Document:

LOAN AGREEMENT

 

                This Loan Agreement (the “Agreement”) dated as of
April 27, 2001, by and between BANK OF AMERICA, N.A., a national banking
association (“Bank” or “Lender”), IHOP PROPERTIES, INC., a California
corporation (“Borrower”), and International House of Pancakes, Inc., a Delaware
corporation, IHOP Corp., a Delaware corporation (“IHOP Parent”), IHOP Realty
Corp., a Delaware corporation, and IHOP Restaurants, Inc., a Delaware
corporation (collectively, the “Guarantors”).

 

                In consideration of the Loan or Loans described below
and the mutual covenants and agreements contained herein, and intending to be
legally bound hereby, Bank, Borrower and Guarantors agree as follows:

 

                1. DEFINITIONS AND REFERENCE TERMS. In
addition to any other terms defined herein, the following terms shall have the
meaning set forth with respect thereto:

 

Accounting
Terms.   All accounting terms not specifically
defined or specified herein shall have the meanings generally attributed to
such terms under generally accepted accounting principles (“GAAP”), as in
effect from time to time, consistently applied, with respect to the financial
statements referenced herein.

 

Affiliate.  
Affiliate shall mean any Person (i) which directly or indirectly
controls, or is controlled by, or is under common control with, IHOP Corp.

 

Borrower.  
IHOP PROPERTIES, INC., a California corporation

 

Borrower’s
Address.   450 North Brand Boulevard, 7th Floor,
Glendale, CA 91203-2306.

 

Capitalized
Lease.   Capitalized Lease means a lease of Property
which in accordance with GAAP should be capitalized on the balance sheet of any
Person.

 

Capitalized
Lease Obligations.   Capitalized Lease Obligations shall mean
the aggregate rentals due and to become due under all Capitalized Leases which
any Person, as a lessee, would be required to reflect as a liability on the
consolidated balance sheet of such Person in accordance with GAAP .

 

Certified.  
Certified when used with respect to any financial information of any
Person to be certified by any of its officers, indicates that such information
is to be accompanied by a certificate to the effect that such financial
information has been prepared in accordance with GAAP consistently applied,
subject in the case of interim financial information to nonrecurring material
year-end audit adjustments, and presents fairly the information contained
therein as at the dates and for the periods covered thereby.

 

 

 

 

Consolidated
Net Income or Loss.   Consolidated Net Income or Loss shall mean
the Net Income or Loss of IHOP Parent, the Borrower and their Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.

 

Consolidated
Tangible Net Worth.   Consolidated Tangible Net Worth shall mean
shareholders’ equity of IHOP Parent and its Subsidiaries less intangible assets booked after the
date hereof, less Restricted
Investments in excess of 10% of shareholders’ equity of IHOP Parent and its
Subsidiaries at any date of determination, all as determined for IHOP Parent
and its Subsidiaries on a consolidated basis in accordance with GAAP.

 

Collateral
Locations.   Those certain IHOP Restaurants located at
the street addresses listed on Exhibit “A” attached hereto and made a part
hereof.

 

Debt.  
Debt with respect to any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the liability of such
Person created by granting a Lien to which the property or assets of such
Person are subject whether or not such Person has assumed or become legally
liable for the payment of any obligation (provided that, if such obligation has
not been assumed or become the legal liability of such Person, the amount of
the liability shall be deemed to be in an amount not to exceed the Fair Market
Value of the property to which the Lien relates, as determined in good faith by
such Person), (iii) Capitalized Lease Obligations of such Person, to the extent
such obligations exceed accounts receivable by such Person as lessor under
direct financing leases with franchisees so long as such direct financing leases
are, at the time of determination to the best knowledge of the lessor
thereunder, valid and enforceable against their lessees and are current as to
payment and not otherwise in default to the extent that there is a reasonable
likelihood that any such lease would be terminated by the lessor prior to its
stated expiration and (iv) the aggregate amount of all Guarantees given by such
Person with respect to any of the foregoing.

 

Default.  
Default or Event of Default (whether such terms are capitalized or not)
shall have the meaning ascribed to them under the Loan Documents which are
subject to any notice and cure rights set forth herein.

 

Disposition.  
Disposition shall mean any sale, transfer, assignment, lease, conveyance
or other disposition of any asset.

 

EBITDA.  
EBITDA means, the following items as defined by GAAP, Earnings Before
Interest, Taxes, Depreciation, and Amortization.

 

Equipment.  
Equipment shall mean all equipment, signage, furniture, fixtures,
machinery and goods of the Borrower and/or IHOP Restaurants, Inc.
(“Restaurants”) located at the Collateral Locations (together with all service
contracts, manufacturer’s or other warranties and licenses relating thereto)
and all accessories and parts now or hereafter affixed thereto, installed therein
or held for use in connection therewith.

 

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Equipment
Leases.   Those certain leases entered into by
Restaurants and the Subtenants (as hereinafter defined) which are described in
full on Exhibit “D” attached hereto and made a part hereof.

 

Fair
Market Value.   Fair Market Value means what a willing
buyer would pay to a willing seller in an arm’s length transaction.

 

Franchise
Agreements.   Franchise Agreements shall mean any and all
franchise agreements, amendments and other documents entered into by IHOP Corp.
with the Subtenants relating to the operation of the IHOP Restaurants at the
Collateral Locations.

 

Funded
Debt.   Funded Debt shall mean (i) all Debt of a
Person (other than Guarantees) having a final maturity of more than one year
from the date of incurrence thereof (or which is renewable or extendible at the
option of the obligor for a period or periods of more than one year from the
date of incurrence), including all payments in respect thereof that are
required to be made within one year from the date of any determination of
Funded Debt, whether or not included in current liabilities, and (ii) in the
case of Guarantees, all Guarantees of obligations maturing more than one year
after the date as of which the Guarantee is incurred.

 

Ground
Leases.   Those certain leases entered into by
Borrower which are described in full on Exhibit “B” attached hereto and made a
part hereof.

 

Ground
Lease Locations.   Those certain Collateral Locations which are
subject to Ground Leases.

 

Guarantee.  
Guarantee means any guarantee or other contingent liability (other than
any endorsement for collection or deposit in the ordinary course of business),
direct or indirect, with respect to any obligations of another Person, through
an agreement or otherwise, including, without limitation, (a) any other
endorsement or discount with recourse or undertaking substantially equivalent
to or having economic effect similar to a guarantee in respect of any such
obligations and (b) any agreement (i) to purchase, or to advance or supply
funds for the payment or purchase of, any such obligations, (ii) to purchase,
sell or lease Property, products, materials or supplies, or transportation or
services, in respect of enabling such other Person to pay any such obligation
or to assure the owner thereof against loss regardless of the delivery or
nondelivery of the Property, products, materials or supplies or transportation
or services or (iii) to make any loan, advance or capital contribution to or
other investment in, or to otherwise provide funds to or for, such other Person
in respect of enabling such Person to satisfy any obligation (including any
liability for a dividend, stock liquidation payment or expense) or to assure a
minimum equity, working capital or other balance sheet condition in respect of
any such obligation. The amount of liability of any Person attributable to any
Guarantee shall be equal to the maximum amount for which such Person could be
liable under such Guarantee.

 

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Guarantor.  
Guarantor shall collectively mean International House of Pancakes, Inc.,
a Delaware corporation, IHOP Corp., a Delaware corporation, IHOP Realty Corp.,
a Delaware corporation, and IHOP Restaurants, Inc., a Delaware corporation.

 

Hazardous
Materials.   Hazardous Materials include all materials
defined as hazardous materials or substances under any local, state or federal
environmental laws, rules or regulations, and petroleum, petroleum products,
oil and asbestos.

 

IHOP
Parties.   IHOP Parties means collectively, IHOP
PROPERTIES, INC., a California corporation, International House of Pancakes,
Inc., a Delaware corporation, IHOP Corp., a Delaware corporation, IHOP Realty
Corp., a Delaware corporation, and IHOP Restaurants, Inc., a Delaware
corporation.

 

Interest
Rate Agreement.   Interest Rate Agreement means any agreement
between Borrower and Bank or any affiliate of Bank, now existing or hereafter
entered into, which provides for an interest rate or commodity swap, cap,
floor, collar, forward foreign exchange transaction, currency swap,
cross-currency rate swap, currency option, or any combination of, or option
with respect to, these or similar transactions, for the purpose of hedging
Borrower’s exposure to fluctuations in interest rates, currency calculations or
commodity prices.

 

Lien.  
Lien means any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, conditional sale or title retention agreement, lessor’s interest
under a Capitalized Lease or analogous instrument, in, of or on any of a
Person’s Property (whether held on the date hereof or hereafter acquired), or
any signed or filed financing statement which names such Person as the debtor,
or the execution of any security agreement or the like authorizing any other
Person as the secured party thereunder to file such a financing statement.

 

Loan.  
Any loan described in Section 2 hereof and any subsequent loan which
states that it is subject to this Loan Agreement.

 

Loan
Documents.   Loan Documents means this Loan Agreement
and any and all promissory notes executed by Borrower in favor of Bank and all
other documents, instruments, guarantees, certificates and agreements executed
and/or delivered by Borrower, any guarantor or third party in connection with
any Loan.

 

Material
Adverse Effect.   Material Adverse Effect means, with respect
to Borrower or any of the Guarantors: any change or changes or effect or
effects that individually or in the aggregate are or are likely to be materially
adverse to: (i) the assets, business, operations, income, prospects or
condition (financial or otherwise), (ii) the transactions contemplated by this
Agreement; or (iii) taken as a whole, the ability to fulfill their respective
obligations under this Agreement or any of the other Loan Documents.

 

Multi-State
Security Instrument.   Multi-State Security Instrument means that
certain Multi-State Security Instrument executed by Borrower in favor of Lender
of even date herewith which is being recorded in the public records of each of
the counties where the Collateral Locations are located.

 

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Obligations.  
Obligations shall mean any and all indebtedness, liabilities and
obligations of Borrower to Bank, including without limiting the generality of
the foregoing, any indebtedness, liability or obligation of Borrower to Bank
under any loan made to Borrower by Bank prior to the date hereof and any and
all extensions or renewals thereof in whole or in part; any indebtedness,
liability or obligations of Borrower to Bank arising hereunder or as a result
hereof, whether evidenced by the Note, Interest Rate Agreement or otherwise,
and any and all extensions or renewals thereof in whole or in part; and any and
all future or additional indebtedness, liabilities or obligations of Borrower
to Bank whatsoever and in any event, whether existing as of the date hereof or
hereafter arising.

 

Operating
Rent Expense.   Operating Rent Expense shall mean rent
expense excluding: (i) inter-company rent, and (ii) rents re-classified as
Capital Lease Obligations.

 

Person.  
Person means and includes an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof

 

Related
Borrower.   Related Borrower shall mean any of the
following corporations: International House of Pancakes, Inc., a Delaware
corporation, IHOP Corp., a Delaware corporation, IHOP Realty Corp., a Delaware
corporation, and IHOP Restaurants, Inc., a Delaware corporation.

 

Related
Loans.   Related Loans shall mean any and all loans
heretofore or hereafter made by Bank to Related Borrower, including but not
limited to the obligations of International House of Pancakes, Inc. under the
$25 Million Letter Agreement.

 

Restricted
Investments.   Restricted Investments shall mean all
Investments made by the IHOP Parties or their Subsidiaries in or to any Person
except (i) Investments in notes of franchisees and receivables of franchisees
in the ordinary course of business other than notes and receivables held in
settlement of franchise obligations, and in Property of IHOP Parent or its
Subsidiaries to be used in the ordinary course of business, (ii) Investments in
Subsidiaries, (iii) Investments in obligations issued or unconditionally
guaranteed by the U.S. or any agency thereof, in each case maturing within one
year from the date of acquisition thereof; (iv) Investments in obligations
issued by any political subdivision of the U.S. or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Corporation or Moody’s Investors Service, Inc. or
some other mutually agreeable rating system if either of these entities no
longer exists; (v) commercial paper maturing no more than 270 days from the
date of creation thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s Corporation or
Moody’s Investors Service, Inc. or some other mutually agreeable rating system
if either of these entities no longer exists; (vi) certificates of deposit,
repurchase agreements or bankers’

 

 

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acceptances maturing
within one year from the date of acquisition thereof issued by commercial banks
which are rated “A2’ or better by either Standard & Poor’s Corporation or
Moody’s Investors Services, Inc. (or by some other mutually agreeable rating
system if either of these entities no longer exists) located in the U.S. and
Canada and have combined capital, surplus and undivided profits of not less
than $100,000,000; (vii) Investments in mutual funds and money market accounts,
which funds or accounts are traded on a national exchange or are managed by a
commercial bank and which invests solely in Investments which satisfy the
criteria set forth in the foregoing clauses (iii) through (vi); and (viii)
other Investments existing on the date hereof which have been disclosed in
writing to Bank.

 

Subleases.  
Those certain subleases entered into by Borrower and the subtenants
(“Subtenants”) which are described in full on Exhibit “C” attached hereto and
made a part hereof.  The Subtenants are also the franchisee and operator
of the IHOP Restaurants located at the Collateral Locations as designated on
Exhibit “C”.

 

Subsidiary.  
Subsidiary shall mean, with respect to any Person, any corporation or
other entity (a) organized under the laws of the United States, the District of
Columbia or Canada or any state or political subdivision of any thereof, (b)
all or substantially all of whose assets and business operations are located or
conducted within the United States or Canada and ( c) of which at least a
majority of the outstanding voting stock is at the time directly or indirectly
owned or controlled by such Person or by one or more of such Person’s
wholly-owned Subsidiaries.

 

Subtenant
Leases.   Subtenant Leases shall collectively mean the
Subleases and the Equipment Leases.

