PARTICIPATION AGREEMENT
                          (Apple South Trust No. 97-1)

                         Dated as of September 24, 1997

                                      among

                               APPLE SOUTH, INC.,
                                 as the Lessee,

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
       not in its individual capacity except as expressly provided herein,
          but solely as Owner Trustee under Apple South Trust No. 97-1,

                             SUNTRUST BANK, ATLANTA,
                                   as Holder,

                             SUNTRUST BANK, ATLANTA,
                            as Administrative Agent,

                                       and

        certain financial institutions from time to time parties hereto,
                                   as Lenders







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                                TABLE OF CONTENTS


SECTION 1.        DEFINITIONS; INTERPRETATION OF THIS AGREEMENT................2
                  1.1      Definitions.........................................2
                  1.2      Directly or Indirectly..............................2

SECTION 2.        FUNDING OF LOANS AND ADVANCES; PURCHASE OF EQUIPMENT;
                  PARTICIPATION IN THE EQUIPMENT COST; CLOSING; TRANSACTION
                  COSTS........................................................2
                  2.1      Funding of Loans and Advances; Purchase.............2
                  2.2      Participation in Equipment Cost.....................3
                  2.3      Closing Date; Commencement Dates; Procedures for 
                           Participation.......................................4
                  2.4      Directions to Owner Trustee and Administrative 
                           Agent; Satisfaction of Conditions...................6
                  2.5      Expenses; Fees......................................7

SECTION 3.        REPRESENTATIONS AND WARRANTIES...............................8
                  3.1      Representations and Warranties of the Owner Trustee.8
                  3.2      Representations and Warranties of the Lessee as of 
                           the Closing Date...................................11
                  3.3      Representations and Warranties of the Lessee as of 
                           Each Commencement Date.............................15

SECTION 4.        CLOSING CONDITIONS..........................................16
                  4.1      Conditions Precedent to the Obligations of Parties
                           other than the Lessee on the Closing Date..........16
                  4.2      Conditions Precedent to the Obligations of the 
                           Parties other than the Lessee on each Commencement 
                           Date...............................................18
                  4.3      Conditions Precedent to the Obligation of the 
                           Lessee on the Closing Date.........................21
                  4.4      Conditions Precedent to the Obligations of the 
                           Lessee on each Commencement Date...................22

SECTION 5.        COVENANTS OF THE LESSEE.....................................23
                  5.1      Information........................................23
                  5.2      Inspection of Property, Books and Records..........25
                  5.3      Adjusted Funded Debt/Adjusted Capitalization Ratio.25
                  5.4      Minimum Stockholder's Equity.......................25
                  5.5      Fixed Charge Coverage Ratio........................26
                  5.6      Total Funded Debt/Cash Flow Coverage Ratio.........26
                  5.7      Negative Pledge....................................26
                  5.8      Maintenance of Existence...........................27
                  5.9      Dissolution........................................27

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                  5.10     Consolidations, Mergers and Sales of Assets........27
                  5.11     Investments........................................27
                  5.12     Compliance with Laws; Payment of Taxes.............30
                  5.13     Maintenance of Property............................30
                  5.14     Insurance..........................................30
                  5.15     Change in Fiscal Year..............................30
                  5.16     Environmental Notices..............................30
                  5.17     Environmental Matters..............................31
                  5.18     Environmental Releases.............................31
                  5.19     Subsidiary Debt....................................31
                  5.20     Change of Chief Executive Office...................31
                  5.21     Lien Searches......................................32
                  5.22     Classification of Equipment........................32
                  5.23     Lien Perfection Filings............................32
                  5.24     Allocation of Equipment Cost among the States 
                           and Counties.......................................32
                  5.25     UCC Filing Amendments..............................32

SECTION 6.        OTHER COVENANTS AND AGREEMENTS..............................33
                  6.1      Restrictions on Transfer...........................33
                  6.2      Lessor's Liens Attributable to the Holders.........35
                  6.3      Lessor's Liens Attributable to the Owner Trustee...36
                  6.4      Liens Created by the Lenders.......................36
                  6.5      Liens Created by the Administrative Agent..........37
                  6.6      Covenants Restricting the Owner Trustee............37
                  6.7      Covenants of All Parties Regarding Operative 
                           Agreements.........................................39
                  6.8      Rent Sufficiency...................................39
                  6.9      Receipts Distribution and Application of Income....39
                  6.10     Acceleration Upon Certain Events of Default........42

SECTION 7.        LESSEE'S INDEMNITIES........................................42
                  7.1      General Tax Indemnity..............................42
                  7.2      Special Income Tax Indemnity.......................46
                  7.3      General Indemnification and Waiver of Certain 
                           Claims.............................................47

SECTION 8.        YIELD PROTECTION; TAXES; COMPENSATION.......................49
                  8.1      Yield Protection Provisions........................49
                  8.2      Withholding Taxes..................................51
                  8.3      Compensation.......................................54

SECTION 9.        MISCELLANEOUS...............................................54
                  9.1      Consents...........................................54
                  9.2      Appointment of Agent...............................54
                  9.3      Notices............................................55

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                  9.4      Successors and Assigns.............................56
                  9.5      Governing Law; Submission To Jurisdiction..........57
                  9.6      Severability.......................................58
                  9.7      Counterparts.......................................58
                  9.8      The Lessee's Right to Quiet Enjoyment..............59
                  9.9      Limitations of Liability...........................59
                  9.10     Confidentiality....................................59
                  9.11     Effectiveness and Survival of Indemnities..........60
                  9.12     Compliance Certificate.............................60


                                       iii

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ATTACHMENTS

Attachment A          -           Form of Certificate of Delivery and Acceptance
Attachment B          -           Form of Compliance Certificate
Attachment C          -           Form of Assignment and Assumption Agreement

SCHEDULES

Schedule 3.2(h)       -           List of Subsidiaries
Schedule 5.7          -           List of Existing Liens


APPENDIX A - Definitions


                                       iv

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                             PARTICIPATION AGREEMENT
                           Apple South Trust No. 97-1


     THIS  PARTICIPATION  AGREEMENT  (Apple  South  Trust No.  97-1) dated as of
September  24,  1997  (as  amended,  modified,  supplemented,  restated  and for
replaced from time to time, the "Agreement"),  is among (i) APPLE SOUTH, INC., a
corporation  organized and existing under the Laws of Georgia (herein,  together
with its successors and assigns permitted hereunder,  called the "Lessee"), (ii)
FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  a national  banking  association
("First Security"),  not in its individual capacity except as expressly provided
herein,  but solely as Owner Trustee under Apple South Trust No. 97-1 (herein in
such capacity,  together with its successors  and assigns  permitted  hereunder,
called the "Owner Trustee"), (iii) SUNTRUST BANK, ATLANTA, a banking corporation
organized and existing under the Laws of Georgia,  in its capacity as the holder
of the  beneficial  interest in the trust estate  established  under Apple South
Trust No.  97-1 (in such  capacity  as of the date  hereof,  the  "Holder",  and
together  with its  successors  and  assigns  permitted  hereunder,  called  the
"Holders"),  (iv) the financial  institutions  now and from time to time parties
hereto (each herein in such  capacity,  together with its successors and assigns
permitted hereunder, called a "Lender" and collectively, the "Lenders"), and (v)
SUNTRUST BANK, ATLANTA, a banking  corporation  organized and existing under the
laws of Georgia,  ("SunTrust"), as collateral agent and administrative agent for
the Lenders and the Holders (in such capacity, the "Administrative Agent").

                              W I T N E S S E T H:

     WHEREAS,  concurrently  with the execution and delivery of this  Agreement,
the Holders have entered into that certain  Trust  Agreement  (Apple South Trust
No.  97-1)  dated as of the date  hereof (as  amended,  modified,  supplemented,
restated  and/or  replaced from time to time,  the "Trust  Agreement")  with the
Owner Trustee  pursuant to which the Owner Trustee  agrees,  among other things,
(a) to hold the Trust  Estate for the benefit of the Holders  thereunder  on the
terms  specified  in the  Trust  Agreement  and (b)  subject  to the  terms  and
conditions  hereof,  to purchase the Equipment from each  applicable  Seller and
concurrently therewith lease such Equipment to the Lessee;

     WHEREAS, pursuant to the terms of the Trust Agreement, the Owner Trustee is
authorized and directed (a) to accept  delivery from time to time of any and all
title  transfer  documents  evidencing  the  purchase  of each Unit by the Owner
Trustee,  and (b) to execute  and deliver  the Lease  relating to the  Equipment
pursuant  to which the Owner  Trustee  agrees  to lease to the  Lessee,  and the
Lessee agrees to lease from the Owner Trustee,  each Unit to be delivered on the
applicable  Commencement  Date,  such lease of  Equipment to be evidenced by the
execution and delivery of a Lease Schedule or a Lease Replacement  Schedule,  as
the case may be, to the Lease;

     WHEREAS,  concurrently  with the execution and delivery of this  Agreement,
the Owner Trustee has entered into the Loan  Agreement  with the Lenders and the
Administrative  Agent  pursuant to which the Owner Trustee  agrees,  among other
things,  to issue the Notes to the Lenders as  evidence  of the Owner  Trustee's
indebtedness in respect of the Loans made under the

                                       -1-

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Loan  Agreement,  which Notes are to be secured  by,  among  other  things,  the
Equipment and certain of the Lessee's obligations under the Lease;

     WHEREAS,  the proceeds  from the Loans will be applied,  together  with the
equity  contributions  made by the Holders  pursuant to this  Agreement  and the
Trust  Agreement,  to effect the purchase of the  Equipment by the Owner Trustee
contemplated hereby.

     NOW, THEREFORE,  in consideration of the mutual agreements herein contained
and other good and valuable consideration, receipt of which is acknowledged, the
parties hereto agree as follows:


            SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT

                                1.1 Definitions.

     The  capitalized  terms used in this  Agreement  (including  the  foregoing
recitals) and not otherwise  defined herein shall have the  respective  meanings
specified  in  Appendix A hereto,  unless the  context  hereof  shall  otherwise
require.  The "General  Provisions" of Appendix A hereto are hereby incorporated
herein by this reference.

                           1.2 Directly or Indirectly.

     Where any provision in this  Agreement  refers to action to be taken by any
Person, or which such Person is prohibited from taking,  such provision shall be
applicable whether such action is taken directly or indirectly by such Person.


        SECTION 2. FUNDING OF LOANS AND ADVANCES; PURCHASE OF EQUIPMENT;
                  PARTICIPATION IN THE EQUIPMENT COST; CLOSING;
                                TRANSACTION COSTS

            2.1 Funding of Loans and Advances; Purchase of Equipment.

     The Loans and Holder  Advances shall be made, at the request of the Lessee,
on any Commencement Date, in accordance with the terms hereof;  provided,  it is
understood  and  agreed  that (a) no such Loan or Holder  Advance  shall be made
subsequent to the  Commitment  Expiration  Date and (b) the aggregate  amount of
Loans and Holder  Advances  requested by the Lessee shall be in an amount of (1)
at least $1,000,000 on the first  Commencement  Date and (2) at least $3,000,000
on each subsequent  Commencement  Date, unless the remaining unfunded portion of
the Commitments is less than  $3,000,000,  in which case the aggregate amount of
Loans and Holders  Advances  may be the amount of such  unfunded  portion of the
Commitments.


                                       -2-

<PAGE>




Subject  to  the  terms  and   conditions   hereof  and  on  the  basis  of  the
representations  and  warranties  set forth herein,  the Owner Trustee agrees to
purchase from the  applicable  Seller on the  applicable  Commencement  Date the
Units of such Seller  described in the  applicable  Certificate  of Delivery and
Acceptance  delivered pursuant to Section 2.3(b),  and in connection  therewith,
the Owner Trustee agrees to pay to such Seller,  or at the request of the Lessee
to  reimburse  the Lessee for,  the cost for each such Unit as  specified in the
Certificate of Delivery and Acceptance  therefor;  provided,  however,  that the
Owner  Trustee shall not be obligated to purchase on any  Commencement  Date any
Unit that is destroyed, damaged, defective, in unsuitable condition or otherwise
unacceptable  to the Lessee for lease  pursuant to the Lease.  Each Seller shall
deliver its  respective  Units to the Owner  Trustee (or its  designee)  and the
Owner Trustee (or its designee)  shall accept such delivery of all the Equipment
on a Commencement Date not later than the Commitment Expiration Date.

                      2.2 Participation in Equipment Cost.

     (a)  Subject  to the terms and  conditions  hereof  and on the basis of the
representations and warranties set forth herein, on each applicable Commencement
Date, each Holder hereby agrees that it shall  participate in the payment of the
Equipment  Cost for the Units  delivered on such  Commencement  Date by making a
Holder Advance to the Owner Trustee (payable to the Administrative Agent for the
benefit of the Owner  Trustee)  in an amount  equal to the product of the Equity
Percentage  of the  aggregate  Equipment  Cost for the Units  delivered  on such
Commencement Date and such Holder's Pro Rata Share percentage set forth opposite
such Holder's name on the signature pages of the Trust Agreement  (collectively,
the "Aggregate Holder Funded Amount"). The Lessee shall not request, pursuant to
a Certificate  of Delivery and  Acceptance or otherwise,  that the Owner Trustee
obtain a Holder  Advance (and the Holders  shall have no  obligation to make any
Holder Advances  regarding any Equipment) in excess of the unused portion of the
Holder  Commitments.  Each  Holder  shall  pay  its  respective  portion  of the
Aggregate Holder Funded Amount required on each applicable  Commencement Date to
the  Administrative  Agent to be held and  applied by the  Administrative  Agent
toward  the  payment  of the  Equipment  Cost  for the  Units  accepted  on such
Commencement Date as provided in Section 2.3.

     (b)  Subject  to the terms and  conditions  hereof  and on the basis of the
representations and warranties set forth herein, on each applicable Commencement
Date, each Lender hereby agrees that it shall  participate in the payment of the
Equipment  Cost for the Units  delivered on such  Commencement  Date by making a
Loan Advance to the Owner Trustee (payable to the  Administrative  Agent for the
benefit  of the Owner  Trustee)  in an amount  equal to the  product of the Debt
Percentage  of the  aggregate  Equipment  Cost for the Units  delivered  on such
Commencement  Date and the Lender's Pro Rata Share percentage set forth opposite
such Lender's name on the signature  pages of the Loan Agreement  (collectively,
the "Aggregate Lender Funded Amount"). The Lessee shall not request, pursuant to
a Certificate  of Delivery and  Acceptance or otherwise,  that the Owner Trustee
obtain  a Loan  (and  the  Lenders  shall  have no  obligation  to make any Loan
Advances regarding any Equipment) in excess of the unused portion

                                       -3-

<PAGE>




of the Lender  Commitments.  Each Lender shall pay its respective portion of the
Aggregate Lender Funded Amount required on each applicable  Commencement Date to
the  Administrative  Agent to be held and  applied by the  Administrative  Agent
toward  the  payment  of the  Equipment  Cost  for the  Units  accepted  on such
Commencement Date as provided in Section 2.3.

       2.3 Closing Date; Commencement Dates; Procedures for Participation.

     (a) All documents and  instruments  required to be delivered on the Closing
Date  shall  be  delivered  on or  prior to such  date at the  office  of King &
Spalding, 191 Peachtree Street.,  N.E., Atlanta,  Georgia 30303 or at such other
location as may be determined by the Owner Trustee, the Administrative Agent and
the Lessee.

     (b) Not later than 11:00 A.M.,  Eastern time, on the fifteenth Business Day
preceding  each  applicable  Commencement  Date, the Lessee shall deliver to the
Administrative  Agent,  on behalf  of the Owner  Trustee,  the  Holders  and the
Lenders (1) a certificate  substantially in the form attached as Attachment A (a
"Certificate  of  Delivery  and  Acceptance")   setting  forth  the  information
requested therein,  including without  limitation a requested  Commencement Date
and a description of any Units that the Lessee  requests be purchased and leased
to it by the Owner Trustee on the  Commencement  Date (including the location of
each such Unit by county and state) and (2) the original invoices respecting the
Units of Equipment  described in such  Certificate  of Delivery and  Acceptance,
which  invoices must  reference (to the extent  available),  for each Unit,  the
make, model,  serial number, and registration  number and Equipment Cost of such
Units. Such Certificate of Delivery and Acceptance and original invoices must be
complete  in  all  material  respects  and  in  form  and  substance  reasonably
satisfactory to the Administrative Agent in its sole discretion.

     (c) If the Certificate of Delivery and Acceptance and original invoices are
reasonably satisfactory to the Administrative Agent in its sole discretion,  not
later than 3:00 P.M.  Eastern time,  three Business Days prior to the applicable
Commencement  Date, the Administrative  Agent shall deliver to the Holders,  the
Owner Trustee and the Lenders,  by facsimile or other form of  telecommunication
or telephone (to be promptly confirmed in writing), a copy of the Certificate of
Delivery and Acceptance together with a statement prepared by the Administrative
Agent (the "Funding  Statement") setting forth (1) the date on which each Lender
shall be obligated to fund its portion of the  Aggregate  Lender  Funded  Amount
unless it has notified the Administrative  Agent that a condition to funding has
not been met, (2) the Aggregate  Holder Funded Amount required to be advanced on
such  Commencement  Date and each Holder's  portion  thereof,  (3) the Aggregate
Lender Funded Amount required to be advanced on such  Commencement Date and each
Lender's  portion thereof and (4) the Scheduled  Payment Dates and the Base Loan
Installments  for such Loan (including the Scheduled  Principal  Installment and
the Scheduled Interest Installment portions thereof).

     (d) Prior to 11:00 A.M., Eastern time on the applicable  Commencement Date,
each Holder shall make its  respective  portion of the  Aggregate  Holder Funded
Amount required

                                       -4-

<PAGE>




to be paid on such Commencement Date available to the Administrative  Agent, and
each Lender shall make its  respective  portion of the  Aggregate  Lender Funded
Amount for the  Equipment  Cost  required to be paid on such  Commencement  Date
available  to the  Administrative  Agent,  in  each  case,  by  transferring  or
delivering such amounts,  in funds  immediately  available on such  Commencement
Date, to the Administrative  Agent. The making available by a Holder or a Lender
of its  respective  portion of the  Aggregate  Holder Funded Amount or Aggregate
Lender Funded Amount for the Equipment Cost, as the case may be, shall be deemed
a consent to the terms set forth in the  Certificate  of Delivery and Acceptance
and the Funding Statement by such Holder or Lender.

