SUPPLEMENTAL CREDIT FACILITY AGREEMENT


                                Atlanta, Georgia
                                December 24, 1998



Avado Brands, Inc.
f/k/a Apple South, Inc.
Corporate Headquarters
Hancock at Washington
Madison, Georgia  30650
Attn:    Erich J. Booth,
         Chief Financial Officer

Gentlemen:

     At your request,  we, Wachovia  Capital  Investments,  Inc. (the "Lender"),
hereby  establish a supplemental,  non-revolving,  short term credit facility of
$30,000,000 in your favor (the "Credit Facility").

     The Credit Facility is being  established  entirely separate and apart from
the credit facility previously  established in your favor by Wachovia Bank, N.A.
(the "Bank"), among others, pursuant to that certain Credit Agreement,  dated as
of April 1,  1998,  between  them and you  (herein,  as it has been,  or may be,
modified  or  amended  from  time  to  time,  called  the  "$100,000,000  Credit
Agreement").  Capitalized  terms used  hereinbelow,  but not  expressly  defined
hereinbelow,  shall have the  meanings  given to such terms in the  $100,000,000
Credit Agreement.  The Credit Facility is being offered subject to the following
terms and conditions:

     1. The Credit  Facility shall be fully  disbursed to you (or your order) in
one (1) disbursement,  on today's date, in the amount of $30,000,000. No portion
of the Credit  Facility may be  re-borrowed,  once repaid;  i.e.,  this is not a
revolving  credit line. The outstanding Debt under the Credit Facility is herein
called your  "Borrowing."  The entire proceeds of the Borrowing shall be used by
you, when received,  to fund (together with your own funds,  as necessary),  the
aggregate  settlement  amount  associated with an Equity Forward Agreement dated
June 24, 1998 between the Company and the Bank (the "Equity Forward  Contract"),
including applicable fees, charges and accrued interest associated therewith.

     2. Your Debt shall be evidenced by a single  promissory note, dated of even
date herewith, in the principal amount of $30,000,000, issued by the Borrower to
the order of the Lender (the "Supplemental Credit Facility Note").

     3. The Credit Facility shall terminate, and your Borrowing shall become due
and  payable  in full,  on March 1, 1999  (the  "Maturity  Date").  Prior to the
Maturity Date, however,  (a) the Borrowing may be voluntarily  prepaid, in whole
or in part (subject to the terms of the $100,000,000 Credit Agreement in respect
of voluntary prepayments  generally),  and (b) the Borrowing shall be subject to
mandatory  prepayment  (i) in full, if any Event of Default  occurs,  (ii) in an
amount equal to 100% of all debt or equity issuances made subsequent to the date
hereof,  but excluding  issuances of debt under the  Borrower's  lines of credit
existing on today's date,  excluding any financings  under the Borrower's  lease
facility with SunTrust  Bank,  Atlanta,  existing on today's date, and excluding
issuances of equity,  subsequent to today's date,  consisting of the issuance of
stock options to employees,  officers or directors of the Borrower or consisting
of the issuance of any common  stock of Borrower  upon the exercise of any stock
options held by  employees,  officers or directors of Borrower,  and (iii) in an
amount equal to the entire net proceeds  received by you from "Identified  Asset
Sales" (as hereinafter defined), upon the closing of each such "Identified Asset
Sale." For  purposes  hereof,  "Identified  Asset  Sales" means your sale of any
Applebee's  restaurants previously identified by you to us as the "West Virginia


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Properties," "Louisville Properties," and the "Washington, D.C. Properties."

     4.  The  unpaid  principal  amount  of the  Borrowing  from  time  to  time
outstanding  shall bear  interest,  payable at the  expiration  of each Interest
Period  (except  for Base Rate  Borrowings,  which  shall be due and  payable at
maturity), and on demand on maturity, at an interest rate equal to the Base Rate
plus one percent (1%) per annum or, at the Borrower's option, the Adjusted LIBOR
Rate  established by the Lender for each  applicable  Interest Period plus three
and one-half percent (3-1/2%) per annum; provided,  however, that after a Credit
Line Event of Default occurs and during its  continuation,  the Borrowing shall,
at the Lender's option, bear interest instead at the Default Rate.

     5. You shall pay the Lender a nonrefundable, transaction fee of $300,000 on
January 4, 1999 as compensation for its arranging the Credit Facility.

