Companies and the Pre-Securitization

 

50

 

Entities,
(ii) the fees and expenses of the independent accountants of the Applebee’s
Entities and the IHOP Entities; (iii) the fees and expenses of the
accountants incurred in connection with the delivery of the comfort letters and
“agreed upon procedures” letters to the Initial Purchaser pursuant to the terms
of this Agreement, (iv) the fees and expenses incurred by the Parent
Companies in connection with any “roadshow” presentations to investors,
including, without limitation, expenses related to the use of any aircraft in
connection therewith, (v) the fees and expenses of the Initial Purchaser
incurred in connection with the transactions contemplated by this Agreement,
including but not limited to fees and expenses incurred by the Initial
Purchaser in connection with any “roadshow” presentations to investors,
including, without limitation, expenses related to the use of any aircraft in
connection therewith, the fees and expenses of Paul, Weiss, Rifkind, Wharton &
Garrison LLP, counsel to the Initial Purchaser (including expenses incurred in
connection with due diligence and travel, courier, reproduction, printing and
delivery expenses, but excluding the IHOP Excluded Fees), the fees of outside
accountants, the costs of any diligence service and the fees of any other
advisor retained by the Initial Purchaser with the prior approval of the Parent
Companies (not to be unreasonably withheld) (whether incurred prior to or
subsequent to the Closing Date) and (vi) all other costs and expenses
incident to the performance of the obligations of the Parent Companies under
this Agreement and under the Transaction Documents which are not otherwise
specifically provided for in this Section 10.  Notwithstanding the foregoing, if (a) this
Agreement shall have been terminated pursuant to Section 6, (b) the
Co-Issuers shall fail to tender the Guaranteed Securities for delivery to the
Initial Purchaser for any reason permitted under this Agreement or (c) the
Initial Purchaser shall decline to purchase the Guaranteed Securities for any
reason permitted under this Agreement, the Parent Companies shall reimburse the
Initial Purchaser for such out-of-pocket expenses (including reasonable fees
and disbursements of counsel) as shall have been reasonably incurred by the
Initial Purchaser in connection with this Agreement and the proposed purchase
and resale of the Guaranteed Securities. 
For purposes of this Agreement, the “IHOP Excluded Fees” means
legal fees and expenses of Paul, Weiss, Rifkind, Wharton & Garrison
LLP incurred prior to the Closing Date in connection with (x) such counsel’s
due diligence investigation of the assets and business of IHOP and its existing
subsidiaries (which, for the avoidance of doubt, excludes Applebee’s and its
existing subsidiaries) and (y) the preparation, review, negotiation,
execution and delivery of all documentation in connection with the IHOP
Securitization.

 

(c)           The interest rate swap
that is documented in the confirmation dated July 16, 2007 (the “Swap
Confirmation”) between IHOP and Lehman Brothers Special Financing Inc. is
deemed terminated as if an “Additional Termination Event” had occurred
thereunder, the “Settlement Amount” to be paid in cash, in immediately
available funds, on the Closing Date. 
For purposes of the Swap Confirmation, an “Early Termination Date” shall
be deemed to have occurred as of November 28, 2007, and IHOP Corp. shall
be the sole “Affected Party.”

 

(d)           IHOP agrees to pay to the Initial Purchaser an additional placement
fee, in immediately available funds, on August 29, 2008, of $40,780,000
(the “Incremental Deferred Discounts”), in respect of the discount at
which the Guaranteed Securities and the $245,000,000
aggregate principal amount of Series 2007-3 Fixed Rate Term Notes 

 

51

 

(the “IHOP Notes” and, together with the Guaranteed Securities,
the “Notes”) being
issued in the IHOP Securitization by the IHOP Securitization Entities
are expected to be resold.

 

(e)           The
Initial Purchaser hereby waives (a) all “Sale Leaseback Fees” provided for
in the Engagement Letter, dated October 8, 2007 (the “SLB Engagement
Letter”), between the Initial Purchaser and IHOP and (b) all fees
associated with any additional asset-backed securities (the proceeds of which
are used to repay the Subordinated Notes) that are issued by the IHOP
Securitization Entities prior to November 29, 2008 (the “Additional
IHOP Securitization”); provided that IHOP shall pay all legal fees and
other expenses (including those of the Initial Purchaser) under the SLB
Engagement Letter and those related to the Additional IHOP Securitization.