     (e)  Upon  receipt  by  the   Administrative   Agent  on  each   applicable
Commencement  Date of the full amount of the Aggregate  Holder Funded Amount and
the Aggregate  Lender  Funded  Amount in respect of the Units  delivered on such
Commencement  Date,  the  Administrative  Agent on behalf  of the Owner  Trustee
shall, subject to the conditions set forth in Section 4 having been fulfilled to
the  satisfaction  of the  Owner  Trustee,  the  Holders,  the  Lenders  and the
Administrative  Agent or  waived  by such  parties  as  appropriate,  pay to the
applicable  Seller,  or at the request of the Lessee reimburse the Lessee,  from
the funds then held by the Administrative Agent, in immediately available funds,
an amount equal to the Equipment Cost for the Units delivered by the applicable
Seller on such Commencement Date, and simultaneously  therewith, (i) the Lessee,
individually and as authorized  representative  of the Owner Trustee (the making
available by the Holders of the  Aggregate  Holder  Funded  Amount to be paid on
such  Commencement Date shall constitute their agreement to permit the Lessee to
act as the authorized  representative of the Owner Trustee),  shall be deemed to
have  confirmed  acceptance  of such  Units from the  applicable  Seller for all
purposes as among the Owner Trustee and the Lessee  (except that there shall not
be any  waiver of claims by any  Person as against  the  applicable  Seller as a
result thereof), such confirmation to be conclusively evidenced by the execution
and delivery by the Lessee or its authorized  representative  of the Certificate
of Delivery and  Acceptance,  (ii) the Lessee shall cause to be delivered to the
Owner Trustee (or its designee) all title transfer  documents  which are legally
sufficient  to evidence the  purchase  and the  transfer of good and  marketable
title in the Units to the Owner  Trustee  and  (iii)  the Owner  Trustee  shall,
pursuant to the Lease,  lease the Units delivered on such  Commencement  Date to
the Lessee, and the Lessee,  pursuant to the Lease, shall accept delivery of the
Units under the Lease (such lease,  delivery and  acceptance  of the Units under
the Lease being  conclusively  evidenced  by the  execution  and delivery by the
Lessee and the Owner Trustee of a Lease  Schedule to the Lease  concerning  such
Units so delivered).  Each of the Lessee,  the Holders,  the Owner Trustee,  the
Lenders and the  Administrative  Agent hereby agree to take all actions required
to be taken by such party in  connection  therewith and pursuant to this Section
2.3(e).

     (f) If any Lender does not fund its portion of the Aggregate  Lender Funded
Amount on any Commencement Date, the Administrative  Agent shall, subject to the
conditions set forth in Section 4 having been fulfilled to the  satisfaction  of
the Owner Trustee,  the Holders,  the other Lenders and the Administrative Agent
or waived by such parties as  appropriate,  (i) delete from the  Certificate  of
Acceptance and Delivery and the Lease Schedule for such

                                       -5-

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Commencement Date such Units as it shall deem appropriate in its sole discretion
such that the Equipment Cost for the remaining Units is as close as possible to,
but less  than,  the  portion  of the  Aggregate  Holder  Funded  Amount and the
Aggregate  Lender  Funded Amount that the  Administrative  Agent has received on
such Commencement Date and (ii) pay to the applicable  Seller, or at the request
of  the  Lessee  reimburse  the  Lessee,   from  the  funds  then  held  by  the
Administrative  Agent,  in immediately  available  funds, an amount equal to the
Equipment  Cost  for  the  Units  delivered  by the  applicable  Seller  on such
Commencement  Date  (after  giving  effect  to the  removal  of  Units  from the
Certificate   of  Acceptance   and  Delivery  and  the  Lease  Schedule  by  the
Administrative   Agent),   and   simultaneously   therewith,   (i)  the  Lessee,
individually and as authorized  representative  of the Owner Trustee (the making
available by the Holders of the  Aggregate  Holder  Funded  Amount to be paid on
such  Commencement Date shall constitute their agreement to permit the Lessee to
act as the authorized  representative of the Owner Trustee),  shall be deemed to
have  confirmed  acceptance  of such  Units from the  applicable  Seller for all
purposes as among the Owner Trustee and the Lessee  (except that there shall not
be any  waiver of claims by any  Person as against  the  applicable  Seller as a
result thereof), such confirmation to be conclusively evidenced by the execution
and delivery by the Lessee or its authorized  representative  of the Certificate
of Delivery and Acceptance,  as modified by the  Administrative  Agent, (ii) the
Lessee shall cause to be delivered to the Owner  Trustee (or its  designee)  all
title transfer  documents which are legally  sufficient to evidence the purchase
and the transfer of good and  marketable  legal title in such Units to the Owner
Trustee and (iii) the Owner  Trustee  shall,  pursuant to the Lease,  lease such
Units  delivered  on such  Commencement  Date  to the  Lessee,  and the  Lessee,
pursuant to the Lease, shall accept delivery of such Units under the Lease (such
lease,  delivery and acceptance of such Units under the Lease being conclusively
evidenced by the execution and delivery by the Lessee and the Owner Trustee of a
Lease Schedule to the Lease (as modified by the Administrative Agent) concerning
such Units so delivered).  Each of the Lessee,  the Holders,  the Owner Trustee,
the  Lenders  and the  Administrative  Agent  hereby  agree to take all  actions
required to be taken by such party in connection  therewith and pursuant to this
Section 2.3(f).  Upon the  Administrative  Agent's  request,  the Lessee and the
Owner Trustee agree promptly to execute and deliver to the Administrative  Agent
a new Certificate of Acceptance and Delivery and a new Lease Schedule revised to
reflect the deletion of Units from the original  Certificate  of Acceptance  and
Delivery and Lease Schedule by the Administrative Agent.

    2.4 Directions to Owner Trustee and Administrative Agent; Satisfaction of
                                   Conditions.

     (a) Each Holder  agrees  that the making  available  to the  Administrative
Agent on each  applicable  Commencement  Date of its  respective  portion of the
Aggregate  Holder  Funded  Amount for the Units  delivered on the  corresponding
Commencement  Date  in  accordance  with  the  terms  of  this  Section  2 shall
constitute  the direction of such Holder to the Owner Trustee,  without  further
act,  authorization and direction by such Holder to the Owner Trustee,  subject,
on such Commencement  Date, to the conditions set forth in Section 4 having been
fulfilled to the satisfaction of such Holder or waived by the Required  Holders,
to take the actions  specified in this  Agreement and the Trust  Agreement  with
respect to the Units on such

                                       -6-

<PAGE>




Commencement Date and the corresponding  Commencement  Date. Such Holder further
agrees that the making available to the Administrative  Agent on each applicable
Commencement  Date of its  respective  portion of the  Aggregate  Holder  Funded
Amount  for  the  Units  delivered  on the  corresponding  Commencement  Date in
accordance  with the terms of this Section 2 shall  constitute (i) the direction
of such Holder to the Administrative  Agent to release to each applicable Seller
or the Lessee (upon its request) its respective  portion of the Aggregate Holder
Funded  Amount  with  respect  to  the  Units  delivered  on  the  corresponding
Commencement  Date and (ii) the agreement of such Holder,  without  further act,
notice or  confirmation,  that all conditions set forth in Section 4 were either
met to the satisfaction of such Holder or, if not so met, were waived by it with
respect to the Units; provided, notwithstanding the foregoing, such Holder shall
not be deemed  (pursuant to the foregoing  provisions)  to have waived its right
after such  Commencement  Date to require the satisfaction of any such condition
for which the Lessee was  responsible  unless the  Required  Holders  shall have
given the Lessee an express written waiver with respect to any such condition.

     (b) Each Lender  agrees  that the making  available  to the  Administrative
Agent of its  respective  portion of the Aggregate  Lender Funded Amount for the
Units  delivered on each  applicable  Commencement  Date in accordance  with the
terms of this  Section 2 shall  constitute  the  direction of such Lender to the
Administrative  Agent, without further act,  authorization and direction by such
Lender to the Administrative  Agent,  subject, on such Commencement Date, to the
conditions set forth in Section 4 having been fulfilled to the  satisfaction  of
such Lender or waived by the Required Lenders,  to take the actions specified in
this  Agreement  and the  Loan  Agreement  with  respect  to the  Units  on such
Commencement  Date. Such Lender further agrees that the making  available to the
Administrative  Agent on each  applicable  Commencement  Date of its  respective
portion of the Aggregate  Lender  Funded  Amount for the Units  delivered on the
corresponding  Commencement  Date in accordance with the terms of this Section 2
shall constitute (i) the direction of such Lender to the Administrative Agent to
release  to  each  applicable  Seller  or the  Lessee  (upon  its  request)  its
respective  portion of the  Aggregate  Lender  Funded Amount with respect to the
Units delivered on the corresponding Commencement Date and (ii) the agreement of
such Lender,  without further act, notice or  confirmation,  that all conditions
set forth in Section 4 were either met to the satisfaction of such Lender or, if
not  so  met,   were  waived  by  it  with  respect  to  the  Units;   provided,
notwithstanding the foregoing,  such Lender shall not be deemed (pursuant to the
foregoing  provisions) to have waived its right after such  Commencement Date to
require  the  satisfaction  of any such  condition  for  which  the  Lessee  was
responsible  unless the Required  Lenders shall have given the Lessee an express
written waiver with respect to any such condition.

                               2.5 Expenses; Fees.

     (a) Subject to the provisions of Section  2.5(b),  the Lessee agrees to pay
when due the reasonable fees, costs and expenses (including, without limitation,
reasonable legal fees and expenses) of the Owner Trustee, the initial Holder and
the   Administrative   Agent  incurred  in  connection  with  the   negotiation,
documentation and closing of the Overall Transaction and the

                                       -7-

<PAGE>




recording,  registration and filing of documents from time to time in connection
with the Overall  Transaction  ("Transaction  Costs").  In addition,  the Lessee
agrees to pay as Supplemental  Rent (i) all reasonable  fees, costs and expenses
(including, without limitation, reasonable legal fees and expenses) of the Owner
Trustee and the  Administrative  Agent from time to time in connection  with any
lien searches and UCC financing  statements  (including  preparation  and filing
costs) made in connection  with  Equipment  leased  hereunder  after the Closing
Date,  (ii)  all  fees,  costs  and  expenses   (including  without  limitation,
reasonable legal fees and expenses) of the Owner Trustee, the initial Holder and
the Administrative  Agent, and if a Default or Event of Default has occurred and
is  continuing,  all fees,  costs and expenses  (including  without  limitation,
reasonable  legal fees and expenses) of all other Holders and the Lenders,  from
time to time in connection with (A) any supplements,  amendments,  modifications
or  alterations of any of the Operative  Agreements  (other than with respect to
such supplements,  amendments,  modifications,  waivers or alterations requested
solely by parties to this  Agreement  other  than the Lessee  regarding  matters
solely  for the  benefit  of such  parties,  in  which  case  each  other  party
requesting such supplement, amendment, modification or alteration shall bear its
own fees, costs and expenses  associated with such matter),  (B) any enforcement
action,  preservation  of rights,  or exercise  of  remedies  with regard to the
Operative Agreements or the Overall Transaction,  and (C) any disposition of any
Unit,  (iii) all fees payable to the Owner Trustee in accordance  with the Owner
Trustee  Fee  Schedule,  (iv)  the  ongoing  reasonable  out-of-pocket  fees and
expenses of the Owner Trustee (including,  without limitation,  reasonable legal
fees and expenses of the Owner Trustee) under the Operative Agreements,  (v) the
reasonable  fees, costs and expenses of any separate Owner Trustee or co-trustee
appointed  pursuant to the Trust Agreement as a result of any requirement of Law
or if otherwise required by any Operative Agreement or if requested or consented
to by the Lessee and (vi) the  Administrative  Agent's Fee payable in accordance
with the Fee Letter.  The Lessee also agrees to pay as Supplemental  Rent on the
respective due date therefor from time to time the Commitment Fee.

     (b) If the  transactions  contemplated  hereby are not  consummated for any
reason, the Lessee shall pay all Transaction Costs.

     (c) Notwithstanding the foregoing provisions of this Section 2.5, except as
specifically  provided in the  Operative  Agreements,  the Lessee  shall have no
liability  for any costs or  expenses  relating to any  voluntary  transfer by a
Holder  of a  Certificate  or by a  Lender  of a Note  (other  than  during  the
occurrence  and  continuation  of a Lease  Event of  Default).  No such costs or
expenses shall  constitute  Transaction  Costs, and the Lessee will not have any
obligation  with  respect  to the costs  and  expenses  resulting  from any such
transfer, whenever occurring.


                   SECTION 3. REPRESENTATIONS AND WARRANTIES

            3.1 Representations and Warranties of the Owner Trustee.


                                       -8-

<PAGE>




     The  Owner  Trustee,  both  in its  individual  capacity  and as the  Owner
Trustee,  represents  and  warrants  to the  other  parties  to this  Agreement,
notwithstanding  the  provisions of Section 9.9 or any similar  provision in any
other Operative Agreement, that, as of the date hereof:

     (a) The Owner Trustee,  in its individual  capacity,  is a national banking
association  duly organized and validly existing in good standing under the Laws
of the United  States of America,  has full power and  authority to carry on its
business  as now  conducted  and to  enter  into  and  perform  its  obligations
hereunder  and  under the  Trust  Agreement  and  (assuming  due  authorization,
execution and delivery of the Trust  Agreement by the Holder) has full power and
authority,  as the Owner Trustee or, to the extent expressly  provided herein or
therein, in its individual  capacity,  to enter into and perform its obligations
under each of the Owner Trustee Agreements.

     (b) The Owner Trustee,  in its individual  capacity,  has duly  authorized,
executed and delivered the Trust Agreement and (assuming the due  authorization,
execution  and delivery of the Trust  Agreement by the Holder) the Owner Trustee
in its trust  capacity and, to the extent  expressly  provided  therein,  in its
individual  capacity,  has duly  authorized,  executed and delivered each of the
other Owner Trustee  Agreements to be delivered as of the Closing Date;  and the
Owner Trustee  Agreements each constitute or when entered into will constitute a
legal,  valid and binding  obligation of the Owner  Trustee,  in its  individual
capacity to the extent such Owner Trustee Agreements relate to the Owner Trustee
in its individual capacity, enforceable against it in its individual capacity in
accordance  with its terms  except  as the same may be  limited  by  bankruptcy,
insolvency,  reorganization,  moratorium or similar Laws affecting the rights of
creditors generally and by general principles of equity.

     (c) Assuming  the due  authorization,  execution  and delivery of the Trust
Agreement  by the  Holders  and  each  of the  Owner  Trustee  Agreements  to be
delivered as of the Closing Date by each of the other parties  thereto,  each of
the Owner Trustee Agreements to which it is a party constitutes, or when entered
into  will  constitute,  a legal,  valid  and  binding  obligation  of the Owner
Trustee,  enforceable  against the Owner Trustee,  in accordance with its terms,
except  as   enforceability   may  be   limited   by   bankruptcy,   insolvency,
reorganization,  moratorium  or other  similar  Laws  affecting  the  rights  of
creditors generally and by general principles of equity.

     (d)  Neither  the  execution  and  delivery  by the Owner  Trustee,  in its
individual  capacity or as the Owner  Trustee,  as the case may be, of the Owner
Trustee Agreements, nor the consummation by the Owner Trustee, in its individual
capacity or as the Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby,  nor the compliance by the Owner Trustee, in its
individual capacity or as the Owner Trustee, as the case may be, with any of the
terms and  provisions  hereof and  thereof,  (i)  requires  or will  require any
approval of its stockholders,  or approval or consent of any trustees or holders
of any  indebtedness  or obligations of it in its individual  capacity,  or (ii)
violates or will violate its organizational  documents or bylaws, or contravenes
or will contravene any provision of, or constitutes or will constitute a

                                       -9-

<PAGE>




default  under,  or  results or will  result in any  breach  of, any  indenture,
mortgage,  chattel mortgage, deed of trust, conditional sale contract, bank loan
or credit agreement, license or other agreement or instrument to which the Owner
Trustee  in its  individual  capacity  is a party or by which  it is  bound,  or
contravenes or will contravene any Law,  governmental  rule or regulation of the
State of Utah or of the United States of America  governing the banking or trust
powers of the Owner Trustee,  or any judgment or order  applicable to or binding
on it.

     (e)  There  are no  Taxes  payable  by the  Owner  Trustee,  either  in its
individual capacity or as the Owner Trustee, imposed by the State of Utah or any
political  subdivision  thereof in connection with the execution and delivery by
the Owner Trustee in its individual capacity of the Trust Agreement, and, in its
individual  capacity  or as the  Owner  Trustee,  as the  case  may be,  of this
Agreement  or the other  Owner  Trustee  Agreements  solely  because  the Owners
Trustee in its individual  capacity is a national  banking  association with its
principal place of business in Salt Lake City, Utah and performs  certain of its
duties as the Owner Trustee in the State of Utah; and there are no Taxes payable
by the Owner Trustee, in its individual capacity or as the Owner Trustee, as the
case may be, imposed by the State of Utah or any political  subdivision  thereof
in connection with the acquisition of its interest in the Equipment  (other than
franchise  or other  Taxes  based  on or  measured  by any fees or  compensation
received by the Owner  Trustee for  services  rendered  in  connection  with the
transactions  contemplated  hereby)  solely  because  the Owner  Trustee  in its
individual  capacity is a national banking  association with its principal place
of business in Salt Lake City,  Utah and  performs  certain of its duties as the
Owner Trustee in the State of Utah.

     (f) There  are no  pending  or, to its  knowledge,  threatened  actions  or
proceedings  against the Owner Trustee,  either in its individual capacity or as
the Owner Trustee,  before any court or administrative agency which individually
or in the aggregate,  if determined  adversely to it, would materially adversely
affect the ability of the Owner Trustee,  in its  individual  capacity or as the
Owner Trustee,  as the case may be, to perform its  obligations  under the Trust
Agreement or the other Owner Trustee Agreements.

     (g) Its chief executive  office,  principal place of business and the place
where its records concerning the Equipment and all its interest in, to and under
all documents  relating to the Trust Estate are located at 79 South Main Street,
Salt Lake City, Utah 84111.

     (h) No consent,  approval,  order or authorization of, giving of notice to,
or  registration  with,  or taking of any other  action in respect  of, any Utah
state or local  governmental  authority or agency or any United  States  federal
governmental  authority or agency  regulating the banking or trust powers of the
Owner  Trustee,  in its individual  capacity,  is required for the execution and
delivery  of, or the  carrying  out by,  the  Owner  Trustee  in its  individual
capacity or as the Owner Trustee, as the case may be, of any of the transactions
contemplated  hereby or by the  Trust  Agreement  or of any of the  transactions
contemplated by any of the other Owner Trustee  Agreements,  other than any such
consent, approval, order, authorization,  registration,  notice or action as has
been duly obtained, given or taken.

                                      -10-

<PAGE>




    3.2 Representations and Warranties of the Lessee as of the Closing Date.

     The Lessee  represents  and warrants to the other parties to this Agreement
that, as of the Closing Date:

     (a)  Each  of  the  Lessee  and  its  Subsidiaries  is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of its  incorporation,  is duly qualified to transact  business in
every jurisdiction  where, by the nature of its business,  such qualification is
necessary,   and  has  all  corporate  powers  and  all  governmental  licenses,
authorizations,  consents and approvals required to carry on its business as now
conducted,  except  where the  failure to so qualify  or obtain  such  licenses,
authorizations,  consents or approvals could not be reasonably  expected to have
or cause a Material Adverse Effect.

     (b)  The  execution,  delivery  and  performance  by  the  Lessee  of  this
Agreement,  the Lease, and the other Operative Agreements to which it is a party
(i) are within the Lessee's corporate powers,  (ii) have been duly authorized by
all necessary corporate action, and, except for such Operative  Agreements which
are to be delivered at subsequent  Commencement  Dates,  accepted and delivered,
(iii)  require no action by or in respect of or filing  with,  any  governmental
body, agency or official, (iv) do not contravene, or constitute a default under,
any provision of applicable Law or of the articles of  incorporation  or by-laws
of the  Lessee  or,  to the  best of the  Lessee's  knowledge,  of any  material
agreement,  judgment, injunction, order, decree or other instrument binding upon
the Lessee or any of its Subsidiaries,  and (v) do not result in the creation or
imposition of any Lien on any asset of the Lessee or any of its Subsidiaries.