 

$25
Million Letter Agreement.   $25 Million Letter Agreement
means that certain Letter Agreement among International House of Pancakes,
Inc., IHOP Corp., and Continental Bank, N.A. dated June 30, 1993, as amended by
that certain First Amendment to Letter Agreement dated December 31, 1994 among
International House of Pancakes, Inc., IHOP Corp. and Bank of America Illinois,
and further amended by that certain Second Amendment to Letter Agreement dated
March 11, 1996 among International House of Pancakes, Inc., IHOP Corp. and Bank
of America Illinois, and further amended by that certain Third Amendment to
Letter Agreement dated September 3, 1996 among International House of Pancakes,
Inc., IHOP Corp. and Bank of America Illinois, and further amended by that
certain Fourth Amendment to Letter Agreement dated November 1, 1996 among
International House of Pancakes, Inc., IHOP Corp. and Bank of America Illinois,
and further amended by that certain Letter dated June 25, 1997 from Yvonne C.
Dennis of Bank of America to IHOP Corp., and further amended by that certain
Fifth Amendment to Letter Agreement dated June 30, 1998 among International
House of Pancakes, Inc., IHOP Corp. and Bank of America National Trust and
Savings Association, and further amended by that certain Sixth Amendment to
Letter Agreement dated June 30, 1999 among International House of Pancakes,
Inc., IHOP Corp. and Bank of America National Trust and Savings Association,
and as further amended by that certain Seventh Amendment to Letter Agreement
dated December 15, 2000, among International House of Pancakes, Inc., IHOP
Corp. and Bank of America, N.A.

 

6

 

                2.   LOANS.   Bank hereby agrees to make a loan to
Borrower in the principal face amount of $12,018,206.00. The obligation to
repay the loans is evidenced by a promissory note or notes dated of even date
herewith (the promissory note or notes together with any and all renewals,
extensions or rearrangements thereof being hereafter collectively referred to
as the “Note”) having a maturity date, repayment terms and interest rate as set
forth in the Note.

 

                3.   SECURITY
INTEREST IN COLLATERAL.   As
security for the payment of the Note and all Obligations whatsoever of Borrower
to Bank, Borrower hereby grants to Bank a continuing, general first lien upon
and security interest and title in and to the following (hereafter known as the
“Collateral”):

 

(a)                                  all Equipment of Borrower relating to the
Collateral Locations;

 

(b)                                 Borrower’s interest in real property,
improvements and fixtures located at the Collateral Locations and Borrower’s
leasehold estate created by the Ground Leases and Borrower shall execute a
Multi-State Security Instrument conveying such interest to Bank;

 

(c)                                  Borrower’s interest in the Subleases and
the right to payments from the Subtenants and Borrower shall execute a
Assignment of Lessor’s Interest in Leases relating to such Subleases; and

 

(d)                                 all Collateral hereafter pledged by
Borrower;

 

AND Guarantors hereby
grant to Bank a continuing, general first lien upon and security interest and
title in and to all Collateral hereafter specifically pledged by such
Guarantors to Bank in connection with the Loan;

 

AND Restaurants hereby
grants to Bank a continuing, general first lien upon and security interest and
title in and to:

 

(e)                                  all Equipment of Restaurants relating to
the Collateral Locations; and

 

(f)                                    Restaurants’ interest in the Equipment
Leases and the right to payments from the Subtenants and Restaurants shall
execute a Assignment of Lessor’s Interest in Leases relating to such Equipment
Leases.

 

Borrower and Restaurants
agree to do all things as may reasonably be required by Bank to perfect and
protect the lien of Bank in such Collateral.

 

The
Loan shall be cross-defaulted with any and all loans now or hereafter made by
Bank to Borrower or Related Borrower. For clarification purposes, by execution
of this Agreement, Bank expressly acknowledges that the Loan described herein
is not cross-collateralized with the $25 Million Letter Agreement, but rather
only cross-defaulted with the $25 Million Letter Agreement and all other loans
to Borrower and Related Borrower.

 

7

 

                4. REPRESENTATIONS AND WARRANTIES. Borrower
and the Guarantors hereby represent and warrant to Bank as follows:

 

                A.   Good Standing. Borrower is a corporation,
duly organized, validly existing and in good standing under the laws of
California and has the power and authority to own its property and to carry on
its business in each jurisdiction in which Borrower does business. Each of the
Guarantors is a corporation, duly organized, validly existing and in good
standing under the laws of Delaware and has the power and authority to own its
property and to carry on its business in each jurisdiction in which Guarantor
does business.

 

                B.   Authority and Compliance of Borrower.
Borrower has full power and authority to execute and deliver the Loan Documents
and to incur and perform the obligations provided for therein, all of which
have been duly authorized by all proper and necessary action of the appropriate
governing body of Borrower. No consent or approval of any public authority or
other third party is required as a condition to the validity of any Loan
Document, and Borrower is in compliance with all laws and regulatory
requirements to which it is subject.

 

                C.   Authority and Compliance of Guarantor. Each
of the Guarantors has full power and authority to execute and deliver the
Limited Guaranty and this Agreement and to incur and perform the obligations
provided for therein, all of which have been duly authorized by all proper and
necessary action of the appropriate governing body of the respective Guarantor.
No consent or approval of any public authority or other third party is required
as a condition to the validity of any Loan Document executed by any of the
Guarantors, and Guarantors are in compliance with all laws and regulatory
requirements to which it is subject.

 

                D.   Binding Agreement. This Agreement and the
other Loan Documents executed by Borrower and Guarantors constitute valid and
legally binding obligations of Borrower and Guarantors, enforceable in
accordance with their terms.

 

                E.   Litigation. There is no proceeding
involving Borrower or any of the Guarantors pending or, to their knowledge,
threatened before any court or governmental authority, agency or arbitration
authority which would have a Material Adverse Effect on Borrower or any of the
Guarantors.

 

                F.   No Conflicting Agreements. There is no
charter, bylaw, stock provision or other document pertaining to the
organization, power or authority of Borrower or any of the Guarantors and no
provision of any existing agreement, mortgage, indenture or contract binding on
Borrower or affecting its property, which would conflict with or in any way
prevent the execution, delivery or carrying out of the terms of this Agreement
and the other Loan Documents.

 

8

 

                G.   Ownership of Assets. Borrower has good
title to the Collateral free and clear of liens, except those granted to Bank
and as disclosed to Bank in writing prior to the date of this Agreement.
Borrower and/or Restaurants, own all of the Equipment located at the Collateral
Locations which is leased to the Subtenants and such Equipment is free and
clear of all liens.

 

                H.   Taxes. All real and personal taxes and
assessments payable by Borrower or any of the Guarantors have been paid before
they become delinquent or are being contested in good faith by appropriate
proceedings and the Borrower and each of the Guarantors have filed all tax
returns which it is required to file.

 

                I.   Financial Statements. The financial
statements of IHOP Corp (which includes Borrower and Guarantors) on a consolidated
basis heretofore delivered to Bank have been prepared in accordance with GAAP
(except as noted therein) applied on a consistent basis throughout the period
involved and fairly present IHOP Corp.’s, the Borrower’s and other Guarantors’
financial condition as of the date or dates thereof, and there has been no
change in IHOP Corp.’s, the Borrower’s and other Guarantors’ financial
condition or operations since September 30, 2000 which would have a Material
Adverse Effect. All factual information furnished by Borrower to Bank in
connection with this Agreement and the other Loan Documents is and will be
accurate and complete on the date as of which such information is delivered to
Bank and is not and will not be incomplete by the omission of any material fact
necessary to make such information not misleading.

 

                J.   Place of Business. Borrower’s and each of
the Guarantors’ principal place of business is located at 450 North Brand
Boulevard, 7th Floor, Glendale, CA 91203-2306.

 

                K.   Environmental. The conduct of Borrower’s
business operations and, based solely on environmental reports obtained for
each of the Collateral Locations prior to executing the Ground Lease for each
such location, the condition of the Collateral Locations, do not violate any
federal, local or state law, rule, regulation or rule of common law or any
judicial interpretation thereof relating primarily to the environment or
Hazardous Materials.

 

                L.   Maintenance. Borrower and Restaurants shall
maintain all of its Equipment located at the Collateral Locations in good
condition and repair and shall make (for Collateral Locations which are not
subject to Subleases) and require all Subtenants (for Collateral Locations
which are subject to Subleases) to make all necessary replacements thereof, and
preserve and maintain all material licenses, trademarks, privileges, permits,
franchises, certificates and the like necessary for the operation of its
business at the Collateral Locations.

 

 

9

 

                M.   Continuation of Representations and
Warranties. All representations and warranties made under this Agreement shall
be deemed to be made at and as of the date hereof and at and as of the date of
any advance under any Loan.

 

                N.   Conduct of Business. Except as otherwise
set forth herein, Borrower shall preserve and maintain its corporate existence,
rights, franchises, and privileges in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is necessary or desirable in view of its business
and operations or the ownership of its IHOP Restaurants at the Collateral
Locations.

 

                O.   Absence of Defaults. Neither Borrower nor
any of the Guarantors are in default under its articles of incorporation or its
bylaws and no event has occurred, which has not been remedied, cured or waived:

 

(i)                                     which constitutes a Default or an Event
of Default (as herein defined); or

 

(ii)                                  which constitutes, or which with the
passage of time, the giving of notice, a determination of materiality, the
satisfaction of any condition, or any combination of the foregoing, would
constitute, a default or event of default (“Default Condition”)

 

by the Borrower or any of the Guarantors under any
agreement or judgment, decree or order to which the Borrower or any of the
Guarantors is a party or by which the Borrower or any of the Guarantors or any
of their properties may be bound where such default would, individually or in
the aggregate, have a Material Adverse Effect on the Borrower. Further, no
Default, Event of Default or Default Condition exists in connection with the
$25 Million Letter Agreement.

 

                5.   AFFIRMATIVE
COVENANTS. Until full payment and performance of all obligations of
Borrower under the Loan Documents, Borrower and Guarantors will, unless Bank
consents otherwise in writing (and without limiting any requirement of any
other Loan Document):

 

                A.   Financial Condition. Maintain Borrower’s
financial condition as follows, determined in accordance with GAAP applied on a
consistent basis throughout the period involved except to the extent modified
by the following definitions, and calculated on a rolling four (4) quarter
basis:

 

10

 

i.                                          Maintain Fixed Charge
Coverage Ratio: The
Borrower and Guarantors, on a consolidated basis, will not permit the ratio of
net income after tax plus non-cash charges (such as depreciation and
amortization) plus Operating Rent Expense plus total interest expense less
distributions, cash dividends, and advances divided by scheduled payments of
long term debt and capitalized leases (due in the next twelve months) plus
total interest expense plus Operating Rent Expense to be less than 1.35. This
Ratio shall be calculated using the form attached as Exhibit F.

 

ii.                                       Maintain Funded Debt to
EBITDA Ratio: The
Borrower and Guarantors, on a consolidated basis, will not permit the ratio of
total Funded Debt divided by EBITDA to be greater than 3.00. This Ratio shall
be calculated using the form attached as Exhibit F.

 

                B.
Financial Statements and Other Information. Maintain a system of accounting in
accordance with GAAP applied on a consistent basis throughout the period
involved, permit Bank’s officers or authorized representatives to visit and
inspect Borrower’s books of account and other records after giving reasonable
notice to Borrower at such reasonable times during normal business hours and as
often as Bank may desire, and after a Default or an Event of Default which
shall be continuing, pay the reasonable fees and disbursements of any
accountants or other agents of Bank selected by Bank for the foregoing
purposes. Unless written notice of another location is given to Bank,
Borrower’s books and records will be located at Borrower’s principal place of
business set forth above.

 

                In addition, Borrower will comply with the following
“Financial Covenants” and agrees to:

 

                1.             Borrower
and Guarantors will furnish to Bank in duplicate:

 

(A)                              as soon as available and in any event
within 45 days after the end of each of the first three quarterly accounting
periods in each fiscal year of Borrower and Guarantors (“quarterly accounting
period”),

 

(1) either (a) copies of IHOP Parent’s Quarterly
Report on Fonn 10-Q for the quarterly accounting period then ended, as filed
with the SEC or (b) if IHOP Parent is not subject to Section 13 or 15(d) of the
Exchange Act, copies of the consolidated balance sheet of Borrower or
Guarantors as of the end of the quarterly accounting period and of the related
consolidated statements of operations, shareholders’ equity and cash flows for
such accounting period, all in reasonable detail and stating in comparative
form the consolidated figures as of the end of and for the corresponding date
and period in the previous fiscal year, all Certified by a President, Vice
President, Chief Executive Officer, Chief Financial Officer, Treasurer or
Controller (“Appropriate Officer”) of IHOP Parent; and

 

11

 

(2) a written statement in the form of Exhibit E
hereto executed by Appropriate Officers of IHOP Parent and Borrower setting
forth computations or other pertinent information in reasonable detail showing
as at the end of such quarterly accounting period whether or not the financial covenants
set forth herein have been met which statement shall be accompanied by actual
calculations set forth in the form of Exhibit F (“Quarterly Compliance
Statement”);

 

(B)                                as soon as available and in any event
within 90 days after the end of each fiscal year of IHOP Parent,

 

(1) either (a) copies of IHOP Parent Annual Report on
Form 10-K and Annual Report to Shareholders, in each case, for the year then
ended and as filed with the SEC together with copies of the consolidating
balance sheets of Borrower and Guarantors as of the end of such fiscal year and
the related consolidating statements of operations, or (b) if IHOP Parent is
not subject to Section 13 or 15( d) of the Exchange Act, copies of the
consolidated and consolidating balance sheets of Borrower and Guarantors as of
the end of such fiscal year, and of the related consolidated and consolidating
statements of operations and the related consolidated statements of
shareholders’ equity and cash flows, together with the notes to such
consolidated statements, which consolidated statements state in comparative
form the respective consolidated figures as of the end of and for the previous
fiscal year, and in the case of such consolidated financial statements referred
to in subclauses (a) or (b), accompanied by a report thereon of
PricewaterhouseCoopers or other independent public accountants of recognized
national standing selected by IHOP Parent (the “Accountants”), which report
shall be unqualified as to going concern and scope of audit and shall state
that such consolidated financial statements present fairly the consolidated
financial position of Borrower and Guarantors as at the end of such fiscal year
and the consolidated results of operations and cash flow for such fiscal year
in conformity with GAAP, and that the examination by the Accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards.

 

12

 

Together with each delivery of financial statements or
Annual Reports required by this subparagraph (1), the Accountants shall deliver
to Bank their report stating that, in making the audit necessary to the
certification of such financial statements, they have obtained no knowledge of
any Default or Event of Default or, if any such Default or Event of Default has
occurred, specifying the nature and period of existence thereof, and

 

(2)                                  a Quarterly Compliance Statement.