 

(f)            Within
five business days (such date, the “Refund Date”) after the later of (i) the
completion of the resale of all of the Notes by the Initial Purchaser to
unaffiliated third party investors and (ii) the date on which all fees and
expenses due and payable to the Initial Purchaser under this Letter Agreement,
the Engagement Letter, the Commitment Letter or otherwise have been paid by
IHOP, the Initial Purchaser agrees to refund to IHOP an amount, in immediately
available funds, equal to 40% times the sum, if positive, of the Resale
Differentials (as defined) for the Notes resold.  The “Resale Differential” (which may
be negative) for any Note resold is (A) the proceeds (the “Resale
Proceeds”) from the resale of such Note to a third party investor which
reflect the dollar price (in each case, adjusted to include the cost of any
secondary surety policy, derivative and/or financing transactions entered into
in connection with selling such Note the cost of which were not reflected in
the proceeds paid to the Initial Purchaser on account of the sale of such Note)
at which the Initial Purchaser sells such Note to a third party investor;
provided, however, in the case of the repayment of a Note prior to the resale
of such Note, the Resale Proceeds will be calculated as if the Note was resold
at par, minus (B) the hypothetical sale proceeds resulting from the
hypothetical dollar price (the “Adjusted Purchase Price”) that would
have been calculated for such Note at the actual time of such sale to a
third-party investor using the then-current benchmark yield to maturity
applicable to such series of Note and the Purchase Date Spread (as defined) on
such Note.  The “Purchase Date Spread”
for a Note is the implied spread at which the Initial Purchaser agreed to
purchase such Note, as reflected in the Letter
Agreement (the “Letter Agreement”), dated November 28, 2007, among
IHOP, CHLH Corp., the Initial Purchaser and Lehman Commercial Paper Inc.,
taking into account the coupon on such Note specified in the Letter Agreement
and the aggregate original issue discount applied evenly across all of the
Notes which, for the purposes of this definition, will be deemed to include all
of the “APPB Engagement Letter and Commitment Letter Fees” (as defined in the
Letter Agreement), the “IHOP Engagement Letter and Commitment Letter Fees” (as
defined in the Letter Agreement), the Incremental Deferred Discounts (as
defined in the Letter Agreement), the APPB Coupon Rounding Discount (as defined
in the Letter Agreement) and the IHOP Coupon Rounding Discount (as defined in
the Letter Agreement).  Lehman hereby
agrees to provide to IHOP Corp., on the Refund Date, (i) a schedule
specifying the Resale Proceeds, Adjusted Purchase Price and Resale Differential
in connection with the resale of all of the Notes resold and (ii) redacted
trade confirmations evidencing the resales of the Notes, which shall be subject
to a customary 

 

52

 

confidentiality agreement between IHOP and Lehman.  For purposes of this 10(f) only, the
$100,000,000 Series 2007-Class A-1 Variable Funding Senior Notes of
the Co-Issuers shall be treated as “Notes”.

 

11.           Survival

 

The respective indemnities, rights
of contribution, representations, warranties and agreements of the Co-Issuers,
the Guarantors, the Parent Companies and the Initial Purchaser contained in
this Agreement or made by or on behalf of the Co-Issuers, the Guarantors, the
Parent Companies or the Initial Purchaser pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and payment
for the Securities and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or
on behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.

 

12.           Notices, etc.

 

All statements, requests, notices
and agreements hereunder shall be in writing, and:

 

(a)           if to the Initial Purchaser, shall be delivered or sent by mail or
facsimile transmission to:

 

	
   

  	
  Lehman Brothers Inc.

