IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS INC.

,1 et al., Chapter 11 Case No. 11-11795 (KG) Jointly Administered Debtors.

Requested Hearing Date: November 22, 2011 at 4:00 p.m. (ET) Requested Objection Deadline: The Debtors and the Committee have requested that any objections or responses to the Motion be due at the Hearing

JOINT MOTION OF THE DEBTORS AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR AN ORDER, PURSUANT TO BANKRUPTCY RULE 9019(a) AND SECTIONS 105(a) AND 363(b) OF THE BANKRUPTCY CODE, AUTHORIZING AND APPROVING (I) THAT CERTAIN SETTLEMENT AGREEMENT AND RELEASE BY AND AMONG THE DEBTORS, CASTLE HARLAN, INC., P&MCS HOLDING LLC, AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS AND (II) THE REORGANIZED DEBTORS PURCHASE OF THE EQUITY INTERESTS OF P&MC REAL ESTATE HOLDING PURSUANT TO SUCH SETTLEMENT AGREEMENT AND RELEASE Perkins & Marie Callenders Inc. (f/k/a The Restaurant Company) (PMCI) and its above-captioned affiliated debtor entities (collectively, with PMCI, the Debtors) and the Official Committee of Unsecured Creditors (the Committee), by and through their undersigned counsel, respectfully move this Court (the Motion) for entry of an order, pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and sections 105(a) and 363(b) of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the

The Debtors, together with the last four digits of each Debtors federal tax identification number, are: Perkins & Marie Callenders Inc. (4388); Perkins & Marie Callenders Holding Inc. (3999); Perkins & Marie Callenders Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.

Bankruptcy Code), substantially in the form annexed hereto as Exhibit B (the Proposed Order), (i) authorizing and approving (a) that certain Settlement Agreement and Release (the Agreement),2 dated as of November 17, 2011, by and among Castle Harlan, Inc. (CHI), nonDebtor P&MCs Holding LLC (f/k/a TRC Holding LLC, Perkins Holdco), Debtor Perkins & Marie Callenders Holding, Inc. (PMCHI), for itself and on behalf of each of its direct and indirect subsidiaries and affiliates identified on Exhibit B to the Agreement (including, without limitation, each of the other Debtors), the Committee, and, for limited purposes, Castle Harlan Partners IV, L.P. (CHPIV)3 and (b) the Reorganized Debtors to purchase one hundred percent (100%) of the equity interests of non-Debtor P&MC Real Estate Holding, LLC (Real Estate Holding) pursuant to the terms, covenants and conditions of the Agreement, and (ii) granting certain related relief. In support of the Motion, the Debtors and the Committee respectfully state as follows: Jurisdiction and Venue 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and

1334. This is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). 2. Venue of the above-captioned chapter 11 cases and this Motion are proper in this

District pursuant to 28 U.S.C. 1408 and 1409. 3. The statutory predicates for the relief requested herein are Bankruptcy Rules

6004(h) and 9019(a) and sections 105(a) and 363(b) the Bankruptcy Code.
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A copy of the Agreement is attached as Exhibit 1 to the Proposed Order. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Agreement. Any summary of or reference to the terms, covenants and conditions of the Agreement provided for herein is provided only for ease of reference and the Courts convenience; to the extent any such summary or reference provided herein differs from the actual terms, covenants and conditions of the Agreement, the actual terms, covenants and conditions of the Agreement shall control. CHI, Perkins Holdco, PMCHI, CHPIV, the Committee and each other Debtor Entity are referred to herein as a Party and collectively as the Parties.
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General Background 4. On June 13, 2011 (the Petition Date), each of the Debtors filed a voluntary

petition for relief under chapter 11 of the Bankruptcy Code, and each thereby commenced chapter 11 cases (collectively, the Chapter 11 Cases) in this Bankruptcy Court (the Court). No request has been made for the appointment of a trustee or examiner, and the Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On June 24, 2011, the Office of the United States Trustee (the U.S. Trustee) appointed the Committee. 5. On September 9, 2011, the Debtors filed the Debtors Second Amended

Disclosure Statement for Debtors Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code [Docket No. 923] (including all exhibits thereto and as may be amended, modified or supplemented from time to time, the Disclosure Statement). That same day, the Court entered an order [Docket No. 935] approving the Disclosure Statement as containing adequate information within the meaning of section 1125 of the Bankruptcy Code. 6. On November 1, 2011, the Court entered an order [Docket No. 1287] (the

Confirmation Order) confirming the Debtors Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (including all exhibits thereto and as may be amended, modified, or supplemented from time to time, and as supplemented by the Plan Supplement,4 the Plan) pursuant to section 1129 of the Bankruptcy Code and Rule 3020 of the Federal Rules of Bankruptcy Procedure. 7. The Effective Date of the Plan has not yet occurred.

For purposes of this Motion, the terms Plan Supplement and Effective Date shall have the meanings ascribed to such terms in the Plan (as hereinafter defined).

8.

Additional information about the Debtors businesses, the events leading up to the

Petition Date, and the facts and circumstances surrounding the Debtors and the Chapter 11 Cases can be found in the Declaration of Joseph F. Trungale in Support of Debtors Chapter 11 Petitions and First Day Motions [Docket No. 19], filed on the Petition Date and incorporated by reference herein. Relevant Background 9. As of the date of this Motion, and pending the occurrence of the Effective Date of

the Plan, Castle Harlan Partners III, L.P. and CHPIV own or control substantially all of the equity interests in Perkins Holdco, which is the indirect parent company of each of the Debtors. Perkins Holdco also owns, beneficially and of record, all of the ownership interests in Real Estate Holding, a non-Debtor entity. 10. For ease of reference, attached hereto as Exhibit A is a chart illustrating the

current corporate structure of the Debtors, subject to the occurrence of the Effective Date of the Plan. I. The Westminster Location, the Sublease, and the REH Claim 11. Real Estate Holding owns one hundred percent (100%) of the interests in non-

Debtor P&MCs Holding Corp. (Holding Corp.) and the building, fixtures and appurtenances located on the real property known as 16390 Beach Boulevard, Westminster, Orange County, California (the Westminster Location). In connection with the Westminster Location, Real Estate Holding and Debtor Marie Callender Pie Shops, Inc. (MCPSI) are parties to that certain Sublease dated September 1, 2010, pursuant to which MCPSI subleases from Real Estate Holding the premises at the Westminster Location (as amended or modified, the Sublease).

12.

