SECOND AMENDED LOAN AGREEMENT
                              

     This Second Amended Loan Agreement, dated as of the 31st day
of January, 1997, is entered into by and among TACO CABANA, INC.,
a Delaware corporation, TEXAS TACO CABANA, L.P., T.P. ACQUISITION
CORP.,  T.C.  MANAGEMENT,  INC., TACO  CABANA  MANAGEMENT,  INC.,
COLORADO   CABANA,  INC.,   AND  TACO  CABANA  MULTISTATE,   INC.
(collectively   the  "Borrower"),  and  INTERNATIONAL   BANK   OF
COMMERCE, a state banking association (the "Lender").

     For   good  and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged, the parties agree as
follows:

                     SECTION 1. THE LOANS.

     1.1   Loan  Commitment.  Subject to the terms and conditions
hereof,  the Lender agrees to lend and advance to Borrower,  from
time  to  the  time  until April 15, 1999 (the  "Loan  Commitment
Period"), such sums as the Borrower may request, but which  shall
not  exceed,  in the aggregate principal amount at any  one  time
outstanding, the amount of $15,000,000.00 ("Loan Commitment").

     1.2   The  Loans.  Each borrowing under the Loan  Commitment
shall  be  referred  to herein as a "Loan",  shall  be  deemed  a
separate and independent loan and shall be evidenced and  secured
as  set forth below.  Each Loan shall bear interest at the lesser
of  (i) the maximum rate allowed by law, or (ii) the floating per
annum rate equal to the New York Prime Rate.  The "New York Prime
Rate"  shall  mean the annual lending rate of interest  announced
from  time  to time by the Chase Manhattan Bank, N.A., New  York,
New York, as its prime rate; if a prime rate is not announced  by
Chase Manhattan Bank, N.A., then the Loans shall bear interest at
the  annual lending rate of interest announced from time to  time
by  Lender  less  one percent (1%) as its prime  rate.   Borrower
acknowledges that Lender makes no warranty or representation that
either  of the prime rates charged by Chase Manhattan Bank,  N.A.
or  Lender is more favorable than another rate or index, or  that
rates  on  other loans or credit facilities may not be  based  on
other  indices, or that rates on loans to other may not  be  made
below  such  prime rate.  Installments of principal and  interest
under each Loan shall be payable quarterly and amortized under  a
ten  (10) year period, and have a term specified by Lender  which
shall not exceed seven (7) years from the date of such Loan.

     1.3   Commitment  Fee.  During the Loan  Commitment  Period,
Borrower agrees to pay to Lender a commitment fee computed at the
rate of one-quarter of one percent (0.25%) per annum on the daily
average  unused  amount  of  the  Loan  Commitment  during   each
Quarterly  Cycle (as hereinafter defined).  Such  commitment  fee
shall  be payable quarterly, in arrears, on the last day of  each
March,  June,  September and December during the Loan  Commitment
Period,  commencing March 30, 1997 and continuing in  consecutive
quarterly payments thereafter until the date of expiration of the
Loan Commitment Period, on which date any accrued and unpaid  fee
computed in accordance with the provisions of this Section  shall
be  due and payable.  For purposes of this Section 1.4, the  term
"Quarterly Cycle" shall refer to each calendar quarter during the
Loan Commitment Period.

     1.4   Replaces  Prior Commitment.  This Second Amended  Loan
Agreement  replaces  entirely that  certain  First  Amended  Loan
Agreement  dated as of January 31, 1995 which governed the  terms
of  a  $15,000,000.00 loan commitment from Lender to Taco Cabana,
Inc.  ("Prior Commitment").  The Borrower and Lender  acknowledge
that  the  Prior Commitment is null and void and  of  no  further
force or effect.

     1.5.   Revolving  Loan Agreement.  The Borrower  and  Lender
have  entered  into  a  Revolving Loan  Agreement  of  even  date
herewith ("Revolving Loan Agreement").  The term "Revolving  Loan
Documents"  as  used in this Second Amended Loan Agreement  shall
have  the  meaning provided in Section 3.2 of the Revolving  Loan
Agreement.

               SECTION 2. SECURITY AND COLLATERAL.

     2.1   Composition  of the Collateral.  The  Loans  shall  be
secured  primarily with first liens and security  interests  upon
those  tracts of Borrower's real property which are  agreed  upon
between  Borrower and Lender ("Security Tracts"),  together  with
the  improvements, furniture, fixtures, equipment,  accounts  and
inventory located on, attributable to or used in connection  with
the  Security  Tracts, as specifically set out in,  and  together
with  such other mortgages, liens and security interests  as  set
out  in  the Loan Documents set forth in Section 3.2 below.   The
security   granted   by  the  Loan  Documents  shall   constitute
collateral for the indebtedness established by the Loans  and  as
otherwise   established  and  set  out  in  the  Loan   Documents
(cumulatively the "Secured Indebtedness").  All of the mortgages,
liens,  security interests, and rights granted to Lender  by  the
Loan  Documents  shall  secure any and all Secured  Indebtedness.
Lender  shall  not  be  required to release  any  of  the  liens,
security interests, and rights granted or given to Lender by  any
of  the  Loan  Documents  unless and until  all  of  the  Secured
Indebtedness  has  been paid in full.  The Loan  Documents  shall
provide that a default under any Loan Document shall constitute a
default under the Loan Documents for all Loans.