  
	
   

  	
  745 Seventh Avenue

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attention: Scott C. Lechner

  
	
   

  	
  Facsimile No.: (646) 758-4203

  

 

(b)           if to the Co-Issuers, the Guarantors or the Parent Companies, shall be
delivered or sent by mail or facsimile transmission to:

 

	
   

  	
  If to the Master Issuer:

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention:  Deputy
  General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

53

 

	
   

  	
  If to the IP Holder:

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

	
   

  	
  If to the Restaurant Holders:

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

 

	
   

  	
  If to Holdings:

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

	
   

  	
  If to Holdings II:

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

	
   

  	
  If to the Franchise Holder:

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

54

 

	
   

  	
  If to Applebee’s International:

  

 

	
   

  	
  Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

	
   

  	
  If to the Servicer: 

  

 

	
   

  	
  c/o Applebee’s International, Inc.,

  
	
   

  	
  11201 Renner Blvd.

  
	
   

  	
  Lenexa, KS 66219

  
	
   

  	
  Attention: 
  Deputy General Counsel

  
	
   

  	
  Facsimile No.: 
  913-890-9100

  

 

	
   

  	
  If to the Merger Sub: 

  

 

	
   

  	
  c/o IHOP, Corp.

  
	
   

  	
  450 North Brand Boulevard

  
	
   

  	
  Glendale, California 
  91203-2306

  
	
   

  	
  Attention: 
  General Counsel

  
	
   

  	
  Facsimile No.: 
  818-637-5361

  

 

 

	
   

  	
  If to IHOP Corp.:

  

 

	
   

  	
  IHOP, Corp.

  
	
   

  	
  450 North Brand Boulevard

  
	
   

  	
  Glendale, California 
  91203-2306

  
	
   

  	
  Attention: 
  General Counsel

  
	
   

  	
  Facsimile No.: 
  818-637-5361

  

 

	
   

  	
  If to IHOP Franchising, LLC:

  

 

	
   

  	
  c/o IHOP, Corp.

  
	
   

  	
  450 North Brand Boulevard

  
	
   

  	
  Glendale, California 
  91203-2306

  
	
   

  	
  Attention: 
  General Counsel

  
	
   

  	
  Facsimile No.: 
  818-637-5361

  

 

55

 

	
   

  	
  If to IHOP IP, LLC:

  

 

	
   

  	
  c/o IHOP, Corp.

  
	
   

  	
  450 North Brand Boulevard

  
	
   

  	
  Glendale, California 
  91203-2306

  
	
   

  	
  Attention:  General
  Counsel

  
	
   

  	
  Facsimile No.: 
  818-637-5361

  

 

	
   

  	
  If to any Co-Issuer, Guarantor or Parent Company
  with a copy to:

  

 

	
   

  	
  c/o International House of Pancakes, Inc.

  
	
   

  	
  450 North Brand Boulevard

  
	
   

  	
  Glendale, California 
  91203-2306

  
	
   

  	
  Attention: 
  General Counsel

  
	
   

  	
  Facsimile No.: 
  818-637-5361

  

 

	
   

  	
  with copies to (which copies shall not constitute
  notice to the Co-Issuers or any Parent Company):

  

 

	
   

  	
  Skadden, Arps, Slate, Meagher & Flom LLP

  
	
   

  	
  Four Times Square

  
	
   

  	
  New York, NY 
  10036

  
	
   

  	
  Attention: 
  David H. Midvidy

  
	
   

  	
  Facsimile No.: 
  (917) 777-2089

  
	
   

  	
  Email: 
  dmidvidy@skadden.com

  

 

Any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof.

 

13.           Initial Purchaser’s Information

 

The parties hereto acknowledge and agree that, for all
purposes of this Agreement, the “Initial Purchaser’s Information”
consists solely of the information to be specified in a letter signed by a
representative of the Initial Purchaser, dated the date of the relevant
Offering Memorandum, and (ii) the names and phone numbers of certain
personnel of the Initial Purchaser on page 60 of the preliminary materials
dated November 7, 2007 (posted on the IntraLinks electronic data site on November 8,
2007).

 

14.          Governing Law

 

This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York without regard to conflicts of law principles (other than
Sections 5-1401 and 5-1402 of the General Obligations Law of the State
New York).