On or about August 15, 2011, Real Estate Holding filed proof of claim no. 1491

against MCPSI for $320,440.97 for unpaid pre-Petition Date rent and related costs under the Sublease (the REH Claim). II. The Management Agreements and the CHI 1999 and 2005 Claims 13. CHI, Wilshire Restaurant Group LLC and MCPSI are parties to that certain

Management Agreement, dated November 12, 1999 (the 1999 Management Agreement). On or about August 15, 2011, CHI filed proofs of claim nos. 1487 and 1489 asserting claims for $3,832,000.00 in management fees due as of the Petition Date under the 1999 Management Agreement (the CHI 1999 Claims). 14. In addition, CHI, PMCHI, PMCI, Holding Corp. and Perkins Holdco are parties

to that certain Management Agreement, dated September 21, 2005 (the 2005 Management Agreement, and, together with the 1999 Management Agreement, the Management Agreements). On or about August 15, 2011, CHI filed proofs of claim nos. 1485 and 1493 asserting claims for $12,444,106.86 in management fees due as of the Petition Date under the 2005 Management Agreement (the CHI 2005 Claims). III. The Perkins Holdco Claim for Director Fees 15. On or about August 15, 2011, Perkins Holdco filed proof of claim no. 1495

against PMCI for $264,423.02 in accrued and unpaid board of director fees as of the Petition Date (collectively, with the REH Claim, the CHI 1999 Claims and the CHI 2005 Claims, the Claims). IV. The Committee Standing Motion 16. After the Claims were filed, on or about September 21, 2011, the Committee filed

a motion [Docket No. 996] (the Standing Motion) requesting that the Court enter an order

authorizing, and granting standing to the Committee to initiate, prosecute, and settle (in each case, subject to prior reasonable notice to the Debtors and subject to the consent of the noteholder counterparties (the Restructuring Support Parties) to that certain Restructuring Support Agreement, dated as of June 6, 2011, as amended from time to time), with any settlement subject to approval of the Court, any claims or causes of action, on behalf of the Debtors estates, against, among others, CHI, Perkins Holdco and Real Estate Holding, that arise from, or relate in any respect to, the Claims. 17. By order dated September 28, 2011 [Docket No. 1057], the Court granted the

Standing Motion. V. The Rejection Motion 18. On October 14, 2011, the Debtors filed a motion with the Court seeking authority

to reject the Sublease [Docket No. 1142] (the Rejection Motion). VI. The Agreement 19. After extensive good faith and arms-length negotiations between the Parties, in

order to avoid the delay, uncertainty and expense of continuing litigation, the Parties have determined to resolve their disputes pursuant to the terms, covenants and conditions of the Agreement, which was entered into effective as of November 17, 2011. 20. By way of summary only, the following are the principal terms, covenants and

conditions of the Agreement: (i) Agreement Effective Date. The Agreement shall become effective on the date that an order, in form and substance reasonably acceptable to each of the Parties and to the Restructuring Support Parties, approving the Agreement is entered by the Court. (ii) Purchase of REH Interests. Within one (1) business day following the Effective Date of the Plan, or such other date reasonably agreed to by the Parties (the Closing Date):

a. Perkins Holdco shall sell, transfer and assign to a designee of the Reorganized Debtors 100% of the equity interests of Real Estate Holding (the REH Interests); Perkins Holdco shall make such notations in the books and records (including the limited liability company agreement of Real Estate Holding) as shall be necessary to reflect the change in ownership of 100% of the REH Interests to the Reorganized Debtors (or its designee). The Parties agree that the transfer is made on an as-is, where is basis and without representations of any kind, other than those set forth in Sections 3 and 10 of the Agreement and on Exhibit D attached to the Agreement and incorporated by reference therein; b. Perkins Holdco shall cause the existing indebtedness owed by Holding Corp. to Citibank, N.A. in connection with the acquisition of the Westminster Location to be repaid in full and any liens against Holding Corp. or the Westminster Location in connection therewith to be released, with evidence thereof provided to the Reorganized Debtors; and c. The Reorganized Debtors shall pay to Perkins Holdco the sum of $1,170,000.00 in cash. The Reorganized Debtors shall make such payment to Perkins Holdco by wire transfer of immediately available funds to an account designated in writing by Perkins Holdco; provided, the representations and warranties set forth in the Agreement are true and correct in all material respects, and in the event such representations and warranties are not true and correct in all material respects, the sole remedy for the non-breaching Parties shall be to terminate the Agreement upon written notice to the other Parties, and there shall be no liability or obligation on the part of any Party to any other Party in connection with a termination of the Agreement pursuant to Section 2 of the Agreement. (iii) On the Closing Date, and subject to the completion of the transactions provided in Section 2 of the Agreement, the proofs of claim filed by each of CHI, Real Estate Holding, and Perkins Holdco in respect of the Claims shall be deemed withdrawn with prejudice, and such entities shall not seek or recover any amounts from the Debtors with respect to any such Claims. CHI and Perkins Holdco represent and warrant that such Claims constitute all assertable claims that the CHI affiliated parties identified on Exhibit A attached to the Agreement (collectively, the Castle Harlan Parties) have against the Debtors and their estates. (iv) Release by Castle Harlan Parties. On the Closing Date, except for the obligations under the Agreement, each of the Castle Harlan Parties shall be deemed to have released, acquitted, and forever discharged each of the Debtor Entities from any and all obligations, duties, actions, demands, claims, penalties, costs, fees, attorneys fees, debts, choses in action, administrative actions or proceedings, arbitrations, mediations, suits, counterclaims, cross-claims, claims for relief, lawsuits, damages, losses, costs, contracts, agreements, controversies, liens or causes of action of any kind or nature whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, whether in law or in equity, based in whole or in part upon any act or omission, transaction or other occurrence taking place on or prior to the Closing Date or arising from, under, or in connection with, or otherwise in any way relating to, the Debtor Entities; provided, that the foregoing shall not operate as a release or waiver of any claims under any insurance policies maintained by or on behalf of the Debtor

Entities for the benefit of officers, directors, managers or members of any of the Reorganized Debtors. (v) Release in Favor of Castle Harlan Parties. On the Closing Date, except for the obligations under the Agreement, each of the Debtor Entities shall be deemed to have released, acquitted, and forever discharged each of the Castle Harlan Parties from any and all obligations, duties, actions, demands, claims, penalties, costs, fees, attorneys fees, debts, choses in action, administrative actions or proceedings, arbitrations, mediations, suits, counterclaims, cross-claims, claims for relief, lawsuits, damages, losses, costs, contracts, agreements, controversies, liens or causes of action of any kind or nature whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, whether in law or in equity, based in whole or in part upon any act or omission, transaction or other occurrence taking place on or prior to the Closing Date or arising from, under, or in connection with, or otherwise in any way relating to, the Debtor Entities. (vi) Further Assurances. The Parties agree to execute and deliver such documents and take such other actions as may be reasonably necessary or appropriate to comply with the intent of the Agreement. (vii) Survival of Representations and Warranties. Only the representations and warranties set forth in the Section 3, Section 10, Section 19 and certain clauses of Exhibit D to the Agreement, including any rights arising out of any breach of such representations and warranties, shall survive the transfer of the REH Interests for a period of nine (9) months following the Closing Date, subject to an overall maximum exposure of $585,000 on the four enumerated representations and warranties on Exhibit D. Relief Requested 21. By this Motion, the Debtors and the Committee request the Court to enter the

Proposed Order, pursuant to Bankruptcy Rule 9019(a) and sections 105(a) and 363(b) of the Bankruptcy Code, (i) authorizing and approving (a) the Agreement and (b) the Reorganized Debtors to purchase one hundred percent (100%) of the REH Interests pursuant to the terms, covenants and conditions of the Agreement, and (ii) granting certain related relief, including, without limitation, the waiver of any stay, pursuant to Bankruptcy Rule 6004(h) or otherwise, of the effectiveness of the Proposed Order. For the avoidance of doubt, the Debtors entry into the Agreement and the completion of all of the acts and transactions contemplated by the Agreement are in furtherance of or in connection with the Plan and, further, shall constitute restructuring transactions for purposes of Article VII.E of the Plan. 8