     2.2   Priority of Liens.  The liens, security interests, and
rights granted to Lender to secure the Secured Indebtedness shall
be  first and prior except for (i) liens for ad valorem taxes not
yet due or payable, and (ii) those matters expressly approved  by
Lender, in advance and in writing, which approval Lender is under
no obligation to provide.

     2.3   Perfection and Preservation of Liens.   Borrower  will
(i)  execute  and  deliver to Lender from time  to  time  at  the
request  of Lender such documents or instruments as Lender  shall
deem  necessary  or  appropriate, and will take  such  other  and
further actions as Lender may from time to time request, in order
to  perfect,  continue, protect and preserve the liens,  security
interests and rights granted to Lender by the Loan Documents; and
(ii)  pay  or  reimburse the Lender for all costs  and  taxes  of
filing or recording the same in such public offices as the Lender
may designate.

                SECTION 3. CONDITIONS PRECEDENT.

     The  obligation  of the Lender to make a Loan  hereunder  is
subject to the following conditions precedent:

     3.1   Certain  Events.   The following conditions  precedent
must be fully satisfied as of the date of any Loan:

          a.    No  event of default under this Agreement or  any
Loan  Document,  as defined below, shall have  occurred,  and  no
event shall have occurred and be continuing that, with the giving
of  notice or passage of time, or both, would be such an event of
default.

          b.    Lender  shall have received an appraisal  of  the
fair  market value of the real property and improvements  thereon
to  be  granted as security for the Loan, in a form, and prepared
by  an  appraiser, approved by Lender, which indicates  that  the
amount  of  the  proposed  Loan is no greater  than  seventy-five
percent  (75%)  of  the lesser of (i) the appraised  fair  market
value  of  such  property, or (ii) the  purchase  price  paid  by
Borrower for such property.

     3.2   Documents  Required for the  Closing.   Prior  to  any
disbursement of any Loan (the "Closing"), the following documents
("Loan  Documents") shall have been delivered  to  Lender,  fully
executed  and  acknowledged where required and all  in  form  and
substance acceptable to Lender:

          a.   This Agreement.

          b.   A Real Estate Lien (Promissory) Note ("Note").



          c.    A Security Agreement between Borrower and Lender,
granting  to Lender a security interest in, among other property,
all  of  Borrower's  right, title and interest,  whether  now  or
hereafter acquired, in all accounts, inventory and equipment, and
all  proceeds  thereof, located on, attributable to  or  used  in
connection with the Security Tracts.

          d.    A  Deed  of Trust, Assignment of Rents,  Security
Agreement  and  Financing Statement from Borrower  to  Thomas  L.
Travis, Trustee for the benefit of Lender, granting a first  lien
upon  the real property and improvements thereon to secure  t  he
respective Loan.

          e.     Financing  statements  as  Lender   shall   deem
necessary  to  file  from time to time in order  to  perfect  and
preserve the security interests granted by the Loan Documents.

          f.    A  Commitment  and  Policy  for  Mortgagee  Title
Insurance issued by a title company acceptable to Lender and  for
the aggregate amount of the respective Loan.

          g.    A  survey  of  the real property and  improvement
thereon prepared by a surveyor acceptable to Lender.

          h.    Engineering and other information evidencing  the
absence  of  pollution  or contamination on  the  property  being
acquired  and  the  suitability of such property  for  Borrower's
intended restaurant operation.

          i.    Tax Certificates evidencing that there are no  ad
valorem taxes or assessments which are past due or payable.

          j.    Liability and casualty insurance coverage  in  an
amount and issued by carriers approved by Lender.

          k.     For the first Loan made hereunder, certified (as
of  the  date  of  Closing)  copies of  (i)  resolutions  of  the
Borrower's  board  of  directors (for each borrower  which  is  a
corporation)  or  a  consent of all general  partners  (for  each
Borrower  which  is  a  partnership) authorizing  the  execution,
delivery,  and  performance  of  this  Agreement  and  the   Loan
Documents,  and  each  other document to  be  delivered  pursuant
hereto  including a certification (dated the date of the Closing)
of  the  Borrower's secretary or its managing or general partner,
as  the  case may be, as to the incumbency and signatures of  the
officers  of  the Borrower signing the Loan Documents,  and  each
other  document to be delivered pursuant hereto; (ii)  Borrower's
bylaws,   or  partnership  agreement,  including  all  amendments
thereto;  (iii)  Borrower's articles of incorporation,  including
any  and all amendments thereto; and (iv) certificates as to  the
good   standing   of   Borrower  from   applicable   governmental
authorities.  For each Loan after the first Loan, Borrower  shall
deliver  to Lender and the applicable title insurer (i) a current
written  statement  of  the  Borrower's  corporate  secretary  or
managing  partner, as the case may be, stating that each  of  the
documents  listed in this Section 3.2(k) delivered in conjunction
with  the  first Loan remains valid, unamended and effective  and
applicable  to  the  particular Loan to  be  made  (or,  if  such
statement  cannot  truthfully be given  then  a  current  written
statement   of   Borrower's  corporate  secretary   stating   the
particular reasons why such statement cannot be truthfully given,
together  with  any  amended documents),  and  (ii)  any  of  the
documents listed in this Section 3.2(k) which are required by the
title  insurer  for  a particular Loan, in  order  to  issue  the
required mortgagee's title insurance policy.

          l.    Any and all other documents or instruments as may
be required by Lender.

          m.    Prior  to the first Loan, and thereafter  at  the
request of Lender, a true and complete list of all legal actions,
claims,  proceedings, investigations and notices thereof, against
or affecting Borrower.