 

56

 

15.           Waiver
of Jury Trial.

 

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

16.           Submission
to Jurisdiction.

 

Each of the parties hereto hereby irrevocably and
unconditionally:

 

(a)           submits
for itself and its property in any legal action or proceeding relating to this
Agreement or any of the transactions contemplated hereby, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York, the courts of
the United States for the Southern District of New York, and appellate courts
from any thereof;

 

(b)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;

 

(c)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to any party hereto at its address set
forth in Section 12 or at such other address of which such party shall
have been notified pursuant thereto; and

 

(d)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 16 any special, exemplary, punitive or
consequential damages.

 

17.           Counterparts

 

This Agreement may be executed in
one or more counterparts (which may include counterparts delivered by
facsimile) and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.

 

18.           Amendments

 

No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
parties hereto.

 

57

 

19.           Headings

 

The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

 

20.           Absence
of Fiduciary Relationship

 

The Co-Issuers, the Guarantors and the Parent
Companies acknowledge and agree that in connection with this offering, sale and
resale of the Securities or any other services the Initial Purchaser may be
deemed to be providing hereunder, notwithstanding any preexisting relationship,
advisory or otherwise, between the parties or any oral representations or
assurances previously or subsequently made by the Initial Purchaser: (i) no
fiduciary or agency relationship between the Co-Issuers, the Guarantors, the
Parent Companies and any other person, on the one hand, and the Initial
Purchaser, on the other, exists; (ii) the Initial Purchaser is not acting
as an advisor, expert or otherwise, to the Co-Issuers, the Guarantors and the
Parent Companies, including, without limitation, with respect to the
determination of the offering price of the Securities, and such relationship
between the Co-Issuers, the Guarantors and the Parent Companies, on the one
hand, and the Initial Purchaser, on the other, is entirely and solely
commercial, based on arms-length negotiations; (iii) any duties and
obligations that the Initial Purchaser may have to the Co-Issuers, the
Guarantors and the Parent Companies shall be limited to those duties and
obligations specifically stated herein; and (iv) the Initial Purchaser and
its respective affiliates may have interests that differ from those of the
Co-Issuers, the Guarantors and the Parent Companies.  The Co-Issuers, the Guarantors and the Parent
Companies hereby waive any claims that the Co-Issuers, the Guarantors and the
Parent Companies may have against the Initial Purchaser with respect to any
breach of fiduciary duty in connection with the offering of the Securities.

 

21.           Effect on Previous Letter Agreement.  This
Agreement supersedes in its entirety the Letter Agreement.

 

[Remainder of page intentionally left blank]

 

58

 

If the foregoing is in accordance
with your understanding of our agreement, kindly sign and return to us a
counterpart hereof, whereupon this instrument will become a binding agreement,
effective as of the date first written above, among the Co-Issuers, the
Guarantors, the Parent Companies and the
Initial Purchaser in accordance with its terms.

 

	
   

  	
  Very truly yours,

  

 

	
   

  	
  APPLEBEE’S ENTERPRISES LLC,

  as Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S IP LLC, as Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      NORTH LLC, as Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      WEST LLC, as
  Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Beverly Elving

  
	
   

  	
  Name:  Beverly Elving

  
	
   

  	
  Title:

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      TEXAS LLC, as
  Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      INC., as
  Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      MID-ATLANTIC LLC, as Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      VERMONT, INC.,
  as Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rebecca Tilden

  
	
   

  	
  Name:  Rebecca Tilden

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S RESTAURANTS

      KANSAS LLC, as
  Co-Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S HOLDINGS LLC, as

  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  APPLEBEE’S FRANCHISING LLC, as

  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
   

  	
  IHOP CORP., as Parent Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Julia Stewart

  
	
   

  	
  Name:  Julia Stewart

  
	
   

  	
  Title:    Chairman
  and Chief Executive Officer

  

 

 

	
   

  	
  APPLEBEE’S INTERNATIONAL, INC.,
  as

  Parent Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rebecca Tilden

  
	
   

  	
  Name:  Rebecca Tilden

  
	
   

  	
  Title:    Vice
  President

  

 

 

	
   

  	
  APPLEBEE’S SERVICES, INC.,
  as

  Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rebecca Tilden

  
	
   

  	
  Name:  Rebecca Tilden

  
	
   

  	
  Title:    Secretary

  

 

 

	
   

  	
  APPLEBEE’S HOLDINGS II CORP., as

  Parent Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carin Stutz

  
	
   

  	
  Name:  Carin Stutz

  
	