 

 

(C)                                concurrently with the financial
statements or reports furnished pursuant to Subsections A and B immediately
above, a certificate of respective Appropriate Officer of the Borrower and
Guarantors in the form of Exhibit E, stating that, based upon such examination
or investigation and review of this Agreement as in the opinion of the signer
is necessary to enable the signer to express an informed opinion with respect
thereto, no Default or Event of Default by Borrower or Guarantors in the
fulfillment of any of the terms, covenants, provisions or conditions of this Agreement
exists or has existed during such period or, if such a Default or Event of
Default shall exist or have existed, the nature and period of existence thereof
and what action the Borrower or any of the Guarantors, as the case may be, has
taken, is taking or proposes to take with respect thereto;

 

(D)                               promptly after the same are available and
in any event within 15 days thereof, copies of all such proxy statements,
financial statements, notices and reports as Borrower or Guarantors shall send
or make available generally to any of their security holders, and copies of all
regular and periodic reports and of all registration statements which Borrower
or Guarantors may file with the SEC or with any securities exchange;

 

(E)                                 promptly (and in any event within 5 days)
after becoming aware of (1) the existence of any Default or Event of Default, a
certificate of Appropriate Officers of Borrower and/or Guarantors specifying
the nature and period of existence thereof and what action the Borrower and/or
Guarantors is taking or proposes to take with respect thereto; or (2) any Debt
of Borrower or Guarantors being declared due and payable before its expressed
maturity, or any holder of such Debt having the right to declare such

 

13

 

Debt due and payable before its expressed maturity,
because of the occurrence of any default (or any event which, with notice
and/or the lapse of time shall constitute any such default) under such Debt or
the agreement pursuant to which such Debt was issued, a certificate of an
Appropriate Officer describing the nature and status of such Default or Event
of Default and what action Borrower or any of the Guarantors is taking or
proposes to take with respect thereto; provided,
however, that any Default or Event of Default which is deemed to
have arisen upon Borrower’s or Guarantors’ failure to promptly notify the Bank
of another Default or Event of Default in accordance with this Section shall be
deemed to be waived so long as (i) such underlying Default or Event of Default
as to which notice is required to be given (the “Underlying Default”) has been
completely cured; (ii) the Underlying Default, if it had not been completely
cured, would not have had a Material Adverse Effect and (iii) notice of the
Underlying Default is delivered within 30 days of its occurrence;

 

(F)                                 promptly and in any event within 10 days
after Borrower or Guarantors knows or, in the case of a Pension Plan has reason
to know, that a Reportable Event with respect to any Pension Plan has occurred,
that any Pension Plan or Multiemployer Plan is or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA, or that
Borrower or any of the Guarantors or ERISA Affiliates will or may incur any
material liability to or on account of a Pension Plan or Multiemployer Plan
under Title IV of ERISA or any other material liability under ERISA has been
asserted against Borrower or any of the Guarantors or ERISA Affiliates, a
certificate of an Appropriate Officer of IHOP Parent setting forth information
as to such occurrence and what action, if any, Borrower or any of the
Guarantors or ERISA Affiliate is required or proposes to take with respect
thereto, together with any notices concerning such occurrences which are (a)
required to be filed by Borrower or any of the Guarantors or ERISA Affiliate or
the plan administrator of any such Pension Plan controlled by Borrower or any
of the Guarantors or ERISA Affiliate with the Internal Revenue Service or the
PBGC, or (b) received by Borrower or any of the Guarantors or ERISA Affiliate
from any plan administrator of a Pension Plan not under their control or from a
Multiemployer Plan;

 

14

 

(G)                                promptly after the Borrower or any of the
Guarantors becomes aware of any Material Adverse Effect with respect to which
notice is not otherwise required to be given pursuant to this Section, a
certificate of an Appropriate Officer setting forth the details of such
Material Adverse Effect and stating what action Borrower or any of the
Guarantors has taken or proposes to take with respect thereto;

 

(H)                               promptly (and in any event within 15
days) after the Borrower or any of the Guarantors knows of (a) the institution
of, or threat of, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Borrower or any of the Guarantors or any
Property of any of them, or (b) any material development in any such action,
suit, proceeding, governmental investigation or arbitration, which, in either
case, is likely to have a Material Adverse Effect, a certificate of an
Appropriate Officer describing the nature and status of such matter in
reasonable detail;

 

(I)                                    in the event that Borrower is no longer a
consolidated Subsidiary of IHOP Parent, financial statements of the IHOP
Parties at such times and in such form (together with such certifications) as
are required to be delivered pursuant to Sections (A), (B) and (C) above;

 

(J)                                   not later than 90 days following the end
of each fiscal year of IHOP Parent, a copy of the consolidated budget of
Borrower and the Guarantors prepared by IHOP Parent for the next succeeding
fiscal year, and

 

(K)                               any other information, including
financial statements and computations, relating to the performance of
obligations arising under this Agreement and/or the affairs of Borrower and
Guarantors that the Bank may from time to time reasonably request and which is
capable of being obtained, produced or generated by Borrower or any of the
Guarantors or of which any of them has knowledge, including, without
limitation, a brief statement describing any significant events relating to
Borrower or any of the Guarantors for any fiscal period.

 

                B.
$25 Million Letter Agreement. Borrower and Guarantors to the extent applicable
to each of them agree to comply with all covenants set forth in the $25 Million
Letter Agreement while the debt set forth in such $25 Million Letter Agreement
remains outstanding.

 

15

 

                C.
Insurance. Maintain (for the Collateral Locations which are not subleased to
Subtenants) and/or cause Subtenants to maintain (for the Collateral Locations
which are subject to Subleases) insurance for each of the Collateral Locations
as required in the respective Ground Leases. Satisfactory evidence of such
insurance will be supplied to Bank prior to funding under the Loan(s) and 10
days prior to each policy renewal.

 

                D.
Existence and Compliance. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation, laws
relating to environmental matters, OSHA, ERISA and Pension Guaranty Board,
applicable to it or to any of its property, business operations and
transactions.

 

                E.
Taxes and Other Obligations. Pay all of its taxes, assessments and other
obligations, including, but not limited to taxes, costs or other expenses
arising out of this transaction, before they become delinquent or are being
contested in good faith by appropriate proceedings in a diligent manner.

 

                F.
Maintenance. Maintain all of its Equipment located at the Collateral Locations
in good condition and repair and shall make (for Collateral Locations not
subject to Subleases) and require all subtenants (for Collateral Locations
which are subject to Subleases) to make all necessary replacements thereof, and
preserve and maintain all licenses, trademarks, privileges, permits,
franchises, certificates and the like necessary for the operation of its
business.

 

                6. NEGATIVE COVENANTS. Until full payment and
performance of all obligations of Borrower under the Loan Documents, Borrower
and Guarantors will not, without the prior written consent of Bank (and without
limiting any requirement of any other Loan Documents):

 

                6.1. Restrictions on Liens. Borrower hereby
covenants that Borrower will not permit any Liens with respect to the
Collateral except for those listed in the marked Title Commitments delivered of
even date herewith by Stewart Title Guaranty Company in favor of Bank or liens
created pursuant to the Ground Leases or Subtenant Leases. Further, the IHOP
Parties covenant that they will not, nor will they permit any Subsidiary to,
directly or indirectly, create, assume or suffer to exist any Lien upon any of
their respective property or asset, whether real, personal or mixed, tangible
or intangible or assets whether now owned or hereafter acquired (“Property” or
“Properties”) , except for:

 

                                (A) Liens for taxes, assessments or
governmental charges or claims the payment of which is not at the time required
by this Agreement;

 

16

 

                                (B) Statutory Liens of landlords, and
Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed
by law incurred in the ordinary course of business for sums not yet delinquent
or being diligently contested in good faith, so long as a reserve or other
appropriate provision, if any, shall have been made therefor;

 

                                (C) Liens (other than any Lien
imposed by ERISA) incurred or deposits made in the ordinary course of business
in connection with obligations not due or delinquent with respect to workers’
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment
of borrowed money);

 

                                (D) Any attachment or judgment Lien
(including judgment or appeal bonds) which shall, within 30 days after the
entry thereof, have been discharged or execution thereof stayed pending appeal,
or which shall have been discharged within 30 days after the expiration of any
such stay, or which is being diligently contested in good faith so long as a
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;

 

                                (E) Easements, rights-of-way,
restrictions and other similar rights in land which do not, individually or in
the aggregate, materially detract from the value of such Property and do not
interfere with the ordinary conduct of the business of IHOP Parent, the
Borrower or any of their Subsidiaries;

 

                                (F) Liens securing Debt of a
Subsidiary to the Borrower or IHOP Parent;

 

                                (G) Liens (other than Liens created
pursuant to Capitalized Leases) existing on the date hereof securing Debt not
exceeding $1,500,000 in the aggregate in principal amount;

 

                                (H) Liens pursuant to Capitalized
Leases existing on the date hereof and Liens created hereafter pursuant to
Capitalized Leases so long as, with respect to Liens pursuant to Capitalized
Leases created following the date hereof, the Funded Debt represented by such
Capitalized Leases is permitted pursuant to Section 5 (A)(ii) above; and

 

                                (1) Liens including Liens arising out
of purchase money financing securing Debt (without duplication) of IHOP Parent,
the Borrower or any Subsidiary of IHOP Parent or the Borrower, provided that the sum of (i) the principal
amount of such Debt plus (ii) unsecured Debt of Subsidiaries of IHOP Parent
(other than the Borrower) and Subsidiaries of the Borrower not otherwise
permitted under this Section does not exceed at any time 15% of Consolidated
Tangible Net Worth.

 

The Liens referred to in
Section 6.1 are herein collectively referred to as “Permitted Liens,” individually,
a “Permitted Lien.”

 

17

 

                6.2. Limitation on Funded Debt. IHOP Parent,
the Borrower and Guarantors shall not, and shall not permit any Subsidiary to,
incur Funded Debt other than:

 

                                (A) the Note, the Guarantee of the
Guarantors and all Funded Debt of IHOP Parent, the Borrower and their
Subsidiaries existing as of the date hereof, which have been disclosed in
writing to Bank;

 

                                (B) any replacement, refinancing or
extension of any Funded Debt, provided that
the aggregate principal amount of such Funded Debt (or, if such Funded Debt is
issued with an original issue discount, the original issue price of such Funded
Debt) does not exceed the then outstanding principal amount of the Funded Debt
so replaced, refinanced or extended (or, if the Funded Debt being replaced,
refinanced or extended was issued with an original issue discount, the original
issue price plus the amortized portion of the original issue discount to the
date that such Funded Debt is replaced, refinanced or extended); and

 

                                (C) additional Funded Debt of the
IHOP Parties, provided that after
giving effect to such incurrence (including payment of interest and principal
following such incurrence) and to the application of any proceeds thereof the
IHOP Parties are still in compliance with the financial ratios set forth in
Section 5 (A) (i) and (ii) above, measured in each case on a pro forma basis as
of the most recently ended fiscal quarter as if such incurrence had occurred on
the last day of such fiscal quarter.

 

                6.3. Limitation on Debt of Subsidiaries. The
IHOP Parties shall not permit any of their Subsidiaries to incur any Debt other
than:

 

                                (A) Debt owed to IHOP Parent or the
Borrower or to a wholly-owned Subsidiary of IHOP Parent or the Borrower in each
case by a direct or indirect wholly-owned Subsidiary of the creditor
thereunder; and

 

                                (B) additional Debt, provided that the sum of the aggregate
principal amount of such Debt plus the aggregate principal amount of all other
Debt (without duplication) of IHOP Parent, the Borrower and any of their
Subsidiaries which is secured by Liens not permitted by Sections 6.1 does not exceed
15% of Consolidated Tangible Net Worth.

 

                6.4. Sale of Assets. Except in connection with
a Release Parcel (as defined in the Multi-State Security Instrument executed of
even date herewith), Borrower shall not permit a Disposition of the Collateral.
Except in connection with a Release Parcel (as defined in the Multi-State
Security Instrument executed of even date herewith), Restaurants shall not
permit a Disposition of the Equipment pledged by Restaurants. The IHOP Parties
shall not, and shall not permit any of their Subsidiaries to, effect a
Disposition of any assets (other than the Collateral) unless (i) no Default or
Event of Default has occurred and is continuing, and (ii) one of the following
applies:

 

18

 

                                (a) such Disposition is in the
ordinary course of business, including, without limitation, (i) sales and
leases of operating restaurants and (ii) financings in connection with asset
securitization programs, each in accordance with the Borrower’s ordinary course
franchising or financing operations and made pursuant to the reasonable
business judgment of the Borrower in accordance with past practice;

 

                                (b:) in each fiscal year, IHOP
Parent, the Borrower and their respective Subsidiaries may effect Dispositions
(other than Qualifying Dispositions of Excepted Properties as such terms are
defined and permitted under the $25 Million Letter Agreement) of assets for
Fair Market Value and which (A) have an aggregate Book Value, together with all
other assets disposed of in that fiscal year (other than Dispositions permitted
by clause (a), (c) or (d) of this Section), of less than 10% of Gross Assets on
a consolidated basis determined as at the date of such sale; (B) generate,
together with all other assets disposed of in that fiscal year (other than
Dispositions permitted by clause (a), (c) or (d) of this Section), net income,
which is less than 10% of the Consolidated Net Income (in each case, determined
as of the end of the immediately preceding fiscal year); and (C) together with
all assets previously disposed of since September 30, 2000 (other than
Dispositions permitted by clause (a), (c) or (d) of this Section), have an
aggregate Book Value of less than 25% of Gross Assets on a consolidated basis
determined as at the date of such sale;

 

                                (c) such Dispositions are made for
Fair Market Value and the proceeds of such Disposition are used (i) within six
months following such Disposition, to purchase assets (“Business Asset
Acquisition”) used in the operations of the Borrower or (ii) to repay Debt of
IHOP Parent or its Subsidiaries which is not junior in right of payment to the
Note; or

 

                                (d) the assets disposed of were
disposed of for Fair Market Value (taking into consideration the rental rate to
be paid by the Borrower in connection with the Disposition and leaseback of the
assets so disposed of) and were constructed or acquired following September 30,
2000 and are immediately leased back from the purchaser thereof by IHOP Parent
or any of its Subsidiaries; provided that
no assets may be sold and leased back pursuant to this clause (d) following the
third anniversary of the acquisition or construction of such assets by IHOP
Parent, the Borrower or any of their Subsidiaries.