Basis for Relief Requested 22. The Debtors and the Committee believe that the benefits of the Agreement clearly

outweigh the risks, burdens and expenses associated with the present disputes and anticipated litigation between the Parties, and is more than reasonable under the facts and circumstances of these Chapter 11 Cases. Moreover, the Agreement is the result of arms-length and good faith negotiations among the Parties, a product of the Debtors sound business judgment, and manifestly in the best interests of the Debtors estates and creditors. For these reasons and those set forth more fully below, the Debtors and the Committee submit that the Agreement, and the transactions contemplated thereby, including, without limitation, then Reorganized Debtors purchase of one hundred percent (100%) of the REH Interests, should be authorized and approved pursuant to Bankruptcy Rule 9019(a) and sections 105(a) and 363(b) of the Bankruptcy Code. I. The Agreement Should be Approved Pursuant to Bankruptcy Rule 9019(a) 23. Bankruptcy Rule 9019(a) provides that [o]n motion by the trustee and after

notice and a hearing, the court may approve a compromise or settlement. Fed. R. Bankr. P. 9019(a). In order for a court to approve a proposed settlement, the court must find that it is fair, reasonable, and in the best interests of the debtors estate. See Myers v. Martin (In re Martin), 91 F.3d 389, 394 (3d Cir. 1996); In re Marvel Nets Group, Inc., 222 B.R. 243, 249 (D. Del. 1998); In re Louises Inc., 211 B.R. 798, 801 (D. Del. 1997). This Court recently remarked on the standard applicable to the approval of a settlement under Bankruptcy Rule 9019(a) as follows: Compromises are generally favored in bankruptcy. The approval of a settlement under Rule 9019 of the Federal Rules of Bankruptcy Procedure is committed to the discretion of the bankruptcy court. In making its evaluation, the court must determine whether the compromise is fair, reasonable, and in the best interest of the estate. The court does not have to be convinced that the settlement is the best possible compromise, but

only that the settlement falls within a reasonable range of litigation possibilities. Therefore, the settlement need only be above the lowest point in the range of reasonableness. In re Wash. Mut., Inc., 442 B.R. 314, 327 (Bankr. D. Del. 2011) (citations and quotation marks omitted). 24. In determining whether a settlement is in the best interests of a debtors estate,

bankruptcy courts inquire whether the value of the settlement outweighs the value of the claim by considering the following factors: (i) the probability of success in litigation; (ii) the likely difficulties in collection; (iii) the complexity of the litigation and the expense, inconvenience and delay attending the litigation; and (iv) the paramount interests of the creditors. See Martin, 91 F.3d at 393; accord In re Mailman Steam Carpet Cleaning Corp., 212 F.3d 632, 635 (1st Cir. 2000); Wash. Mut., 442 B.R. at 328. 25. Generally, a bankruptcy court should defer to the debtors judgment so long as

there is a legitimate business justification for entering into the settlement. Martin, 91 F.3d at 395; see also Protective Comm. for Indep. Stockholders of TIV1T Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968) (basic to the process of evaluating proposed settlements is the need to compare the terms of the compromise with the likely rewards of litigation). In undertaking an examination of a settlement, the responsibility of the bankruptcy judge is not to decide the numerous questions of law and fact raised . . . but rather to canvass the issues and see whether the settlement fall[s] below the lowest point in the range of reasonableness. Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d Cir. 1983), cert. denied, 464 U.S. 822 (1983), (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1973)). 26. Applying the standards set forth above, pursuant to Bankruptcy Rule 9019(a), this

Court should enter the Proposed Order authorizing and approving the Agreement.

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A. 27.

Probability of Success The Debtors and the Committee are confident in the merits of the Rejection

Motion and the claims, causes of action, and objections of the Debtors estates against the Castle Harlan Parties that arise from, or relate to, the Claims. The Debtors and the Committee are cognizant, however, of the fact that the Castle Harlan Parties strenuously oppose the position of the Debtors and the Committee with respect to such matters. As in any contested litigation, litigating the various issues surrounding the Claims entails risk that the Court will decide some or all of the issues involved in favor of the Castle Harlan Parties and against the Debtors estates. 28. Accordingly, while the Debtors and the Committee believe in the strength of their

legal positions, the significant risks posed by litigation in these Chapter 11 Cases cause this factor to weigh in favor of the Court authorizing and approving the Agreement. B. 29. Difficulties in Collection The Debtors and the Committee have no reason to believe that the Debtors

estates would be unable to collect any judgment against the Castle Harlan Parties in favor of the Debtors estates. However, the amounts in controversy with respect to the Claims amounts which have been asserted against the Debtors estates will be fully and finally resolved by virtue of the Agreement. Thus, the Debtors and the Committee submit that this factor neither supports nor detracts from this Courts authorization and approval of the Agreement. C. 30. Complexity and Expense of Litigation The Claims, as well as the claims, causes of action, and objections of the Debtors

estates against the Castle Harlan Parties that arise from, or relate to, the Claims, entail a myriad of issues of fact and law that are sufficiently complex and would require the Debtors management and their professionals, and the Committees professionals, to expend significant

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time, energy and resources to prosecute to a final resolution. For instance, the issues related to the CHI 1999 Claims and the CHI 2005 Claims include, among others things, whether the fees sought through such Claims were simply on account of annual returns on an equity investment and therefore, not claims, but rather equity interests, and whether any obligations under the Management Agreements were incurred when the Debtors were insolvent or otherwise financially impaired and are therefore avoidable. Thus, in the absence of this Courts

authorization and approval of the Agreement, the Parties would be required to litigate issues that are not only complex, but would consume a substantial amount of time, energy and resources to adjudicate. 31. In light of this, the Debtors and the Committee submit that this factor heavily

favors entry of the Proposed Order. D. 32. Interests of Creditors The final factor considered by courts in evaluating proposed settlements under

Bankruptcy Rule 9019(a) the interests of estate creditors also weighs overwhelmingly in favor of authorizing and approving the Agreement. By resolving the Claims and obviating the need for protracted litigation, the Agreement is a success not only for the Debtors, the Committee and the Castle Harlan Parties, but for the Debtors estates and creditors. Through the Agreement, the Claims will be fully resolved and settled, and the Debtors will be relinquished of their future payment obligations under the Sublease, without subjecting their estates to a potentially significant rejection damages claim on account of the proposed rejection of the Sublease.5 Therefore, this factor supports this Courts entry of the Proposed Order.

As previously noted, the Debtors filed the Rejection Motion seeking to reject the Sublease on October 14, 2011. The Proposed Order states that upon the Effective Date, the Rejection Motion will be deemed withdrawn. In

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II.