     6.  The  following  shall  constitute   "Credit  Line  Events  of  Default"
hereunder: (i) you shall fail to pay the Borrowing, when due, or any interest or
fee,  within five (5)  Domestic  Business  Days after its due date;  or (ii) any
breach by you of  Paragraph  7 hereof;  or (iii) any Event of Default  occurring
under the $100,000,000  Credit Agreement (except under Section 5.4 of the Credit
Agreement until such time as such provision is amended by the parties  thereto).
Upon the occurrence of any Event of Default, all existing Credit Line Borrowings
shall become immediately due and payable, at the Lender's option.

     7. All representations,  warranties and covenants  (including  affirmative,
negative and financial covenants) set forth in the $100,000,000 Credit Agreement
shall be deemed  incorporated  by  reference  herein and made an  integral  part
hereof, as if fully set forth herein. In addition to the foregoing,  and without
limitation  thereof,  you further  agree not (i) to prepay any Debt  (except for
prepayments  made in respect of  borrowings  under  lines of credit  existing on
today's date), or (ii) make any additional  common stock  repurchases  hereafter
(except with respect to the Equity  Forward  Agreement),  so long as any part of
the Borrowing remains outstanding and unpaid.

     8.  This  Agreement  is  intended  by the  parties  hereto to  survive  any
termination of the $100,000,000 Credit Agreement.  In such event,  however,  all
terms of the  $100,000,000  Credit  Agreement  shall be  deemed to  continue  in
existence  and remain  applicable  hereto until the  Borrowing is fully paid and
satisfied.

     9. This Agreement  shall be governed by, and construed in accordance  with,
the laws of the State of Georgia and all  applicable  federal laws of the United
States of America.

     10.  You agree to pay all costs and  expenses  of the  Lender  incurred  in
connection  with the  preparation,  execution,  delivery and enforcement of this
Agreement  and  all  other  loan  documents  executed  in  connection  herewith,
including the reasonable fees and out-of-pocket expenses of Bank's counsel.


                            AVADO BRANDS, INC.
                            f/k/a APPLE SOUTH, INC., as Borrower

                            By:_________________________________
                               Erich J. Booth, Chief Financial
                               Officer and Treasurer

                            Attest:_____________________________
                                   John McLeod, Secretary


                            Accepted and Agreed:

                            WACHOVIA CAPITAL INVESTMENTS, INC., as Lender

                            By:________________________________
                            Name:___________________________
                            Title:____________________________


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                       SUPPLEMENTAL CREDIT FACILITY NOTE

                                Atlanta, Georgia
                                December 24, 1998


     For value received,  AVADO BRANDS, INC., f/k/a APPLE SOUTH, INC., a Georgia
corporation (the  "Borrower"),  promises to pay to the order of WACHOVIA CAPITAL
INVESTMENTS, INC. (the "Lender"), the principal sum of Thirty Million and No/100
Dollars  ($30,000,000.00),  or so much thereof as shall be disbursed  and remain
outstanding  under  the  Credit  Facility  established  pursuant  to the  Credit
Agreement  (defined below),  on the Credit Facility  Maturity Date. The Borrower
promises  to pay  interest  on the unpaid  principal  amount of this Note on the
dates and at the interest rate provided for in the Credit Agreement  referred to
below. Interest on any overdue principal of and, to the extent permitted by law,
overdue  interest on the  principal  amount  hereof  shall bear  interest at the
Default  Rate,  as provided for in the Credit  Agreement.  All such  payments of
principal  and interest  shall be made in lawful  money of the United  States in
federal or other immediately  available funds at the office of the Lender at 191
Peachtree Street, N.E., Atlanta, Georgia 30303-1757.

     This Note is the  "Supplemental  Credit  Facility  Note" referred to in the
Supplemental  Credit Facility  Agreement dated as of December 24, 1998,  between
the Borrower  and the Lender (as the same may be amended and modified  from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for the
provisions for the voluntary and mandatory  prepayment and the repayment  hereof
and the acceleration of the maturity hereof.

     IN WITNESS WHEREOF,  the Borrower has caused this Note to be duly executed,
under seal,  by its duly  authorized  officer as of the day and year first above
written.


                            AVADO BRANDS, INC.,
                            f/k/a APPLE SOUTH, INC.            (SEAL)

                            By:_______________________________
                               Erich J. Booth, Chief Financial
                               Officer and Treasurer

                               Attest:___________________________
                                      John McLeod, Secretary


                                  

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