 

                6.5. Consolidation or Merger. IHOP Parent and
the Borrower covenant that neither of them will, nor will they permit any of
their respective Subsidiaries to, enter into any transaction of merger or
consolidation, whether in one transaction or a series of related or unrelated
transactions and whether at the same time or over a period of time,

provided
that:

 

                                6.5.1 (i) the Borrower may merge with
IHOP Parent or any of IHOP Parent’s other Subsidiaries, (ii) IHOP Parent may
merge with the Borrower or any of IHOP Parent’s other Subsidiaries and (iii)
any Subsidiary may merge with IHOP Parent, the Borrower or any other
Subsidiary, so long as, with
respect to any mergers of IHOP

 

19

 

Parent, the Borrower or
any Guarantor in which such party is not the surviving Person, (a) the
surviving Person of such transaction shall be a solvent U.S. or Canadian
corporation, and such surviving Person shall have assumed in writing all of the
obligations of the Borrower, IHOP Parent or Guarantors, as the case may be,
under this Agreement, the Note and the Guarantees, as the case may be, and all
documents necessary to reflect such merger with respect to the Collateral shall
be executed and recorded as necessary in the public records of the counties and
states as required for each of the Collateral Locations, and (b) at the time
of, and immediately after giving effect to, any such consolidation or merger,
no Default or Event of Default shall have occurred and be continuing, and

 

                                6.5.2 Borrower, IHOP Parent or any of
IHOP Parent’s other Subsidiaries may merge with any other Person so long as (i)
the surviving Person of such transaction shall be a solvent U.S. or Canadian
corporation, and such surviving Person shall have assumed in writing all of the
obligations of the Borrower, IHOP Parent or Guarantors, as the case may be,
under this Agreement, the Note and the Guarantees, as the case may be, and all
documents necessary to reflect such merger with respect to the Collateral shall
be executed and recorded as necessary in the public records of the counties and
states as required for each of the Collateral Locations, and (b) at the time
of, and immediately after giving effect to, any such consolidation or merger,
no Default or Event of Default shall have occurred and be continuing.

 

                6.6. Transactions with Affiliates. Each of
IHOP Parties covenants that it will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any Property or the rendering of any service), with any Affiliate,
unless (i) after giving affect to such transaction, the IHOP Parties will
remain in compliance with the financial ratios set forth in Section 5 (A)(i)
and (ii) above, and (ii) the transactions is not on terms that are less
favorable to IHOP Parent, the Borrower or such Subsidiary, as the case may be,
than those that would be obtainable at the time in an arm’s length transaction
with any Person who is not such an Affiliate; provided,
however, that this Section shall not prohibit the payment of
compensation and benefits to directors and officers of IHOP Parent, the
Borrower and their Subsidiaries in the ordinary course of business and
consistent with past practices.

 

                6.7. Acquisition of Margin Securities. Each of
the IHOP Parties covenants that it will not, and will not permit any of its
Subsidiaries to, own, purchase or acquire (or enter into any contract to
purchase or acquire) any “margin stock” as defined by any regulation of the
Board of Governors of the United States Federal Reserve System as now in effect
or as the same may hereafter be in effect unless, prior to any such purchase or
acquisition or entering into any such contract, Bank shall have received an opinion
of counsel satisfactory to Bank to the effect that such purchase or acquisition
will not cause this Agreement or the Note to be in violation of Regulation G or
any other regulation of such Board then in effect.

 

20

 

                6.8. Conduct of Business. Each of the IHOP
Parties covenants that it will not, and will not permit any of its Subsidiaries
to, engage in any business activity if, such business activity would result in
a substantial change in the general nature of the business of IHOP Parent and
its Subsidiaries, taken as a whole, from the business activities currently
conducted by the IHOP Parties.

 

                6.9. Ownership of Borrower. The IHOP Parties
agree that so long as any of the Obligations set forth herein remain
outstanding, International House of Pancakes, Inc. will continue to own of
record and beneficially all of the issued and outstanding capital stock of
Borrower and IHOP Parent will continue to own of record and beneficially all of
the issued and outstanding capital stock of International House of Pancakes,
Inc.

 

                7. DEFAULT. Borrower shall be in default under
this Agreement and under each of the other Loan Documents if it shall default
in the payment of any amounts due and owing under the Loan or should it fail to
timely and properly observe, keep or perform any term, covenant, agreement or
condition in this Loan Agreement, any other Loan Document or in any other loan
agreement, promissory note, security agreement, deed of trust, deed to secure
debt, mortgage, assignment or other contract securing or evidencing payment of
any indebtedness of Borrower to Bank or any affiliate or subsidiary of Bank of
America Corporation. An event of default under any of documents given in
connection with any Related Loans, including the $25 Million Letter Agreement,
shall also be an Event of Default hereunder. Borrower and Guarantors also
acknowledge that a default under the $25 Million Letter Agreement shall also be
a default hereunder.

 

                8. REMEDIES UPON DEFAULT. If an Default or
Event of Default shall occur, Bank shall have all rights, powers and remedies
available under each of the Loan Documents and the $25 Million Letter Agreement
as well as all rights and remedies available at law or in equity. Upon the
occurrence of any Default Condition or Event of Default, Bank’s obligation to
disburse any undisbursed portion of the Loan shall immediately cease. Upon the
occurrence or existence of any Event of Default, or at any time thereafter,
without prejudice to the rights of Bank to enforce its claims against Borrower
for damages for failure by Borrower to fulfill any of its obligations
hereunder, subject only to prior receipt by Bank of payment in full of all
Obligations then outstanding in a form acceptable to Bank, Bank shall have all
of the rights and remedies described hereunder, and it may exercise any one,
more, or all of such remedies, in its sole discretion, without thereby waiving
any of the others.

 

                                8.1 Notice and Right to Cure. In
the event of any Default or Event of Default of Borrower or any of the IHOP
Parties (except as otherwise stated below), Lender shall not accelerate the
Obligations, make any payments for which Borrower is primarily liable or
foreclose upon or attach any Collateral of Borrower or Restaurants unless
Lender first gives written notice of such Default or Event of Default to
Borrower pursuant to the notice provision set forth in Section 9 below and such
Default or Event of Default is not fully cured by Borrower or any of the other
IHOP Parties within the following periods:

 

21

 

                                (a) ten (10) days after such notice
is deemed given in the event of any failure to make a monetary payment to any
person;

 

                                (b) thirty (30) days after such
notice is deemed given in the event of non-monetary defaults not subject to
other provisions of this paragraph, provided (i) within ten (10) days after
given the notice of default Borrower and/or any of the IHOP Parties commences
its cure and submits to Lender in writing its plan to cure, and (ii) said cure
is continuously pursued by Borrower and/or any of the IHOP Parties with due
diligence. If said Default or Event of Default is not reasonably capable of
being cured within thirty (30) days, Borrower and/or any of the IHOP Parties
(as applicable) shall have such additional time as is reasonably necessary to
complete the cure, but in no event for more than ninety (90) days after the
notice of default is deemed given, all provided (x) said default is in Lender’s
reasonable judgment curable within said period, (y) Borrower and/or one of the
other IHOP Parties provides Lender with written, detailed progress reports at
least every thirty (30) days until is cure is complete, and (z) Borrower
continuously and diligently pursues said cure; or

 

                                (c) sixty (60) days after the filing
of any involuntary petition in bankruptcy against or for the appointment of a
receiver for Borrower or any of the IHOP Parties (except for petitions for
receivership filed by Lender), with the dismissal of such petitions by the
court within such period being deemed to cure such default.

 

                                Notwithstanding the above provisions,
the cure period provided for in this paragraph shall not apply in the following
circumstances:

 

                                                I. if Borrower
transfers or encumbers all or any portion of its interest in the Collateral
without the required consent of Lender unless permitted as a Release Parcel
under the Multi-State Security Instrument or if Restaurants transfers or
encumbers all or any portion of its interest in the Equipment pledged by
Restaurants to Bank without the required consent of Lender unless permitted as
a Release Parcel under the Multi-State Security Instrument; or

 

                                                II. in any
circumstance when a delay in effecting a cure is, in the reasonable judgment of
Lender, likely to result in any security being damaged, becoming uninsured or
rendered unavailable to Lender or the value thereof being materially and
adversely affected; or

                                                III. any monetary
Default which is repeated for four (4) consecutive months;

 

                                                IV. any failure to
proceed with the construction or repair of improvements to the Collateral
Locations as required by the Multi-State Security Instrument; or

 

22

 

                                                V. any filing of a
voluntary petition in bankruptcy by Borrower or Guarantors, or for the
appointment of a receiver or trustee of all or a portion of Borrower’s or any
of the Guarantors’ Property; or

                                                VI.
any assignment for the benefit of creditors, fraudulent conveyance, or other
plan or action instituted by Borrower, in any attempt to avoid the satisfaction
of any lawful indebtedness; or any waste committed to the Collateral Locations,
or any demolition or removal of any improvements on the Collateral Locations
which is not provided for under the Multi-State Security Instrument and which
is without Lender’s consent (other than the exercise by any proper authority of
the right of eminent domain); or

                                                VII. any nonmonetary
default which Lender reasonably determines is not capable of being cured within
the requisite period.

 

                                The provisions of this paragraph
shall apply to defaults under all Loan Documents executed in connection with
the Loan, and unless expressly stated to the contrary in such documents any
cure period referred to therein shall be deemed to incorporate said provisions.
If any Loan Documents are inconsistent with this paragraph the latter shall be
controlling. Where additional notice or cure periods are provided in this or
any other Loan Documents or are required by any other contract or by law, said
periods and those contained in this paragraph shall run concurrently. Nothing
in this paragraph shall be construed as extending the term of the Loan or the
date upon which a Default occurs, and no decision to forego any remedy for any
given Default shall be deemed a waiver on the part of Lender of any right
relating to any other Default. This paragraph shall be strictly construed, and
shall not impair the exercise of any remedy not referred to above immediately
upon Default, including, without limitation, the seeking of any mandatory or
prohibitive injunction or restraining order.

 

                9. NOTICES. All notices, requests or demands
which any party is required or may desire to give to any other party under any
provision of this Agreement must be in writing delivered to the other party at
the following address:

 

	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  IHOP PROPERTIES, INC.

  450 North Brand Boulevard

  7th Floor

  Glendale, CA 91203-2306

  Attn: Legal Department

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  BANK OF AMERICA, N.A.

  Commercial Loan Service Center

  Bank of America Office Park

  P.O. Box 45247

  Jacksonville, Florida 32256-0771

  
	
   

  	
   

  	
   

  

 

23

 

                or
to such other address as any party may designate by written notice to the other
party. Each such notice, request and demand shall be deemed given or made as
follows:

 

                A.
Deposited in the United States mail, registered or certified, return receipt
requested, postage prepaid;

 

                B.
delivered by an overnight private mail service which provides delivery
confirmation such as without limitation Federal Express, Airborne or UPS; or

 

                C.
Personally delivered at such address. All communication delivered as set forth
herein shall be deemed received by the addressee on the delivery date or the
delivery refusal date shown on the return receipt of the delivery confirmation.

 

                10. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower
shall pay to Bank immediately upon demand the full amount of all costs and
expenses, including reasonable attorneys’ fees (to include outside counsel fees
and all allocated costs of Bank’s in-house counsel if permitted by applicable
law), incurred by Bank in connection with (a) negotiation and preparation of
this Agreement and each of the Loan Documents, and (b) all other costs and
attorneys’ fees incurred by Bank for which Borrower is obligated to reimburse
Bank in accordance with the terms of the Loan Documents.

 

                11. MISCELLANEOUS. Borrower and Bank further
covenant and agree as follows, without limiting any requirement of any other
Loan Document:

 

                A.
Cumulative Rights and No Waiver. Each and every right granted to Bank under any
Loan Document, or allowed it by law or equity shall be cumulative of each other
and may be exercised in addition to any and all other rights of Bank, and no
delay in exercising any right shall operate as a waiver thereof, nor shall any
single or partial exercise by Bank of any right preclude any other or future
exercise thereof or the exercise of any other right. Borrower expressly waives
any presentment, demand, protest or other notice of any kind, including but not
limited to notice of intent to accelerate and notice of acceleration. No notice
to or demand on Borrower in any case shall, of itself, entitle Borrower to any
other or future notice or demand in similar or other circumstances.

 

                B.
Applicable Law. This Loan Agreement and the rights and obligations of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of Georgia and applicable United States federal law.

 

                C.
Amendment. No modification, consent, amendment or waiver of any provision of
this Loan Agreement, nor consent to any departure by Borrower therefrom, shall
be effective unless the same shall be in writing and signed by an

 

24

 

officer of Bank, and then shall be effective only in
the specified instance and for the purpose for which given. This Loan Agreement
is binding upon Borrower, its successors and assigns, and inures to the benefit
of Bank, its successors and assigns; however, no assignment or other transfer
of Borrower’s rights or obligations hereunder shall be made or be effective
without Bank’s prior written consent, nor shall it relieve Borrower of any
obligations hereunder. There is no third party beneficiary of this Loan Agreement.

 

                D.
Documents. All documents, certificates and other items required under this Loan
Agreement to be executed and/or delivered to Bank shall be in form and content
satisfactory to Bank and its counsel.

 

                E.
Partial Invalidity. The unenforceability or invalidity of any provision of this
Loan Agreement shall not affect the enforceability or validity of any other
provision herein and the invalidity or unenforceability of any provision of any
Loan document to any person or circumstance shall not affect the enforceability
or validity of such provision as it may apply to other persons or
circumstances.

 

                F.
Survivability. All covenants, agreements, representations and warranties made
herein or in the other Loan Documents shall survive the making of the Loan and
shall continue in full force and effect so long as the Loan is outstanding or
the obligation of the Bank to make any advances under the Loan shall not have
expired.

 

                12. ARBITRATION. (a) This paragraph concerns
the resolution of any controversies or claims between the Borrower and the
Bank, whether arising in contract, tort or by statute, including but not
limited to controversies or claims that arise out of or relate to: (i) this
Agreement (including any renewals, extensions or modifications); or (ii) any
document related to this Agreement; (collectively a “Claim”).