     (c) This Agreement and the Lease constitute  valid and binding  obligations
of the Lessee  enforceable in accordance with their  respective  terms,  and the
other Operative Agreements,  when executed and delivered in accordance with this
Agreement and the Lease,  will constitute  valid and binding  obligations of the
Lessee enforceable in accordance with their respective terms,  provided that the
enforceability  hereof and thereof is subject in each case to general principles
of equity and to  bankruptcy,  insolvency and similar laws affecting the enforce
ment of creditors' rights generally.

     (d)  The  audited  balance  sheet  of  the  Lessee  and  its   Consolidated
Subsidiaries  as of December  29,  1996,  and the related  consolidated  audited
statements of income,  shareholders' equity and cash flows of the Lessee and its
Consolidated  Subsidiaries for the Fiscal Year then ended,  copies of which have
been  delivered  to  each of the  Holders  and the  Lenders,  and the  unaudited
financial  statements of the Lessee and its Consolidated  Subsidiaries as of and
for the Fiscal Quarter ended June 29, 1997,  copies of which have been delivered
to each of the Holders and the Lender,  fairly present, in conformity with GAAP,
the financial  position of the Lessee and its  Consolidated  Subsidiaries  as of
such dates and the  results  of its  operations  and cash flow for such  periods
stated;  provided,  that,  (i) the interim  statements  remain subject to normal
year-end audit  adjustments and (ii) during the term of this Agreement after the
Closing  Date,  future  rep  resentations  as to the  matters  set forth in this
sentence shall be deemed to refer to the most recent

                                      -11-

<PAGE>




financial  statements  delivered  pursuant to Sections 5.1(a) and 5.1(b).  Since
June 29, 1997, there has been no event,  act,  condition or occurrence having or
which could be expected to have a Material  Adverse  Effect,  except for matters
disclosed in the quarterly financial statements referred to above; provided that
during  the  term  of  this  Agreement   following  the  Closing  Date,   future
representations  as to  matters  set forth in this  sentence  shall be deemed to
refer to the last day of the most recent audited financial  statements delivered
by the Lessee pursuant to Section 5.1(a).

     (e) There is no action,  suit or proceeding pending, or to the knowledge of
the  Lessee  threatened,   against  or  affecting  the  Lessee  or  any  of  its
Subsidiaries  before any court or arbitrator or any governmental body, agency or
official which could have a Material Adverse Effect or which in any manner draws
into  question  the  validity  of, or could  impair the ability of the Lessee to
perform its obligations  under,  this Agreement,  the Lease, or any of the other
Operative Agreements.

     (f) The  Lessee  and each  Subsidiary  are in  compliance  in all  material
respects with applicable Laws (including, but not limited to, ERISA) and similar
requirements of Gov ernmental Authorities (including, but not limited to, PBGC),
noncompliance  with which could have or cause a Material Adverse Effect,  except
where the necessity of such  compliance is being contested in good faith through
appropriate  proceedings.  To the best of the Lessee's knowledge, (i) the Lessee
and  each  member  of the  Controlled  Group  have  fulfilled  their  respective
obligations  under  the  minimum  funding  standards  of ERISA and the Code with
respect to each Plan and are in  compliance  in all material  respects  with the
presently applicable provisions of ERISA and the Code, and have not incurred any
liability  to the PBGC or a Plan under Title IV of ERISA;  and (ii)  neither the
Lessee nor any member of the  Controlled  Group is or ever has been obligated to
contribute to any Multiemployer Plan.

     (g) There have been filed on behalf of the Lessee and its  Subsidiaries all
federal,  state and local income,  excise,  property and other tax returns which
are  required to be filed by them and all taxes due  pursuant to such returns or
pursuant  to any  assessment  received  by or on  behalf  of the  Lessee  or any
Subsidiary have been paid,  except for amounts that either are immaterial or are
being  disputed  in good  faith and by  appropriate  proceedings.  The  charges,
accruals and reserves on the books of the Lessee and its Subsidiaries in respect
of taxes or other  governmental  charges  are,  in the  opinion  of the  Lessee,
adequate.

     (h) As of the Closing Date, the Lessee has no Subsidiaries,  except for the
Subsidiaries  set  forth  on  Schedule  3.2(h),  all of which  are  Consolidated
Subsidiaries.

     (i)  Neither the Lessee nor any  Subsidiary  is a "holding  company,"  or a
"subsidiary  company" of a "holding  company," or an  "affiliate"  of a "holding
company"  or of a  "subsidiary  company"  of a "holding  company,"  or a "public
utility,"  within the meaning of the Public Utility Holding Company Act of 1935,
as amended;  or a "public  utility" within the meaning of the Federal Power Act,
as  amended;  or  an  "investment  company"  or a  company  "controlled"  by  an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended;  or an  "investment  adviser"  within the meaning of the  Investment
Advisers Act of 1940, as amended.

     (j) The Lessee owns Properties, or interests in Properties,  sufficient for
the conduct of its business;  and none of such Properties is subject to any Lien
except as permitted in Section 5.7.

     (k) Neither the Lessee nor any of its  Subsidiaries  is in default under or
with respect to any agreement,  instrument or undertaking to which it is a party
or by  which it or any of its  property  is bound  which  could  have or cause a
Material Adverse Effect. No Lease Default or Lease Event of Default has occurred
and is continuing and no Event of Loss has occurred.

     (l) All written information and, to the best of the Lessee's knowledge, all
other information,  heretofore furnished by the Lessee to the Owner Trustee, any


                                      -12-
<PAGE>

Holder, any Lender or the Administrative  Agent for purposes of or in connection
with this  Agreement  or any  transaction  contemplated  hereby is, and all such
information  hereafter furnished by the Lessee to the Owner Trustee, any Holder,
any Lender or the Administrative  Agent will be, true,  accurate and complete in
every material respect or based on reasonable  estimates on the date as of which
such  information is stated or certified.  The Lessee has disclosed to the Owner
Trustee,  the Holders,  the Lenders and the Administrative  Agent in writing any
and all facts  which  could  reasonably  be expected to have or cause a Material
Adverse Effect.

     (m) To the best of the Lessee's  knowledge:  (i) neither the Lessee nor any
Subsidiary is subject to any Environmental Liability which could have or cause a
Material  Adverse  Effect,  and neither the Lessee nor any  Subsidiary  has been
designated  as a potentially  responsible  party under CERCLA or under any state
statute  similar to CERCLA;  (ii) none of the  Properties  located in the United
States,  owned by either the Lessee or a Subsidiary,  has been identified on any
current or proposed (A) National  Priorities  List under 40 C.F.R.  ss. 300, (B)
CERCLIS  list or (C) any list arising  from a state  statute  similar to CERCLA;
(iii)  no  Hazardous   Materials   have  been  or  are  being  used,   produced,
manufactured,  processed,  treated,  recycled,  generated,  stored, disposed of,
managed  or  otherwise  handled  at, or shipped  or  transported  to or from the
Properties or are  otherwise  present at, in or under the  Properties,  owned or
operated by either the Lessee or a  Subsidiary,  or at or from any adjacent site
or  facility,   except  for  Hazardous  Materials  such  as  cleaning  solvents,
pesticides and other materials used, produced, manufactured, processed, treated,
recycled,  generated,  stored, disposed of, managed, or otherwise handled in the
ordinary  course of business in  compliance  with all  applicable  Environmental
Requirements;  and (iv) the Lessee and its  Subsidiaries  are in compliance with
all  Environmental  Requirements  in  connection  with  the  ownership,  use and
operation of the  Properties and the Lessee's and such  Subsidiary's  respective
businesses.

     (n) All Capital Stock, debentures, bonds, notes and all other securities of
the Lessee and its Subsidiaries presently issued and outstanding are validly and
properly  issued in ac cordance  with all  applicable  laws,  including  but not
limited  to,  the  "Blue  Sky" laws of all  applicable  states  and the  federal
securities laws.

     (o) Neither the Lessee nor any of its Subsidiaries is engaged  principally,
or as one of its important activities, in the business of purchasing or carrying
any  Margin  Stock,  and no part of the  proceeds  of any  Loan  will be used to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of  purchasing  or carrying any Margin  Stock,  or be used for any purpose which
violates,  or which is inconsistent with the provisions of,  Regulations G, T, U
or X.

     (p) After giving effect to the  execution  and delivery of this  Agreement,
the Lease,  and the other Operative  Agreements to which it is a party,  and the
leasing of the Equipment to Lessee under the Lease, the Lessee will be Solvent.

     (q) The Lessee and its  Subsidiaries  possess  to the extent  material  all
franchises,  certificates,  licenses,  permits  and  other  authorizations  from
governmental  and  political  subdivisions  or regulatory  authorities,  and all
patents,  trademarks,  service  marks,  trade  names,  copyrights,   franchises,
licenses and other rights that are  necessary  for  ownership,  maintenance  and
operation of any of their respective material Properties and assets, and neither
the Lessee nor any of its  Subsidiaries  is in violation of any thereof,  which,
individually  or in the  aggregate,  would  or might  have or  cause a  Material
Adverse Effect.  Without  limiting the generality of the foregoing,  and, in any
event,  the Lessee and its  Subsidiaries  possess all Franchise Rights necessary


                                      -13-

<PAGE>

for the  ownership,  operation  and  development  of its (or  their)  franchised
restaurant  business as con ducted,  or  contemplated  to be  conducted,  by the
Lessee and such  Subsidiaries,  including,  without  limitation,  in the case of
"Applebee's"  restaurants,  franchise agreements for each franchised  restaurant
location and  exclusive  development  rights for each  designated  area in which
franchised restaurants are located or contemplated to be located.

     (r) The Lessee and each of its Subsidiaries maintain adequate insurance on,
and in respect of the ownership  and  operation  of, its  Properties in at least
such amounts and against at least such risks as are usually  insured  against in
the same general area by companies of established  repute engaged in the same or
similar business.

     (s) The  principal  place of  business  and chief  executive  office of the
Lessee and the place where the Lessee  shall retain its records  concerning  the
Equipment  and all its interest in, to and under all  documents  relating to the
Trust  Estate  (i) are  located  in Morgan  County,  Georgia  and (ii) have been
located  at such  address  for no less  than the six  month  period  immediately
preceding the Closing Date.

     (t) The legal  name of the  Lessee  is (and for no less than the  five-year
period immediately preceding the Closing Date has been) "Apple South, Inc."

     (u) Each item of  Equipment  is personal  property  and is not,  and is not
intended  to be,  attached  to real  estate  in such  manner  that  any  item of
Equipment constitutes or would constitute a fixture.

     (v) The  Equipment  will (i) qualify as property  with respect to which the
depreciation  deductions provided by Code Section 167(a) are determined pursuant
to Code Section 168 using the applicable  depreciation  method set forth in Code
Section  168(b)(1)  and the  applicable  convention  described  in Code  Section
168(d)(4);  (ii)  qualify as  "five-year  property"  within the  meaning of Code
Section  168(d)(1);  and (iii)  have a tax basis  equal to one  hundred  percent
(100%) of Equipment Cost (not taking into account the Transaction Costs).

    3.3 Representations and Warranties of the Lessee as of Each Commencement
                                      Date.

     The Lessee  represents  and warrants to the other parties to this Agreement
that,   as  of  each   Commencement   Date   (except  to  the  extent  any  such
representations and warranties are waived in writing by the Required Holders and
Required Lenders as of such Commencement Date):

     (a) The  representations  and warranties  given by the Lessee under Section
3.2 shall be true and accurate as of each such Commencement Date.

     (b) Upon (i) the filing of the Uniform Commercial Code financing statements
(which  have been  prepared  by the  Administrative  Agent and  reviewed  by the
Lessee)  in the  filing  offices  referenced  on such  Uniform  Commercial  Code
financing  statements,  and (ii) the  execution  and delivery of the  applicable
Lease  Schedule  regarding  the  Equipment  accepted  under  the  Lease  on such
Commencement  Date,  all  filings  and other  actions  necessary  or required to
establish and perfect the right, title and interest of the Owner Trustee (and to
establish  good and marketable  legal title in favor of the Owner Trustee,  free
and clear of all Liens,  except  Permitted Liens) in and to the Equipment funded
on the applicable Commencement Date and the remainder of the Trust Estate and to
perfect the Lien of the  Administrative  Agent on the Collateral  will have been
made on or prior to such Commencement  Date, and the Loan Agreement will on such
Commencement  Date  create a valid  and  perfected  first  priority  Lien on the
Collateral, subject only to any Lessor's Liens and Permitted Liens.

     (c) On the applicable  Commencement  Date all sales,  use or transfer Taxes
due and payable upon the purchase of the  Equipment by the Owner Trustee on each
applicable  Commencement  Date and on the lease  thereof to the Lessee will have
been paid or the Lessee shall be liable for the payment thereof.

     (d) The  Units  accepted  under  the  Lease on such  Commencement  Date are
adequate to operate in commercial service and comply with all Laws governing the
service in which such Units are being placed by the Lessee;  each Unit specified
in Annex 1 to the applicable

                                      -14-

<PAGE>




Lease  Schedule  has been  delivered  directly by the  applicable  Seller to the
Lessee, and the Lessee is unaware of any defects in or damage to such Units.

     (e) The conveyance of the Units effected on such  Commencement Date are not
void or voidable under any applicable Law.

     (f) The Lessee is in  compliance  with all  applicable  Environmental  Laws
relating to the Equipment  accepted under the Lease on such  Commencement  Date,
including,   without  limitation,   the  ownership,  use,  transport,   storage,
condition, maintenance and operation of the Equipment.

     (g) The Lessee has received no service of any writs, injunctions,  decrees,
orders or judgments  outstanding  against the Lessee  relating to the  Equipment
accepted  under  the  Lease  on  such  Commencement  Date,  including,   without
limitation, the ownership, use, transport,  storage,  condition,  maintenance or
operation of the Equipment resulting from a material violation of any applicable
Environmental  Law,  and  there  are  no  material   lawsuits,   proceedings  or
investigations  under  any  applicable  Environmental  Law  pending  or,  to the
Lessee's  knowledge,  threatened  against the Lessee  relating to the ownership,
use, maintenance or operation of the Equipment.

     (h) Since the date of the financial statements referenced in Section 5.1(a)
or Section  5.1(b) most  recently  provided by the Lessee to the  Administrative
Agent,  there has been no  change  in the  financial  condition,  operations  or
business of the Lessee and its Subsidiaries,  taken as a whole, which would give
rise to a Material Adverse Effect.

     (i) The Equipment  accepted on such Commencement Date has an Equipment Cost
as set forth in the Certificate of Acceptance.

                         SECTION 4. CLOSING CONDITIONS

        4.1 Conditions Precedent to the Obligations of Parties other than
                         the Lessee on the Closing Date.

     The  obligation  of each of the parties  hereto  (other than the Lessee) to
comply  with  its  obligations  under  Article  2  and  to  participate  in  the
transactions  contemplated  hereby  on the  Closing  Date  shall be  subject  to
satisfaction  of the following  conditions  (and, to the extent such  conditions
precedent require the delivery of any agreement,  document,  instrument, opinion
or any other item, such shall be in form and substance  reasonably  satisfactory
to the Owner Trustee, the Holders, the Lenders and the Administrative  Agent) on
or prior to the Closing Date,  except that (i) the  obligation of any such party
shall not be subject to such party's own  performance or compliance and (ii) the
conditions specified below as being only for the benefit of a specified party or
parties need be fulfilled only to the  satisfaction of, or waived by, such party
or parties:


                                      -15-

<PAGE>




     (a) (i) Each of the  Operative  Agreements  to be delivered as of such date
shall have been duly authorized,  executed and delivered by the parties thereto,
shall be in full force and effect and executed  counterparts  of each shall have
been  delivered  to the  Administrative  Agent or its designee (on behalf of the
Owner  Trustee,  the Holders and the  Lenders) on or before the Closing Date and
promptly thereafter,  the Administrative Agent shall cause executed counterparts
of each to be  delivered  to the Owner  Trustee,  the  Holders  and the  Lenders
(except that the executed  Certificates  shall be delivered  only to the Holders
and executed  Notes shall be delivered  only to the Lenders),  and (ii) no event
shall have  occurred and be  continuing  that  constitutes  a Lease Default or a
Lease Event of Default.

     (b) (i) The Lessee shall have caused the original chattel paper counterpart
of the Lease to be duly delivered to the Administrative  Agent, and (ii) Uniform
Commercial  Code  financing  statements and other  documents  pertaining to Lien
perfection  shall  have been  filed in such  places as the Owner  Trustee or the
Administrative  Agent may reasonably request for (A) the protection of the Owner
Trustee's  and  Administrative  Agent's  interest  in  the  Lease  and  (B)  the
termination of any existing Liens against the Lease.

     (c) The  representations  and warranties of the parties hereto contained in
Section 3 shall be true and  correct  with the same effect as though made on and
as of said  date,  and the  execution  and  delivery  of  this  Agreement  shall
constitute  a  certification  by each  party  giving  such  representations  and
warranties as to the accuracy of the representations and warranties in Section 3
as of the Closing Date.

     (d) The Owner  Trustee,  the  Holders,  the Lenders and the  Administrative
Agent  shall  have  received  the  favorable  written  opinion  of  each  of (i)
Kilpatrick  Stockton  L.L.P.,  counsel  for the Lessee  and (ii) Ray,  Quinney &
Nebeker, counsel for the Owner Trustee.

     (e) The Lessee shall deliver or cause to be delivered to the Owner Trustee,
the Holders, the Lenders and the Administrative Agent the following, each unless
otherwise noted dated the Closing Date, (i) good standing  certificates from its
jurisdiction  of  incorporation,  the  jurisdiction  of its  principal  place of
business and each other  jurisdiction in which the failure to qualify may have a
Material  Adverse  Effect,  each dated a recent date prior to the Closing  Date,
(ii)  a  certified  copy  of its  articles  of  incorporation,  bylaws  and  the
resolutions of its Board of Directors  approving and  authorizing the execution,
delivery and  performance  of this  Agreement,  the Lease,  and all other Lessee
Agreements,  certified  as of the Closing  Date by its  corporate  secretary  or
assistant  secretary as being in full force and effect without  modification  or
amendment,  and (iii)  signature  and  incumbency  certificates  of its officers
executing this Agreement, the Lease, and all other Lessee Agreements.

     (f) The  Owner  Trustee  shall  deliver  or  cause to be  delivered  to the
Holders,  the Lenders and the  Administrative  Agent the following,  each unless
otherwise noted dated the Closing Date, (i) a good standing certificate from the
Office of the  Comptroller  of the  Currency  dated a recent  date  prior to the
Closing Date (ii) a certified copy of its articles of association,

                                      -16-

<PAGE>




bylaws and the  resolutions of its Board of Directors  approving and authorizing
the execution,  delivery and performance of the Operative Agreements to which it
is a party,  certified as of the Closing Date by an authorized  officer as being
in full force and effect without modification or amendment,  and (iii) signature
and incumbency  certificates of its officers executing the Operative  Agreements
to which it is a party.

     (g)  No  action  or  proceeding   shall  have  been  instituted  nor  shall
governmental  action be threatened  before any court or Governmental  Authority,
nor shall any order,  judgment  or decree  have been  issued or  proposed  to be
issued by any court or  Governmental  Authority at the time of the Closing Date,
to set aside,  restrain,  enjoin or prevent the completion and  consummation  of
this Agreement or the transactions contemplated hereby.