The Reorganized Debtors Purchase of 100% of the REH Interests Under the Agreement Should Be Approved Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code 33. Section 363(b)(1) of the Bankruptcy Code provides, in relevant part, that a debtor,

after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). Although section 363 of the Bankruptcy Code does not set forth a standard for determining when it is appropriate for a court to authorize the debtors use of estate property, courts in this Circuit and others, in applying this section, have required that decisions regarding the disposition of assets outside the ordinary course of business be based upon the debtors sound business judgment and a finding of good faith. See In re Abbotts Dairies of Pennsylvania, Inc., 788 F.2d 143, 149-50 (3d Cir. 1986) (requiring a finding of good faith to approve a sale under section 363(b)); Meyers v. Martin (In re Martin), 91 F.3d 389, 395 (3d Cir. 1996) (noting that under normal circumstances, courts defer to a trustees judgment concerning use of property under section 363(b) when there is a legitimate business justification); Dai-Ichi Kangyo Bank, Ltd. v. Montgomery Ward Holding Corp. (In re Montgomery Ward Holding Corp.), 242 B.R. 147, 153 (D. Del. 1999) (In determining whether to authorize the use, sale or lease of property under [section 363(b)], courts require the debtor to show that a sound business purpose justifies such actions.); In re Delaware & Hudson Ry. Co., 124 B.R. 169, 176 (D. Del. 1991) (examining the history of the standard required for a preconfirmation sale of assets under section 363(b) and opining that the Third Circuit has implicitly abandoned the emergency test under earlier precedent and has adopted the sound business judgment test as utilized by other courts).

addition, to avoid any uncertainty, the Debtors will file a notice formally withdrawing the Rejection Motion immediately upon the Effective Date.

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34.

As set forth more fully above, through the Agreement the Debtors and the

Committee will be able to completely and finally resolve the Claims and preserve and maximize value by avoiding the substantial costs and expenses necessarily associated with the Debtors estates litigating the Claims and the surrounding issues. Equally as important, the Agreement will allow the Reorganized Debtors to acquire one hundred percent (100%) of the REH Interests and thereby own the Westminster Location, a prospective and anticipated profit-generating location, without the financial burdens and obligations attendant to the Sublease, and without subjecting the Debtors estates to a rejection damages claim.6 Furthermore, the Agreement is the product of arms-length and good faith negotiations among the Parties, and the Debtors and the Committee believe that the Agreement reflects a sound exercise of the Debtors business judgment. 35. Accordingly, the Debtors and the Committee submit that Reorganized Debtors

purchase of one hundred percent (100%) of the REH Interests under the terms, covenants and conditions of the Agreement should be authorized and approved by this Court pursuant to sections 105(a) and 363(b) of the Bankruptcy Code. Request For Waiver of 14-Day Stay 36. By this Motion, the Debtors and the Committee also seek a waiver of any stay of

the effectiveness of the order approving this Motion. Pursuant to Bankruptcy Rule 6004(h), [a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise. Fed. R. Bankr. P. 6004(h). As the Court is aware, the Confirmation Order was entered on November 1, 2011, and the Debtors, the Committee, and the Restructuring Support Parties are presently
6

See supra, footnote 5.

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targeting a November 30th Effective Date. Because the Committee is a party to the Agreement, and the Agreement contemplates this Court entering an order approving the Agreement before the Agreement becomes effective, the Proposed Order must be entered prior to the Effective Date considering that the Committee will be dissolved on the Effective Date. In light of this, the Debtors and the Committee submit that ample cause exists to justify a waiver of any stay imposed by Bankruptcy Rule 6004(h) or otherwise on the Proposed Order, so that the Effective Date of the Plan and the Debtors successful emergence from chapter 11 is not delayed on account of the Agreement. Notice 37. The Debtors and the Committee will serve notice of this Motion by express mail

and/or overnight or hand delivery upon: (i) the U.S. Trustee; (ii) counsel to the agent for the Debtors pre-petition Credit Facility and post-petition debtor-in-possession financing facility; (iii) counsel to the indenture trustee for the Senior Secured Notes; (iv) counsel to the indenture trustee for the Senior Notes; (v) counsel to the Restructuring Support Parties; (vi) counsel to the Castle Harlan Parties; and (vii) all parties that, as of the filing of this Motion, have requested notice in these Chapter 11 Cases pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested, the Debtors and the Committee submit that no other or further notice is necessary. No Prior Request 38. other court. No prior application for the relief requested herein has been made to this or any

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Conclusion WHEREFORE, the Debtors and the Committee respectfully request the Court to enter the Proposed Order, pursuant to Bankruptcy Rule 9019(a) and sections 105(a) and 363(b) of the Bankruptcy Code, (i) authorizing and approving (a) the Agreement and (b) the Reorganized Debtors purchase of one hundred percent (100%) of the REH Interests pursuant to the terms, covenants and conditions of the Agreement, (ii) granting certain related relief, including a waiver of any stay of the effectiveness of the Proposed Order, and (iii) granting such other and further relief to the Debtors estates as this Court deems just and proper. Dated: November 17, 2011 Wilmington, DE YOUNG CONAWAY STARGATT & TAYLOR, LLP By: /s/ Robert F. Poppiti, Jr. Robert S. Brady (No. 2847) Robert F. Poppiti, Jr. (No. 5052) The Brandywine Building, 1000 West Street, 17th Floor Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253 - AND TROUTMAN SANDERS LLP Mitchel H. Perkiel Hollace T. Cohen Brett D. Goodman The Chrysler Building, 405 Lexington Avenue New York, NY 10174 Telephone: (212) 704-6000 Facsimile: (212) 704-6288 COUNSEL FOR PERKINS & MARIE CALLENDERS INC., ET AL., Debtors and Debtors-in-Possession - AND -

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LANDIS RATH & COBB LLP /s/ William E. Chipman, Jr. William E. Chipman, Jr. (No. 3818) Mark D. Olivere (No. 4291) 919 Market Street, Suite 1800 Wilmington, DE 19801 Telephone: (302) 467-4400 Facsimile: (302) 467-4450 - AND ROPES & GRAY LLP Mark R. Somerstein Benjamin L. Schneider 1211 Avenue of the Americas New York, NY 10036-8704 Telephone: (212) 596-9000 Facsimile: (212) 596-9090 COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

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EXHIBIT A

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS INC.,1 et al., Chapter 11 Case No. 11-11795 (KG) Jointly Administered Debtors.
Requested Hearing Date: November 22, 2011 at 4:00 p.m. (ET) Requested Objection Deadline: The Debtors and the Committee have requested that any objections or responses to the Motion be due at the Hearing

NOTICE OF JOINT MOTION OF THE DEBTORS AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR AN ORDER, PURSUANT TO BANKRUPTCY RULE 9019(a) AND SECTIONS 105(a) AND 363(b) OF THE BANKRUPTCY CODE, AUTHORIZING AND APPROVING (I) THAT CERTAIN SETTLEMENT AGREEMENT AND RELEASE BY AND AMONG THE DEBTORS, CASTLE HARLAN, INC., P&MCS HOLDING LLC, AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS AND (II) THE REORGANIZED DEBTORS PURCHASE OF THE EQUITY INTERESTS OF P&MC REAL ESTATE HOLDING PURSUANT TO SUCH SETTLEMENT AGREEMENT AND RELEASE TO: (I) THE U.S. TRUSTEE; (II) COUNSEL TO THE AGENT FOR THE DEBTORS PRE-PETITION CREDIT FACILITY AND POST-PETITION DEBTOR-IN-POSSESSION FINANCING FACILITY; (III) COUNSEL TO THE INDENTURE TRUSTEE FOR THE SENIOR SECURED NOTES; (IV) COUNSEL TO THE INDENTURE TRUSTEE FOR THE SENIOR NOTES; (V) COUNSEL TO THE RESTRUCTURING SUPPORT PARTIES; (VI) COUNSEL TO THE CASTLE HARLAN PARTIES; AND (VII) ALL PARTIES THAT, AS OF THE FILING OF THE MOTION, HAVE REQUESTED NOTICE IN THESE CHAPTER 11 CASES PURSUANT TO BANKRUPTCY RULE 2002.