 

(b) At the request of the
Borrower or the Bank, any Claim shall be resolved by arbitration in accordance
with the Federal Arbitration Act (Title 9, U. S. Code) (the “Act”). The Act
will apply even though this Agreement provides that it is governed by the law
of a specified state.

 

(c) Arbitration
proceedings will be determined in accordance with the Act, the rules and
procedures for the arbitration of financial services disputes of J.A.M.S./Endispute
or any successor thereof “J.A.M.S.”), and the terms of this paragraph. In the
event of any inconsistency, the terms of this paragraph shall control.

 

(d) The arbitration shall
be administered by J.A.M.S. and conducted in any U.S. state where real or
tangible personal property collateral for this credit is located. All Claims
shall be determined by one arbitrator; however, if Claims exceed Five Million
Dollars ($5,000,000), upon the request of any party, the Claims shall be
decided by three arbitrators. All arbitration hearings shall commence within 90
days of the demand for

 

25

 

arbitration and close
within 90 days of commencement and the award of the arbitrator(s) shall be
issued within 30 days of the close of the hearing. However, the arbitrator(s),
upon a showing of good cause, may extend the commencement of the hearing for up
to an additional 60 days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to
any court having jurisdiction to be confirmed and enforced.

 

(e) The arbitrator(s)
will have the authority to decide whether any Claim is barred by the statute of
limitations and, if so, to dismiss the arbitration on that basis. For purposes
of the application of the statute of limitations, the service on J.A.M.S. under
applicable J.A.M.S. rules of a notice of Claim is the equivalent of the filing
of a lawsuit. Any dispute concerning this arbitration provision or whether a Claim
is arbitrable shall be determined by the arbitrator(s). The arbitrator(s) shall
have the power to award legal fees pursuant to the terms of this Agreement.

 

(f) This paragraph does
not limit the right of the Borrowers or the Bank to: (i) exercise self-help
remedies, such as but not limited to, setoff; (ii) initiate judicial or
nonjudicial foreclosure against any real or personal property collateral; (iii)
exercise any judicial or power of sale rights, or (iv) act in a court of law to
obtain an interim remedy, such as but not limited to, injunctive relief, writ
of possession or appointment of a receiver, or additional or supplementary
remedies.

 

                13. NOTICE OF FINAL AGREEMENT. BY SIGNING THIS
DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT (A) THE WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THE WRITTEN LOAN AGREEMENT MAY NOT
BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENT OR UNDERSTANDINGS OF THE PARTIES.

 

26

 

                IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed under seal by their duly authorized
representatives as of the date first above written.

 

	
   

  	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  IHOP PROPERTIES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard K. Herzer

  
	
   

  	
   

  	
  Name:

  	
  Richard. K. Herzer

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GUARANTOR:

  	
   

  	
  GUARANTOR:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IHOP RESTAURANTS, INC.

  	
   

  	
  IHOP CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  Richard K.
  Herzer

  	
   

  	
  By:

  	
  /s/  Richard K.
  Herzer

  
	
  Name:

  	
  Richard K. Herzer

  	
   

  	
  Name:

  	
  Richard K. Herzer

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (CORPORATE SEAL)

  	
   

  	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GUARANTOR:

  	
   

  	
  GUARANTOR:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IHOP REALTY CORP.

  	
   

  	
  INTERNATIONAL HOUSE OF

  PANCAKES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  Richard K.
  Herzer

  	
   

  	
  BY:

  	
  /s/  Richard K.
  Herzer

  
	
  Name:

  	
  Richard K. Herzer

  	
   

  	
  Name:

  	
  Richard K. Herzer

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (CORPORATE SEAL)

  	
   

  	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK/LENDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
							

 

27

 

LIST OF EXHIBITS

 

	
  Exhibit A

  	
  -

  	
  List of Collateral
  Locations

  
	
  Exhibit B

  	
  -

  	
  Description of Ground
  Leases

  
	
  Exhibit C

  	
  -

  	
  Description of
  Subleases

  
	
  Exhibit D

  	
   

  	
  Description of Equipment
  Leases

  
	
  Exhibit E

  	
   

  	
  Compliance Certificate

  
	
  Exhibit F

  	
   

  	
  Calculations for
  Compliance Certificate

  

 

28

 

Exhibit A                -               List of Collateral Locations

 

 

 

	
  Store
  ID

  	
   

  	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  Zip

  	
   

  
	
  0582

  	
   

  	
  2990 Donnell Drive

  	
   

  	
  Forestville

  	
   

  	
  MD

  	
   

  	
  20747-3256

  	
   

  
	
  0583

  	
   

  	
  9680 Baltimore Avenue

  	
   

  	
  College Park

  	
   

  	
  MD

  	
   

  	
  20740-1324

  	
   

  
	
  0943

  	
   

  	
  2575 Highland Avenue

  	
   

  	
  Highland

  	
   

  	
  CA

  	
   

  	
  92346-2003

  	
   

  
	
  1723

  	
   

  	
  7951 NE Vancouver Plaza
  Drive

  	
   

  	
  Vancouver

  	
   

  	
  WA

  	
   

  	
  98662-6625

  	
   

  
	
  1724

  	
   

  	
  32010 Dyer Street

  	
   

  	
  Union City

  	
   

  	
  CA

  	
   

  	
  94587-1700

  	
   

  
	
  1726

  	
   

  	
  3525 Bradshaw Road

  	
   

  	
  Sacramento

  	
   

  	
  CA

  	
   

  	
  95827-3304

  	
   

  
	
  1824

  	
   

  	
  7733 W Long Drive

  	
   

  	
  Littleton

  	
   

  	
  CO

  	
   

  	
  80123-1245

  	
   

  
	
  4452

  	
   

  	
  6125 Peachtree Parkway

  	
   

  	
  Norcross

  	
   

  	
  GA

  	
   

  	
  30092-3304

  	
   

  
	
  4460

  	
   

  	
  35 Riverbend Drive SW

  	
   

  	
  Rome

  	
   

  	
  GA

  	
   

  	
  30161-6065

  	
   

  
	
  4767

  	
   

  	
  95 Main Street

  	
   

  	
  Tewksbury

  	
   

  	
  MA

  	
   

  	
  01846-1708

  	
   

  
	
  5320

  	
   

  	
  3505 N Rock Road

  	
   

  	
  Wichita

  	
   

  	
  KS

  	
   

  	
  67226-1320

  	
   

  
	
  5321

  	
   

  	
  15410 W 119th Street

  	
   

  	
  Olathe

  	
   

  	
  KS

  	
   

  	
  66062-5606

  	
   

  
	
  5322

  	
   

  	
  2187 S Telegraph Road

  	
   

  	
  Bloomfield Hills

  	
   

  	
  MI

  	
   

  	
  48302-0250

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

29

 

Exhibit B                -               Description of Ground Leases

 

 

 

 

	
  UNIT NO.

  	
   

  	
  DESCRlPllON
  OF LEASE

  	
   

  	
  Memorandum
  or Short Form

  	
   

  
	
  0582

  	
   

  	
  Ground Lease between
  dated February 8, 1999, between IHOP Properties, Inc., as Tenant and Penn Mar
  Associates, LLC, as Landlord.

  	
   

  	
  Short Form Lease dated
  February 8, 1999, between IHOP Properties, Inc., as Tenant and Penn Mar
  Associates, LLC, as Landlord.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0583

  	
   

  	
  Ground Lease dated
  March 26, 1997 between IHOP Properties, Inc., as Tenant and Mirza Hussain Ali
  Baig and Amina J. Baig, as Landlord, as amended by that certain Addendum to
  Ground Lease dated March 16, 1999, between IHOP Properties, Inc., as Tenant
  and Mirza Hussain Ali Baig and Amina J. Baig, as Landlord.

  	
   

  	
  Short Form of Ground
  Lease dated September 28,1998, between IHOP Properties, Inc., as Tenant and
  Mirza Hussain Ali Baig and Amina J. Baig, as Landlord.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0943

  	
   

  	
  Ground Lease dated May
  1, 1998, between IHOP Properties, Inc., as Tenant and Delbert M. Shofner and
  Carol S. Shofner, Trustees of the Shofner Family Trust U/D/T dated March 24,
  1997; James C. Seley and Charlene R. Seley, Trustees under the Seley Family
  Trust U/D/T dated February 16, 1977; and James C. Seley and Charlene R.
  Seley, Trustees of the Seley Children’s Trust U/D/T dated September 8, 1987,
  as Landlord, as amended by that certain First Amendment to Ground Lease
  between IHOP Properties, Inc., as Tenant and Delbert M. Shofner and Carol S.
  Shofner, Trustees of the Shofner Family Trust U/D/T dated March 24, 1997;
  James C. Seley and Charlene R. Seley, Trustees under the Seley Family Trust
  U/D/T dated February 16, 1977; and James C. Seley and Charlene R. Seley,
  Trustees of the Seley Children’s Trust U/D/T dated September 8, 1987, as
  Landlord and further amended by that certain Second Amendment to Ground Lease
  between IHOP Properties, Inc., as Tenant and Delbert M. Shofner and Carol S.
  Shofner, Trustees of the Shofner Family Trust U/D/T dated March 24, 1997; James
  C. Seley and Charlene R. Seley, Trustees under the Seley Family Trust U/D/T
  dated February 16, 1977; and James C. Seley and Charlene R. Seley, Trustees
  of the Seley Children’s Trust U/D/T dated September 8, 1987, as Landlord.

  	
   

  	
  Short Form Lease dated
  May 18, 1998, between IHOP Properties, Inc., as Tenant and Delbert M. Shofner
  and Carol S. Shofner, Trustees of the Shofner Family Trust U/D/T dated March
  24, 1997; James C. Seley and Charlene R. Seley, Trustees under the Seley
  Family Trust U/D/T dated February 16, 1977; and James C. Seley and Charlene
  R. Seley, Trustees of the Seley Children’s Trust U/D/T dated September 8,
  1987, as Landlord, recorded on July 6, 1998, at Instrument No. 98-259891 of
  the official records of San Bernardino County, California.

  	
   

  

 

30

 

	
  1723

  	
   

  	
  Ground Lease dated June
  24, 1998 between The Cafaro Northwest Partnership, an Ohio general
  partnership, as Landlord and IHOP Properties, Inc., as Tenant, as amended by
  that certain First Amendment to Ground Lease dated December 1, 1998 between
  The Cafaro Northwest Partnership, an Ohio general partnership, as Landlord
  and IHOP Properties, Inc., as Tenant, and further amended by that certain
  Second Amendment to Ground Lease dated March 17, 1999 between The Cafaro
  Northwest Partnership, an Ohio general partnership, as Landlord and IHOP
  Properties, Inc., as Tenant, as further amended by that certain Third
  Amendment to Ground Lease dated May 17, 1999 between The Cafaro Northwest
  Partnership, an Ohio general partnership, as Landlord and IHOP Properties,
  Inc., as Tenant, and further amended by that certain Fourth Amendment to
  Ground Lease dated October 18, 1999 between The Cafaro Northwest Partnership,
  an Ohio general partnership, as Landlord and IHOP Properties, Inc., as
  Tenant.

  	
   

  	
  Short Form of Ground
  Lease dated June 24, 1998, between The Cafaro Northwest Partnership, an Ohio
  general partnership, as Landlord and IHOP Properties, Inc., as Tenant,
  recorded on May 21, 1999, at Recording Number 3108864.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1724

  	
   

  	
  Ground Lease dated
  April 28, 1999 between Dyer Triangle, LLC, as Landlord and IHOP Properties,
  Inc., as Tenant, as amended by that certain Addendum to Ground Lease dated
  October 11, 1999 between Dyer Triangle, LLC, as Landlord and IHOP Properties,
  Inc., as
  Tenant.

  	
   

  	
  Short Form Ground Lease
  dated April 28, 1999, between Dyer Triangle, LLC, as Landlord and IHOP
  Properties, Inc., as Tenant, recorded May 17, 1999, at Document Number
  99-187826.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1726

  	
   

  	
  Ground Lease dated June
  21, 1999 between First Rancho Plaza, L.P., as Landlord and IHOP Properties,
  Inc., as Tenant, as amended by First Amendment to Lease dated December 2,
  1999 between First Rancho Plaza, L.P., as Landlord and IHOP Properties, Inc.,
  as Tenant and evidenced of public record by that certain Short Form of Ground
  Lease dated June 21, 1999 between First Rancho Plaza, L.P., as Landlord and
  IHOP Properties, Inc., as Tenant, recorded June 24, 1999, in Book 990624,
  Page 602, official records of Sacramento County, California.

  	
   

  	
  Short Form of Ground
  Lease dated June 21, 1999 between First Rancho Plaza, L.P., as Landlord and
  IHOP Properties, Inc., as Tenant, recorded June 24, 1999, in Book 990624,
  Page 602, official records of Sacramento County, California.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1824

  	
   

  	
  Ground Lease dated June
  12, 1998 between The Section 14 Development Co., as Landlord and IHOP
  Properties, Inc., as Tenant, as amended by that certain First Amendment to
  Ground Lease dated September 28, 1998 between The Section 14 Development Co.,
  as Landlord and IHOP Properties, Inc., as Tenant, and further amended by that
  certain Second Amendment Ground Lease dated March 16, 1999 between The
  Section 14 Development Co., as Landlord and IHOP Properties, Inc., as Tenant.

  	
   

  	
  Short Form Ground Lease
  dated June 30, 1998 between The Section 14 Development Co., as Landlord and
  IHOP Properties, Inc., as Tenant, recorded at Reception no. FO693231 in
  Jefferson County, Colorado.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4452

  	
   

  	
  Ground Lease dated
  September 3, 1998, between IRT Property Company, as Landlord and IHOP
  Properties, Inc., as Tenant as amended by that certain Addendum to Ground
  Lease dated February 18, 2000, between IRT Property Company, as Landlord and
  IHOP Properties, Inc., as Tenant.