     (h)  All  approvals  and  consents  of  any  trustees  or  holders  of  any
indebtedness  or  obligations of the Lessee which are required to be obtained on
or prior to the Closing Date in connection with the transactions contemplated by
the Operative Agreements, shall have been duly obtained and be in full force and
effect.

     (i) All actions,  if any,  required to have been taken by any  Governmental
Authority on or prior to the Closing Date in  connection  with the  transactions
contemplated  by  the  Operative  Agreements  shall  have  been  taken  by  such
Governmental   Authority,   and  all  orders,  permits,   waivers,   exemptions,
authorizations  and  approvals of such  entities  required to be in effect on or
prior to the Closing Date in connection  with the  transactions  contemplated by
this Agreement shall have been issued,  and all such orders,  permits,  waivers,
exemptions,  authorizations  and approvals shall be in full force and effect, on
the Closing Date.

     (j) The Administrative  Agent shall have received evidence  satisfactory to
it that the  aggregate  amount of all Fees due and payable on the  Closing  Date
have been paid.

     (k) The Owner Trustee and the Administrative Agent shall have received such
other documents, appraisals,  certificates, financing statements and other items
as any such parties may reasonably require.

    4.2 Conditions Precedent to the Obligations of the Parties other than the
                       Lessee on each Commencement Date.

     The  obligation  of each of the parties  hereto  (other than the Lessee) to
comply  with  its  obligations  under  Article  2  and  to  participate  in  the
transactions  contemplated  hereby on each Commencement Date shall be subject to
satisfaction  of the following  conditions  (and, to the extent such  conditions
precedent require the delivery of any agreement,  document,  instrument, opinion
or any other item, such shall be in form and substance  reasonably  satisfactory
to the  Owner  Trustee  and the  Administrative  Agent) on or prior to each such
Commencement Date, except that (i) the obligation of any such party shall not be
subject to such party's own  performance  or compliance  and (ii) the conditions
specified below as being only for the benefit of

                                      -17-

<PAGE>




a specified party or parties need be fulfilled only to the  satisfaction  of, or
waived by, such party or parties:

     (a)  Each  of  the  Operative   Agreements  to  be  delivered  as  of  such
Commencement Date shall have been duly authorized, executed and delivered by the
parties thereto,  shall be in full force and effect and executed counterparts of
each shall have been  delivered to the Owner Trustee,  the Holders,  the Lenders
and the  Administrative  Agent or their  counsel on or before such  Commencement
Date,  and no event shall have  occurred and be  continuing  that  constitutes a
Lease Default or a Lease Event of Default.

     (b) (i) The Lessee shall have caused the original chattel paper counterpart
of the Lease Schedule  covering the Units delivered on such Commencement Date to
be duly delivered to the  Administrative  Agent (and the Units described on such
Lease  Schedule  shall be  identical to the Units  described  in the  applicable
Certificate  of  Delivery  and  Acceptance)  and (ii)  Uniform  Commercial  Code
financing  statements and other documents  pertaining to Lien  perfection  shall
have been filed in such places as the Owner Trustee or the Administrative  Agent
may request for (A) the protection of the Owner Trustee's title to the Equipment
and  interest  in the  Lease  or the  Lien of the  Administrative  Agent  in the
Collateral and (B) the termination of any existing Liens against the Collateral.

     (c) The Owner  Trustee,  the  Holders,  the Lenders and the  Administrative
Agent shall have received Lien searches  regarding the Lessee (including without
limitation  Uniform  Commercial  Code  searches and similar  searches in foreign
jurisdictions),   Tax  Lien   searches  and  judgment   Lien  searches  in  such
jurisdictions  as such  parties  shall  determine  based on the  location of the
Equipment  and all such Liens which would  materially  impair the rights of such
parties (as determined in good faith by such parties) shall have been removed at
such time or otherwise handled in a manner satisfactory to all such parties.

     (d) The Owner  Trustee,  the  Holders,  the Lenders and the  Administrative
Agent  shall have  received  (1)  landlord  consents  and  waivers,  in form and
substance  satisfactory  to the Majority In Interest,  from the landlords at all
real  property  locations  leased by Lessee  where  Equipment  is, or as of such
applicable  Commencement Date will be, located to the extent that Lessee is able
to obtain such landlord consents and waivers after using its reasonable  efforts
to do so and (2)  commencing  on the September  30, 1998  Commencement  Date and
continuing  on  each  Commencement   Date  thereafter,   a  certificate  from  a
Responsible  Officer of the Lessee to the effect that after giving effect to the
purchase of the Units on such Commencement  Date, at least seventy percent (70%)
of the  Equipment,  based  on  the  Equipment  Cost  of all  Equipment  on  such
Commencement Date, will be located at locations either owned by Lessee or leased
by  Lessee  for which a  landlord  consent  and  waiver,  in form and  substance
satisfactory to the Majority In Interest, has been delivered.

     (e) The  Lessee  shall have  delivered  the  Certificate  of  Delivery  and
Acceptance and all related originals  invoices for such Commencement Date to the
Administrative Agent (on

                                      -18-

<PAGE>




behalf of the Owner Trustee, the Holders and the Lenders) in accordance with the
provisions of Section 2.3(b).

     (f) The  representations  and warranties of the parties hereto contained in
Section 3 shall be true and  correct  with the same effect as though made on and
as of said date, and the execution and delivery of the applicable Lease Schedule
shall constitute a certification by each party giving such  representations  and
warranties of the accuracy of the  representations and the warranties in Section
3 as of such Commencement Date.

     (g) After giving effect to the transactions  contemplated hereby, the Owner
Trustee shall have good and marketable  legal title to each Unit of Equipment to
be delivered on such  Commencement  Date, free and clear of all Liens other than
Permitted  Liens,  and the execution  and delivery of the Lease  Schedule by the
Lessee to which such Unit is applicable  shall be deemed a certification  by the
Lessee of the same.

     (h) If not previously  furnished,  the  Additionally  Insured Parties shall
have  received  certificates  of  insurance  signed  by  the  insurer  or  by an
independent insurance broker evidencing insurance coverages required pursuant to
Section 12 of the Lease.

     (i)  No  action  or  proceeding   shall  have  been  instituted  nor  shall
governmental  action be threatened  before any court or Governmental  Authority,
nor shall any order,  judgment  or decree  have been  issued or  proposed  to be
issued  by any court or  Governmental  Authority  at the time of the  applicable
Commencement Date, to set aside, restrain,  enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.

     (j) The  Administrative  Agent  (on  behalf of the  other  parties  to this
Agreement) shall have received (or shall have waived receipt of) the Certificate
of  Delivery  and  Acceptance  applicable  to such  Commencement  Date  required
pursuant to Section 2.3.

     (k) No change  shall  have  occurred  after the date of the  execution  and
delivery of this  Agreement  in  applicable  Law or  interpretations  thereof by
regulatory  authorities  that, in the opinion of either the Owner  Trustee,  any
Holder,  any Lender, the  Administrative  Agent or their counsel,  would make it
illegal  for such  party  to enter  into  any  transaction  contemplated  by the
Operative Agreements.

     (l) Each Holder shall have made  available  its  respective  portion of the
Aggregate  Holder  Funded  Amount in the amount  specified  in, and otherwise in
accordance with, Sections 2.2(a) and 2.3.

     (m)  All  approvals  and  consents  of  any  trustees  or  holders  of  any
indebtedness  or  obligations  of the Lessee  which are  required to be obtained
prior to such Commencement Date in connection with the transactions contemplated
by the Operative  Agreements  shall have been duly obtained and be in full force
and effect.

                                      -19-

<PAGE>





     (n) All actions,  if any,  required to have been taken by any  Governmental
Authority  on or  prior  to  such  Commencement  Date  in  connection  with  the
transactions  contemplated by the Operative Agreements on such Commencement Date
shall have been taken by such Governmental  Authority,  and all orders, permits,
waivers,  exemptions,  authorizations and approvals of such entities required to
be in effect  on such  Commencement  Date in  connection  with the  transactions
contemplated by this Agreement on such Commencement Date shall have been issued,
and all such orders, permits, waivers, exemptions,  authorizations and approvals
shall be in full force and effect, on such Commencement Date.

     (o) A  Certificate  of  Acceptance  with  respect to the  applicable  Units
delivered  to the Lessee,  on behalf of the Owner  Trustee on such  Commencement
Date  shall  have  been  duly  executed  and  delivered  by the  Lessee,  as the
authorized representative of the Owner Trustee.

     (p) The Owner Trustee and the Administrative Agent shall have received such
other documents,  appraisals,  certificates,  financing statements,  opinions of
counsel, and other items as any such parties may reasonably require.

  4.3 Conditions Precedent to the Obligation of the Lessee on the Closing Date.

     The  obligations  of the Lessee to enter into this  Agreement and the other
Operative  Agreements to which the Lessee is a party is subject to the following
conditions as of the Closing Date:

     (a) Each of the Operative  Agreements to be delivered as of such date shall
be  satisfactory  in form and  substance  to the Lessee and shall have been duly
authorized,  executed and delivered by the respective  party or parties  thereto
(other than the Lessee),  and an executed counterpart of each thereof shall have
been  delivered  to  the  Lessee  or  its  counsel  (except  that  the  executed
Certificates  shall be delivered only to the Holders and executed Notes shall be
delivered only to the Lenders).

     (b) The  representations  and warranties of the Owner Trustee  contained in
Section 3 shall be true and correct in all  material  respects as of the Closing
Date as though made on and as of such date,  and the  execution  and delivery of
this Agreement shall  constitute a certification  by the Owner Trustee as to the
accuracy of the  representations  and  warranties in Section 3 as of the Closing
Date.

     (c) The Lessee  shall have  received  the opinion of  counsel,  in form and
substance  reasonably  satisfactory  to  the  Lessee,  referred  to  in  Section
4.l(d)(ii).

     (d) The Notes  shall  have  been duly  issued  and  delivered  by the Owner
Trustee to the  Lenders,  and the  Certificate  shall have been duly  issued and
delivered by the Owner Trustee to the Holders, each dated the Closing Date.

                                      -20-

<PAGE>





     (e) The Owner  Trustee shall deliver or cause to be delivered to the Lessee
the following,  each unless  otherwise  noted dated the Closing Date and in form
and substance  satisfactory to the Lessee, (i) a good standing  certificate from
the Office of the  Comptroller  of the Currency dated a recent date prior to the
Closing Date, (ii) a certified copy of its articles of  association,  bylaws and
the  resolutions  of its  Board  of  Directors  approving  and  authorizing  the
execution, delivery and performance of the Operative Agreements to which it is a
party,  certified  as of the Closing Date by an  authorized  officer as being in
full force and effect without modification or amendment, and (iii) signature and
incumbency  certificates of its officers  executing the Operative  Agreements to
which it is a party.

     (f) No change  shall  have  occurred  after the date of the  execution  and
delivery of this  Agreement  in  applicable  Law or  interpretations  thereof by
regulatory authorities that, in the opinion of either the Lessee or its counsel,
would make it illegal for the Lessee to enter into any transaction  contemplated
by the Operative Agreements.

     (g) All actions,  if any,  required to have been taken by any  Governmental
Authority on or prior to the Closing Date in  connection  with the  transactions
contemplated  by the  Operative  Agreements  on the Closing Date shall have been
taken by any such  Governmental  Authority,  and all orders,  permits,  waivers,
exemptions,  authorizations  and  approvals of such  entities  required to be in
effect on the Closing Date in connection with the  transactions  contemplated by
the  Operative  Agreements  on the Closing Date shall have been issued,  and all
such orders, permits, waivers, exemptions, authorizations and approvals shall be
in full force and effect, on the Closing Date.

        4.4 Conditions Precedent to the Obligations of the Lessee on each
                               Commencement Date.

     The  obligation  of  the  Lessee  to   participate   in  the   transactions
contemplated  hereby on each  Commencement Date shall be subject to satisfaction
of the  following  conditions  (and,  to the extent  such  conditions  precedent
require the  delivery of any  agreement,  document,  instrument,  opinion or any
other item, such shall be in form and substance  reasonably  satisfactory to the
Lessee) on or prior to such Commencement Date, except that (i) the obligation of
the Lessee shall not be subject to the Lessee's own  performance  or  compliance
and (ii) the  conditions  specified  below as being  only for the  benefit  of a
specified  party or parties need be fulfilled  only to the  satisfaction  of, or
waived by, such party or parties:

     (a) Each of the Operative  Agreements to be delivered as of such date shall
be  reasonably  satisfactory  in form and substance to the Lessee and shall have
been duly authorized,  executed and delivered by the respective party or parties
thereto  (other than the Lessee),  and an executed  counterpart  of each thereof
shall have been delivered to the Lessee or its counsel.


                                      -21-

<PAGE>




     (b) The  representations  and warranties of the Owner Trustee  contained in
Section 3 shall be true and  correct  with the same effect as though made on and
as of said date, and the execution and delivery of the applicable Lease Schedule
shall  constitute a certification by the Owner Trustee as to the accuracy of the
representations and warranties in Section 3 as of such Commencement Date.

     (c)  No  action  or  proceeding   shall  have  been  instituted  nor  shall
governmental  action be threatened  before any court or Governmental  Authority,
nor shall any order,  judgment  or decree  have been  issued or  proposed  to be
issued by any court or Governmental  Authority at the time of such  Commencement
Date, to set aside, restrain,  enjoin or prevent the completion and consummation
of this  Agreement  or the  Lease or the  transactions  contemplated  hereby  or
thereby.

     (d) The Holders  shall have made  available  the  Aggregate  Holder  Funded
Amount in the amount  specified in, and otherwise in accordance  with,  Sections
2.2(a) and 2.3.

     (e) The Lenders  shall have made  available  the  Aggregate  Lender  Funded
Amount in the amount  specified in, and otherwise in accordance  with,  Sections
2.2(b) and 2.3.

     (f) After giving effect to the transactions  contemplated hereby, the Owner
Trustee shall have good and marketable  legal title to each Unit of Equipment to
be  delivered on such  Commencement  Date,  free and clear of all Liens,  except
Lessor Liens and Permitted Liens.

     (g) No change  shall  have  occurred  after the date of the  execution  and
delivery of this  Agreement  in  applicable  Law or  interpretations  thereof by
regulatory authorities that, in the opinion of either the Lessee or its counsel,
would make it illegal for the Lessee to enter into any transaction  contemplated
by the Operative Agreements.

     (h) All actions,  if any,  required to have been taken by any  Governmental
Authority  on or  prior  to  such  Commencement  Date  in  connection  with  the
transactions  contemplated by the Operative Agreements on such Commencement Date
shall  have  been  taken  by any such  Governmental  Authority  and all  orders,
permits,  waivers,  exemptions,  authorizations  and  approvals of such entities
required  to be in  effect  on such  Commencement  Date in  connection  with the
transactions  contemplated by the Operative Agreements on such Commencement Date
shall have been  issued,  and all such  orders,  permits,  waivers,  exemptions,
authorizations  and  approvals  shall  be in  full  force  and  effect,  on such
Commencement Date.


                       SECTION 5. COVENANTS OF THE LESSEE

                                5.1 Information.

           The Lessee will deliver to each of the Holders and Lenders:


                                      -22-

<PAGE>




     (a) as soon as available and in any event within ninety (90) days after the
end of each Fiscal  Year,  a  consolidated  balance  sheet of the Lessee and its
Consolidated  Subsidiaries  as of the end of such  Fiscal  Year and the  related
consolidated statements of income,  shareholders' equity and cash flows for such
Fiscal Year,  setting forth in each case in comparative form the figures for the
previous  fiscal  year,  all  audited  and  reported  on by  independent  public
accountants of nationally  recognized  standing,  with such report to be free of
any material  exceptions and  qualifications;  provided  that,  the  information
required by this paragraph may be satisfied by delivery of information  pursuant
to Section 5.1(e) or Section 5.1(f);

     (b) As soon as available  and in any event within fifty (50) days after the
end of each of the first  three (3)  Fiscal  Quarters  of each  Fiscal  Year,  a
consolidated balance sheet of the Lessee and its Consolidated Subsidiaries as of
the end of such Fiscal Quarter and the related statement of income and statement
of cash flows for such  quarter  and for the portion of the Fiscal Year ended at
the end of such  quarter,  setting  forth in each case in  comparative  form the
figures  for the  corresponding  quarter  and the  corresponding  portion of the
previous Fiscal Year, all certified (subject to normal year-end  adjustments) as
to fairness of presentation, GAAP and consistency by the chief financial officer
of the Lessee;  provided, that the information required by this paragraph may be
satisfied  by delivery  of  information  pursuant  to Section  5.1(e) or Section
5.1(f);

     (c)  Simultaneously  with the delivery of each set of financial  statements
referred to in Sections 5.1(a) and 5.1(b),  a certificate,  substantially in the
form of  Attachment  B (a  "Compliance  Certificate"),  of the  chief  financial
officer of the Lessee (i) setting  forth in reasonable  detail the  calculations
required to establish whether the Lessee was in compliance with the requirements
of Sections 5.3, 5.4, 5.5, 5.6 and 5.11 on the date of such financial statements
and  (ii)  stating  whether  any  Lease  Default  exists  on the  date  of  such
certificate  and, if any Lease  Default then exists,  setting  forth the details
thereof  and the  action  which the  Lessee is taking or  proposes  to take with
respect thereto;

     (d) Promptly  (and, in any event,  within five (5) Business Days) after the
Lessee becomes aware of the  occurrence of any Lease  Default,  a certificate of
the chief financial  officer of the Lessee setting forth the details thereof and
the action which the Lessee is taking or pro poses to take with respect thereto;

     (e) Promptly  upon the mailing  thereof to the  shareholders  of the Lessee
generally,  copies of all financial statements,  reports and proxy statements so
mailed;

     (f) Promptly upon the filing thereof, copies of all registration statements
and annual,  quarterly or monthly reports which the Lessee shall have filed with
the Securities and Exchange Commission;

     (g) If and when any member of the Controlled Group (i) gives or is required
to give notice to the PBGC of any  reportable  event (as defined in Section 4043
of ERISA) with

                                      -23-

<PAGE>




respect to any Plan which might  constitute  grounds for a  termination  of such
Plan under Title IV of ERISA, or knows that the plan  administrator  of any Plan
has given or is required to give notice of any such reportable  event, a copy of
the notice of such  reportable  event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal  liability under Title IV
of ERISA, a copy of such notice;  or (iii)  receives  notice from the PBGC under
Title IV of ERISA of an intent to terminate  or appoint a trustee to  administer
any Plan, a copy of such notice; and

     (h) From time to time such additional  information  regarding the financial
position or business of the Lessee and its  Subsidiaries  as the  Administrative
Agent, at the request of any Holder or Lender, may reasonably request.