   

  	
  Title:    President

  

 

 

	
  Acknowledged and agreed:

  	
   

  
	
   

  	
   

  
	
  LEHMAN BROTHERS INC.,

  	
   

  
	
  as Initial Purchaser

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Cory Wishengrad

  	
   

  
	
   

  	
  Authorized Signatory

  
				

 

 

SCHEDULE
A-1

 

 

The Restaurant Holders

 

(i)            Applebee’s Restaurants
North LLC (a Delaware limited liability company)

 

(ii)           Applebee’s Restaurants
West LLC (a Delaware limited liability company)

 

(iii)          Applebee’s Restaurants
Texas LLC (a Texas limited liability company)

 

(iv)          Applebee’s Restaurants
Inc. (a Kansas corporation)

 

(v)           Applebee’s Restaurants
Mid-Atlantic LLC (a Delaware limited liability corporation)

 

(vi)          Applebee’s Restaurants
Vermont, Inc. (a Vermont corporation)

 

(vii)         Applebee’s Restaurants
Kansas LLC (a Kansas limited liability company)

 

1

 

SCHEDULE
A-2

 

 

The
Liquor License Holders

 

(i)            Applebee’s Restaurants
Calvert County Licensing LLC (a Delaware limited liability company)

 

(ii)           Applebee’s Restaurants
Allegany County Licensing LLC (a Delaware limited liability company)

 

(iii)          Applebee’s Restaurants
Maryland Licensing LLC (a Delaware limited liability company)

 

(iv)          Applebee’s Restaurants
St. Mary’s County Licensing LLC (a Delaware limited liability company)

 

1

 

SCHEDULE B-1

 

 

Bridge Syndication Materials

 

1.             Rating
assessment letter of Standard & Poor’s Rating Evaluation Services
dated July 13, 2007.

 

2.             Financial
guaranty insurance policy agreement between Financial Guaranty Insurance
Company and IHOP Corporation dated July 15, 2007.

 

3.             Financial
guaranty insurance policy agreement between Financial Guaranty Insurance
Company and IHOP Corporation dated as of July 15, 2007.

 

4.             Financial
guaranty insurance policies agreement among Financial Guaranty Insurance
Company, Assured Guaranty Corp., XL Capital Assurance Inc., Applebee’s International
Inc. and IHOP Corporation dated as of July 15, 2007.

 

5.             Letter
of expression of interest of Spirit Finance Corporation and GE Capital
Franchise Finance Corporation to provide sale/lease back financing for
approximately 200 fee simple Applebee’s restaurants dated August 30, 2007.

 

6.             Letter
of expression of interest of Corporate Property Associates 16 – Global
Incorporated to provide sale/lease back financing for approximately 200 fee
simple Applebee’s restaurants dated August 30, 2007.

 

7.             The
Pro Forma Financial Assumptions made available on IntraLinks data site September 7,
2007.

 

8.             The
Pro Forma Financial Statement – Base Case No Refinance made available on
IntraLinks data site September 12, 2007.

 

9              The
Pro Forma Financial Statement – Summary made available on IntraLinks data site September 13,
2007.

 

10.           The
2006 Applebee’s International Corporation Form of Franchise Agreement made
available on IntraLinks data site September 12, 2007.

 

10.           Summary
of Terms of First Lien Securitization Bridge Facilities made available on
IntraLinks data site September 14, 2007.

 

11.           Excerpt
from Engagement Letter between IHOP and the Initial Purchaser, dated July 17,
2007, made available on IntraLinks data site September 17, 2007.