  	
   

  	
  Short Form of Ground
  Lease dated September 3, 1998, between IRT Property Company, as Landlord and
  IHOP Properties, Inc., as Tenant

  	
   

  

 

31

 

	
  4460

  	
   

  	
  Ground Sublease dated
  April 23, 1999 between IHOP Properties, Inc., as Tenant and Larry C. Martin
  as Landlord, as amended by that certain First Amendment to Ground Sublease
  dated December 6, 1999 between IHOP Properties, Inc., as Tenant and Larry C.
  Martin as Landlord.

  	
   

  	
  Short Form of Ground
  Sublease dated April 23, 1999 between IHOP Properties, Inc., as Tenant and
  Larry C. Martin as Landlord, recorded at Book 1536, Page 651, public records
  of Floyd County, Georgia.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4767

  	
   

  	
  Ground Lease dated
  August 19, 1998, between Motel 6 Multipurpose, Inc., as Landlord and IHOP
  Properties, Inc., as Tenant as amended by that certain Addendum to Ground
  Lease dated April 16, 1999, between Motel 6 Multipurpose, Inc., as Landlord
  and IHOP Properties, Inc., as Tenant and further amended by that certain
  First Amendment to Ground Lease dated September 27, 2000 between Motel 6
  Multipurpose, Inc., as Landlord and IHOP Properties. Inc., as Tenant.

  	
   

  	
  Short Form of Ground
  Lease dated August 25, 1998 between Motel 6 Multipurpose, Inc., as Landlord
  and IHOP Properties, Inc., as Tenant, recorded at Book 9587, Page 2, public
  records of Middlesex County (Northern District) Registry of Deeds,
  Massachusetts.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5320

  	
   

  	
  Ground Lease dated
  February 19, 1999 between IHOP Properties, Inc., as Tenant and Northbrooke
  Development Company, Inc., as Landlord, as amended by that certain Addendum
  to Ground Lease dated July 9, 1999, between IHOP Properties, Inc., as Tenant
  and Northbrooke Development Company, Inc., as Landlord.

  	
   

  	
  Short Form of Lease
  dated February 19, 1999, between IHOP Properties, Inc., as Tenant and Northbrooke Development
  Company, Inc., as Landlord, recorded at Film 1893, Page 2545, public records
  of Sedwick County, Kansas.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5321

  	
   

  	
  Ground Lease between
  IHOP Properties, Inc., as Tenant and Glo-Rae Investment Co. and D & S
  Investors, L.L.C., as Landlord dated October 30, 1998 as amended by that
  certain Addendum to Ground Lease between IHOP Properties, Inc., as Tenant and
  Glo-Rae Investment Co. and D & S Investors, L.L.C., as Landlord dated
  December 28, 1999.

  	
   

  	
  Short Form of Lease
  dated October 30, 1998 between IHOP Properties, Inc., as Tenant and
  Glo-Rae Investment Co. and D & S Investors, L.L.C., as Landlord, recorded
  at Book 6067, Page 937, public records of Johnson County, Kansas.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5322

  	
   

  	
  Ground Lease between RD
  Bloomfield Limited Partnership, as Landlord and IHOP Properties, Inc., as
  Tenant dated January 15, 1999, as amended by First Amendment to Ground Lease
  between RD Bloomfield Limited Partnership, as Landlord and IHOP Properties,
  Inc., as Tenant dated February 25, 1999, and further amended by that certain
  Addendum to Ground Lease between RD Bloomfield Limited Partnership, as
  Landlord and IHOP Properties, Inc., as Tenant dated October I, 1999.

  	
   

  	
  Short Form Lease dated
  January 22, 1999 between RD Bloomfield Limited Partnership and IHOP
  Properties, Inc., recorded at Liber 20328, Page 597, Oakland County, Michigan
  records.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

32

 

Exhibit C                -               Description of Subleases

 

 

 

 

	
  UNIT NO.

  	
   

  	
  Discription
  of Sublease

  	
   

  
	
  0582

  	
   

  	
  Sublease dated March
  30, 2000 by and between Robert Sharp as Subtenant and IHOP Properties, Inc.,
  as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  0583

  	
   

  	
  Sublease dated March
  25, 1999, by and between Hospitality Management of College Park, Inc., as
  Subtenant and IHOP Properties, Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  0943

  	
   

  	
  Sublease dated November
  2, 2000, by and between Nazimuddin Hashim, as Subtenant and IHOP Properties,
  Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  1723

  	
   

  	
  Sublease dated
  September 9, 1999, by and between Steven L. Graham as Subtenant and IHOP
  Properties, Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  1724

  	
   

  	
  Sublease dated August
  25, 1999, by and between Alice A. Knudsen, as Subtenant and IHOP Properties,
  Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  1726

  	
   

  	
  Sublease dated
  September 29, 1999, by and between Mohammad Tariq Munir, as Subtenant and
  IHOP Properties, Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  1824

  	
   

  	
  Sublease dated February
  12, 1999, by and between 1824, INC., as Subtenant and IHOP Properties, Inc.,
  as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  4452

  	
   

  	
  Sublease dated June
  25,1999, by and between Elaine M. Ambrose-Ghoniem, as Subtenant and IHOP
  Properties, Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  4460

  	
   

  	
  Sublease dated
  September 30, 1999, by and between ISSAM HAMIDEH, as Subtenant and IHOP
  Properties, Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  4767

  	
   

  	
  Sublease dated July 1,
  1999, by and between Roderick Macpherson, Jr., as Subtenant and IHOP
  Properties, Inc., as Sublandlord, as amended by that certain First Amendment
  to Sublease dated October 16, 2000.

  
	
   

  	
   

  	
   

  
	
  5320

  	
   

  	
  Sublease dated July 24,
  1995, between Bassam S. Salameh, as Subtenant and IHOP Properties, Inc., as
  Sublandlord.

  
	
   

  	
   

  	
   

  
	
  5321

  	
   

  	
  Sublease dated August
  5, 1999, by and between Houssni Al Abed, as Subtenant and IHOP Properties,
  Inc., as Sublandlord.

  
	
   

  	
   

  	
   

  
	
  5322

  	
   

  	
  N/A

  

 

33

 

Exhibit D                -               Description of Equipment Leases

 

 

	
  UNIT NO.

  	
   

  	
  Description of Equipment Lease

  	
   

  	
   

  
	
  0582

  	
   

  	
  Equipment Lease dated
  March 30, 2000 between IHOP Restaurants, Inc., as Lessor and Robert Sharp, as
  Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  0583

  	
   

  	
  Equipment Lease dated
  March 25, 1999 between IHOP Restaurants, Inc., as Lessor and Hospitality
  Management of College Park, Inc., as Lessee; as amended by that certain
  Amendment to Equipment Lease dated June 24,  1999

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  0943

  	
   

  	
  Equipment Lease dated
  November 2, 2000 between IHOP Restaurants, Inc., as Lessor and Nazimuddin
  Hashim as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1723

  	
   

  	
  Equipment Lease dated
  September 9, 1999 between IHOP Restaurants, Inc., as Lessor and Steven L.
  Graham, as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1724

  	
   

  	
  Equipment Lease dated
  August 25, 1999, between IHOP Restaurants, Inc., as Lessor and Alice A.
  Knudson, as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1726

  	
   

  	
  Equipment Lease dated
  September 26, 1999 between IHOP Restaurants, Inc., as Lessor and Mohammad
  Tariq Munir, as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1824

  	
   

  	
  Equipment Lease dated
  February 12, 1999 between IHOP Restaurants, Inc., as Lessor and 1824, Inc.,
  as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4452

  	
   

  	
  Equipment Lease dated
  June 25, 1999 between IHOP Restaurants, Inc., as Lessor and Elaine M.
  Ambrose-Ghoniem as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4460

  	
   

  	
  Equipment Lease dated
  September 30, 1999 between IHOP Restaurants, Inc., as Lessor and Issam
  Hamideh, as Lessee 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4767

  	
   

  	
  Equipment Lease dated
  July 1, 1999 between IHOP Restaurants, Inc., as Lessor and Roderick
  MacPherson, Jr. as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5320

  	
   

  	
  Equipment Lease dated
  July 24, 1999 between IHOP Restaurants, Inc., as Lessor and Bassam S.
  Salameh, as Lessee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5321

  	
   

  	
  Equipment Lease dated
  August 5, 1999 between IHOP Restaurants, Inc., as Lessor and Houssni Al Abed,
  as Lessee 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5322

  	
   

  	
  N/A

  	
   

  

 

34

 

Exhibit E                 Compliance Certificate

 

COMPLIANCE CERTIFICATE

 

                This Compliance Certificate is delivered pursuant to
the Loan Agreement dated as of February        
,2001 (together with all amendments and modifications, if any, from time to
time made thereto, the “Loan Agreement”) between BANK OF AMERICA, N.A., a
national banking association (“Bank” or “Lender”), IHOP PROPERTIES, INC., a
California corporation (“Borrower”), and International House of Pancakes, Inc.,
a Delaware corporation, IHOP Corp., a Delaware corporation (“IHOP Parent”),
IHOP Realty Corp., a Delaware corporation, and IHOP Restaurants, Inc., a
Delaware corporation (collectively, the “Guarantors”).

 

                Unless otherwise defined, terms used herein
(including the attachments hereto) have the meanings provided in the Loan
Agreement.

 

                The undersigned, being the duly elected, qualified
and acting Appropriate Officer, on behalf of the IHOP Parties and solely in his
or her capacity as an officer of the Borrower, hereby certifies and warrants
that:

 

                1.             He
or she is holds the following offices for the IHOP Parties:

 

	
   

  	
  of IHOP PROPERTIES,
  INC.

  
	
   

  	
  of lntemational House
  of Pancakes, Inc. 

  
	
   

  	
  of IHOP Corp.

  
	
   

  	
  of IHOP Realty Corp.

  
	
   

  	
  of IHOP Restaurants,
  Inc.

  

 

and that, as such, he or
she is authorized to execute this certificate on behalf of the Borrower.

 

2.
                           
As of                     
,                     
:

 

(a)
The Borrower and Gaurantors were not in default of any of the provisions of the
Loan Agreement or any of the Loan Documents during the period as to which this
Compliance Certificate relates;

 

(b)
The Borrower’s and Guarantors’ Fixed Charge
Coverage Ratio, on a consolidated basis, was     
to 1.0 as computed on Attachment 1 hereto (using the form provided as Exhibit F
to the Loan Agreement);

 

(c)
The Borrower’s and Guarantors’ Funded Debt to
EBITDA Ratio, on a consolidated basis, was    
to 1.0 as computed on Attachment 1 hereto (using the form provided as Exhibit F
to the Loan Agreement);

 

35

 

IN WITNESS WHEREOF, the
undersigned has executed and delivered this certificate, this                
day of                    
20  .

 

 

	
  By:

  	
   

  
	
  Print Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
					

 

36

 

Exhibit F                 Calculations for Compliance
Certificate

 

	
  BANK
  OF AMERICA FINANCIAL COVENANTS:

  
	
   

  
	
  1.
  Consolidated Income Available for Fixed Charges:

  
	
  Net Income after tax

  
	
  Plus non-cash charges
  (such as depreciation and amortization)

  
	
  Plus total Interest
  Expense

  
	
  Plus Operating Rent
  Expense

  
	
  Less distributions,
  dividends, and advances

  
	
  2.
  Fixed Charges:

  
	
  Scheduled Principal
  Payments LT Debt in the next 12 months

  
	
  Plus Scheduled Payments
  Capitalized Leases

  
	
  Plus Interest Expense

  
	
  Plus Operating Rent
  Expense

  
	
  FIXED
  CHARGE COVERAGE  (>= 1.35x)

  
	
   

  
	
  3.
  EBITDA:

  
	
  Net Income

  
	
  Income Taxes

  
	
  Depreciation &
  Amortization

  
	
  Interest Expense

  
	
   

  
	
   

  
	
  4.
  Funded Debt:

  
	
  Current Maturities of
  Long-Term Debt

  
	
  Current Portion of
  Capital Lease Obligations

  
	
  Long-Term Debt

  
	
  Capital Lease
  Obligations

  
	
   

  
	
  FUNDED
  DEBT / EBITDA  (<= 3.00x)

  

 

 

37EXHIBIT 10.10

 

EMPLOYMENT AGREEMENT

 

 

This Employment
Agreement (the “Agreement”) is entered into as of the 3rd day of December, 2001
(the “Effective Date”), between IHOP CORP., a Delaware corporation (the
“Company”), and Julia Stewart (the “Employee”).

 

Whereas, the Board
of Directors of the Company (the “Board”) has approved and authorized the entry
into this Agreement with the Employee; and

 

Whereas, the
parties desire to enter into this Agreement setting forth the terms and
conditions for the employment relationship of the Employee with the Company.

 

Now, Therefore, in
consideration of the promises and mutual covenants and agreements herein
contained and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:

 

1.             Employment.  The Employee is employed as President and
Chief Operating Officer of the Company from the Effective Date through June 3,
2002 and thereafter as President and Chief Executive Officer through the Term
of this Agreement (as defined in Section 2 hereof).  In this capacity, the Employee shall have such duties and
responsibilities as may be designated to her by the Board from time to time and
as are not inconsistent with the Employee’s position with the Company, including
the performance of duties with respect to any subsidiaries of the Company, as
may be designated by the Board.  During
the Employee’s period of employment hereunder, the Employee shall be based in
the principal offices of the Company in Southern California, and shall not be
required to relocate outside of Southern California to perform services
hereunder, except for travel as reasonably required in the performance of her
duties hereunder.

 

2.             Term.  The “initial term” of this Agreement shall be for the period
commencing on the Effective Date and ending on the second anniversary of the
Effective Date; provided, however, that on the second anniversary of the
Effective Date, and on each subsequent anniversary date thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than 90 days prior to such applicable anniversary date, the Company
or the Employee shall give notice not to extend this Agreement; and provided
further, however, that, if a Change in Control (as defined in Section 11(g)) occurs
prior to the expiration of the Term of this Agreement, this Agreement shall
remain in full force and effect and shall not expire prior to the last day of
the 24th month following the date of such Change in Control.  The “Term of this Agreement” or “Term” shall
mean, for purposes of this Agreement, both the “initial term” (as hereinbefore
described) and any additional term (created by extension, as described above),
and the Term of this Agreement shall not be affected by the Employee’s
termination of employment.