            SECTION 4. REPRESENTATIONS AND WARRANTIES

     4.1   Original.   To induce the Lender to  enter  into  this
Agreement,  and  to  fund the Loans to be  made  hereunder,  each
Borrower represents and warrants to the Lender as follows:

          a.    Borrower  is a corporation or general partnership
or  limited  partnership, as applicable, duly organized,  validly
existing, and in good standing under the laws of the state  under
which it was organized; Borrower has the lawful power to own  its
properties and to engage in the business it conducts, and is duly
qualified  and  in  good  standing as a  foreign  corporation  or
foreign  partnership in the jurisdictions wherein the  nature  of
the  business transacted by it or property owned by it makes such
qualification necessary.

          b.    Borrower is not in default with respect to any of
its  existing indebtedness, and the making and performance of the
Loan  Documents will not immediately or with the passage of time,
or  the  giving of notice, or both:  (i) Violate the  charter  or
bylaw or partnership provisions of Borrower; or (ii) Violate  any
Laws  or  result in a default under any contract,  agreement,  or
instrument  to which Borrower is a party or by which Borrower  or
its property is bound.
     
          c.   Borrower has the power and authority to enter into
and  perform each of the Loan Documents to which it is  a  party,
and to incur the obligations herein and therein provided for, and
has  taken  all  corporate  or partnership  action  necessary  to
authorize  the  execution,  delivery,  and  performance  of  this
Agreement and such other Loan Documents.

          d.     The  Loan  Documents  are,  and  the  Note  when
delivered  will be, valid, binding, and enforceable in accordance
with their respective terms.

          e.     There  is  no  pending  order,  notice,   claim,
litigation,  proceeding, or investigation  against  or  affecting
Borrower,  whether  or  not  covered  by  insurance,  that  would
materially  and  adversely affect the  business  of  Borrower  if
adversely determined.

          f.     All   financial  information  given  to  Lender,
including  any schedules and notes pertaining thereto, have  been
prepared   in  accordance  with  generally  accepted   accounting
principles consistently applied, and fully and fairly present the
financial  condition  of Borrower at the dates  thereof  and  the
results of operations for the periods covered thereby, and  there
have  been  no  material  adverse  changes  in  the  consolidated
financial condition or business of Borrower set forth therein, to
the date hereof.

          g.   Except as otherwise permitted herein, Borrower has
filed  and  paid  all federal, state, and local tax  returns  and
other  required  reports  and all taxes, assessments,  and  other
governmental charges that are due and payable prior to  the  date
hereof.

          h.    Except  to the extent that the failure to  comply
would  not materially interfere with the conduct of the  business
of  the  Borrower, Borrower has complied, and shall comply,  with
all applicable laws and regulations.

          i.    No  representation or warranty  by  the  Borrower
contained herein or in any Loan Document or certificate or  other
document  furnished  by  the  Borrower  contains  any  untrue  or
misleading  statement  of  material fact  or  omits  to  state  a
material  fact necessary to make such representation or  warranty
not  misleading in light of the circumstances under which it  was
made.

          j.    Each  consent, approval or authorization  of,  or
filing, registration, or qualification required to be obtained by
Borrower  in connection with the execution and delivery  of  this
Agreement,  the Loan Documents, or the undertaking or performance
of   any  obligation  hereunder  or  thereunder,  has  been  duly
obtained.


     4.2   Survival.   All of the representations and  warranties
set  forth  in  Section  4.1  shall  survive  until  all  Secured
Indebtedness is satisfied in full.

               SECTION 5. COVENANTS OF BORROWER.

     Borrower  does  hereby covenant and agree  with  the  Lender
that,  so long as any of the Secured Indebtedness remains unpaid,
Borrower will comply with the following covenants:

     5.1  Affirmative Covenants.
     
          a.    Taco  Cabana, Inc. will furnish to Lender  within
one hundred twenty (120) days after the close of each fiscal year
(or,  in  the event an extension of the deadline for filing  such
information  with the Securities and Exchange Commission  ("SEC")
is  required  or authorized by the SEC, then within  one  hundred
eighty (180) days after the close of each fiscal year), for  such
fiscal  year,  the following independently audited  and  prepared
financial information for itself and its subsidiaries prepared on
a  consolidated  basis:   (i)  a statement  of  stockholders'  or
partners' equity and a statement of changes of cash flows; ; (ii)
income  statements; and (iii) balance sheets; , all in reasonable
detail,  including  all supporting schedules  and  comments,  and
certified by an independent certified public accountant  auditor,
approved  by  Lender, to have been prepared  in  accordance  with
generally accepted accounting principles consistently applied.

