EXTENSION AND AMENDMENT TO EMPLOYMENT AGREEMENT


      This  Extension  and Amendment to Employee Agreement (the "Amendment")  is
made  and  entered into this 15th day of May, 1998 by and between  TACO  CABANA,
INC., a Delaware corporation ("Company"), and STEVE CLARK ("Employee").

                                   WITNESSETH:

      WHEREAS,  the  Company and Employee entered into an  Employment  Agreement
dated June 6, 1995 (the "Employment Agreement"), which Employment Agreement  was
effective  as  of  the  24th  day of April, 1995, a  copy  of  which  Employment
Agreement  is attached hereto as Exhibit A and incorporated herein by  reference
for all relevant purposes; and

     WHEREAS, Employee is currently the President and Chief Executive Officer of
the Company and is also a member of the Board of Directors thereof; and

      WHEREAS,  at  a Board of Directors meeting the Company held on  March  27,
1998,  with  Employee  abstaining, the Board of  Directors  of  the  Company  in
recognition  of the outstanding efforts of the Employee unanimously resolved  to
extend the Term of the Employment Agreement, to increase Employee's Base Salary,
to grant to Employee additional options to purchase common shares of the Company
and  to  provide  for  a  Contract Payment under certain circumstances,  all  in
accordance with the terms and conditions hereinafter set forth.

      NOW,  THEREFORE, for and in consideration of the premises herein contained
and  other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

      1.    The  Term of the Employment Agreement set forth in Section 2 thereof
shall  be extended one year and as extended shall continue until April 23,  1999
or  until  otherwise  terminated  as provided in  the  Employment  Agreement  as
modified by the Amendment.

      2.    The Base Salary to be paid Employee during the extended one (1) year
Term  as set forth in Section 3.1 Base Salary of the Employment Agreement  shall
be  increased to $280,000 by the terms of the Amendment and all of the remaining
provisions of Section 3.1 shall remain in full force and effect.

      3.    A  new Section 7.3 entitled Contract Payment shall be added  to  the
Employment Agreement and shall read as follows:

             "7.3   Contract Payment.  In the event the Agreement has  not  been
          terminated during the Term hereof and is in full force and  effect  on
          April 23, 1999 and the Term is not renewed or extended, Employee shall
          receive  as  a Contract Payment $140,000 payable in equal installments
          over  a  period of six (6) months and in accordance with the Company's
          general  payroll  practices  less such deductions  or  amounts  to  be
          withheld  as  shall  be  required by applicable law  and  regulations.
          During the Term hereof, in the event there is a Change of Control  (as
          defined  in the Taco Cabana Standard Stock Option Agreement and  Plan)
          and  as  a result of such Change of Control the Term of this Agreement
          is  not  renewed and Employee shall not remain employed by the Company
          or  its  successors after the expiration of the Term hereof,  Employee
          shall receive $280,000 payable over a period of twelve (12) months  in
          equal  installments  and  in  accordance with  the  Company's  payroll
          practices  less such deductions or amounts to be withheld as  required
          by applicable law or regulations."

     4.   A  new  Section 7.4 entitled Additional Stock Option Provided  in  the
Extension and Amendment to Employment Agreement shall be added to the Employment
Agreement and shall read as follows:

                "7.4  Additional  Stock Option Provided  in  the  Extension  and
          Amendment  to Employment Agreement   In addition to the stock  options
          granted  in Section 7.2 above of the Employment Agreement, the Company
          does  hereby grant to Employee an option to acquire 100,000 shares  of
          stock (the "Stock Option"), which Stock Option shall vest in five  (5)
          equal installments of 20,000 shares each commencing on April 24, 1999;
          provided, however, during the Term hereof in the event of a Change  of
          Control (as defined in the Taco Cabana Standard Stock Option Agreement
          and  Plan), then, in such event, any unexercised portion of the  Stock
          Option shall accelerate and immediately vest in the Employee upon  any
          such Change of Control."

       5.     The   parties  hereto  acknowledge  it  is  their  intention   for
representatives  of the Board of Directors of the Company and  the  Employee  to
meet  to  discuss  the  status of the Employment Agreement  as  amended  by  the
Extension and Amendment to Employment Agreement at least ninety (90) days  prior
to the expiration of the Term hereof.

      6.    The parties hereto agree that all of the terms and conditions of the
Employment Agreement not expressly amended herein shall remain in full force and
effect and are hereby ratified.

     IN WITNESS WHEREOF, this Extension and Amendment to Employment Agreement is
executed the day and year above written.

                         COMPANY:
                         TACO CABANA, INC.


                         By:_______________________________________
                         Its: ______________________________________



                         EMPLOYEE:



                         __________________________________________
                         STEVE  CLARK