 

 

 

3.             Salary.  Subject to the further provisions of this Agreement, the Company
shall pay the Employee during the period beginning with the Effective Date and
ending on June 2, 2002 a salary at an annual rate equal to $425,000, and
thereafter salary at an annual rate of $450,000, with such salary to be
increased at such times, if any, and in such amounts as determined by the
Board, which increases shall be consistent with the historical business
practices of the Company and the salary adjustments for other senior executives
of the Company.  Such salary shall be
payable by the Company to the Employee not less frequently than monthly and
shall not be decreased at any time during the Term of this Agreement.  Participation in deferred compensation, discretionary
bonus, retirement, and other employee benefit plans and in fringe benefits
shall not reduce the salary payable to the Employee under this Section.

 

4.             Participation in Bonus, Retirement
and Employee Benefit Plans.  The
Employee shall be entitled to participate equitably with other senior
executives in any plan of the Company relating to bonuses, stock options, stock
purchases, pension, thrift, profit sharing, life insurance, medical coverage,
education, or other retirement or employee benefits that the Company has
adopted or may adopt for the benefit of its senior executives. For purposes of
the Company’s Executive Incentive Plan, Employee’s target bonus will be 60% of
her base salary.

 

5.             Hiring Incentives.

 

(i)            Upon the Effective Date, or as soon
as practicable thereafter, Employee shall receive an option to purchase a total
of 150,000 shares of IHOP Corp. common stock. Such stock option shall be
subject to the terms of the IHOP Corp. 2001 Stock Incentive Plan, as amended,
and a Stock Option Agreement setting forth, among other things, the option
exercise vesting schedule and option exercise price.  The option exercise price shall be equal to the “fair market
value” (as such term is used in the 2001 Stock Incentive Plan) of IHOP Corp.
common stock on the Effective Date. The calculation of fair market value shall
be performed in the manner most favorable to Employee.  The options will have a term of 10 years and
will become one-third vested after one year, two-thirds vested after two years
and fully vested after three years. In the event the Company terminates your
employment for any reason other than Cause prior to such options having become
fully vested, such options shall automatically become fully vested as of the
Date of Termination.

 

 

2

 

(ii)           The Company will make a personal loan
to Employee of $600,000.  The loan will
be interest-free and shall be funded within 3 days of request by Employee.  The loan amount will be forgiven in
increments of $100,000 annually, commencing on December 31, 2002.  In the event the Company terminates your
employment for any reason other than for Cause before the loan has been
completely forgiven, the loan will be forgiven and deemed paid in full
effective as your last date of employment. 
In the event the Company terminates your employment for Cause or if at
any time the Employee’s employment shall be terminated by her for any reason
(other than in a Voluntary Termination), then Employee agrees to repay the
remaining balance to IHOP Corp. within 60 days thereafter.  In the event of a “Change in Control” as
such term is used in the employment agreement referred to below, the loan shall
automatically be forgiven.

 

(iii)          IHOP Corp. will provide to you an
interest free “bridge loan” of up to $600,000 to be used as a portion of the
down payment on a new home, which shall be secured by a mortgage on Employee’s
Kansas house.  The bridge loan shall be
funded within 3 days of request by Employee. Employee agrees to repay the
bridge loan in full immediately upon the closing of the sale of her house in
Kansas.  Prior to the funding of the
bridge loan, Employee shall furnish IHOP with evidence that she possesses at
least $600,000 in equity in the Kansas house.

 

(iv)          Other Relocation Assistance shall be
furnished to Employee as outlined on Exhibit “A” attached hereto.

 

6.             Fringe Benefits; Automobile.  The Employee shall be entitled to receive
all other fringe benefits which are now or may be provided to the Company’s
senior executives.  In addition, the
Company shall provide the Employee during the Term of this Agreement with a car
allowance of $1,000 per month, plus reimbursement of all automobile expenses
such as gasoline, maintenance, insurance and vehicle registration, in accordance
with the Company’s general policy on providing cars to senior executives.  Notwithstanding the foregoing, the benefits
provided under this Section 6 shall cease upon the Employee’s Date of
Termination (as defined in Section 11(d)).

 

7.             Vacations.  The Employee shall be entitled to an annual
paid vacation as determined in accordance with the Company’s general policy for
senior executives.

 

8.             Business Expenses.  During such time as the Employee is
rendering services hereunder, the Employee shall be entitled to incur and be
reimbursed for all reasonable business expenses and be provided allowances as
are furnished to the Company’s most senior executives under the Company’s then
current policies. 

 

3

The Company agrees that
it will reimburse the Employee for all such expenses upon the presentation by
the Employee, from time to time, of an itemized account of such expenditures,
setting forth the date, the purposes for which incurred, and the amounts
thereof, together with such receipts showing payments in conformity with the
Company’s established policies. Reimbursement shall be made within a reasonable
period after the Employee’s submission of an itemized account.

 

 

 

9.             Insurance and Indemnity.  The Employee shall be added as an additional
named insured under all appropriate insurance policies now in force or
hereafter obtained covering any officers or directors of the Company.  The Company shall indemnify and hold the Employee
harmless from any cost, expense or liability arising out of or relating to any
acts or decisions made by the Employee on behalf of or in the course of
performing services for the Company to the same extent the Company indemnifies
and holds harmless other senior executive officers and directors of the Company
and in accordance with the Company’s established policies.

 

10.           Professional Services Allowance.  The Employee shall be entitled to
reimbursement by the Company for expenses incurred by her for personal legal,
accounting, investment, estate planning services or other similar services as
outlined in the Company’s Professional Services Allowance policy, in an amount
to be determined by the Board, but in no event greater than $10,000 annually
(or a pro rata portion of such amount for any period of employment less than a
full year); provided, however, that no reimbursement shall be made for any such
expenses incurred by the Employee after such Employee’s Date of Termination.

 

11.           Termination.

 

(a)           Disability.  If, as a result of the Employee’s incapacity due to physical or
mental illness, she shall have been absent from the full-time performance of
her duties with the Company for 90 consecutive days or 180 days within any
12-month period, her employment may be terminated by the Company for “Disability.”

 

(b)           Cause.  Subject to the notice provisions set forth below, the Company may
terminate the Employee’s employment for “Cause” at any time.  “Cause” shall mean termination upon:  (1) the willful failure by the Employee to
substantially perform her duties with the Company (other than any such failure
resulting from her incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to her by the Board,
which demand specifically identifies the manner in which the Board believes
that she has not substantially performed her duties; (2) the Employee’s willful
misconduct 

 

 

4

 

that is demonstrably and
materially injurious to the Company, monetarily or otherwise; or (3) the
Employee’s commission of such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude as would prevent the effective performance of her
duties.  For purposes of this subsection
(b), no act, or failure to act, on the Employee’s part shall be deemed
“willful” unless done, or omitted to be done, by her not in good faith and
without the reasonable belief that her action or omission was in the best
interest of the Company.  Notwithstanding
the foregoing, the Employee shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to her a copy of a
resolution duly adopted by the affirmative vote of a majority of the
non-employee members of the Board at a meeting of such members (after reasonable
notice to her and an opportunity for her , together with her counsel, to be
heard before such members of the Board), finding that she has engaged in the
conduct set forth above in this subsection (b) and specifying the particulars
thereof in detail.

 

(c)           Notice of Termination.  Any termination of the Employee’s employment
by the Company or by the Employee shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 15.  “Notice of Termination” shall mean a notice
that indicates the specific termination provision in this Agreement relied upon
and sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for the termination of the Employee’s employment under the
provision so indicated.

 

(d)           Date of Termination.  “Date of Termination” shall mean:  (1) if the Employee’s employment is
terminated by her death, the date of her death; (2) if the Employee’s
employment is terminated for Disability, 30 days after Notice of Termination is
given; and (3) if the Employee’s employment is terminated for any other reason,
the date specified in the Notice of Termination.

 

(e)           Dispute Concerning Termination.  If within the later of (i) fifteen (15) days
after Notice of Termination is given, or (ii) fifteen (15) days prior to the
Date of Termination (as determined without regard to this Section 11(e), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning a termination by the Employee for Good Reason (as
defined in Section 11(h)) following a Change in Control (as defined in Section
11(g)), the Date of Termination shall be the earlier of the expiration date of
the Agreement, or the date on which the dispute is finally resolved, either by
mutual written agreement of the parties or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence.

 

 

5

 

(f)            Compensation During Dispute.  If a purported termination by the Employee
for Good Reason occurs following a Change in Control and during the Term of
this Agreement, and such termination is disputed in accordance with Section
11(e) hereof, the Company shall continue to pay the Employee the full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the Employee as a
participant in all compensation, benefit and insurance plans in which the
Employee was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 11(e)
hereof or, if earlier, the expiration date of the Agreement.  Amounts paid under this Section 11(f) are in
addition to all other amounts due under this Agreement (other than those due
under Section 12(b) hereof) and shall not be offset against or reduce any other
amounts payable under this Agreement.

 

(g)           Change in Control.  A “Change in Control” shall be deemed to
have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:

 

(i)            any “person” (as such term is used
in Sections 14(d) and 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (other than the Company; any trustee or other fiduciary
holding securities under an employee benefit plan of the Company; or any
Company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of the stock of the
Company) is or becomes after the Effective Date the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned
by such person any securities acquired directly from the Company or its
affiliates) representing 25% or more of the combined voting power of the
Company’s then outstanding securities; or

 

(ii)           during any period of two consecutive
years (not including any period prior to the Effective Date), individuals who
at the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in subparagraph (i), (iii)
or (iv) of this Section 11(g)) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least 2/3
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or

 

 

6

 

(iii)          the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 75% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company’s then
outstanding securities; or

 

(iv)          the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the Company’s
assets.

 

(h)           Good Reason.  At any time following a Change in Control,
the Employee may terminate her employment hereunder for “Good Reason.”  “Good Reason” shall mean the occurrence
(without the Employee’s express written consent) of any material breach of this
Agreement, including, without limitation, any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in subsections (i), (iv), (v), (vi) or (vii) below,
such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:

 

(i)            the assignment to the Employee of
any duties inconsistent with the Employee’s status as a senior executive of the
Company or a substantially adverse alteration in the nature or status of the
Employee’s responsibilities from those in effect immediately prior to the
Change in Control;

 

(ii)           a reduction by the Company in the
Employee’s annual base salary as in effect on the date hereof or as the same
may be increased from time to time;

 

(iii)          the relocation of the Company’s
principal offices to a location outside Southern California (or, if different,
the metropolitan area in which such offices are located immediately prior to
the Change in Control) or the Company’s requiring the Employee to be based
anywhere other than the Company’s principal executive offices, except for
required travel on the Company’s business to an extent substantially consistent
with the Employee’s present business travel obligations;

 

 

7

 

(iv)          the failure by the Company to pay to
the Employee any portion of the Employee’s current compensation, or to pay to
the Employee any portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven days of the date
such compensation is due;

 

(v)           the failure by the Company to
continue in effect any compensation plan in which the Employee participates
immediately prior to the Change in Control which is material to the Employee’s
total compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or the
failure by the Company to continue the Employee’s participation therein (or in
such substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of the
Employee’s participation relative to other participants, as existed immediately
prior to the Change in Control;

 

(vi)          the failure by the Company to continue
to provide the Employee with benefits substantially similar to those enjoyed by
the Employee under any of the Company’s pension, life insurance, medical,
health and accident, or disability plans in which the Employee was
participating immediately prior to the Change in Control; or the taking of any
action by the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Employee of any material fringe benefit enjoyed
by the Employee immediately prior to the Change in Control;

 

(vii)         any purported termination of the
Employee’s employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of this Agreement; for purposes of this Agreement,
no such purported termination shall be effective; or

 

(viii)        any failure by the Company to comply
with and satisfy Section 13(b) of this Agreement.

 

The Employee’s
right to terminate the Employee’s employment for Good Reason shall not be
affected by the Employee’s incapacity due to physical or mental illness.  The Employee’s continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.

 

(i)            Voluntary Termination.  The Employee may terminate her employment
hereunder (“Voluntary Termination”) upon a material breach of this Agreement by
the Company, unless the Company shall fully correct such breach within 30 days
of the Employee’s Notice of Termination given in respect thereof.

 

 

8

 

12.           Compensation Upon Termination or
During Disability.  The Employee shall
be entitled to the following benefits during a period of disability, or upon
termination of her employment, as the case may be, provided that such period or
termination occurs during the Term of this Agreement:

 

(a)           During any period that the Employee
fails to perform her full-time duties with the Company as a result of
incapacity due to physical or mental illness, she shall continue to receive her
base salary at the rate in effect at the commencement of any such period,
together with all compensation payable to her under the Company’s disability
plan or program or other similar plan during such period, until her employment
is terminated pursuant to Section 11 hereof. 
Thereafter, or in the event the Employee’s employment shall be
terminated by reason of her death, her benefits shall be determined under the
Company’s retirement, insurance and other compensation programs then in effect
in accordance with the terms of such programs.

 

(b)           If at any time the Employee’s
employment shall be terminated:  (i) by
the Company for Cause or Disability or (ii) by her for any reason (other than
in a Voluntary Termination or for Good Reason following the occurrence of a
Change in Control), the Company shall pay the Employee her full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which she is entitled through
the Date of Termination under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further obligations to her
under this Agreement.