                 5.2 Inspection of Property, Books and Records.

     The Lessee will keep, and require each Subsidiary to keep,  proper books of
record and account in which full,  true and correct  entries in conformity  with
GAAP (or,  in the case of any  non-domestic  Subsidiary,  such other  accounting
standards,  rules,  regulations and practices applicable to businesses operating
in the locality in which each such Person operates);  and permit, and cause each
Subsidiary to permit,  representatives of any Holder or Lender, at such Person's
expense prior to the  occurrence of a Lease Default and at the Lessee's  expense
after the occurrence and during the continuation of a Lease Default to visit and
inspect any of their respective  properties,  to examine and make abstracts from
any of their  respective  books and  records  and to  discuss  their  respective
affairs,  finances and accounts with their  respective  officers,  employees and
independent  public  accountants.  The Lessee  agrees to cooperate and assist in
such visits and inspections in each case at such  reasonable  times and as often
as may reasonably be desired.

             5.3 Adjusted Funded Debt/Adjusted Capitalization Ratio.

     The Adjusted Funded Debt/Adjusted Capitalization Ratio will not at any time
exceed 0.65:1.00.

                        5.4 Minimum Stockholder's Equity.

     Stockholders'  Equity  will  at no  time  be  less  than  the  sum  of  (i)
$180,000,000,  as of the Fiscal  Quarter ended closest to December 31, 1996 (the
"Base Fiscal Quarter"), plus (ii) fifty percent (50%) of Consolidated Net Income
(if positive)  for each Fiscal  Quarter  subsequent to the Base Fiscal  Quarter;
plus, without duplication,  (iii) seventy-five percent (75%) of any net proceeds
received by Lessee from any offering of equity securities (other than Redeemable
Preferred  Stock) by Lessee  subsequent  to February  27,  1996;  plus,  without
duplication,  (iv)  seventy-five  percent (75%) of any net proceeds  received by
Lessee from any conversion of debt into equity  subsequent to February 27, 1996;
plus, without  duplication,  (v) seventy-five percent (75%) of any adjustment to
equity due to any pooling of  interests  occurring  subsequent  to December  31,
1996; plus, without duplication, (vi) seventy-five percent (75%) of any increase
in

                                      -24-

<PAGE>




Stockholders'  Equity  resulting  from the  issuance  or  exchange of any equity
securities in furtherance of any acquisition constituting a permitted investment
under Section 5.11.

                        5.5 Fixed Charge Coverage Ratio.

     Lessee's Fixed Charge Coverage Ratio, measured on a rolling four (4) Fiscal
Quarters' basis as of the end of each Fiscal Quarter, commencing with the Fiscal
Quarter ended closest to September 30, 1997, shall be not less than 2:1.

                 5.6 Total Funded Debt/Cash Flow Coverage Ratio.

     The  ratio  which  (i)  the  Total  Funded  Debt  of  the  Lessee  and  its
Consolidated Subsidiaries at the end of any Fiscal Quarter,  commencing with the
Fiscal Quarter ended closest to September 30, 1997,  bears to (ii) the Cash Flow
of the Lessee and its Consolidated Subsidiaries,  measured on a rolling four (4)
Fiscal Quarters' basis as of the end of such Fiscal Quarter, commencing with the
Fiscal  Quarter  ended  closest  to  September  30,  1997,  shall  be less  than
4.50:1.00.

                              5.7 Negative Pledge.

     The Lessee will not, nor will the Lessee permit any  Subsidiary to, create,
assume or suffer to exist any Lien on any asset now owned or hereafter  acquired
by it, except:  (i) those Liens, if any,  described on Schedule 5.7,  concerning
existing  debt of the Lessee,  to be set forth and described  more  particularly
therein,  together  with any Lien  arising  out of the  refinancing,  extension,
renewal or refunding of any debt  secured by any such Lien,  provided  that such
debt is not  secured  by any  additional  assets,  and the  amount  of such debt
secured by any such Lien is not increased;  (ii) Liens incidental to the conduct
of its business or the ownership of its Properties  which (A) do not secure debt
and  (B) do not in the  aggregate  materially  detract  from  the  value  of its
Properties  or  materially  impair  the  use  thereof  or the  operation  of its
business,  including, without limitation,  easements, rights of way, restrictive
covenants,  zoning  and  other  similar  restrictions  on real  property;  (iii)
materialmen's mechanics', warehousemen's carriers', landlords' and other similar
statutory  Liens which secure debt or other  obligations  that are not past due,
or,  if  past  due are  being  contested  in good  faith  by the  Lessee  or the
appropriate  Subsidiary  by  appropriate  proceedings;  (iv) Liens for taxes not
delinquent  or  taxes  being   contested  in  good  faith  and  by   appropriate
proceedings;  (v) pledges or deposits in connection with worker's compen sation,
unemployment  insurance and other social security legislation;  (vi) deposits to
secure performance of bids, trade contracts,  leases,  statutory obligations (to
the extent not excepted elsewhere  herein);  (vii) grants of security and rights
of  setoff  in  accounts,  securities  and  other  properties  held at  banks or
financial  institutions to secure the payment or reimbursement  under overdraft,
letter of credit,  acceptance  and other  credit  facilities;  (viii)  rights of
setoff,  banker's  liens and other similar rights arising solely by operation of
law; (ix) Purchase Money Liens;  (x) Liens on any Properties  acquired by Lessee
or any  Subsidiary  subsequent  to the Closing Date, to the extent that (A) such
Liens are existing at the time of  acquisition,  (B) the debt secured thereby is
not  secured by any other  Properties  of Lessee or such  Subsidiary  except the
acquired

                                      -25-

<PAGE>




Properties,  (C) the amount of such debt so secured  thereby is not increased at
or  subsequent  to the  acquisition  and (D) the  total  amount of all such debt
secured  by all  such  acquired  Properties  does not  exceed  at any  time,  in
aggregate amount, fifteen percent (15%) of Tangible Net Worth, together with any
Lien arising out of the refinancing, extension, renewal or refunding of any debt
secured by any such Lien  described in this clause (x),  provided that such debt
is not secured by any additional  assets, and the amount of such debt secured by
any such Lien is not  increased;  and (xi)  capital  leases made in the ordinary
course of business (but excluding,  however,  sale-leaseback transactions in any
event) in which there is no provision  for title to the leased  Property to pass
to the Lessee or such  Subsidiary  at the  expiration of the lease term or as to
which no bargain purchase option exists.

                          5.8 Maintenance of Existence.

     Except as permitted in Section 5.10, the Lessee shall, and shall cause each
Subsidiary  to,  maintain its  corporate  existence and carry on its business in
substantially  the same  manner  and in  substantially  the same  fields as such
business is now carried on and  maintained.  Without  limiting the generality of
the foregoing, the Lessee shall, and shall cause each Subsidiary to, maintain at
all  times in full  force and  effect  all  Franchise  Rights  necessary  to the
ownership,  operation and  development  of all  franchised  restaurant  business
conducted, or contemplated to be conducted, by the Lessee and such Subsidiaries,
except with respect to Voluntary Store Closings.

                                5.9 Dissolution.

     Neither  the  Lessee  nor any of its  Subsidiaries  shall  suffer or permit
dissolution or liq uidation either in whole or in part, except through corporate
reorganization to the extent per mitted by Section 5.10.

                5.10 Consolidations, Mergers and Sales of Assets.

     The Lessee will not, nor will it permit any Subsidiary  to,  consolidate or
merge with or into, or sell, lease or otherwise  transfer all or any substantial
part of its  assets  to, any other  Person,  or  discontinue  or  eliminate  any
business line or segment,  provided that,  subject at all times to Section 5.11,
the Lessee or any  Subsidiary  may merge with another  Person  (which is not the
Lessee or such  Subsidiary)  if (i) such Person was organized  under the laws of
the  United  States of  America  or one of its  states  (ii) the  Lessee or such
Subsidiary  (as the case may be) is the corpora tion  surviving  such merger and
(iii)  immediately  after giving effect to such merger,  no Lease De fault shall
have occurred and be continuing;  and, provided,  further, that any Subsidiaries
of the  Lessee may (i) merge or  consolidate  with each other or with the Lessee
(so long as the Lessee is the corporation  surviving such merger),  or (ii) sell
assets to each other or to the Lessee.

                              


                                      -26-

<PAGE>

                                5.11 Investments.


     The Lessee  will not make (nor will the Lessee  permit  any  Subsidiary  to
make) any invest ment in any Person or Property  (which term  "investment,"  for
purposes hereof, shall mean and in clude, without limitation, the acquisition of
any property,  the issuance,  acquisition or exchange of any capital stock, debt
or other obligations or security to, from or with any Person,  and the making of
any loan,  advance,  extension  of credit,  credit  accommodation,  Guarantee or
capital contribution to or on behalf of any Person),  provided,  however,  that,
notwithstanding the foregoing,  the Lessee (or any Subsidiary) may, from time to
time,  undertake  the  following,  without the  necessity of obtaining the prior
written consent of the Majority In Interest thereto:

     (a) Current Assets. Acquire current assets for use in, or arising from, the
sale of goods or services in the ordinary course of its business (including, for
this purpose, but without limitation, credit card receivables);

     (b) Capital Expenditures.  Make capital expenditures in the ordinary course
of its business;

     (c) Franchise Fees. Pay franchisee fees and royalties to its franchisors in
the ordinary course of its business;

     (d) Escrow  Deposits.  Make or maintain  escrow deposits for the payment of
taxes, rents, utilities, insurance or like matters in the ordinary course of its
business;

     (e) Bank  Accounts.  Make and maintain  deposits of cash in demand  deposit
accounts of banks in the ordinary course of its business,  and make endorsements
of checks, drafts or other instruments in connection therewith;

     (f)  Surplus  Cash.  Consistent  at all times  with the  Lessee's  internal
Statement of Investment  Policy,  invest surplus cash in (A)  obligations of, or
guaranteed  by,  the  United  States  of  America  or any  agency  thereof,  (B)
short-term  certificates  of deposit issued by, and time deposits with, any Bank
or any other  financial  institution  domiciled in the United  States of America
with assets of at least $500,000,000,  (C) short-term  commercial paper rated at
least "A1" by Standard & Poors or "P1" by Moody's,  and (D) fixed or  adjustable
rate corporate debt securities with a credit rating of at least double A (Aa/AA)
by either  Moody's  or  Standard  & Poors,  provided  that any  fixed  rate debt
securities have a maturity of one year or less;

     (g) Subsidiaries.  Make investments in those  Consolidated  Subsidiaries of
the Lessee which are wholly-owned, directly or indirectly, by the Lessee, in the
ordinary course of, and pursuant to the reasonable requirements of, the Lessee's
and such Subsidiaries' respective businesses, provided that the aggregate amount
of such  investments  which may be outstanding at any one time hereafter,  as to
all such Subsidiaries,  shall not exceed, in any event, (A) ten percent (10%) of
Lessee's  consolidated  total assets at any time prior to December 30, 1997, (B)
seven and one-half percent (7 1/2%) of Lessee's  consolidated total assets on or
at any time after  December 31, 1997,  but prior to June 30, 1998,  and (C) five
percent (5%) of Lessee's consolidated total

                                      -27-

<PAGE>




assets on or after June 30, 1998; it being  understood and agreed that (i) there
shall be excluded from such calculation any investment deemed made by the Lessee
in  DF&R  Restaurants,  Inc.,  a  Texas  corporation  which  is a  wholly-owned,
Consolidated  Subsidiary of the Lessee, pursuant to the accounting for the prior
acquisition of such  corporation  by the Lessee as a pooling of interests;  (ii)
there  shall  be  deducted  in any  event  from the  amount  of  investments  in
Subsidiaries  which may be made pursuant to this clause (g) the aggregate amount
of  Capitalized  Lease  Obligations  of all  Subsidiaries  which are at any time
outstanding; and (iii) the provisions of this clause (g) henceforth shall be the
exclusive means by which the Lessee (or any Subsidiary) may make  investments in
any Subsidiaries  (whether or not wholly-owned  Subsidiaries) and shall override
any other provisions of this Section 5.11 (including, particularly, clauses (j),
(k) and (l) below) which may be construed otherwise to permit such investments.

     (h) Travel  Advances.  Make travel and similar  advances to employees  from
time to time in the ordinary course of business;

     (i) Special Life Insurance Program. The Lessee may invest up to$850,000 per
Fiscal Year in the making of annual  premiums  payable on the split dollar joint
survivor life insurance program implemented, or to be implemented,  covering the
lives of Tom E. DuPree,  Jr. and his spouse Anne DuPree,  with an initial  death
benefit of $50,000,000,  provided,  however,  that (i) such investments are made
over a period not to exceed ten (10) Fiscal Years and (ii) the Lessee  maintains
at all times during the effective  period of the program a security  interest in
policy  proceeds and cash values of policies issued as part of the program equal
in amount to not less than its then cumulative premium investments;

     (j) Applebee's Franchisees. Make investments in franchisees of "Applebee's"
restaurants, but no investment in Applebee's International,  Inc. (or any Person
which subsequent hereto shall become the franchisor of "Applebee's" restaurants)
shall be permitted to be made  subsequent to the Closing  Date,  notwithstanding
this clause (j) or any other  provision of this Sec tion,  except with the prior
written consent of the Majority In Interest;

     (k)  Other  Restaurant  Concepts.  Make  investments  in  other  restaurant
concepts,  besides  "Applebee's,"  so  long as the  total  amount  of each  such
investment  (either  considered  individually or as part of a series of related,
concurrent  investments),   does  not  exceed  ten  percent  (10%)  of  Lessee's
consolidated  total assets  immediately before such investment (or the last in a
series of related, concurrent investments) is made;

     (l) Other Investments Generally.  Make other investments,  not described in
clauses  (a)  through  (k) above,  provided  that all such  investments,  in the
aggregate,  do not  exceed at any one time ten  percent  (10%) of  Stockholders'
Equity.

     The Lessee shall notify the Administrative Agent from time to time, but not
less  frequently than quarterly,  or at any time at the  Administrative  Agent's
request, of the nature and amount of any

                                      -28-

<PAGE>




investments made pursuant to clauses (j), (k) and (l) hereof which, individually
or in the aggregate, exceed $100,000.

Notwithstanding  anything in this Section 5.11 to the  contrary,  no  Subsidiary
shall be required to comply with,  and Lessee shall not be required to cause any
Subsidiary  to comply  with,  any part of clause (g),  (j),  (k) and (l) of this
Section  5.11 to the  extent  it  would  cause a  violation  of any  term of the
Lessee's  $125,000,000 9 3/4% Senior Notes due 2006 or the Prospectus Supplement
dated May 23, 1996 related thereto.

                  5.12 Compliance with Laws; Payment of Taxes.

     The Lessee will, and will cause each of its Subsidiaries and each member of
the Controlled  Group to, comply in all material  respects with  applicable Laws
(including but not limited to ERISA) and similar  requirements  of  Governmental
Authorities  (including but not limited to PBGC),  except where the necessity of
such   compliance  is  being   contested  in  good  faith  through   appropriate
proceedings.  The Lessee will, and will cause each of its  Subsidiaries  to, pay
promptly when due all taxes, assessments governmental charges, claims for labor,
supplies,  rent and other  obligations  which,  if unpaid,  might  become a Lien
against the Property of the Lessee or any Subsidiary,  except  liabilities being
contested in good faith and against  which,  if requested by the  Administrative
Agent, the Lessee will set up reserves in accordance with GAAP.

                          5.13 Maintenance of Property.

     The Lessee shall,  and shall cause each  Subsidiary to, maintain all of its
Properties in good condition,  repair and working order,  ordinary wear and tear
excepted.

                                 5.14 Insurance.

     The  Lessee  will  maintain,  and will cause  each of its  Subsidiaries  to
maintain  (either in the name of the Lessee or in such  Subsidiary's  own name),
with financially sound and reputable insurance  companies,  insurance on, and in
respect of the  ownership  and  operation  of, its  Properties  in at least such
amounts and against at least such risks as are  usually  insured  against in the
same  general area by companies  of  established  repute  engaged in the same or
similar business.

                           5.15 Change in Fiscal Year.

     The  Lessee  will not change its Fiscal  Year  without  the  consent of the
Majority In Interest.

                           5.16 Environmental Notices.

     The Lessee shall furnish to the  Administrative  Agent,  promptly after the
Lessee becomes aware thereof,  written notice of all Environmental  Liabilities,
pending  or  threatened   Environmental   Proceedings,   Environmental  Notices,
Environmental Judgments and Orders, and

                                      -29-

<PAGE>




Environmental Releases, at, on, in, under or in any way affecting the Properties
or any  adjacent  property  and all  facts,  events,  or  conditions  that could
reasonably be expected to lead to any of the foregoing.

                           5.17 Environmental Matters.

     The Lessee will not, and will not permit any Third Party to, use,  produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise  handled or ship or transport to or from the  Properties any Hazardous
Materials except for Hazardous  Materials such as cleaning solvents,  pesticides
and other similar materials used, produced,  manufactured,  processed,  treated,
recycled,  generated,  stored,  disposed,  managed,  or otherwise handled in the
ordinary  course of business in  compliance  with all  applicable  Environmental
Requirements.

                          5.18 Environmental Releases.

     The Lessee  agrees that upon the  occurrence  of an  Environmental  Release
(except for any Environmental  Release which (x) occurred in compliance with all
Environmental  Requirements  and (y) could not reasonably be expected to have or
cause a Material  Adverse  Effect),  it will act  immediately to investigate the
extent  of,  and  to  take  appropriate  remedial  action  to  eliminate,   such
Environmental Release,  whether or not ordered or otherwise directed to do so by
any Environmental Authority.

                              5.19 Subsidiary Debt.

     Except  solely to the extent  expressly  permitted in clause (g) of Section
5.11 of this Agreement,  the Lessee will not permit any Consolidated  Subsidiary
of the Lessee which is a wholly owned Subsidiary, directly or indirectly, of the
Lessee,  to  create,  incur  or  suffer  to  exist  any  of the  following:  (i)
indebtedness for borrowed funds; (ii) Capitalized Lease  Obligations,  provided,
however, that DF&R Restaurants,  Inc. and its Subsidiaries may incur Capitalized
Lease  Obligations in an aggregate  amount not to exceed  $10,000,000 at any one
time outstanding;  (iii) Guarantees;  (iv) debts,  liabilities or obligations to
any seller  incurred to pay the deferred  purchase price of property or services
having a deferred purchase price of $1,000,000 or more, excepting, in any event,
trade accounts  payable  arising in the ordinary course of business and purchase
options prior to their  exercise;  and (v) debts,  liabilities or obligations in
respect of Synthetic Leases.

                     5.20 Change of Chief Executive Office.

     No less than 30 days prior to the date upon which the Lessee  shall  change
its chief executive  office (as such term is defined in Article 9 of the Uniform
Commercial  Code as in  effect  in the  State of  Georgia),  principal  place of
business or the place where the Lessee shall retain its records  concerning  the
Equipment and all its  interests in, to and under all documents  relating to the
Trust Estate from Hancock at Washington,  Madison,  Georgia  30650,  then in any
such case

                                      -30-

<PAGE>




the  Lessee  shall  notify  the  Administrative  Agent  (on  behalf of the Owner
Trustee,  the  Holders  and the  Lenders)  of the  same  and of the need to make
additional Uniform Commercial Code filing with respect thereto.

                               5.21 Lien Searches.

     Within 30 days  after the  Closing  Date and  within 30 days after the last
Commencement Date, the Administrative Agent (on behalf of the Owner Trustee, the
Holders and the Lenders) shall have received Lien searches  regarding the Lessee
and the  Equipment  (including,  without  limitation,  Uniform  Commercial  Code
searches and similar  searches in foreign  jurisdictions,  Tax Lien searches and
judgment Lien searches) in such jurisdictions as such parties shall determine in
their reasonable  discretion,  and Lessee shall cause all such Liens which would
materially  impair the rights of such parties (as reasonably  determined by such
parties)  to  be  removed  at  such  time  or  otherwise  handled  in  a  manner
satisfactory to all such parties.