PLEASE TAKE NOTICE that the debtors and debtors in possession in the above-captioned cases (collectively, the Debtors) and the Official Committee of Unsecured
The Debtors, together with the last four digits of each Debtors federal tax identification number, are: Perkins & Marie Callenders Inc. (4388); Perkins & Marie Callenders Holding Inc. (3999); Perkins & Marie Callenders Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.
1

Creditors (the Committee) have filed the attached Joint Motion of the Debtors and the Official Committee of Unsecured Creditors for an Order, Pursuant To Bankruptcy Rule 9019(a) and Sections 105(a) and 363(b) of the Bankruptcy Code, Authorizing and Approving (I) That Certain Settlement Agreement and Release By and Among the Debtors, Castle Harlan, Inc., P&MCs Holding LLC, and the Official Committee of Unsecured Creditors and (II) the Reorganized Debtors Purchase of the Equity Interests of P&MC Real Estate Holding Pursuant To Such Settlement Agreement and Release (the Motion). PLEASE TAKE FURTHER NOTICE that, contemporaneously with the filing of the Motion, the Debtors and the Committee have filed a motion (the Motion to Shorten) requesting that a hearing to consider the Motion be held on November 22, 2011 at 4:00 p.m. (ET) (the Hearing) before the Honorable Kevin Gross in the United States Bankruptcy Court for the District of Delaware, 824 N. Market Street, 6th Floor, Courtroom #3, Wilmington, Delaware 19801. PLEASE TAKE FURTHER NOTICE that pursuant to the Motion to Shorten, the Debtors and the Committee have requested that any objections or responses to the Motion be due at the Hearing (the Objection Deadline). PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO OBJECT OR RESPOND TO THE MOTION AT OR BEFORE THE HEARING, THE COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR A HEARING. Dated: November 17, 2011 Wilmington, DE YOUNG CONAWAY STARGATT & TAYLOR, LLP By: /s/ Robert F. Poppiti, Jr. Robert S. Brady (No. 2847) Robert F. Poppiti, Jr. (No. 5052) The Brandywine Building, 1000 West Street, 17th Floor Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253 - AND TROUTMAN SANDERS LLP Mitchel H. Perkiel Hollace T. Cohen Brett D. Goodman The Chrysler Building, 405 Lexington Avenue New York, NY 10174 Telephone: (212) 704-6000 Facsimile: (212) 704-6288 COUNSEL FOR PERKINS & MARIE CALLENDERS INC., ET AL., Debtors and Debtors-in-Possession - AND 2

LANDIS RATH & COBB LLP /s/ William E. Chipman, Jr. William E. Chipman, Jr. (No. 3818) Mark D. Olivere (No. 4291) 919 Market Street, Suite 1800 Wilmington, DE 19801 Telephone: (302) 467-4400 Facsimile: (302) 467-4450 - AND ROPES & GRAY LLP Mark R. Somerstein Benjamin L. Schneider 1211 Avenue of the Americas New York, NY 10036-8704 Telephone: (212) 596-9000 Facsimile: (212) 596-9090 COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

EXHIBIT B Proposed Order

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS INC.,1 et al., Chapter 11 Case No. 11-11795 (KG) Jointly Administered Debtors. Ref Docket No. ______ ORDER PURSUANT TO BANKRUPTCY RULE 9019(a) AND SECTIONS 105(a) AND 363(b) OF THE BANKRUPTCY CODE AUTHORIZING AND APPROVING (I) THAT CERTAIN SETTLEMENT AGREEMENT AND RELEASE BY AND AMONG THE DEBTORS, CASTLE HARLAN, INC., P&MCS HOLDING LLC, AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS AND (II) THE REORGANIZED DEBTORS PURCHASE OF THE EQUITY INTERESTS OF P&MC REAL ESTATE HOLDING PURSUANT TO SUCH SETTLEMENT AGREEMENT AND RELEASE Upon consideration of the Joint Motion of the Debtors and the Official Committee of Unsecured Creditors for an Order, Pursuant To Bankruptcy Rule 9019(a) and Sections 105(a) and 363(b) of the Bankruptcy Code, Authorizing and Approving (I) That Certain Settlement Agreement and Release By and Among the Debtors, Castle Harlan, Inc., P&MCs Holding LLC, and the Official Committee of Unsecured Creditors and (II) the Reorganized Debtors Purchase of the Equity Interests of P&MC Real Estate Holding Pursuant To Such Settlement Agreement and Release (the Motion),2 the Court finds that: (i) it has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); (iii) the relief requested in the Motion is in the best interest of the Debtors, their estates and

The Debtors, together with the last four digits of each Debtors federal tax identification number, are: Perkins & Marie Callenders Inc. (4388); Perkins & Marie Callenders Holding Inc. (3999); Perkins & Marie Callenders Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.
2

Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Motion.

creditors and other parties in interest; (iv) notice of the Motion and the hearing thereon was sufficient under the circumstances; and (v) after due deliberation, good and sufficient cause exists for the relief requested in the Motion. Accordingly, it is hereby ORDERED, ADJUDGED AND DECREED that: 1. 2. The Motion is granted. Pursuant to Bankruptcy Rule 9019(a) and sections 105(a) and 363(b) of the

Bankruptcy Code, the Agreement, a copy of which is attached hereto as Exhibit 1, is authorized and approved and the terms, covenants and conditions of the Agreement are incorporated in this Order by reference as if fully set forth herein. 3. Pursuant to sections 105(a) and 363(b) of the Bankruptcy Code, the Reorganized

Debtors (or their designee) are authorized and approved to purchase one hundred percent (100%) of the REH Interests pursuant to and in accordance with the terms, covenants and conditions of the Agreement. 4. The claims agent in the Debtors chapter 11 cases, Omni Management Group,

LLC, is authorized and empowered to amend the claims register in the Debtors Chapter 11 Cases as necessary to comport with the entry of this Order and the terms, covenants and conditions of the Agreement. 5. 6. Upon the Effective Date, the Rejection Motion shall be deemed withdrawn. The Debtors entry into the Agreement and the completion of all of the acts and

transactions contemplated by the Agreement are in furtherance of or in connection with the Plan and, further, shall constitute restructuring transactions for purposes of Article VII.E of the Plan.

7.