 

12.           Pro
Forma Financial Statements Summary made available on IntraLinks data site September 17,
2007.

 

13.           WBS
Model made available on IntraLinks data site September 17, 2007.

 

1

 

SCHEDULE B-2

 

 

Preliminary Marketing Materials

 

1.             Preliminary
Materials dated October 24, 2007.

 

2.             Preliminary
Materials dated November 7, 2007.

 

3.             Applebee’s
and IHOP model runs made available on IntraLinks data site October 31,
2007.

 

4.             Applebee’s
and IHOP model runs made available on IntraLinks data site November 8,
2007.

 

1

 

EXHIBIT
1

 

DRAFT OFFERING MEMORANDUM

 

1

 

EXHIBIT
2

 

BASE INDENTURE

 

1

 

EXHIBIT
3

 

SUPPLEMENT

 

1

 

EXHIBIT
4

 

FORM OF 10b-5 LETTER OF 

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

 

1

 

EXHIBIT
5

 

FORM OF OPINION OF SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP

PURSUANT TO SECTION 5(k) HEREIN

 

1

 

EXHIBIT
6

 

FORM OF OPINION OF SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP

PURSUANT TO SECTION 5(l) HEREIN

 

1

 

EXHIBIT
7

 

FORM OF OPINION OF SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP

PURSUANT TO SECTION 5(m) HEREIN

 

1

 

EXHIBIT
8

 

FORM OF OPINION OF SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP

PURSUANT TO SECTION 5(n) HEREIN

 

1QuickLinks
 -- Click here to rapidly navigate through this document
 

 

 
 

Exhibit 10.2    
    

 
 

FIRST AMENDMENT TO CREDIT AGREEMENT    
    

        FIRST AMENDMENT, dated as of February 25, 2008 (effective as of December 31, 2007) (this
"Amendment") to the Credit Agreement dated as of August 20, 2007 (the "Credit Agreement") by and among VEECO INSTRUMENTS INC., a Delaware
corporation (the "Company"), the Lenders party thereto and HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent
for the Lenders. 

        WHEREAS, the Company has requested that the Lenders amend certain provisions of the Credit Agreement, and the Lenders have agreed to amend
such provisions of the Credit Agreement, subject to the terms and conditions set forth herein; 

        NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: 

1.     Amendments.

        a.     The
first sentence of the definition of Consolidated EBITDA in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to provide as
follows: 

"Consolidated
EBITDA" shall mean, for any Person for any period, the Consolidated Net Income (Net Loss) of such Person and its Subsidiaries for such period before provision for federal and state
income taxes, minus the sum of (x) Consolidated Interest Income and (y) all extraordinary gains,  plus the sum, without duplication, of
(a) one-time non-cash charges related to (i) write-downs of intangible
assets (including the value of in-process research and development related to a Permitted Acquisition) and (ii) to the extent included in Consolidated Net Income before provision
for federal and state income taxes, write-downs of, or reserves for, deferred tax assets, (b) Consolidated Interest Expense, (c) depreciation and amortization expenses,
(d) non-cash non-recurring charges incurred in connection with accounting for stock-based compensation expense and changes to Statements of Financial Accounting
Standards and (e) those non-recurring charges recorded in the fiscal quarters ending December 31, 2007, March 31, 2008 and June 30, 2008 and described in a
schedule previously provided to the Lenders on or about February 13, 2008 (provided that such charges do not exceed $10,640,000 for the fiscal quarter ended December 31, 2007, $3,558,000
for the fiscal quarter ending March 31, 2008 or $350,000 for the fiscal quarter ending June 30, 2008), all determined in accordance with Generally Accepted Accounting Principles applied
on a consistent basis. 

        b.     Section 7.13(c)
of the Credit Agreement is hereby amended and restated in its entirety to provide as follows: 

"Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio to be less than (i) 1.00:1.00, for the fiscal
quarter ending March 31, 2008, (ii) 1.10:1.00, for the fiscal quarter ending June 30, 2008, or (iii) 1.25:1.00, for the fiscal quarter ending September 30, 2008 and
at any time thereafter. 

        c.     Section 7.13(d)
of the Credit Agreement is hereby amended and restated in its entirety to provide as follows: 

"Pre-tax Loss. Permit a pre-tax loss greater than (i) $10,000,000, to exist for the fiscal quarter ended
December 31, 2007, (ii) $7,000,000, to exist for the fiscal quarter ending March 31, 2008, (iii) $7,000,000, on an aggregate basis, to exist for the two fiscal quarters
ending June 30, 2008 or (iv) $5,000,000, on an aggregate basis, to exist during any two consecutive 

1

 

fiscal
quarters of the Company, commencing with the two fiscal quarters ending September 30, 2008. 