 

(c)           If the Employee’s employment should
be terminated:  (1) by reason of her
death, (2) by the Company other than for Cause or Disability, (3) by the
Company giving notice to Employee of its election not to extend this Agreement
pursuant to paragraph 2 hereof, or (4) by the Employee in a Voluntary
Termination, she shall be entitled to the benefits provided below:

 

(i)            the Company shall pay to the
Employee or the appropriate payee (as determined in accordance with Section
13(c)) (A) her full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; plus (B)(x) in the case of
death or a Voluntary Termination all salary and bonus payments that would have
been payable to the Employee pursuant to this Agreement for the remaining Term
of this Agreement, or (y) in all other cases, all salary and bonus payments
that would have been payable to the Employee had the Employee continued to be
employed for a period of 12 months, assuming for the purpose of such payments
that her salary for such remaining period is equal to her salary at the Date of
Termination and that her annual bonus for such 

 

9

 

remaining Term is equal
to the average of the annual bonuses paid to her by the Company with respect to
the three fiscal years ended immediately prior to the fiscal year in which the
Date of termination occurs; plus (C) all other amounts to which she is entitled
under any compensation plan of the Company, in cash in a lump sum no later than
the 15th day following the Date of Termination;

 

(ii)           for a 12-month period after the Date
of Termination, the Company shall arrange to provide the Employee with life,
disability, accident and health insurance benefits substantially similar to
those which the Employee and her covered family members are receiving
immediately prior to the Notice of Termination (without giving effect to any
reduction in such benefits subsequent to a Change in Control); provided,
however, that such continued benefits shall be reduced to the extent comparable
benefits are actually received by or made available to the Employee without
cost during the 12-month period following the Employee’s termination of
employment (and the Employee agrees that she shall promptly report any such
benefits actually received to the Company); and

 

(iii)           the Company shall continue in effect
for the benefit of the Employee all insurance or other provisions for
indemnification and defense of officers or directors of the Company which are
in effect on the date the Notice of Termination is sent to the Employee with
respect to all of her acts and omissions while an officer or director as fully
and completely as if such termination had not occurred, and until the final
expiration or running of all periods of limitation against actions which may be
applicable to such acts or omissions.

 

(iv)          the stock options referred to in shall
automatically become fully-vested and exercisable.

 

(d)           If the Employee’s employment should
be terminated by the Employee for Good Reason following a Change in Control,
she shall be entitled to the benefits provided below:

 

(i)            the Company shall pay to the
Employee or the appropriate payee (as determined in accordance with Section
13(c)) (A) her full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; plus (B)(x) in the case of
death or a Voluntary Termination all salary and bonus payments that would have
been payable to the Employee pursuant to this Agreement for the remaining Term
of this Agreement, or (y) in all other cases, all salary and bonus payments
that would have been payable to the Employee had the Employee continued to be
employed for a period of 24 months, assuming for the purpose of such payments
that her salary for such remaining period is equal to her salary at the Date of
Termination and that her annual bonus for such remaining Term is equal to the
average of the annual bonuses paid to her by the 

 

10

Company with respect to
the three fiscal years ended immediately prior to the fiscal year in which the
Date of termination occurs; plus (C) all other amounts to which she is entitled
under any compensation plan of the Company, in cash in a lump sum no later than
the 15th day following the Date of Termination;

 

(ii)           for a 24-month period after the Date
of Termination, the Company shall arrange to provide the Employee with life,
disability, accident and health insurance benefits substantially similar to
those which the Employee and her covered family members are receiving
immediately prior to the Notice of Termination (without giving effect to any
reduction in such benefits subsequent to a Change in Control); provided,
however, that such continued benefits shall be reduced to the extent comparable
benefits are actually received by or made available to the Employee without
cost during the 24-month period following the Employee’s termination of
employment (and the Employee agrees that she shall promptly report any such
benefits actually received to the Company); and

 

(iii)           the Company shall continue in effect
for the benefit of the Employee all insurance or other provisions for
indemnification and defense of officers or directors of the Company which are in
effect on the date the Notice of Termination is sent to the Employee with
respect to all of her acts and omissions while an officer or director as fully
and completely as if such termination had not occurred, and until the final
expiration or running of all periods of limitation against actions which may be
applicable to such acts or omissions.

 

(e)           Notwithstanding any other provisions
of this Agreement, in the event that any payment or benefit received or to be
received by the Employee in connection with the termination of the Employee’s
employment (whether such benefit is pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company, and all such
payments and benefits being hereinafter called “Total Payments”) would not be
deductible (in whole or part), by the Company as a result of the application of
Section 280G of the Internal Revenue Code of 1986, as amended (“Code”), then,
to the extent necessary to make the nondeductible portion of the Total Payments
deductible, (i) the cash payments under this Agreement shall first be reduced
(if necessary, to zero), and (ii) all other non-cash payments under this
Agreement shall next be reduced (if necessary, to zero).

 

(f)            If it is established as described in
the preceding subsection (d) that the aggregate benefits paid to or for the
Employee’s benefit are in an amount that would result in any portion of such
“parachute payments” not being deductible by reason of Section 280G of the
Code, then the Employee shall have an obligation to pay the Company upon demand
an amount equal to the sum of:  (i) the
excess of the aggregate “parachute payments” paid to or for the Employee’s
benefit over

 

11

 the aggregate “parachute payments” that could
have been paid to or for the Employee’s benefit without any portion of such
“parachute payments” not being deductible by reason of Section 280G of the
Code; and (ii) interest on the amount set forth in clause (i) of this sentence
at the rate provided in Section 1274(b)(2)(B) of the Code from the date of the
Employee’s receipt of such excess until the date of such payment.

 

(g)           The Employee shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise.

 

(h)           If the employment of the Employee is
terminated by the Company without Cause or the Employee’s employment is
terminated by the Employee under conditions entitling her to payment hereunder
and the Company fails to make timely payment of the amounts then owed to the
Employee under this Agreement, the Employee shall be entitled to interest on
such amounts at the rate of 1% above the prime rate (defined as the base rate
on corporate loans at large U.S. money center commercial banks as published by
the Wall Street Journal), compounded monthly, for the period from the date such
amounts were otherwise due until payment is made to the Employee (which
interest shall be in addition to all rights which the Employee is otherwise
entitled to under this Agreement).

 

13.           Assignment.

 

(a)           This Agreement is personal to each of
the parties hereto.  No party may assign
or delegate any rights or obligations hereunder without first obtaining the
written consent of the other party hereto, except that this Agreement shall be
binding upon and inure to the benefit of any successor corporation to the
Company.

 

(b)           The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. 
As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or otherwise.

 

(c)           This Agreement shall inure to the
benefit of and be enforceable by the Employee and her personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the 

 

 

12

 

Employee should die while
any amount would still be payable to her hereunder had she continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to her devisee, legatee or other designee or,
if there is no such designee, to her estate.

 

14.           (a)           Confidential
Information.  During the Term of this
Agreement and thereafter, the Employee shall not, except as may be required to
perform her duties hereunder or as required by applicable law, disclose to
others for use, whether directly or indirectly, any Confidential Information
regarding the Company.  “Confidential
Information” shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public and that was learned by the Employee in the course of her
employment by the Company, including (without limitation) any data, formulae,
information, proprietary knowledge, trade secrets and client and customer lists
and all papers, resumes, records and the documents containing such Confidential
Information.  The Employee acknowledges
that such Confidential Information is specialized, unique in nature and of
great value to the Company, and that such information gives the Company a
competitive advantage.  Upon the termination
of her employment, the Employee will promptly deliver to the Company all
documents (and all copies thereof) containing any Confidential Information.

 

(b)           Non-competition.  The Employee agrees that during the Term of
this Agreement, and for a period of one year thereafter, she will not, directly
or indirectly, without the prior written consent of the Company, provide
consultative service with or without pay, own, manage, operate, join, control,
participate in, or be connected as a stockholder, partner, or otherwise with
any business, individual, partner, firm, corporation, or other entity which is
then in competition with the Company or any present affiliate of the Company;
provided, however, that the “beneficial ownership” by the Employee, either individually
or as a member of a “group,” as such terms are used in Rule 13d of the General
Rules and Regulations under the Exchange Act, of not more than 1% of the voting
stock of any publicly held corporation shall not be a violation of this
Agreement.  It is further expressly
agreed that the Company will or would suffer irreparable injury if the Employee
were to compete with the Company or any subsidiary or affiliate of the Company
in violation of this Agreement and that the Company would by reason of such
competition be entitled to seek injunctive relief in a court of appropriate
jurisdiction, and the Employee further consents and stipulates to the entry of
such injunctive relief upon sufficient proof of violation of this provision, in
such a court, prohibiting the Employee from competing with the Company or any
subsidiary or affiliate of the Company in violation of this Agreement.

 

 

13

 

(c)           Right to Company Materials.  The Employee agrees that all styles, designs,
recipes, lists, materials, books, files, reports, correspondence, records, and
other documents (“Company Material”) used, prepared, or made available to the
Employee, shall be and shall remain the property of the Company.  Upon the termination of her employment or
the expiration of this Agreement, all Company Materials shall be returned
immediately to the Company, and Employee shall not make or retain any copies
thereof.

 

(d)           Antisolicitation.  The Employee promises and agrees that during
the Term of this Agreement, and for a period of one year thereafter, she will
not influence or attempt to influence customers, franchisees, landlords, or
suppliers of the Company or any of its present or future subsidiaries or
affiliates, either directly or indirectly, to divert their business to any
individual, partnership, firm, corporation or other entity then in competition
with the business of the Company, or any subsidiary or affiliate of the
Company.

 

15.           Notice.  For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
addresses as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address shall be
effective only upon actual receipt:

 

	
  Company:

  	
  IHOP Corp.

  
	
   

  	
  450 North Brand Blvd.

  
	
   

  	
  Glendale,
  California  91203-1903

  
	
   

  	
  to the attention of the
  Board;

  
	
  with a copy to:

  	
  the Secretary of the
  Company

  
	
   

  	
   

  
	
  Employee:

  	
  Julia Stewart

  
	
   

  	
  c/o IHOP Corp.

  
	
   

  	
  450 North Brand
  Boulevard

  
	
   

  	
  Glendale  California  91203.

  

 

16.           Amendments or Additions.  No amendments or additions to this Agreement
shall be binding unless in writing and signed by both parties hereto.

 

17.           Section Headings.  The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.

 

 

14

 

18.           Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

 

19.           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but both of
which together will constitute one and the same instrument.

 

20.           Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Los Angeles, California, in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator’s award in any court having jurisdiction;
provided, however, that the Employee shall be entitled to seek specific
performance of her right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.

 

21.           Attorneys’ Fees.  The Company shall pay to the Employee all
out-of-pocket expenses, including attorneys’ fees, incurred by the Employee in
connection with any claim, legal action or proceeding involving this Agreement
in which the Employee prevails in whole or in part, whether brought by the
Employee or by or on behalf of the Company or by another party.  The Company shall pay prejudgment interest
on any money judgment obtained by the Employee calculated at 3% above the prime
rate (defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by the Wall Street Journal), from the date that
payment(s) to the Employee should have been made under this Agreement.

 

22.           Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Employee and such officer as may be
specifically designated by the Board. 
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.  No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in this
Agreement and this agreement shall supersede any prior understanding or
agreement either written or oral, will respect to the subject matter
hereto.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California without regard to its conflicts of law principles.  All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections.

 

 

15

 

Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law.  The
obligations of the Company under Section 12 and Section 20 and the obligations
of the Employee under Section 14 and Section 20 shall survive the expiration of
the Term of this Agreement.

 

IN WITNESS
WHEREOF, each of the parties hereto has executed this Agreement on the date
first indicated above.

 

	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Julia Stewart

  
	
  IHOP Corp.

  
	
   

  
	
   

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
  Richard K. Herzer

  
	
  Chief Executive Officer

  
			

 

 

16

 

Julia
Stewart

Relocation
Assistance

 

•                                            House Hunting
Trips — IHOP will reimburse you for reasonable expenses incurred by you and
your spouse for a maximum of two (2) five-day advance trips for house hunting
in the Southern California area.

•                                            IHOP will house
you at the Glendale Hilton (or a comparable Hotel) for the days you are here in
the area until you have moved permanently. 
If temporary housing for you and your family becomes necessary, IHOP
will provide reasonable temporary housing until you find a permanent residence
in the area.

•                                            IHOP will
reimburse reasonable interim living expenses for you and your family at the new
location while awaiting permanent housing, for a period of time not to exceed
sixty (60) days.

•                                            Return Visits
Home — IHOP will pay for you to go home every weekend from wherever you may be
each Friday (e.g. somewhere in the country visiting franchisees, company
restaurants, training or at the Glendale headquarters offices).

•                                            Sale of
Residence at Old Location — IHOP will reimburse reasonable (non-recurring)
expenses for the sale, such as real estate commissions, legal fees, title fees,
mortgage penalties, transfer tax payments and other miscellaneous closing
costs, not to exceed 8% of the sale price.

•                                            Purchase of
Residence in Southern California — IHOP will reimburse reasonable
(non-recurring ) expenses for the purchase, such as appraisal costs, escrow,
title, recording documents and other miscellaneous closing costs, not to exceed
1.5% of the purchase price.

•                                            Mortgage
reimbursement — IHOP will reimburse you for the lesser of the two mortgage
(PITI) payments (i.e. either your Kansas mortgage or your Southern California
mortgage) you incur until the Kansas property sells.

•                                            Additional Home
Sale Assistance — If your home does not sell in Kansas City within twelve
months after your employment date, IHOP will offer to purchase your home through
a relocation vendor at an appraised price. 
This price will be established through an evaluation by two licensed
real estate appraisers selected by you from a list furnished by our relocation
vendor.  This price shall be established
after a review of your property and a comparison of like properties in the
area.  If the two appraisals are within
5% of one another.  IHOP will offer to
purchase the home at the average of the two appraisals.  If the difference is greater than 5%, you
will select a third appraiser from the list and the offer will be based upon
the average of the two highest appraisals. 
If you elect not to accept the offer then IHOP’s obligation to reimburse
one of your mortgage payments shall cease at that time.

•                                            Household Goods
— IHOP will pay reasonable charges for packing, unpacking and transportation
costs for one (1) pick-up at origin and one (1) delivery at destination, plus
insurance costs and normal appliance servicing.  Included in the charges will be 

 

 

Exhibit
"A"

 

•                                            moving four
vehicles which require a separate transportation van and premium charges
associated with moving antiques and crating fine valuables (not to exceed
$10,000).

•                                            Travel Expenses
— IHOP will reimburse your reasonable expenses transporting you and your family
to the new location.  Reimbursement will
be based on the most direct route.

•                                            Miscellaneous
Expense Allowance — At the time of your move to Southern California, IHOP will
provide up to $10,000 to compensate for incidental expenses incurred in
relocating (e.g., Nanny search, temporary child care, cable, fax, phone
installation, utilities, etc.).

•                                            IHOP will gross
up all reimbursed relocation expenses to cover tax consequences.

•                                            In the event
you voluntarily terminate your employment with IHOP prior to two years
following relocation, you agree to repay IHOP for all of your reimbursed
relocation expenses.

 

 

Exhibit "A"

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