The Debtors and the Committee are authorized and empowered to take any and all

necessary steps to carryout and otherwise effectuate the terms, covenants and conditions of the Agreement. 8. Notwithstanding any applicability of Bankruptcy Rules 6004 and 7062, the terms,

covenants and conditions of this Order shall be immediately effective and enforceable upon its entry. 9. This Court shall retain jurisdiction to hear and determine any and all matters

arising from or related to the interpretation or implementation of this Order or the Agreement.

Date: ______________, 2011 KEVIN GROSS CHIEF UNITED STATES BANKRUPTCY JUDGE

EXHIBIT 1 Agreement

DRAFT

SETTLEMENT AGREEMENT AND RELEASE

THIS SETTLEMENT AGREEMENT AND RELEASE (this Agreement) is made and entered into as of the 17th day of November, 2011, by and among Castle Harlan, Inc. (CHI), P&MCs Holding LLC (f/k/a TRC Holding LLC, Perkins Holdco), Perkins & Marie Callenders Holding, Inc. (PMCHI), for itself and on behalf of each of its direct and indirect subsidiaries and affiliates identified on Exhibit B hereto (collectively with PMCHI, the Debtor Entities), the Official Committee of Unsecured Creditors (the Committee), and, solely for purposes of Section 19 hereof, Castle Harlan Partners IV, L.P. (CHPIV). CHI, Perkins Holdco, PMCHI, the Committee, CHPIV and each other Debtor Entity shall each be referred to as a Party and collectively as the Parties.1 RECITALS WHEREAS, prior to the Effective Date of the Plan, Castle Harlan Partners III, L.P. and CHPIV owned or controlled substantially all of the equity interests in Perkins Holdco, which is the indirect parent company of each of the Debtor Entities; WHEREAS, Perkins Holdco owns, beneficially and of record, all of the ownership interests in P&MC Real Estate Holding, LLC (Real Estate Holding); WHEREAS, Real Estate Holding owns, beneficially and of record, all of the ownership interests in P&MCs Holding Corp. (Holding Corp) and the building, fixtures and appurtenances located on the real property at 16390 Beach Boulevard, Westminster, Orange County, California (the Westminster Location).

Capitalized terms used herein (including the exhibits hereto) and not otherwise defined shall have the meanings set forth in the Debtors Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated September 9, 2011, as confirmed by order of the United States Bankruptcy Court for the District of Delaware by order dated November 1, 2011 (the Plan) [D.I. No. 1287].

WHEREAS, Real Estate Holding and Marie Callender Pie Shops, Inc. (MCPSI) are parties to that certain Sublease dated September 1, 2010, pursuant to which MCPSI subleases from Real Estate Holding the premises at the Westminster Location (as amended or modified, the Sublease); WHEREAS, CHI, Wilshire Restaurant Group LLC and MCPSI are parties to that certain Management Agreement, dated November 12, 1999 (the 1999 Management Agreement); WHEREAS, CHI, PMCHI, Perkins & Marie Callenders Inc. (f/k/a The Restaurant Company) (PMCI), Holding Corp. and Perkins Holdco are parties to that certain Management Agreement, dated September 21, 2005 (the 2005 Management Agreement); WHEREAS, on June 13, 2011 (the Petition Date), each of the Debtor Entities filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. 101 et. seq. (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court), and pursuant to Bankruptcy Code 1107 and 1108, the Debtor Entities continued in the management and operation of their businesses and properties as debtors in possession; WHEREAS, on June 24, 2011, the Office of the United States Trustee appointed the Committee; WHEREAS, by order dated July 9, 2011, the Bankruptcy Court established August 16, 2011 as the date by which all proofs of claim against the Debtors were required to be filed; WHEREAS, on or about August 15, 2011, Real Estate Holding filed proof of claim no. 1491 against MCPSI for $320,440.97 for unpaid rent and related costs under the Sublease (the REH Claim);

WHEREAS, on or about August 15, 2011, CHI filed proofs of claim nos. 1487 and 1489 asserting claims for $3,832,000.00 in management fees due as of the Petition Date under the 1999 Management Agreement (the CHI 1999 Claims); WHEREAS, on or about August 15, 2011, CHI filed proofs of claim nos. 1485 and 1493 asserting claims for $12,444,106.86 in management fees due as of the Petition Date under the 2005 Management Agreement (the CHI 2005 Claims); WHEREAS, on or about August 15, 2011, Perkins Holdco filed proof of claim no. 1495 against PMCI for $264,423.02 in accrued and unpaid board of director fees as of the Petition Date (collectively, with the REH Claim, the CHI 1999 Claims and the CHI 2005 Claims, the Claims); WHEREAS, on or about September 21, 2011, the Committee filed a motion requesting that the Bankruptcy Court enter an order authorizing, and granting standing to the Committee to initiate, prosecute, and settle (in each case, subject to prior reasonable notice to the Debtors and subject to the consent of the noteholder counterparties (the Restructuring Support Parties) to that certain Restructuring Support Agreement, dated as of June 6, 2011, as amended from time to time), with any settlement subject to approval of the Bankruptcy Court, any claims or causes of action, on behalf of the Debtor Entities estates, against, among others, CHI, Perkins Holdco and Real Estate Holding, that arise from, or relate in any respect to the Claims (the Standing Motion). By order dated September 28, 2011, the Bankruptcy Court granted the Standing Motion; WHEREAS, on October 14, 2011, the Debtors filed a motion with the Bankruptcy Court seeking authority to reject the Sublease;

WHEREAS, contemporaneously with the closing of the transfer of the REH Interests (as defined herein) pursuant to Section 2 of this Agreement, Real Estate Holding and MCPSI intend to amend the Sublease; and WHEREAS, in order to avoid the delay, uncertainty and expense of continuing litigation, the Parties have determined to resolve their disputes pursuant to the terms, covenants and conditions of this Agreement, as set forth below. NOW, THEREFORE, in consideration of the recitals hereto, the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned Parties agree as follows: 1. This Agreement shall become effective on the date that an order, in form and

substance reasonably acceptable to each of the Parties and to the Restructuring Support Parties, approving this Agreement (the Approval Order) is entered by the Bankruptcy Court. 2. Within one (1) business day following the Effective Date, or such other date

reasonably agreed to by the Parties (the Closing Date): a. Perkins Holdco shall sell, transfer and assign to a designee of the Reorganized Debtors 100% of the equity interests of Real Estate Holding (the REH Interests); Perkins Holdco shall make such notations in the books and records (including the limited liability company agreement of Real Estate Holding) as shall be necessary to reflect the change in ownership of 100% of the REH Interests to the Reorganized Debtors (or its designee). The Parties agree that the transfer is made on an as-is, where is basis and without

representations of any kind, other than those set forth herein and on Exhibit D attached hereto and incorporated by reference herein; b. Perkins Holdco shall cause the existing indebtedness owed by Holding Corp. to Citibank, N.A. in connection with the acquisition of the Westminster Location (the Citibank Loan) to be repaid in full and any liens against Holding Corp. or the Westminster Location in connection therewith to be released, with evidence thereof provided to the Reorganized Debtors; and c. The Reorganized Debtors shall pay to Perkins Holdco the sum of $1,170,000.00 in cash. The Reorganized Debtors shall make such payment to Perkins Holdco by wire transfer of immediately available funds to an account designated in writing by Perkins Holdco; provided, the representations and warranties set forth herein (including Exhibit D attached hereto) are true and correct in all material respects, and in the event such representations and warranties are not true and correct in all material respects, the sole remedy for the non-breaching Parties shall be to terminate this Agreement upon written notice to the other Parties, and there shall be no liability or obligation on the part of any party to any other Party in connection with a termination of this Agreement pursuant to this Section 2. 3. On the Closing Date, and subject to the completion of the transactions provided in