          b.    Taco  Cabana, Inc. will furnish to Lender  within
fifty  (50)  days  after the close of each  quarterly  accounting
period in each fiscal year of each Borrower and its subsidiaries,
for  such  quarter,  prepared on a  consolidated  basis:   (i)  a
statement of stockholders' or partners' equity and a statement of
changes in financial position; (ii) income statements; and  (iii)
balance  sheets  as of the end of such quarterly period,  all  in
reasonable  detail,  subject to year-end audit  adjustments,  and
certified by Taco Cabana Inc.'s secretary  to have been  prepared
in  accordance  with  generally  accepted  accounting  principles
consistently applied.

          c.     Borrower  will  furnish  to  Lender  such  other
financial  statements  or reports as Lender  may  reasonably  and
periodically require, including without limitation balance sheets
and income statements for each Borrower on an individual basis.

          d.    Borrower will maintain its inventory,  equipment,
real  estate, and other properties in good condition  and  repair
(normal wear and tear excepted); will pay and discharge, or cause
to  be  paid and discharged when due, the cost of repairs  to  or
maintenance  of the same; and will pay or cause to  be  paid  all
rental  or  mortgage  payments due  on  such  real  estate.   The
Borrower hereby agrees that, in the event Borrower fails  to  pay
or cause to be paid any such payment, the Lender may do so and on
demand be reimbursed therefor by the Borrower.

          e.    In  addition  to  any requirements  in  the  Loan
Documents,  Borrower will maintain, or cause  to  be  maintained,
public   liability  insurance  and  fire  and  extended  coverage
insurance  on  all  assets owned by them, all in  such  form  and
amounts,  and  with such insurers, as are reasonably satisfactory
to  Lender.  Such policies shall contain a provision whereby they
cannot  be canceled except after thirty (30) days' written notice
to  the  Lender, and shall name Lender as an additional  insured.
Borrower will furnish to the Lender such evidence of insurance as
the  Lender  may require.  Borrower hereby agrees  that,  in  the
event  it  or any Borrower fails to pay or cause to be  paid  the
premium on any such insurance, the Lender may do so and on demand
be reimbursed therefor by the Borrower.

          f.   Borrower will pay or cause to be paid when due all
taxes,  assessments or fees imposed upon it  or  on  any  of  its
property or that it is required to withhold and pay over,  except
when,  prior to impending foreclosure such taxes, assessments  or
fees are contested in good faith by appropriate proceedings, with
adequate reserves therefor having been set aside on its books.

          g.    Borrower  will, when requested  so  to  do,  make
available  for  inspection by duly authorized representatives  of
the  Lender any of their books and records, and will furnish  the
Lender  any  information  regarding their  business  affairs  and
financial  condition  within  a  reasonable  time  after  written
request therefor.

          h.   Borrower will take all necessary steps to preserve
its  corporate or partnership existence and franchises  and  will
comply with all present and future Laws applicable to them in the
operation  of  their  respective  businesses  and  all   material
agreements to which they are subject.

          i.    Within  ten (10) days after the Lender's  request
therefor, Borrower will furnish the Lender with copies of federal
income tax returns filed by the Borrower.

          j.    Borrower will pay when due (or within  applicable
grace  periods)  all  indebtedness due  third  parties.   If  any
Borrower defaults in the payment of any principal (or installment
thereof)  of, or interest on, any such indebtedness,  the  Lender
shall  have  the  right,  but not the  obligation,  to  pay  such
interest  or  principal  for  the  account  of  Borrower  and  be
reimbursed by Borrower therefor on demand.

          k.   The Borrower will notify the Lender immediately if
it  becomes  aware of the occurrence of any Event of Default,  as
defined below, or of any fact, condition, or event that, with the
giving  of  notice or passage of time, or both, could  become  an
Event  of  Default hereunder, or of the failure  of  Borrower  to
observe any of its undertakings hereunder.

          l.    The  Tangible Net Worth of Borrower (as  defined)
shall  at all times equal or exceed 90% of Tangible Net Worth  as
determined for the purposes of Section 5.2(a).

          m.    All cash, cash equivalents and funds derived from
operations of the Borrower shall be the property of the  Borrower
at  the  close  of  each  business day, unless  such  cash,  cash
equivalents  and  funds are utilized by other  entities  for  the
payment  of obligations in compliance with applicable law.   This
provision is not intended to restrict Borrower's use of  fund  or
usual and regular course of business.

          n.    Borrower  will maintain Quarterly Cash  Flow  (as
defined) in an amount equal to, or in excess of, $2,750,000.00.

     5.2  Negative Covenants.

          a.    For  so long as any indebtedness under the  Loans
remains outstanding, Borrower shall not without the prior written
consent of the holder of the Note:

               (1)  Permit the ratio of Consolidated Cash Flow to
Consolidated Fixed Charges for any period consisting of four  (4)
consecutive fiscal quarters  to be less than 2.0:1.0;

               (2)  Permit Consolidated Net Worth at any time  to
be  less than (i) $110,000,000.00 through December 31, 1997;  and
(ii) $110,000,000.00 plus fifty percent (50%) of the consolidated
net  income of Borrower and its Subsidiaries (as of December  31,
1997) thereafter.