                        5.22 Classification of Equipment.

     At all times during the Term,  the Lessee  shall cause all  Equipment to be
personal property, not fixtures.

                          5.23 Lien Perfection Filings.

     Regarding  the  Uniform  Commercial  Code  financing  statements  and other
filings referenced in Section 4.2 of this Agreement relating to any Commencement
Date, the Lessee shall execute and deliver any and all such financing statements
and filings as the Administrative Agent may deem necessary or desirable promptly
and no later than five Business Days after receipt of such financing  statements
and filings by the Administrative  Agent . The Lessee also hereby authorizes the
Administrative Agent, for the benefit of itself, the Lenders and the Holders, to
file any such financing statements,  filings or continuation  statements without
the signature of the Lessee to the extent  permitted by  applicable  law, and to
pay all reasonable fees and expenses in connection therewith.

         5.24     Allocation of Equipment Cost among the States and Counties.

     On each December 31 during the Term, the Lessee shall provide a certificate
to the Administrative  Agent on behalf of the Owner Trustee, the Lenders and the
Holders certifying (a) any changes in the allocation of Equipment Cost among the
various States and counties  therein  referenced in each Certificate of Delivery
and Acceptance and (b) the Lessee shall have made all necessary and  appropriate
payment of additional filing taxes and other like charges in connection with the
foregoing.  The Lessee shall provide evidence of the same to the  Administrative
Agent on each such date.

                           5.25 UCC Filing Amendments.

                                      -31-

<PAGE>





     The Administrative  Agent (at the direction of the Majority In Interest but
at the cost and  expense of the  Lessee)  shall have the option of  electing  to
amend the Uniform Commercial Code financing statements filed with respect to the
Equipment in a manner determined by the  Administrative  Agent in its reasonable
discretion  (such  amendments  to be in form and substance  satisfactory  to the
Majority In Interest) in order to correct or supplement  the  description of the
property therein or any other  information set forth therein.  The Lessee hereby
agrees to execute any and all such amendments (as provided by the Administrative
Agent to the  Lessee)  and to  promptly  return  the same to the  Administrative
Agent.


                   SECTION 6. OTHER COVENANTS AND AGREEMENTS

                          6.1 Restrictions on Transfer.

     (a)  Subject to the  provisos  to this  sentence,  each of the  Holders and
Lenders  agrees that no such entity shall sell,  transfer or assign (in whole or
in part) its right,  title and interest in and to the Operative  Agreements  (or
any  of  them)  without  the  prior  written  consent  of  the  Lessee  and  the
Administrative  Agent  (which  consent  may  not  be  unreasonably  withheld  or
delayed);  provided, no such consent from Lessee shall be required subsequent to
the occurrence  and during the  continuance of a Lease Default or Lease Event of
Default; provided, further, that without the prior written consent of the Lessee
and the  Administrative  Agent (i) any Holder may sell,  transfer  or assign its
interest to an  Affiliate of such  Holder,  to another  Holder or to an Eligible
Assignee,  and (ii) any Lender may sell,  transfer or assign its  interest to an
Affiliate  of such  Lender,  to another  Lender or to an Eligible  Assignee.  In
addition,  (x) no Holder may sell,  transfer or assign any such interest  unless
(1) such sale,  transfer  or  assignment  is ratable as to all of such  Holder's
interests in the  Operative  Agreements  (including,  without  limitation,  with
respect  to its  Certificate),  and  (2) the  amount  of the  Holder  Commitment
assigned by such Holder is at least  $5,000,000 and increments  thereof,  unless
such Holder is selling,  transferring or assigning one hundred percent (100%) of
its Holder Commitment,  and (y) no Lender may sell,  transfer or assign any such
interest unless (1) such sale,  transfer or assignment is ratable as to all such
Lender's interests in the Operative Agreements  (including,  without limitation,
with respect to all Notes), (2) the amount of the Lender Commitment  assigned by
such Lender is at least $5,000,000 and increments thereof, unless such Lender is
selling,  transferring  or assigning  one hundred  percent  (100%) of its Lender
Commitment  and (3) such  Lender and the Person to whom such sale,  transfer  or
assignment  is made shall  execute  and deliver to the  Administrative  Agent an
Assignment and Assumption  Agreement in  substantially  the form of Attachment C
attached hereto (the  "Assignment  Agreement").  In addition,  there shall be no
such sale,  transfer or  assignment of any  Certificate  or Note in violation of
applicable  securities Laws, and Lessee shall have no obligation to pay any cost
or  expense  for  the  registration  under  applicable  securities  Laws  of any
Certificate or Note.


                                      -32-

<PAGE>




     (b) Upon any such transfer,  (i) except as the context otherwise  requires,
the Person to whom such sale,  transfer or assignment  is made (a  "Transferee")
shall be deemed a "Holder" or "Lender",  as the case may be, and shall enjoy the
rights and privileges and perform the obligations of the transferring party (the
"Transferor") to the extent of the interest transferred hereunder and under each
other Operative Agreement to which the Transferor is a party, and, except as the
context  otherwise  requires,  each  reference in this  Agreement and each other
Operative Agreement to the "Holders" or the "Lenders", as the case may be, shall
thereafter be deemed to include such  Transferee  for all purposes to the extent
of the interest  transferred,  (ii) the Transferor shall continue to be entitled
to all the  benefits  and  rights,  including  without  limitation  any right to
indemnification,  rights to reimbursement for increased costs or similar rights,
hereunder and under each other Operative Agreement to which the Transferor was a
party or by which it was bound except to the extent otherwise agreed in writing;
provided,  subsequent to any such sale, transfer or assignment from a Transferor
to a Transferee,  with respect to any judgment award for which the Lessee has an
indemnity obligation under the Operative  Agreements,  the Lessee shall not have
an obligation to pay such judgment  award more than once for the benefit of such
Transferor and Transferee;  provided,  further,  the foregoing proviso shall not
diminish  the  obligations  of the  Lessee  under the  Operative  Agreements  to
indemnify each Transferor and Transferee in all matters  regarding  fees,  costs
and  expenses  associated  with  litigation  and (iii) the  Transferor  shall be
released from all obligations hereunder and under each other Operative Agreement
to which the  Transferor  is a party or by which the  Transferor is bound to the
extent  such  obligations  are  expressly  assumed  by a  Transferee;  provided,
further,  that in no event shall any such sale,  transfer or assignment waive or
release the  Transferor  from any  liability  on account of any breach  existing
immediately  prior  to  such  sale,   transfer  or  assignment  of  any  of  its
representations, warranties, covenants or obligations set forth in the Operative
Agreements or for any gross negligence or fraudulent or willful misconduct.  The
restrictions  set forth in this  Section 6.1 shall not apply with respect to the
sale,  transfer or assignment of the Equipment  which is to be consummated on or
after the expiration or the termination of the Lease or after the occurrence and
during the continuation of a Lease Event of Default. In connection with any such
sale,  transfer or  assignment  of a Lender's  interest,  the  Transferor or the
Transferee (as agreed between the parties) shall pay the Administrative  Agent a
transfer fee of $2,500.

     (c) The Lessee agrees that any Holder or Lender may, without the consent of
the  Lessee,  at any time  sell to one or more  Persons  (each a  "Participant")
participating  interests  in any  Holders  Advances  owing to such  Holder,  any
Certificate of such Holder,  such Holder's  Holder  Commitment  hereunder or any
other  interest  of  such  Holder  hereunder,  in the  case  of any  Holder,  or
participating interests in any Loan Advances owing to such Lender, any Note held
by such Lender, such Lender's Lender Commitment  hereunder or any other interest
of such Lender  hereunder,  in the case of any Lender.  In the event of any such
sale by any Holder or Lender of a participating interest to a Participant,  such
Holder's or such Lender's obligations,  as the case may be, under this Agreement
shall remain  unchanged,  such Holder or such Lender,  as the case may be, shall
remain  solely  responsible  for the  performance  thereof,  such Holder or such
Lender,  as the case may be, shall remain the holder of any such  Certificate or
Note, as the case may be, for all purposes under this Agreement,  and the Lessee
and the Administrative Agent shall continue to

                                      -33-

<PAGE>




deal solely and directly with such Holder or such Lender, as the case may be, in
connection  with such Holder's or such Lender's,  as the case may be, rights and
obligations  under this  Agreement.  In no event  shall any Holder  that sells a
participation be obligated to the Participant to take or refrain from taking any
action  hereunder  except that such Holder may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of any Holder  Advances or yield on the Holder
Advances,  (ii) the change of the  amounts of the  Holder  Advances  or yield on
Holder Advances due on any date fixed for the payment thereof,  (iii) the change
of the Holder  Commitment or the amount of the Holder Advances,  (iv) any change
in the rate at which the yield on the Holder  Advances is computed from the rate
at which the  Participant  is  entitled  to  receive  yield in  respect  of such
participation, (v) the release or substitution of all or any substantial part of
the Trust Estate or (vi) the release of any Guarantee  given to support  payment
of the Holder Advances.  In no event shall any Lender that sells a participation
be  obligated  to the  Participant  to take or  refrain  from  taking any action
hereunder except that such Lender may agree that it will not (except as provided
below),  without the consent of the Participant,  agree to (i) the change of any
date fixed for the payment of  principal  of or interest on the Loans,  (ii) the
change of  principal,  interest  or fees due on any date  fixed for the  payment
thereof,  (iii) the change of such Lender's  Lender  Commitment or the principal
amount  of the  Loans  related  thereto,  (iv) any  change  in the rate at which
interest on the Loans or any  commitment  fee is payable  from the rate at which
the  Participant is entitled to receive  interest or a commitment fee in respect
of  such  participation,  (v)  the  release  or  substitu  tion  of  all  or any
substantial part of the Collateral or (vi) the release of any Guarantee given to
support payment of the Loans. Each Holder or Lender selling such a participating
interest to any other Person shall,  within ten (10) Business Days of such sale,
provide  the  Lessee and the  Administrative  Agent  with  written  notification
stating that such sale has  occurred and  identifying  the  Participant  and the
interest  purchased by such  Participant.  The  Administrative  Agent, the Owner
Trustee  and the Lessee  agree that each  Participant  shall be  entitled to the
benefits of Article 8 with respect to its  participation  in the Holder Advances
or the Loans  outstanding  from time to time,  but only to the  extent  that the
Holder or Lender which sold the relevant  participation would have been entitled
thereto pursuant to the terms of this Agreement.

     (d) Subject to the rights of the Lessee  pursuant to Section 18.2(b) of the
Lease,  the Lessee shall not sell,  transfer or assign (in whole or in part) its
respective right,  title and interest in and to the Equipment or its obligations
hereunder or the other Operative Agreements without the prior written consent of
each other  party to this  Agreement  (which  consent  may be  withheld  in such
party's sole discretion).

                 6.2 Lessor's Liens Attributable to the Holders.

     (a) Each Holder hereby covenants and agrees with and for the benefit of the
other parties to this Agreement that such Holder will not directly or indirectly
create,  incur,  assume or suffer to exist any Lessor's  Liens on or against any
part of the Trust Estate or the  Equipment  attributable  to it, and such Holder
agrees  that it will,  at its own cost and  expense,  take such action as may be
necessary to duly discharge and satisfy in full any such Lessor's Lien

                                      -34-

<PAGE>




described  above (by bonding or otherwise in a manner  reasonably  acceptable to
the Lessee and the Administrative Agent); provided, that such Holder may contest
any such Lessor's Lien in good faith by appropriate  proceedings so long as such
proceedings do not involve any material  danger of the sale,  forfeiture or loss
of the  Equipment or any  interest  therein and do not  interfere  with the use,
operation,  or  possession of the Equipment by the Lessee under the Lease or the
rights of the Lenders under the Loan Agreement or the payment of Rent.

     (b) Each Holder  agrees,  severally and not jointly,  to indemnify and hold
harmless the other parties to this  Agreement from time to time from and against
any loss,  cost,  expense  or damage  which may be  suffered  by such party as a
result of the  failure  of such  Holder to  discharge  and  satisfy  in full any
Lessor's Lien attributable to it and of the type identified in and when required
to be discharged and satisfied by it under Section 6.2(a).

     6.3 Lessor's Liens Attributable to the Owner Trustee.

     (a) The Owner Trustee in its  individual  capacity  hereby  unconditionally
agrees with and for the benefit of the other parties to this  Agreement that the
Owner Trustee in its individual capacity will not directly or indirectly create,
incur,  assume or suffer to exist any  Lessor's  Liens on or against any part of
the Trust Estate or the Equipment arising out of any act or omission of or claim
against the Owner Trustee in its individual  capacity,  and the Owner Trustee in
its individual  capacity agrees that it will, at its own cost and expense,  take
such action as may be necessary to duly  discharge  and satisfy in full any such
Lessor's Lien  attributable to the Owner Trustee in its individual  capacity (by
bonding  or  otherwise  in a manner  reasonably  acceptable  to the  Lessee  and
Lenders); provided, that the Owner Trustee may contest any such Lessor's Lien in
good faith by appropriate proceedings so long as such proceedings do not involve
any  material  danger of the sale,  forfeiture  or loss of the  Equipment or any
interest therein and do not interfere with the use, operation,  or possession of
the  Equipment by the Lessee under the Lease or the rights of the Lenders  under
the Loan Agreement or the payment of Rent.

     (b) The Owner Trustee in its  individual  capacity  agrees to indemnify and
hold  harmless the other  parties to this  Agreement  from and against any loss,
cost,  expense or damage  which may be suffered by such party as a result of the
failure  of the Owner  Trustee to  discharge  and  satisfy  any  Lessor's  Liens
attributable to it in its individual  capacity and of the type identified in and
when required to be discharged and satisfied by it under Section 6.3(a).

                        6.4 Liens Created by the Lenders.

     (a) Each Lender  covenants and agrees with and for the benefit of the other
Parties to this  Agreement  that such Lender  shall not cause or permit to exist
any  Lien  on or  against  any  part  of  the  Trust  Estate  or  the  Equipment
attributable  to such  Lender,  except  such Liens  which are  contemplated  and
permitted by the  Operative  Agreements,  and that such Lender will,  at its own
cost  and  expense,  promptly  take  such  action  as may be  necessary  duly to
discharge any such Lien; provided, that such Lender may contest any such Lien in
good faith by appropriate

                                      -35-

<PAGE>




proceedings so long as such  proceedings  do not involve any material  danger of
the sale, forfeiture or loss of the Equipment or any interest therein and do not
interfere with the use, operation,  or possession of the Equipment by the Lessee
under the Lease or the rights of the  Lenders  under the Loan  Agreement  or the
payment of Rent.

     (b) Each Lender  agrees,  severally and not jointly,  to indemnify and hold
harmless the other parties to this  Agreement from time to time from and against
any loss,  cost,  expense  or damage  which may be  suffered  by such party as a
result of the failure of such Lender to  discharge  and satisfy in full any Lien
attributable  to it and of the  type  identified  in  and  when  required  to be
discharged and satisfied by it under Section 6.4(a).

                 6.5 Liens Created by the Administrative Agent.

     (a) The Administrative  Agent covenants and agrees with and for the benefit
of the other parties to this Agreement that the  Administrative  Agent shall not
cause or permit to exist any Lien on or against any part of the Trust  Estate or
the Equipment  attributable to the Administrative Agent, except such Liens which
are  contemplated  and  permitted  by the  Operative  Agreements,  and  that the
Administrative  Agent  will,  at its own cost and  expense,  promptly  take such
action as may be necessary duly to discharge any such Lien.

     (b) The  Administrative  Agent  agrees to indemnify  and hold  harmless the
other  parties to this  Agreement  from time to time from and  against any loss,
cost,  expense or damage  which may be suffered by such party as a result of the
failure of the  Administrative  Agent to discharge  and satisfy in full any Lien
attributable  to it and of the  type  identified  in  and  when  required  to be
discharged and satisfied by it under Section 6.5(a).

                  6.6 Covenants Restricting the Owner Trustee.

     So long  as any  Loans,  Notes,  Holder  Advances  or  Certificates  remain
outstanding and have not been paid in full or otherwise discharged in accordance
with the terms of the Operative Agreements:

     (a) The Owner Trustee shall not conduct,  transact or otherwise  engage in,
or commit  to  transact,  conduct  or  otherwise  engage  in,  any  business  or
operations  other than the entry into, and exercise of rights and performance of
obligations  in  respect  of,  the  Operative  Agreements  and other  activities
incidental or related to the foregoing.

     (b) The Owner Trustee shall not own, lease, manage or otherwise operate any
properties or assets other than in connection  with the activities  described in
Section 6.6(a), or incur, create,  assume or suffer to exist any indebtedness or
other  consensual  liabilities  or  financial  obligations  other than as may be
incurred,  created or assumed or as may exist in connection  with the activities
described in Section 6.6(a).


                                      -36-

<PAGE>




     (c) The Owner Trustee shall not convey,  sell, lease,  assign,  transfer or
otherwise dispose of any of its property,  business or assets, including without
limitation  its  interest in the Trust  Estate,  whether now owned or  hereafter
acquired,   except  to  the  extent  expressly  contemplated  by  the  Operative
Agreements.

     (d) The Owner Trustee shall at all times (i) observe and perform all of the
covenants, conditions and obligations required to be performed by it (whether in
its capacity as the Lessor, the Owner Trustee or otherwise) under each Operative
Agreement to which it is a party and (ii)  observe and  perform,  or cause to be
observed and performed, all of the covenants,  conditions and obligations of the
Lessor under the Lease, even in the event that the Lease is terminated at stated
expiration following a Lease Event of Default or otherwise.

     (e) At any time and from  time to time,  upon the  written  request  of the
Administrative  Agent or any Lender or Holder,  the Owner  Trustee will promptly
and duly execute and deliver such further  instruments  and  documents  and take
such  further  action as the  Administrative  Agent or any  Lender or Holder may
reasonably  request for the purpose of obtaining or preserving the full benefits
of this  Agreement  and the other  Operative  Agreements  and of the  rights and
powers herein or therein granted.

     (f) If on any date a Responsible  Officer of the Owner Trustee shall obtain
actual  knowledge of the occurrence of a Default or Event of Default,  the Owner
Trustee will give written notice thereof to the Administrative Agent within five
Business Days after such date.

     (g) Without  prejudice to any right under the Trust  Agreement of the Owner
Trustee to resign,  the Owner  Trustee (in such  capacity and in its  individual
capacity)  agrees  not to  terminate  or revoke  the trust  created by the Trust
Agreement except as permitted by the terms thereof.

     (h) On each  Commencement  Date,  the  Owner  Trustee's  rights,  title and
interests in and to the Equipment  delivered on such  Commencement  Date and the
Collateral shall be free of any Lessor's Liens attributable to the Owner Trustee
in its individual capacity.

     (i) The Owner  Trustee  shall  receive  from each  Seller such title to the
Equipment  as is  conveyed  to it by such  Seller,  subject to the rights of the
Owner Trustee and the Lessee under the Lease.