Section 2 of this Agreement, the proofs of claim filed by each of CHI, Real Estate Holding, and Perkins Holdco in respect of the Claims shall be deemed withdrawn with prejudice, and such entities shall not seek or recover any amounts from the Debtors with respect to any such Claims. 5

CHI and Perkins Holdco represent and warrant that such Claims constitute all assertable claims that the CHI affiliated parties identified on Exhibit A hereto (collectively, the Castle Harlan Parties) have against the Debtors and their estates. 4. Releases By Castle Harlan Parties. On the Closing Date, except for the

obligations hereunder, each of the Castle Harlan Parties shall be deemed to have released, acquitted, and forever discharged each of the Debtor Entities from any and all obligations, duties, actions, demands, claims, penalties, costs, fees, attorneys fees, debts, choses in action, administrative actions or proceedings, arbitrations, mediations, suits, counterclaims, crossclaims, claims for relief, lawsuits, damages, losses, costs, contracts, agreements, controversies, liens or causes of action of any kind or nature whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, whether in law or in equity, based in whole or in part upon any act or omission, transaction or other occurrence taking place on or prior to the Closing Date or arising from, under, or in connection with, or otherwise in any way relating to, the Debtor Entities; provided, that the foregoing shall not operate as a release or waiver of any claims under any insurance policies maintained by or on behalf of the Debtor Entities for the benefit of officers, directors, managers or members of any of the Reorganized Debtors. 5. Releases in Favor of Castle Harlan Parties. On the Closing Date, except for the

obligations hereunder, each of the Debtor Entities shall be deemed to have released, acquitted, and forever discharged each of the Castle Harlan Parties from any and all obligations, duties, actions, demands, claims, penalties, costs, fees, attorneys fees, debts, choses in action, administrative actions or proceedings, arbitrations, mediations, suits, counterclaims, crossclaims, claims for relief, lawsuits, damages, losses, costs, contracts, agreements, controversies, liens or causes of action of any kind or nature whatsoever, whether known or unknown, foreseen 6

or unforeseen, existing or hereafter arising, whether in law or in equity, based in whole or in part upon any act or omission, transaction or other occurrence taking place on or prior to the Closing Date or arising from, under, or in connection with, or otherwise in any way relating to, the Debtor Entities. 6. Further Assurances. The Parties hereby agree to execute and deliver such

documents and take such other actions as may be reasonably necessary or appropriate to comply with the intent of this Agreement. 7. Costs Included. The Castle Harlan Parties shall be responsible for their own

costs, expenses and attorneys fees, taxable or otherwise, incurred by them arising out of the subject matter of this Agreement, and shall not be responsible for the costs, expenses and attorneys fees, taxable or otherwise, incurred by any other Party hereto. 8. No Oral Modifications. This Agreement may not be modified or amended except

in writing, signed by the Parties hereto. The Parties to this Agreement hereby agree that they will make no claim at any time or place that the Agreement has been orally altered or modified or otherwise changed by oral communication of any kind or character. 9. No Admission of Liability. The Parties (i) acknowledge that the settlement

described herein does not constitute an admission or concession of liability by any Party on account of any claim or matter, or of the truth or untruth of any of the claims made by any party in interest, liability for which is expressly denied, and (ii) agree that nothing in this Agreement shall be used for any purpose by any party in any other action or proceeding, whether pending or to be commenced in the future, other than an action to enforce or for breach of this Agreement. 10. Authority. The Parties represent and warrant that they have the sole right and

exclusive authority to execute this Agreement and to receive the aforesaid consideration in that 7

they have not sold, assigned, or otherwise set over to any other person or entity, any claim, lien, demand, cause of action, obligation, damage, interest, right or liability covered hereby. Each person signing below represents and warrants that he/she is authorized to sign this Agreement on behalf of the Party for whom he/she is signing and to bind it to the terms of this Agreement. Notwithstanding the foregoing, in the case of the Debtors and the Committee, such authority is subject to the entry of the Approval Order. 11. Binding Effect. This Agreement shall be binding upon and for the benefit of the

Parties hereto and their respective heirs, executors, administrators, successors, devisees and assigns. 12. Integration. No promise, inducement or agreement not expressed herein has been

made to any party in connection with this Agreement. This Agreement constitutes the entire agreement between the Parties herein named with respect to the subject matter hereof, and except as otherwise expressly provided herein, is not intended to confer upon any other person or entity any rights or remedies hereunder. No representations have been made or relied upon by the Parties with respect to the subject matters hereof, except as set forth herein. 13. Voluntary Settlement. The Parties represent that they have read, and been advised

by counsel regarding, this Agreement, that they understand its provisions and legal effect, and that they are voluntarily entering into this Agreement of their own accord and without duress or coercion by any other party. The Parties further represent that, in executing this Agreement, they do not rely on any inducements, promises or representations by any other party other than those expressly set forth in this Agreement. 14. Fees and Expenses. If any legal action or any arbitration or other proceedings are

brought for the enforcement of this Agreement or because of an alleged dispute, breach, default 8

or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing Party or Parties shall be entitled to recover reasonable attorneys fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. Neither Perkins Holdco nor CHI shall be liable for any sales, use, value added, documentary, stamp duty, gross receipts, registration, transfer, transfer gain, conveyance, excise, recording, license and other similar taxes and fees, including any interest, penalties, additions to tax or additional amounts in respect of the foregoing (Transfer Taxes) arising out of or in connection with or attributable to the transfer and sale of the REH Interest. Neither Perkins Holdco nor CHI are making any representations or warranties with respect to any taxes payable with respect to the sale of the REH Interest, including Transfer Taxes, or any taxes that may be due or payable with respect to Real Estate Holding. 15. Severability. If any provision of this Agreement, or the application of any such

provision to any person, entity, or circumstance, shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement or the application of such provision to persons, entities, or circumstances other than those as to which it is held invalid, shall not be affected thereby, unless the effect is to render the purposes of this Agreement unachievable. 16. Governing Law. This Agreement shall be construed and enforced in accordance

with the laws of the State of New York without regard to its conflicts of laws principles. 17. Survival of Representations and Warranties. Except as provided in this Section

17, the representations and warranties set forth herein (including those set forth on Exhibit D hereto), including any rights arising out of any breach of such representations and warranties, shall not survive the transfer of the REH Interests; provided, that the representations and warranties set forth in the last sentence of Section 3, Section 10, Section 19 and clauses (i), (ii), 9