               (3)   Permit  the  ratio of Debt to  Tangible  Net
Worth to be greater than 0.5:1.0 at any time; or

               (4)   Permit  the  ratio of Intangible  Assets  to
Consolidated Net Worth to be greater than 0.55:1.0 at  any  time;
or

               (5)   Incur capital expenditures: ; (i) in  excess
of  $20,000,000.00 during the 1997 fiscal year  of  Borrower;  or
(ii)  in excess of $40,000,000.00 during the 1998 fiscal year  of
Borrower.

     For  purposes of this subsection 5.2(a), the following terms
shall have the following meanings:
     "Consolidated  Cash  Flow" for any  period  shall  mean  the
consolidated net income of the Borrower and all Subsidiaries  for
such  period  (after  having taken into account  the  effects  of
income   tax),  plus  (without  duplication)  interest   expense,
depreciation, amortization and all other non-cash charges, all as
determined  in  accordance  with  generally  accepted  accounting
principles consistently applied.

     "Consolidated Fixed Charges" for any period shall  mean  (i)
consolidated interest expense, and obligations under  capitalized
leases for such period, plus (ii) matured debt and any additional
debt  maturing within one year of the date of determination, plus
(iii) dividends and distributions to partners in respect of their
partnership interest, for the Borrower and all Subsidiaries,  all
as  determined  in accordance with generally accepted  accounting
principles consistently applied.

     "Consolidated    Net   Worth"   shall   mean    consolidated
shareholders'  or  partners'  equity  of  the  Borrower  and  all
Subsidiaries as determined in accordance with generally  accepted
accounting principles consistently applied.

     "Debt"   means,  with  respect  to  the  Borrower  and   its
Subsidiaries,  on  a  consolidated basis,  (i)  indebtedness  for
borrowed money or for the deferred purchase price of property  or
services,  (ii)  obligations as lessee under leases  which  shall
have  been  or  should be, in accordance with generally  accepted
accounting   principles,  recorded  as  capital   leases,   (iii)
obligations under direct or indirect guaranties in respect of and
obligations  (contingent or otherwise) to purchase  or  otherwise
acquire,  or  otherwise  to  assure a creditor  against  loss  in
respect  of, indebtedness or obligations of others of  the  kinds
referred to in clause (i) or (ii) above, and (iv) liabilities  in
respect of unfunded vested benefits under plans covered by  Title
IV  of  the Employee Retirement Income Security Act of  1974,  as
amended.

     "Intangible Assets" means, with respect to the Borrower  and
its    Subsidiaries,   on   a   consolidated   basis,   goodwill,
organizational expenses, trademarks, tradenames,  and  any  other
items  which  are  treated  as  intangibles  in  conformity  with
generally accepted accounting principles consistently applied.

     "Quarterly  Cash Flow" shall mean for any fiscal quarter  of
Borrower  the  consolidated  net  income  of  Borrower  and   its
Subsidiaries for such period (after having taken into account the
effects  of  income  tax)  plus  (without  duplication)  interest
expense,   depreciation,  amortization  and  all  other  non-cash
charges,  all as determined in accordance with generally accepted
accounting principles consistently applied.

     "Subsidiaries"  means all corporations  or  partnerships  of
which at least 99% of the partnership interests, or of the shares
of  stock of every class of which, outstanding at the time as  of
which  any determination is being made, is owned by the Borrower,
either directly or through a Subsidiary.  "Subsidiary" means each
of the Subsidiaries.

     "Tangible Net Worth" means, with respect to the Borrower and
its Subsidiaries, on a consolidated basis, Consolidated Net Worth
less  the  value  of  any  intangible  assets  as  determined  in
accordance   with   generally  accepted   accounting   principles
consistently applied.

          b.    No Borrower shall change its name, enter into any
merger,  consolidation, reorganizations or  recapitalization,  or
reclassify its capital stock without the prior written consent of
Lender, which consent shall not be unreasonably withheld,  except
that  Borrower  shall be permitted to purchase  common  stock  of
Borrower  in  an  aggregate amount not  to  exceed  $3,000,000.00
during the term of this Agreement.

          c.    No  Borrower  shall  sell,  transfer,  lease,  or
otherwise  dispose of all, or (except in the ordinary  course  of
business)  any  material part of, its assets, without  the  prior
written   consent  of  Lender,  which  consent   shall   not   be
unreasonably withheld.

          d.    No  Borrower  shall mortgage, pledge,  grant,  or
permit  to exist a security interest in or lien upon any  of  the
security  given for the Loans, other than pursuant  to  the  Loan
Documents and Revolving Loan Documents and statutory liens in the
ordinary course of its business.

          e.    Borrower  shall not furnish the Lender  with  any
certificate  or  other  document that  will  contain  any  untrue
statement of material fact or that will omit to state a  material
fact  necessary  to  make  it  not misleading  in  light  of  the
circumstances under which it was furnished.

          f.     No  Borrower  shall  transfer,  alienate,  sell,
assign,  or  encumber  any of its capital  stock  or  partnership
interests in any Subsidiary.

          g.   No Borrower shall incur, create, assume, or permit
any   indebtedness  other  than  (i)  under  the  Revolving  Loan
Documents  and the Loan Documents; (ii) obligations under  leases
for  real or personal property used in Borrower's business; (iii)
loans  between  Borrowers;  (iv)  loans  between  Borrowers   and
nonborrower  Subsidiaries not exceeding the  aggregate  principal
amount  of  $100,000.00 without the consent of the Lender,  which
consent  shall not be unreasonably withheld; (v) normal  accruals
and  trade  accounts payable incurred in the ordinary  course  of
business; or otherwise become liable, directly or indirectly,  as
guarantor  or  otherwise  for  any  obligation  (other  than  the
endorsement of commercial paper for deposit or collection in  the
ordinary   course  of  business  and  guaranties   of   affiliate
transactions made in the ordinary course of business).

          h.    Borrower shall not make any loans or advances  to
any officer, shareholder, director, or employee of Borrower or of
any  Subsidiary  which,  at  ant  time,  exceed  the  outstanding
aggregate principal amount of $300,000.00.