     (j) The Owner Trustee in its individual capacity agrees to give the Lessee,
the  Holders,  the Lenders and the  Administrative  Agent at least 30 days prior
written notice of any relocation of the Owner Trustee's chief executive  office,
principal  place of  business or said place  where its  records  concerning  the
Equipment  and all its interest in, to and under all  documents  relating to the
Trust Estate are located from its present location  referenced in Section 3.1(g)
or any  subsequent  location,  which in all cases  shall  remain  in the  United
States.


                                      -37-

<PAGE>




          6.7 Covenants of All Parties Regarding Operative Agreements.

     The Owner Trustee (in such capacity and in its  individual  capacity),  the
Holders,  the  Administrative  Agent, the Lenders and the Lessee hereby agree to
comply with the provisions of all Operative Agreements to which they are a party
and  not to  terminate,  amend,  modify,  supplement,  restate  or  replace  any
Operative  Agreement  in  such  a  manner  that  increases  the  obligations  or
liabilities,  or  decreases  the rights of, or is  adverse  to, any other  party
hereto  without the prior  written  consent of such Person (it being  understood
that (i) the  consent of each  Lender and  Holder is  unnecessary  to the extent
permitted by the  provisions  of Section 9.1 of the Loan  Agreement  and Section
11.01 of the  Trust  Agreement,  respectively  and (ii) the Owner  Trustee,  the
Holders,  the  Administrative  Agent and the Lenders may  exercise  the remedies
granted to them in the Operative Agreements).

                              6.8 Rent Sufficiency.

     Anything contained herein, in the Lease or in any other Operative Agreement
to the contrary notwithstanding,  (i) the aggregate amount of Basic Rent payable
on any Payment Date under the Lease shall be, under all circumstances and in any
event, at least equal to the sum of (A) the amount of the scheduled installments
of yield on the  Certificates  pursuant  to the  Trust  Agreement,  plus (B) the
amount of the  scheduled  installments  of  principal  and interest on the Notes
pursuant to the Loan Agreement, in each case, due on such Payment Date, and (ii)
the amount of the  Stipulated  Loss Value  payable on any date on account of any
Unit of Equipment,  together with any other amounts payable pursuant to Sections
11 or 21 of the Lease, as the case may be, shall be, under all circumstances and
in any event,  at least equal to the sum of (x) the amount of any payments  then
required to be made respecting such Unit on account of the outstanding principal
of and interest on the Notes  pursuant to the Loan Agreement plus (y) the amount
of any payments then required to be made  respecting such Unit on account of the
outstanding Holder Advances to be repaid and yield on the Certificates  pursuant
to the Trust Agreement.  Anything contained herein, in the Lease or in any other
Operative  Agreement  to the contrary  notwithstanding,  the amount of the Early
Termination  Option  Payment  payable  on any  date on  account  of any  Unit of
Equipment, together with any other amounts payable pursuant to Section 10 of the
Lease, shall be, under all circumstances and in any event, at least equal to the
amount of any payments then required to be made  respecting such Unit on account
of the  outstanding  principal of and interest on the Notes pursuant to the Loan
Agreement.

              6.9 Receipts Distribution and Application of Income.

     The Lessee has agreed pursuant to the terms of the Operative  Agreements to
pay to the Administrative  Agent, until such time as the Loan Agreement has been
discharged pursuant to its terms and thereafter to the Holders, any and all Rent
(provided,  that such right to receive Rent shall not include a right to receive
Segregated  Excepted  Property  but shall  include a right to receive  all other
Excepted  Property)  and any and all other amounts of any kind or type under any
of the Operative  Agreements due and owing the Lessor,  the Owner  Trustee,  the
Holders, the

                                      -38-

<PAGE>




Administrative  Agent and the Lenders  (excluding such amounts referenced in the
immediately  preceding  parenthetical  phrase in this sentence).  The Lessee has
agreed  pursuant to the terms of the Operative  Agreements to pay to the Holders
or such other Persons as are entitled to the receipt  thereof,  as  appropriate,
the Segregated  Excepted Property payable to such Persons.  Notwithstanding  the
preceding  provisions of this Section 6.9, in connection with any disposition of
Equipment, upon the exercise of remedies in connection with any Event of Default
and with regard to all amounts  received by the  Administrative  Agent under the
Operative  Agreements other than Segregated  Excepted Property or otherwise with
respect to the Equipment,  the Administrative Agent shall apply all such amounts
received in  accordance  with the terms of this  Section 6.9 to the  obligations
owed under the  Operative  Agreements  (including,  without  limitation,  to the
Certificates  and  Notes and to the  out-of-pocket  costs  and  expenses  of the
Administrative Agent or the Owner Trustee in connection with such disposition or
exercise of remedies).

     (a) Any such  payment  or amount  identified  as or deemed to be Basic Rent
shall be applied and  allocated  by the  Administrative  Agent:  first,  ratably
(based on principal amounts then outstanding under the Notes) to the Lenders for
application  and  allocation  to the payment of interest and  principal (in that
order of priority) then due and payable on the Notes, second,  ratably (based on
amounts then outstanding as Holders Advances) to the Holders for application and
allocation to the payment of accrued yield and Holder Advances (in that order of
priority)  then due and  payable on the  Certificates;  and  third,  if no Lease
Default or Lease Event of Default has occurred and is continuing, any excess (if
other than a  prepayment)  shall be paid to such Person or Persons as the Lessee
may designate; provided, that if a Lease Default or a Lease Event of Default has
occurred and is  continuing,  such excess (if any) shall  instead be held by the
Administrative Agent until the earlier of (i) the first date thereafter on which
no Lease  Default or Lease  Event of  Default  shall be in effect (in which case
such  payments or amounts  shall then be made to such other Person or Persons as
the Lessee may designate)  and (ii) the Maturity Date (or, if earlier,  the date
of any  acceleration of the Notes),  in which case such amounts shall be applied
and allocated in the manner contemplated by Section 6.9(c)(i).

     (b) Any such payment or amount  identified  as or deemed to be Renewal Rent
or proceeds  from the  disposition  of a Class of Equipment  pursuant to Section
21.2 of the Lease shall be applied and  allocated by the  Administrative  Agent:
first,  ratably (based on amounts then  outstanding as Holders  Advances) to the
Holders for  application  and  allocation  to the  payment of accrued  yield and
Holder  Advances  (in  that  order of  priority)  then  due and  payable  on the
Certificates;  and  second,  if no Lease  Default or Lease  Event of Default has
occurred and is  continuing,  any excess (if other than a  prepayment)  shall be
paid to such Person or Persons as the Lessee may designate;  provided, that if a
Lease Default or a Lease Event of Default has occurred and is  continuing,  such
excess (if any)  shall  instead be held by the  Administrative  Agent  until the
earlier  of (i) the first  date  thereafter  on which no Lease  Default or Lease
Event of  Default  shall be in effect (in which  case such  payments  or amounts
shall then be made to such other Person or Persons as the Lessee may  designate)
and (ii) the Termination Date (or, if earlier, the date of any

                                      -39-

<PAGE>




acceleration of the  Certificates),  in which case such amounts shall be applied
and allocated in the manner contemplated by Section 6.9(c)(i).

     (c) (i) Except as otherwise provided in Sections 6.9(c)(ii),  or 6.9(e), in
the event that any prepayment of the Notes or the  Certificates,  in whole or in
part, is required in accordance with the provisions of' Section 2.10 of the Loan
Agreement  or Section  4.10 of the Trust  Agreement,  then any  amount  received
pursuant  to  Section 10 or 11 of the Lease or  otherwise  shall in each case be
distributed and paid in the following order of priority:  first,  ratably to the
Owner  Trustee and the  Administrative  Agent with  respect to their  respective
out-of pocket costs and expenses  regarding  any such  prepayment or sale of the
Equipment;  second,  ratably (based on principal  amounts then outstanding under
the Notes) to the  Lenders as provided  in Section  2.10 of the Loan  Agreement;
third,  ratably (based on amounts then  outstanding  as Holder  Advances) to the
Holders as provided in Section 4.10 of the Trust Agreement;  fourth,  ratably to
the Owner Trustee and the Administrative Agent regarding any other amounts owing
to either such party under the Operative Agreements;  and fifth, the balance, if
any, of such  amount  remaining  thereafter  shall be  distributed  to the Owner
Trustee for distribution to the Holders.

     (ii) Any insurance payment, requisition payment or other amount received by
the  Administrative  Agent that is not required to be paid over to the Lessee or
distributed  shall  be held by the  Administrative  Agent  as  security  for the
obligations  of the Lessee  under the Lease and applied as set forth  therein or
herein.

     (d) (i) Except as otherwise provided in Section 6.9(e),

     (A) An  amount  equal  to any  such  payment  identified  as or which is is
Supplemental Rent received by the Administrative Agent for which provision as to
the  application  thereof is made in the Operative  Agreements  shall be applied
forthwith to the purpose for which such payment was made in accordance  with the
terms thereof and otherwise shall be applied and allocated by the Administrative
Agent to the  payment  of any  amounts  (other  than any  such  amounts  payable
pursuant to the  preceding  provisions  of this  Section  6.9) then owing first,
ratably to the Owner  Trustee  and the  Administrative  Agent with  respect  any
Supplemental Rent then due and payable to such Person; second, ratably (based on
principal  amounts then outstanding under the Notes) to the Lenders with respect
to any  Supplemental  Rent then due and payable to the Lenders;  third,  ratably
(based on amounts  then  outstanding  as Holder  Advances)  to the Holders  with
respect  to any  Supplemental  Rent then due and  payable  to the  Holders;  and
fourth,  the  balance,  if any, of such  amount  remaining  thereafter  shall be
distributed to the Owner Trustee for distribution to the Holders.

     (B)  Subject to Section  6.9(d)(ii),  any  payments  received  and  amounts
realized  by  the  Administrative  Agent  for  which  no  provision  as  to  the
application thereof is made in the Lease or this Section 6.9 or otherwise in any
Operative Agreement shall be distributed  forthwith by the Administrative  Agent
to the Owner Trustee for distribution pursuant to

                                      -40-

<PAGE>




the  Trust  Agreement;   provided,   however,  that if a Loan Agreement Event of
Default  has  occurred  and is  continuing,  such  amounts  shall be paid to the
Lenders pursuant to the Loan Agreement.

     (ii) Any payments received by the Administrative  Agent for which provision
as to the  application  thereof  is made in the  Lease  or any  other  Operative
Agreement, but not elsewhere in this Agreement, shall be applied to the purposes
for which such payments were made in accordance with the provisions of the Lease
or such other Operative Agreement, as the case may be.

     (iii) The  Administrative  Agent in its reasonable  judgment shall identify
the nature of each payment or amount  received by the  Administrative  Agent and
apply and allocate each such amount in the manner specified above.

     (e)  All   amounts   constituting   Excepted   Property   received  by  the
Administrative  Agent shall be paid by the Administrative Agent to the Person or
Persons entitled thereto.

     Ratable allocations under this Section 6.9 between the Administrative Agent
and the Owner Trustee shall be based upon the relative amount of costs, expenses
and other  amounts  owed to each such  party at the  particular  time  under the
particular provisions of the Operative Agreements.

                6.10 Acceleration Upon Certain Events of Default.

     Each of the parties  hereto agrees that the  occurrence of a Lease Event of
Default and the  exercise of any  remedies  set forth in Section 15 of the Lease
with respect thereto shall immediately  create a Loan Agreement Event of Default
and an acceleration  of the Notes under the Loan Agreement and the  Certificates
under the Trust Agreement.

                        SECTION 7. LESSEE'S INDEMNITIES

                           7.1 General Tax Indemnity.

     (a)  Indemnification.  The Lessee shall pay and assume  liability  for, and
does hereby agree to indemnify,  protect and defend all Indemnified Persons, and
hold them harmless against all Impositions  (other than amounts addressed in and
either  covered by or  specifically  excluded  from the  coverage of Section 7.2
hereof) on an After Tax Basis.

     (b) The foregoing indemnity in Section 7.1(a) hereof shall not apply to any
Impositions  for Taxes to the extent they result  from the gross  negligence  or
willful misconduct of an Indemnified Person, or (subject to the last sentence of
Section  7.1(b)) to the  extent  such  Taxes are based  upon or  measured  by an
Indemnified Person's net income (other than Taxes that are, or are in the nature
of,  sales,  use,  value  added,  transfer or property  Taxes,  and other than a
Covered

                                      -41-

<PAGE>




Income  Tax  as  defined  in the  following  sentence).  For  purposes  of  this
Agreement,  a "Covered  Income Tax" shall mean an income Tax (including  without
limitation  a  Tax  imposed  upon  gross  income  or  receipts)  imposed  on  an
Indemnified  Person by any state,  local or foreign taxing authority  (excluding
the United States  federal  government)  in whose  jurisdiction  an  Indemnified
Person (including without limitation for this purpose all entities with which it
is combined, integrated or consolidated in such taxing authority's jurisdiction)
would not engage in  business,  would not  maintain  an office or other place of
business,  would not  otherwise be located  therein,  and would not otherwise be
subject to such taxing  authority  but for an  Indemnified  Person's role in the
Operative Agreements and the transactions  contemplated thereby, with respect to
the Equipment, its manufacture,  construction, ordering, purchase, acceptance or
rejection, ownership, delivery, leasing, releasing, subleasing, possession, use,
operation,   maintenance,   storage,   titling  or   retitling,   licensing   or
re-licensing, documentation, removal, return, sale (including without limitation
sale to the Lessee by an  Indemnified  Person  pursuant to the terms  hereof) or
other  applications  or dispositions  thereof,  or the presence of the Lessee in
such jurisdiction.  The foregoing indemnity in Section 7.1(a) shall apply to any
Taxes upon or with respect to any of the  enumerated  matters of Section  7.1(a)
imposed on the Owner Trustee  (including  without limitation those based upon or
measured by the Owner  Trustee's net income or other such Taxes that are, or are
in the  nature  of, a Tax on net  income)  other  than  such  Taxes  based on or
measured by any fees or compensation  received by the Owner Trustee for services
rendered in connection with the transactions contemplated hereby.

     (c) Payments. (i) Subject to the terms of Section 7.1(e) hereof, the Lessee
shall pay or cause to be paid all Impositions directly to the taxing authorities
where feasible and otherwise to the Indemnified Person, as appropriate,  and the
Lessee  shall at its own  expense,  upon such  Indemnified  Person's  reasonable
request, furnish to such Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment.

     (ii) In the case of Impositions for which no contest is conducted  pursuant
to  Section  7.1(e)  hereof  and which the Lessee  pays  directly  to the taxing
authorities,  the Lessee  shall pay such  Impositions  prior to the latest  time
permitted by the relevant taxing  authority for timely  payment.  In the case of
Impositions  for which the Lessee is to reimburse  an  Indemnified  Person,  the
Lessee  shall make such  payment  within  twenty (20) days after  receipt by the
Lessee of demand by such Indemnified  Person describing in reasonable detail the
nature of the Imposition and the basis for the demand (including the computation
of the amount  payable),  but in no event  shall the Lessee be  required to make
such payment  prior to thirty (30) days before the latest time  permitted by the
relevant  taxing  authority for timely  payment.  In the case of Impositions for
which a contest is conducted pursuant to Section 7.1(e) hereof, the Lessee shall
pay such Impositions or reimburse such Indemnified  Person for such Impositions,
to the extent not  previously  paid or reimbursed  pursuant to  subsection  (a),
prior to the latest time permitted by the relevant  taxing  authority for timely
payment after conclusion of all contests under Section 7.1(e) hereof.


                                      -42-

<PAGE>




     (iii)  Impositions  imposed  with  respect to  Equipment  for a Tax billing
period  during  which the Lease  expires or  terminates  (unless  the Lessee has
exercised its option to purchase the  Equipment  pursuant to Section 21.2 of the
Lease or to renew the Lease  pursuant  to Section  21.3 of the  Lease)  shall be
adjusted  and  prorated  on a daily  basis  between  the Lessee and the  Lessor,
whether or not such  Imposition  is imposed  before or after such  expiration or
termination,  and each party shall pay or  reimburse  the other for each party's
pro rata share thereof.

     (d) Reports and Returns.  (i) The Lessee shall be responsible for preparing
and filing all  property  and ad valorem  tax returns in respect of each item of
Equipment.  In case any other  report or tax return shall be required to be made
with respect to any obligations of the Lessee under or arising out of subsection
(a) and of which the Lessee has knowledge or should have knowledge,  the Lessee,
at its cost and expense,  shall notify the relevant  Indemnified  Person of such
requirement and (except if such Indemnified Person notifies the Lessee that such
Indemnified  Person  intends to file such  report or  return)  (A) to the extent
required or permitted by and consistent with  applicable  Laws, make and file in
its own name such return,  statement or report: and (B) in the case of any other
such  return,  statement  or  report  required  to be made  in the  name of such
Indemnified Person,  advise such Indemnified Person of such fact and prepare and
deliver to such  Indemnified  Person  (together with payment of all  Impositions
required to be paid at the time of filing such return,  statement or report), at
least fifteen (15) Business Days prior to the date of any required filing,  such
return, statement or report for filing by such Indemnified Person or, where such
return,  statement or report  shall be required to reflect  items in addition to
any  obligations of the Lessee under or arising out of subsection  (a),  provide
such Indemnified  Person at the Lessee's expense with information  sufficient to
permit such return,  statement or report to be properly made with respect to any
obligations  of the  Lessee  under  or  arising  out  of  subsection  (a).  Such
Indemnified Person shall, upon the Lessee's request and at the Lessee's expense,
provide  any data  maintained  by such  Indemnified  Person  (and not  otherwise
available  to or within the control of the Lessee)  with respect to each item of
Equipment  which the Lessee  reasonably  requires  to prepare any  required  tax
returns or reports.

     (ii) The Lessee  shall  deliver to the  Administrative  Agent copies of all
property  and ad valorem  tax returns  that it is  required to file  pursuant to
clause  (i) above no later than  fifteen  (15)  Business  Days prior to the date
Lessee intends to file such tax returns.

     (e)  Contests of  Impositions.  (i) If a written  claim is made against any
Indemnified  Person  or if  any  proceeding  shall  be  commenced  against  such
Indemnified  Person  (including  a written  notice of such  proceeding)  for any
Impositions, such Indemnified Person shall promptly notify the Lessee in writing
and shall not take action with respect to such claim or  proceeding  without the
consent of the Lessee for thirty  (30) days after the  receipt of such notice by
the  Lessee;  provided,  however,  that,  in the  case  of  any  such  claim  or
proceeding,  if action  shall be required by Law to be taken prior to the end of
such 30-day period, such Indemnified Person shall, in such notice to the Lessee,
inform  the Lessee of such  shorter  period,  and no action  shall be taken with
respect to such claim or proceeding without the consent of the Lessee before two
(2)

                                      -43-

<PAGE>




days before the end of such shorter period; provided,  further, that the failure
of such  Indemnified  Person to give the notices  referred  to in this  sentence
shall not  diminish  the  Lessee's  obligation  hereunder  except to the  extent
failure to give such notice  precludes the Lessee from contesting all or part of
such claim.