(v)[, and] (vii) [and (viii)] of Exhibit D hereto, including any rights arising out of any breach of such representations and warranties, shall survive the transfer of the REH Interests for a period of nine (9) months following the Closing Date (the Survival Period), it being understood and agreed that the maximum exposure for breach of any of the representations and warranties set forth in Exhibit D hereto that survive the Closing Date (the Surviving Exhibit D Reps) shall be $585,000 (the CH Cap). 18. Counterparts. This Agreement may be executed in any number of counterparts

and by different Parties hereto in separate counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by facsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Agreement. 19. Guarantee. CHPIV hereby guarantees to PMCHI the due and punctual full

payment, performance and discharge of all obligations of Perkins Holdco solely with respect to breaches of the Surviving Exhibit D Reps after the Closing Date; provided, that CHPIVs guarantee shall be limited to the CH Cap. In connection therewith, CHPIV represents and warrants that (a) it has uncommitted capital that is substantially in excess of the CH Cap and (b) the term of CHPIV expires May 16, 2012, subject to extension. 20. Termination. This Agreement shall terminate without any action of the Parties if

the Closing Date has not occurred on or prior to December 31, 2011. If this Agreement is terminated in accordance with this Section 20, this Agreement shall become void and of no further force and effect, and there shall be no liability or obligation on the part of any Party to

10

any other Party, except for fraud or material willful breaches of this Agreement prior to the time of such termination. [SIGNATURE PAGES FOLLOW]

11

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date and year first hereinabove written. PERKINS & MARIE CALLENDERS INC.

By: Name: Joseph F. Trungale Title: President & CEO

PERKINS & MARIE CALLENDERS HOLDING INC.

By: Name: Joseph F. Trungale Title: President & CEO

PERKINS & MARIE CALLENDERS REALTY LLC

By: Name: Joseph F. Trungale Title: President & CEO

PERKINS FINANCE CORP.

By: Name: Joseph F. Trungale Title: President

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Settlement Agreement & Release

WILSHIRE RESTAURANT GROUP LLC

By: Name: Joseph F. Trungale Title: President & CEO

PMCI PROMOTIONS LLC

By: Name: Joseph F. Trungale Title: President & CEO

MARIE CALLENDER PIE SHOPS, INC.

By: Name: Joseph F. Trungale Title: President

MARIE CALLENDER WHOLESALERS, INC.

By: Name: Joseph F. Trungale Title: President

MACAL INVESTORS, INC.

By: Name: Joseph F. Trungale Title: President [SIGNATURES CONTINUE ON FOLLOWING PAGE]
Signature Page to Settlement Agreement & Release

MCID, INC.

By: Name: Joseph F. Trungale Title: President

WILSHIRE BEVERAGE, INC.

By: Name: Joseph F. Trungale Title: Vice President

FIV CORP.

By: Name: Joseph F. Trungale Title: President THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

By: Name: Title: CASTLE HARLAN, INC.

By: __________________________ Name: Title:

P&MCS HOLDING LLC

By:__________________________ Name: Title: [SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Settlement Agreement & Release

CASTLE HARLAN PARTNERS IV, L.P. (AS GUARANTOR SOLELY FOR PURPOSES OF SECTION 19)

By:__________________________ Name: Title:

Signature Page to Settlement Agreement & Release

EXHIBIT A CASTLE HARLAN PARTIES 1. CASTLE HARLAN INC. 2. CASTLE HARLAN PARTNERS III, L.P. 3. CASTLE HARLAN PARTNERS IV, L.P. 4. P&MCS HOLDING LLC 5. P&MCS REAL ESTATE HOLDING LLC 6. P&MCS HOLDING CORP. 7. With respect to each of the foregoing, its respective present and former officers, directors, partners, members, investors, managers, employees, agents, representatives, attorneys, and advisors.

EXHIBIT B DEBTOR ENTITIES 1. PERKINS & MARIE CALLENDERS HOLDING, INC. 2. PERKINS & MARIE CALLENDERS INC. 3. PERKINS & MARIE CALLENDERS REALTY LLC 4. PERKINS FINANCE CORP. 5. WILSHIRE RESTAURANT GROUP LLC 6. PMCI PROMOTIONS LLC 7. MARIE CALLENDERS PIE SHOPS, INC. 8. WILSHIRE BEVERAGE, INC. 9. MARIE CALLENDER WHOLESALERS, INC. 10. MCID, INC. 11. FIV CORP. 12. MACAL INVESTORS, INC. 13. With respect to each of the foregoing, its respective present and former officers, directors, partners, members, investors, managers, employees, agents, representatives, attorneys, and advisors.

EXHIBIT C 1. Asset Purchase Agreement dated as of July 2009 by and between MC Westminster, a California limited partnership, and P&MCS Real Estate Holding, LLC, a Delaware limited liability company, as amended or modified. 2. Ground Lease dated June 25, 1986 (the Ground Lease) between Westminster Investment Group, a California general partnership, predecessor in interest to PK I Pavilions Place, L.P., and MC Westminster, a California limited partnership, as amended or modified, assigned by MC Westminster to P&MCS Real Estate Holding LLC pursuant to the Assignment and Assumption of Lease, dated September 3, 2009 between MC Westminster, a California limited partnership, and P&MCS Real Estate Holding, LLC, a Delaware limited liability company, as amended or modified. 3. The Sublease.

EXHIBIT D PERKINS HOLDCO REPRESENTATIONS AND WARRANTIES

Perkins Holdco represents and warrants as follows: (i) Perkins Holdco is the sole owner of the REH Interests.

(ii) Perkins Holdco has the full limited liability power and authority to transfer the REH Interests. (iii) The transfer of the REH Interests has been duly authorized by all requisite action of Perkins Holdco and will not violate any provision of law, any order of any court or other governmental authority or any provision of any indenture, agreement or other instrument to which Perkins Holdco is a party or by which it is bound. (iv) Except for the pending rejection of the Sublease which could result in a default under the Ground Lease, to the Knowledge of Perkins Holdco, there is no material pending or threatened claim, arbitration proceeding, action, suit, investigation or other proceeding against or involving Real Estate Holding or the Westminster Location that (x) is not known by the Debtors or any employee of a Debtor who was involved in Real Estate Holdings acquisition of the Westminster Location or the business operations of the restaurant located at the Westminster Location or (y) has been disclosed to the Debtors. As used herein, Knowledge means the actual knowledge of David B. Pittaway without any requirement of due inquiry. (v) The REH Interests are being transferred free and clear of all liens, claims and encumbrances (other than those set forth in the Agreement listed on Exhibit C to the Agreement). (vi) The sole purpose of Real Estate Holding was to acquire the Westminster Location and to sublease it to MCPSI pursuant to the agreements referenced in Exhibit C to the Agreement. (vii) Real Estate Holding has not engaged in any other activities or executed any agreements other than those incidental to the purchase, ownership and operation of the Westminster Location, as well as serving as the direct parent of Holding Corp. (viii) [To the Knowledge of Perkins Holdco, Holding Corp. has no indebtedness other than the Citibank Loan.] Notwithstanding anything to the contrary set forth in this Agreement, including the representations and warranties set forth in this Exhibit D, Perkins Holdco makes no representation or warranty as to any actions or agreements entered into by any employee of the Debtor Entities without the Knowledge of David B. Pittaway.