                      SECTION 6. DEFAULT.

     6.1   Events of Default.  The occurrence of any one or  more
of  the  following  events shall constitute an Event  of  Default
hereunder:

          a.    Any  installment of principal and/or interest  on
the  Loans  or  any  other sums due by Borrower  under  the  Loan
Documents shall not be paid when due and payable.

          b.    Any  Borrower shall breach any of the affirmative
or  negative  covenants contained herein and the  breach  is  not
cured  within five days of the receipt of written notice  of  the
breach from the Lender to the Borrower.

          c.    Any  Borrower  shall fail  to  perform,  keep  or
otherwise   observe  any  other  obligation,   term,   provision,
covenant, warranty or representation contained herein or  in  any
of  the Loan Documents and such failure is not cured within  five
days  of  the  receipt of written notice of the breach  from  the
Lender to the Borrower.

          d.   Any financial statement or report, representation,
warranty, or certificate made or furnished by any Borrower to the
Lender  hereunder or in connection with this Agreement, any  Loan
or  any  Loan Documents, or in any separate statement or document
to  be delivered under the Loan Documents to the Lender, shall be
materially   false,  incorrect,  or  incomplete  when   made   or
furnished.

          e.    Any Borrower shall admit its inability to pay its
debts as they mature, or shall make an assignment for the benefit
of its or any of its creditors.

          f.   Proceedings in bankruptcy, or for the dissolution,
full or partial liquidation or reorganization of any Borrower, or
for  the readjustment of any of their respective debts, under the
Bankruptcy  Code, as amended, or any part thereof, or  under  any
other  laws, whether state or federal, for the relief of debtors,
now or hereafter existing, shall be commenced by Borrower.

          g.    If an application is made by any Borrower for the
appointment of a receiver, trustee, or custodian for Borrower  or
for  any  substantial  part of their respective  assets,  or  any
Borrower  shall  discontinue business or  materially  change  the
nature of its business.

          h.    If  a  receiver, trustee, or custodian  shall  be
appointed  for  any Borrower or for any part of their  respective
assets,  and  shall  not be discharged within  30  days  of  such
appointment.

          i.    If  all  or  any  of  any borrower's  assets  are
attached,  seized, subjected to a writ, or are  levied  upon,  or
come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors.

          j.     If   any   Borrower  is  permanently   enjoined,
restrained or in any way prevented by court order from conducting
any material part of its business affairs.

          k.    If  a notice of lien, levy or assessment is filed
of  record with respect to all or any of Borrower's assets by the
United  States  or  any  department,  agency  or  instrumentality
thereof,   or  by  any  state,  county,  municipality  or   other
governmental agency, or if any taxes or debts owing at  any  time
or  times  hereafter to any one or more of them becomes  a  lien,
upon all or any material portion of Borrower's assets.

          l.    A  judgment creditor of any Borrower shall obtain
possession  of  any of the collateral securing repayment  of  the
Loans  by  any  means, including, but without  limitation,  levy,
distraint, replevin, or self-help.

          m.   Any Event of Default occurs under the terms of any
of  the Loan Documents or under the terms of any of the Revolving
Loan Documents.

          n.     Any  Borrower  shall  dissolve,  liquidate,   or
otherwise  terminate its existence, or take any action to  effect
such termination.

          o.    Any  Borrower shall suffer a final  judgement  in
excess  of  $250,000.00, and shall not discharge the same  within
thirty (30) days.

          p.    To  furnish  the Lender with any  certificate  or
other document that will contain any untrue statement of material
fact or that will omit to state a material fact necessary to make
it  not  misleading in light of the circumstances under which  it
was furnished.

          q.    Any  material nonborrower Subsidiary  shall  have
failed  to  pay when due all taxes, assessments or  fees  imposed
upon  it  or  on  any of its property or that it is  required  to
withhold   and   pay  over,  except  when,  prior  to   impending
foreclosure such taxes, assessments or fees are contested in good
faith by appropriate proceedings, with adequate reserves therefor
having been set aside on its books.

          r.    Any material nonborrower Subsidiary fails to take
all  necessary  steps  to preserve its corporate  or  partnership
existence and franchises, or fails to comply with all present and
future laws applicable to it in the operation of its business and
all material agreements to which it is subject.

          s.    Lender,  at  its discretion and after  five  days
written  notice given to Borrower, deems itself to  be  adversely
affected and/or insecure by reason of any material change in  any
of  Borrower's  (including any endorsers and/or  guarantors)  net
worth,  or  by  reason of any other material change of  condition
whether or not described herein.