2.     Conditions to Effectiveness.

        This
Amendment shall become effective upon receipt by the Administrative Agent of: (a) this Amendment, duly executed by the Company and the Guarantors, (b) executed
consents from the Required Lenders authorizing the Administrative Agent to execute this Amendment on behalf of the Lenders (the "Consent"), and (c) an amendment fee for each Lender providing
its Consent to the Administrative Agent on or before the date of this Amendment, in an amount equal to five (5) basis points of such Lender's Revolving Credit Commitment. 

3.     Miscellaneous.

        Capitalized
terms used herein and not otherwise defined herein shall have the same meanings as defined in the Credit Agreement. 

        Except
as expressly amended hereby, the Credit Agreement shall remain in full force and effect in accordance with the original terms thereof. 

        The
amendments set forth above are limited specifically to the matters set forth above and for the specific instances and purposes given and do not constitute directly or by implication
a waiver or amendment of any other provision of the Credit Agreement or a waiver of any Default or Event of Default, whether now existing or hereafter arising, which may occur or may have occurred. 

        The
Company hereby represents and warrants that (a) after giving effect to this Amendment, the representations and warranties made by the Company and each of its Subsidiaries
pursuant to the Credit Agreement and the other Loan Documents to which each is a party are true and correct in all material respects as of the date hereof with the same effect as though such
representations and warranties had been made on and as of such date, unless any such representation or warranty is as of a specific date, in which case, as of such date, and (b) after giving
effect to this Amendment, no Default or Event of Default has occurred and is continuing. 

        The
Company hereby further represents and warrants that the execution, delivery and performance by the Company of this Amendment and Wavier and the Credit Agreement, as amended by this
Amendment, (a) have been duly authorized by all requisite corporate action, (b) will not violate or require any consent (other than consents as have been made or obtained and which are
in full force and effect) under (i) any provision of law applicable to the Company, any applicable rule or regulation of any Governmental Authority, or the Certificate of Incorporation or
By-laws of the Company, (ii) any order of any court or other Governmental Authority binding on the Company or (iii) any agreement or instrument binding on the Company. Each
of this Amendment and Wavier and the Credit Agreement, as amended hereby, constitutes a legal, valid and binding obligation of the Company. 

        This
Amendment may be executed in one or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one Amendment. This
Amendment shall become effective when duly executed counterparts hereof which, when taken together, bear the signatures of each of the parties hereto shall have been delivered to the Administrative
Agent. 

        This
Amendment shall constitute a Loan Document. 

        This
Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. 

        [next
page is signature page] 

2

 

        IN WITNESS WHEREOF, the Company and the Administrative Agent, as authorized on behalf of the Lenders, have caused this Amendment to be
duly executed by their duly authorized officers, all as of the day and year first above written. 

	VEECO INSTRUMENTS INC.	 	HSBC BANK USA, NATIONAL

ASSOCIATION, as Administrative Agent
	

By:	

/s/  JOHN F. REIN, JR.      
	
 	

By:	

/s/  CHRISTOPHER MENDELSOHN      

	Name: John F. Rein, Jr.

Title:    Executive Vice President and Chief

             Financial Officer	 	Name: Christopher Mendelsohn

Title:    First Vice President

        The
undersigned, not parties to the Credit Agreement but as Guarantors under the Guaranty dated as of the Closing Date executed in favor of the Lenders, each hereby (a) accept and
agree to the terms of the foregoing Amendment; (b) acknowledge and confirm that all terms and provisions contained in the Guaranty are, and shall remain, in full force and effect in accordance
with their respective terms; (c) reaffirm and ratify all of the representations and covenants contained in the Guaranty; and (d) represent, warrant and confirm the
non-existence of any offsets, defenses and counterclaims to its obligations under the Guaranty. 

	 	 	VEECO COMPOUND SEMICONDUCTOR INC.

VEECO METROLOGY INC.

VEECO PROCESS EQUIPMENT INC.
	

 	
 	

By:	

/s/  JOHN F. REIN, JR.      

	 	 	Name: John F. Rein, Jr.

Title:    Vice President of each of the foregoing

             corporations
 

3

QuickLinks

Exhibit 10.2

FIRST AMENDMENT TO CREDIT AGREEMENT

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