     6.2   Remedies.  Upon the occurrence of an Event of Default,
Lender, at  its option, may:

          a.   Terminate any obligation to make any further Loans
and   declare  the  entire  principal  balance  of  the   Secured
Indebtedness and all interest, unpaid accrued and earned  thereon
to  be  immediately due and payable without demand  for  payment,
presentment  for  payment,  notices of  intention  to  accelerate
maturity, notices of election to accelerate maturity, protest and
notice  of protest or any other notice whatsoever, all  of  which
are hereby expressly waived.
          b.    Enforce or avail itself of any and all rights and
remedies given to it by any or all of the Loan Documents.

          c.   Enforce or avail itself of all rights and remedies
allowed by all applicable laws.

                 SECTION 7. INTEREST LIMITATION

     7.1   Limitation.   Interest on the debt  evidenced  by  the
Notes  or otherwise in connection with the Loans shall not exceed
the maximum amount of nonusurious interest that may be contracted
for,  taken,  reserved,  charged,  or  received  under  law;  any
interest  in  excess of that maximum amount shall be credited  on
the  principal  of the debt or, if that has been paid,  refunded.
On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration  or
prepayment or, if already paid, credited on the principal of  the
debt  or,  if the principal of the debt has been paid,  refunded.
This  provision overrides other provisions in this and all  other
instruments concerning the debt.  All sums paid or agreed  to  be
paid for the use, forbearance or detention of the indebtedness of
Borrower  to Lender shall, to the extent permitted by  applicable
law, be amortized, prorated, allocated and spread throughout  the
full  stated term of such indebtedness until payment in  full  so
that   the  rate  or  amount  of  interest  on  account  of  such
indebtedness does not exceed the maximum rate of interest allowed
by  law  for so long as such indebtedness is outstanding, and  to
the  extent  that  TEX. REV. CIV. STAT. Ann. Art.  5069-1.04,  as
amended,  is applicable to such indebtedness, the quarterly  rate
ceiling  from time to time in effect under such article shall  be
the   applicable   ceiling.   This  provision   overrides   other
provisions in this and all other instruments concerning the debt.

                    SECTION 8. MISCELLANEOUS

     8.1   No  Permanent Waivers.  No waiver at any time  of  the
provisions or conditions of this Agreement or of any of the other
Loan Documents shall be construed as a waiver of any of the other
provisions or conditions hereof or thereof nor be construed as  a
right  to  a  subsequent  waiver  or  any  other  provisions   or
conditions.

     8.2   Severability.  Unenforceability for any reason against
any person or persons of any provision of this Loan Agreement, or
of  any  of the other Loan Documents or other Agreements  between
Borrower  and the Lender, shall not limit or impair the operation
or  validity of any other provisions of this Agreement or any  of
the other Loan Documents.

     8.3   Descriptive Headings.  The descriptive headings of the
various  sections and subsection of this Agreement and  the  Loan
Documents  and  any  schedule,  agreement  or  other  instrument,
executed  with  reference hereto are inserted for convenience  of
reference only, do not constitute a part of any such document and
no  inference  is to be drawn from such headings.   Whenever  the
context  shall require, words of any gender shall  be  deemed  to
include  the other genders and either the singular or the  plural
shall include the other.

     8.4   Further  Assurance.  From time to time, Borrower  will
execute  and deliver to the Lender such additional documents  and
will  provide  such  additional information  as  the  Lender  may
reasonably  require to carry out the terms of this Agreement  and
be informed of the Borrower's status and affairs.

     8.5   Enforcement and Waiver by the Lender.  All rights  and
remedies  of  the Lender are cumulative and concurrent,  and  the
exercise  of one right or remedy shall not be deemed a waiver  or
release of any other right or remedy.  The Lender shall have  the
right  at  all times to enforce the provisions of this  Agreement
and the Loan Documents in strict accordance with the terms hereof
and thereof, notwithstanding any conduct or custom on the part of
the Lender in refraining from so doing at any time or times.   Th
failure of the Lender at any time or times to enforce its  rights
under  such  provisions, strictly in accordance  with  the  same,
shall  not be construed as having created a custom in any way  or
manner contrary to specific provisions of this Agreement or  such
Loan  Documents  or  as having in any way or manner  modified  or
waived the same.

     8.6   Expenses of the Lender.  The Borrower will, on demand,
pay,  or  reimburse  the  lender, for  all  reasonable  expenses,
including  the reasonable fees and expenses of legal counsel  for
the  Lender,  incurred  by  the Lender  in  connection  with  the
preparation,   administration,   amendment,   modification,    or
enforcement  of  this Agreement and the Loan Documents,  and  the
collection  or  attempted collection of any and all  Notes.   All
reasonable   costs,  including  but  not  limited  to  reasonable
attorney's fees of Borrower, Lender, or other interested parties,
other  professional fees,  appraiser's and surveyor's fees, taxes
and  all  expenses  of  all kinds inured in connection  with  the
Loans,  shall  be  borne  by Borrower,  and  Borrower  agrees  to
indemnify  the  Lender  and save it harmless  from  the  payment,
defense  and/or  expense of any claim or demand  for  such  fees,
costs, taxes and expenses.

     8.7  Notices.  Any notices or consents required or permitted
by  this Agreement shall be in writing and shall be deemed  given
when  delivered in person, or upon deposit in the U.S.  Mail,  if
sent   by   certified  mail,  postage  prepaid,  return   receipt
requested, as follows, unless such address is changed by  written
notice hereunder:

          a.   If to Borrower:

               Taco Cabana, Inc.
               Texas Taco Cabana, L.P.
               T.P. Acquisition Corp.
               T.C. Management, Inc.
               Taco Cabana Management, Inc.
               Taco Cabana Multistate, Inc.
               Colorado Cabana, Inc.
               8918 Tesoro Drive, Suite 200
               San Antonio, Texas 78217


          b.   If to the Lender:

               International Bank of commerce
               130 East Travis
               San Antonio, Texas 78205
               Attention:  Mr. Steve E. Edlund

     8.8   RELEASE  BY  THE  BORROWER.   TO  THE  MAXIMUM  EXTENT
PERMITTED  BY APPLICABLE LAWS, BORROWER RELEASES THE  LENDER  AND
ITS  DIRECTORS,  OFFICERS, ATTORNEYS, AGENTS, AND EMPLOYEES  FROM
ALL  CLAIMS,  CAUSES,  DAMAGES, LIABILITY  AND  RELATED  EXPENSES
ARISING  OUT OF ANY ACT OR OMISSION ON THE PART OF ANY  OF  THEM,
WITH  REGARD TO THIS AGREEMENT, WHICH DOES NOT INVOLVE FRAUD  BAD
FAITH  OR  NEGLIGENCE  BY  LENDER  OR  ITS  DIRECTORS,  OFFICERS,
ATTORNEYS, AGENTS OR EMPLOYEES.

     8.9   Governing  Law.  This Agreement is made and  accepted,
and  the  obligations of the parties set forth  herein  shall  be
performable, in the County of Bexar and State of Texas, and  this
Agreement  and all the Loan Documents shall be governed  by,  and
construed  in  accordance with, the laws of the  State  of  Texas
except  to the extent that such laws may be preempted by laws  of
the United States of America.  The parties hereby agree that this
Agreement and the Loans to be made pursuant hereto shall  not  be
subject to the provisions of Chapter 15 of the Texas Credit Code.

     8.10   Lender's  Relationship to Other.   Lender  is  not  a
partner  or  joint  venturer in any manner  whatsoever  with  any
Borrower.

     8.11  Waiver, Modification.  Neither this Agreement nor  any
provision hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the  party
against  whom  enforcement of the change,  waiver,  discharge  or
termination is sought.

     8.12   Cumulative Remedies.  The right and remedies  of  the
Lender  under  the  Loan Documents shall be  cumulative  and  the
exercise, or partial exercise, of any such right or remedy  shall
not preclude the exercise of any other right or remedy.

     8.13   Binding Effect.  This Loan Agreement shall be binding
upon  and  inure to the benefit of Borrower and Lender and  their
respective  successors and assigns, provided that no Borrower may
assign  its  rights or obligations hereunder.  If more  than  one
party  executes  this Agreement a Borrower, the  term  "Borrower"
shall mean and refer to each such party, jointly and severally.

     8.14  Survival  of Agreement.  The provisions thereof  shall
survive  the  execution of all instruments herein mentioned,  and
shall  continue  in full force until the Secured Indebtedness  is
paid  in  full and shall prevail and control over any conflicting
provision contained elsewhere in the Loan Documents.

     8.15   Entire  Agreement.   The Loan  Documents  embody  the
entire  agreement  between the parties and supersedes  all  prior
agreements  and understandings, if any, relating to  the  subject
matter  hereof.   There are no oral agreements or  understandings
between  the  parties  which  are  not  evidenced  by  the   Loan
Documents.

     8.16    Subsidiaries.   Except  where  otherwise   specified
herein,  the term "Subsidiary" shall  mean every entity of  which
more than fifty percent (50%) of the outstanding voting stock  or
other ownership interests shall, at the time of determination, be
owned directly or indirectly by the named Borrower or through one
or more intermediaries of Borrower.
     
IN  WITNESS  WHEREOF, the parties hereto have duly executed  this
Agreement as of the day and y ear first above written.

BORROWER:                     TACO CABANA, INC.

WITNESS:
                                   By:______________________
________________________           Name:____________________
Name:___________________           Title:___________________

                                   TEXAS TACO CABANA, L.P.

                                   By:______________________
________________________           Name:____________________
Name:___________________           Title:___________________
                                   
                                   T.P. ACQUISITION CORP.

                                   By:______________________
________________________           Name:____________________
Name:___________________           Title:___________________

                                   T.C. MANAGEMENT, INC.

                                   By:______________________
________________________           Name:____________________
Name:___________________           Title:___________________

                                   TACO CABANA MANAGEMENT, INC.

                                   By:______________________
________________________           Name:____________________
Name:___________________           Title:_____________________

                                   
                                   TACO CABANA MULTISTATE, INC.

                                   By:______________________
                                   Name:____________________
                                   Title:_____________________

                                   COLORADO CABANA, INC.

                                   By:_______________________
                                   Name:_____________________
                                   Title:______________________
          
                                   
                                   INTERNATIONAL BANK OF COMMERCE

                                   By:______________________
                                   Name:  Steve E. Edlund
                                   Title: Executive Vice President