     (ii) If,  within  thirty  (30)  days of  receipt  of such  notice  from the
Indemnified  Person  (or such  shorter  period  as the  Indemnified  Person  has
notified the Lessee is required by Law or regulation for the Indemnified  Person
to  commence  such  contest),  the Lessee  shall  request  in writing  that such
Indemnified Person contest such Imposition, the Indemnified Person shall, at the
sole cost and expense of the  Lessee,  in good faith  conduct  and control  such
contest (including,  without limitation,  by pursuit of appeals) relating to the
validity,  applicability or amount of such Impositions (provided,  however, that
(A) if such  contest  involves  a tax other  than a tax on net income and can be
pursued  independently  from any other  proceeding  involving a tax liability of
such Indemnified Person, the Indemnified Person, at the Lessee's request,  shall
allow the Lessee to conduct and control  such contest and (B) in the case of any
contest,  the  Indemnified  Person may require the Lessee to conduct and control
such  contest  at the sole  cost and  expense  of the  Lessee)  by,  in the sole
discretion of the Person conducting and controlling such contest,  (1) resisting
payment  thereof,  (2) not paying the same except under  protest,  if protest is
necessary and proper,  (3) if the payment be made, using  reasonable  efforts to
obtain a refund thereof in appropriate  administrative and judicial proceedings,
or (4) taking such other  action as is  reasonably  requested by the Lessee from
time to time. If Lessee conducts and controls such contest, it shall use counsel
selected by it and consented to by the  Indemnified  Person (which consent shall
not be unreasonably withheld), except that in the event of any material conflict
of interest between Lessee and such Indemnified  Person, such Indemnified Person
may retain separate  counsel,  the reasonable fees and expenses of which will be
paid by the Lessee.

     (iii) The Person  controlling  any contest shall consult in good faith with
the non-controlling  Person and shall keep the non-controlling  party reasonably
informed  as to the  conduct  of such  contest;  provided,  that  all  decisions
ultimately  shall be made in the sole discretion of the controlling  party.  The
parties agree that an Indemnified Person may at any time decline to take further
action with respect to the contest of any Imposition and may settle such contest
if such  Indemnified  Person  shall waive its rights to any  indemnity  from the
Lessee that otherwise  would be payable in respect of such claim (and any future
claim by any taxing  authority,  the contest of which is  precluded by reason of
such resolution of such claim) and shall pay to the Lessee any amount previously
paid  or  advanced  by  the  Lessee  pursuant  to  this  Section  7.1  by way of
indemnification  or advance for the payment of an Imposition other than expenses
of such contest.

     (iv)  Notwithstanding  the  foregoing  provisions  of this  Section 7.1, an
Indemnified Person shall not be required to take any action and the Lessee shall
not be  permitted  to  contest  any  Impositions  in its own name or that of the
Indemnified Person unless (A) the Lessee shall have agreed in writing to pay and
shall pay to such  Indemnified  Person  on demand  and on an After Tax Basis all
reasonable costs, losses and expenses that such Indemnified Person

                                      -44-

<PAGE>




actually  incurs in connection  with  contesting  such  Impositions,  including,
without limitation,  all reasonable legal, accounting and investigatory fees and
disbursements,  and  the  amount  of  such  Imposition  should  the  contest  be
unsuccessful,  (B) in the case of a claim that must be pursued in the name of an
Indemnified  Person  (or an  Affiliate  thereof),  the  amount of the  potential
indemnity (taking into account all similar or logically related claims that have
been or could be raised in any audit involving such Indemnified Person for which
the Lessee may be liable to pay an  indemnity  under this  Section  7.1) exceeds
$100,000,  (C) the Indemnified Person shall have reasonably  determined that the
action to be taken will not result in any material danger of sale, forfeiture or
loss of any  Equipment,  or any  part  thereof  or  interest  therein,  will not
interfere  with the  payment of Rent,  and will not  result in risk of  criminal
liability, (D) if such contest shall involve the payment of the Imposition prior
to  the  contest,  the  Lessee  shall  provide  to  the  Indemnified  Person  an
interest-free  advance in an amount equal to the Imposition that the Indemnified
Person  is  required  to pay  (with no  additional  net  after-tax  cost to such
Indemnified Person), (E) in the case of a claim that must be pursued in the name
of an  Indemnified  Person (or an  Affiliate  thereof),  the  Lessee  shall have
provided  to such  Indemnified  Person an opinion  of  independent  tax  counsel
selected by the  Indemnified  Person and reasonably  satisfactory  to the Lessee
stating that a reasonable basis exists to contest such claim (or, in the case of
an appeal of an adverse determination,  an opinion of such counsel to the effect
that the position asserted in such appeal will more likely than not prevail) and
(F) no Lease Event of Default shall have occurred and be continuing. In no event
shall  an  Indemnified   Person  be  required  to  appeal  an  adverse  judicial
determination  to the United States Supreme Court.  In addition,  an Indemnified
Person  shall not be  required  to contest  any claim in its name (or that of an
Affiliate) if the subject  matter  thereof  shall be of a continuing  nature and
shall  have  previously   been  decided   adversely  by  a  court  of  competent
jurisdiction  pursuant to the contest  provisions  of this Section  7.1,  unless
there  shall  have  been a change  in Law (or  interpretation  thereof)  and the
Indemnified Person shall have received,  at the Lessee's expense,  an opinion of
independent  tax  counsel  selected  by the  Indemnified  Person and  reasonably
acceptable  to the  Lessee  stating  that as a result of such  change in Law (or
interpretation  thereof), it is more likely than not that the Indemnified Person
will prevail in such contest.

                        7.2 Special Income Tax Indemnity.

     (a)  Indemnity.  The Lessee will indemnify the Lessor and each Holder on an
After  Tax  Basis for (i) any loss,  reduction,  failure  to claim  (based on an
opinion  of  tax  counsel  that  there  is  no   reasonable   basis  to  claim),
disallowance,  recapture,  or deferral, in whole or in part, of any tax benefits
that the Lessor or such Holder has claimed in connection  with the Equipment and
the  transactions  contemplated  by the  Operative  Agreements  and  any  costs,
expenses, losses or breakage incurred by the Lessor or such Holder in connection
therewith,  and (ii) any  inclusion  (an  "Inclusion")  in the  Lessor's or such
Holder's foreign, federal, state or local gross income of any amounts other than
(A) Basic Rent, Renewal Rent,  Stipulated Loss Value, or the purchase price paid
by Lessee pursuant to Section 21.2 of the Lease, in the amounts and at the times
provided in the Lease;  (B)  payments  made  hereunder  or under the Lease on an
After-Tax  Basis;  (C) any other amount to the extent that such income Inclusion
is completely offset by a deduction of the same

                                      -45-

<PAGE>




character  and in the same  taxable  year as the  Inclusion;  and (D) any amount
designated  as a pre-tax fee or interest  payment due and owing to the Lessor or
such Holder under the terms of the Operative Agreements, each loss and Inclusion
under clause (a)(i) and (ii) constituting a "Tax Loss." This tax indemnity shall
constitute an "all events" indemnity,  covering, by way of example only, any Tax
Loss resulting from a change of law, change in tax rates,  recharacterization of
the  transaction  for tax  purposes,  and the  Lessor's  inability  to currently
utilize any tax benefits.  Notwithstanding  the foregoing,  the Lessee shall not
indemnify the Lessor or any Holder for (i) a Tax Loss resulting  solely from (x)
such Holder's failure to take the actions within its control that are reasonably
necessary  to secure the  benefits  that are the  subject of the Tax Loss or (y)
such Holder's  failure to prevent the Trust from  becoming an entity  separately
subject to United States federal income tax liability; or (ii) a Tax Loss to the
extent  that such Tax Loss  exceeds the amount that the Tax Loss would have been
had the Lessor not  transferred,  assigned,  pledged or sold its interest in the
Equipment after the applicable  Closing Date or had such Holder not transferred,
assigned,  pledged or sold its  interest in its  Certificate  or in the Trust or
Trust Estate after the applicable Closing Date.

     (b)  Computation  of Indemnity  and  Gross-Up;  Payment.  The amount of the
indemnity  payable as a result of a Tax Loss,  and the gross-up of the indemnity
payment for income taxes attributable to the indemnity payment hereunder,  shall
be computed using the actual rate(s) of United States  federal,  state and local
tax then in effect and applicable to the Lessor or the affected  Holder,  as the
case may be. An event or occurrence giving rise to a Tax Loss for federal income
tax purposes  shall be deemed to give rise to a Tax Loss at the same time and in
the same amount for state and local income tax purposes. At the Lessor's option,
the Lessee shall pay the indemnity in installments on each subsequent  Scheduled
Payment Date or by an amendment to the Lease.

     (c) Certain Adjustments.  If the Lessor shall suffer a Tax Loss involving a
tax benefit  that was taken into  account in  calculating  any amount  under the
Lease,  then such value or values  shall be  adjusted  to take into  account the
unavailability, if any, of such tax benefit.

     (d) Contests.  Any contests of claims arising in connection with a Tax Loss
shall be conducted  under the  provisions  set forth in Section  7.1(e)  hereof,
except that (i) references to the  Indemnified  Person shall be to the Lessor or
the Holders,  or both, as the case may be; and (ii)  references to an Imposition
shall be to a Tax Loss.

            7.3 General Indemnification and Waiver of Certain Claims.

     The Lessee hereby assumes liability for, and does hereby agree,  whether or
not any of the transactions  contemplated hereby are consummated,  to indemnify,
protect, save, defend,  exonerate, pay and hold harmless each Indemnified Person
on  an  After-Tax  Basis  from  and  against  any  and  all  obligations,  fees,
liabilities,  losses, interest,  damages,  punitive damages,  penalties,  fines,
claims, demands,  actions,  suits,  judgments,  costs and expenses (collectively
"Expenses"),  including, without limitation,  reasonable legal fees and expenses
payable pursuant to

                                      -46-

<PAGE>




Section 2.5(a) (including,  without  limitation,  such reasonable legal fees and
expenses  incurred in connection  with the  enforcement or  modification of this
Agreement or any other Operative Agreement), of every kind and nature whatsoever
imposed on, incurred by, or asserted against any Indemnified  Person, in any way
relating to or arising out of (a) the Equipment,  including  without  limitation
the  manufacture,  construction,  ordering,  purchase,  acceptance or rejection,
ownership, delivery, leasing, releasing, subleasing, possession, use, operation,
maintenance,   storage,  titling  or  re-titling,   licensing  or  re-licensing,
documentation,  removal, return, sale (including, without limitation, sale by an
Indemnified  Person to the Lessee  pursuant  to the terms of the Lease) or other
applications or dispositions of the Equipment,  including,  without  limitation,
any of such as may arise  from (i) loss or damage  to any  property  or death or
injury to any Person, (ii) patent or latent defects in the Equipment (whether or
not  discoverable  by the Lessee or any  Indemnified  Person),  (iii) any claims
based on strict liability in tort or otherwise, (iv) any claims based on patent,
trademark  or  copyright  infringement  and  (v)  any  claims  relating  to  any
Environmental  Violation,  Hazardous  Material or  otherwise  based on liability
arising  under any  Environmental  Law or other  pollution  control Law, (b) any
failure on the part of the Lessee to perform or comply  with any of the terms of
the Lease, any other Operative Agreement or any document, instrument,  agreement
or contract  entered  into in relation  hereto or  otherwise  in relation to the
Equipment,  (c) any claims,  Liens or legal processes regarding such Indemnified
Person's  title  to or  interest  in the  Equipment  (except  as such  arise  in
connection with Lessor's Liens),  (d) any representation or warranty made by the
Lessee  under or in  connection  with this  Agreement,  the Lease,  or any other
Operative  Agreement  or any  certificate  or  report  delivered  by the  Lessee
pursuant  hereto or thereto  which  shall have been  false or  incorrect  in any
material  respect  when made or deemed  made,  or (e) the  Operative  Agreements
(including,  without limitation,  Section 8 of this Agreement). The Lessee shall
not be required to indemnify an Indemnified Person for any claims resulting from
acts which would  constitute the willful  misconduct or gross negligence of such
Indemnified  Person. The Lessee shall give each Indemnified Person prompt notice
of any  occurrence,  event or condition  known to the Lessee as a consequence of
which any  Indemnified  Person is or is  reasonably  likely  to be  entitled  to
indemnification  hereunder.  The  indemnification  provided in this  Section 7.3
shall  specifically  apply to and  include  claims or  actions  brought by or on
behalf of  employees  of the Lessee  notwithstanding  any  immunity to which the
Lessee may otherwise be entitled under any  industrial or worker's  compensation
Laws. The Lessee shall promptly upon request of any such Indemnified Person (but
in any event within 30 days of such request)  reimburse such Indemnified  Person
for amounts  expended by it in connection  with any of the foregoing or pay such
amounts directly.

     In case any action,  suit or proceeding is brought  against any Indemnified
Person  in  connection  with  any  claim  indemnified  against  hereunder,  such
Indemnified  Person will,  after receipt of notice of the  commencement  of such
action, suit or proceeding,  notify the Lessee thereof,  enclosing a copy of all
papers served upon such Indemnified  Person;  provided,  failure to deliver such
notice will not impair the rights of  indemnification of such Indemnified Person
unless such failure by the Indemnified  Person  materially and adversely affects
the ability of the Lessee to defend such action, suit or proceeding.  The Lessee
shall,  at its sole cost and expense,  assume  control of such  action,  suit or
proceeding (with counsel to be selected by the Lessee and

                                      -47-

<PAGE>




consented to by the  Indemnified  Person,  such  consent not to be  unreasonably
withheld).  Notwithstanding  any of the  foregoing to the  contrary,  the Lessee
shall not be entitled to pursue any such  action,  suit or  proceeding  if (i) a
Lease Event of Default shall have occurred and be continuing,  (ii) such action,
suit or proceeding will involve a material risk of the sale,  forfeiture or loss
of, or the  creation of any lien on the  Equipment  unless the Lessee shall have
posted a bond or other security reasonably satisfactory to the Owner Trustee and
the Holders in respect to such risk, (iii) such  proceedings,  in the good faith
opinion of the Indemnified Person, entail any risk of criminal liability to such
Indemnified Person or (iv) a conflict of interest exists between the Indemnified
Person and the Lessee  with  respect to such  action,  suit or  proceeding.  The
Indemnified  Person may  participate at its own expense and with its own counsel
in any judicial  proceeding  controlled by the Lessee  pursuant to the preceding
provisions;  provided,  in the event of a material  conflict of interest between
the  Lessee and such  Indemnified  Person,  the  Lessee  shall pay the costs and
expenses of counsel for such Indemnified Person.

     Each  Indemnified  Person  shall  supply the Lessee  with such  information
reasonably  available  to it  and  reasonably  requested  by  the  Lessee  as is
necessary  or  advisable  for  the  Lessee  to  control  or  participate  in any
proceeding to the extent  permitted by this Section 7.3. Unless a Lease Event of
Default shall have occurred and be continuing,  each  Indemnified  Person agrees
not to enter into a  settlement  or other  compromise  with  respect to any such
action,  suit or  proceeding  without the prior  written  consent of the Lessee,
which  consent  shall  not be  unreasonably  withheld  or  delayed,  unless  the
Indemnified  Person  waives  its right to be  indemnified  with  respect to such
action, suit or proceeding.  The Lessee shall supply the Indemnified Person with
such information  reasonably requested by the Indemnified Person as is necessary
or  advisable  for the  Indemnified  Person to  control  or  participate  in any
proceeding to the extent permitted by this Section 7.3. In addition,  the Lessee
shall  be  subrogated  to the  rights  of the  Indemnified  Person  against  any
manufacturer  or maintenance  provider with respect to any such action,  suit or
proceeding  with  respect  to which the  Lessee  has  actually  reimbursed  such
Indemnified  Person for amounts expended by it or has actually paid such amounts
directly  pursuant  to this  Section  7.3;  provided,  further to do so will not
impair the  rights of  indemnification  of such  Indemnified  Person  unless the
failure  by the  Indemnified  Person  to  deliver  such  notice  materially  and
adversely  affects  the  ability of the Lessee to defend  such  action,  suit or
proceeding.

               SECTION 8. YIELD PROTECTION; TAXES; COMPENSATION.

                        8.1 Yield Protection Provisions.

     (a) If, after the date hereof,  any  Participant  has  determined  that the
adoption or the  becoming  effective  of, or any change in, or any change by any
Governmental  Authority,  central  bank or  comparable  agency  charged with the
interpretation or administration thereof in the interpretation or administration
of, any  applicable  Law  regarding  capital  adequacy,  or  compliance  by such
Participant  or its parent  with any  request  or  directive  regarding  capital
adequacy (whether or not having the force of Law) of any such authority, central
bank or comparable  agency, has or would have the effect of reducing the rate of
return on such Participant's or its parent's capital or

                                      -48-

<PAGE>




assets as a consequence of such Participant's  obligations  hereunder to a level
below that which such Participant or its parent could have achieved but for such
adoption,  effectiveness,  change or compliance  (taking into consideration such
Participant's or its parent's policies with respect to capital adequacy),  then,
upon notice from such Participant to the Owner Trustee,  the Owner Trustee shall
be obligated to pay (with funds provided by the Lessee as Supplemental  Rent) to
such  Participant  such  additional  amount or amounts as will  compensate  such
Participant  for such  reduction.  Each  determination  by such  Participant  of
amounts owing under this Section 8.1 shall, absent manifest error, be conclusive
and binding on the parties hereto.

     (b)  Notwithstanding  any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring  after the Closing Date shall make it unlawful for any  Participant to
fund or maintain its Loan Advances or its Holder  Advances,  as the case may be,
based upon LIBOR,  (a) such  Participant  shall  promptly give written notice of
such circumstances to the Owner Trustee, the Administrative Agent and the Lessee
(which notice shall be withdrawn  whenever such  circumstances no longer exist),
(b) the  commitment  of such  Participant  to continue  Loan  Advances or Holder
Advances,  as the case may be, based upon LIBOR shall  forthwith be canceled and
(c) the  interest  rate on the  outstanding  Loan  Advances and the yield on the
outstanding Holder Advances,  as the case may be, shall  automatically  begin to
accrue  or be  computed,  as the case may be,  based  upon the CD Rate  (and all
calculations  and  definitions  shall  substitute CD Rate for LIBOR) on the next
succeeding  Scheduled  Payment Date or within such earlier period as required by
Law until such time as such  Participant  shall  notify the Owner  Trustee,  the
Administrative  Agent  and the  Lessee  that it is no longer  unlawful  for such
Participant  to fund or maintain Loan Advances or Holder  Advances,  as the case
may be, based upon LIBOR,  whereupon the interest rate on the  outstanding  Loan
Advances and the yield on the outstanding Holder Advances shall automatically be
restored to accrue or be computed based upon LIBOR.

     (c) If the  adoption of or any change in any  Requirement  of Law or in the
interpretation  or  application  thereof  applicable  to  any  Participant,   or
compliance  by any  Participant  with any request or  directive  (whether or not
having the force of Law) from any central bank or other Governmental  Authority,
in each case made  subsequent  to the Closing  Date (or,  if later,  the date on
which a Participant becomes a Participant):

     (i) shall subject such  Participant to any Tax of any kind  whatsoever with
respect to the Operative Agreements, ownership, maintenance, or financing of the
Loan  Advances or Holder  Advances or payments of other amounts due, as the case
may be,  made by it,  or  change  the  basis of  taxation  of  payments  to such
Participant in respect thereof (except for Non-Excluded Taxes covered by Section
8.2  hereof  (including  Non-  Excluded  Taxes  imposed  solely by reason of any
failure of such Participant to comply with its obligations  under Section 8.2(b)
hereof) and changes in Taxes measured by or imposed upon the overall net income,
or franchise Tax (imposed in lieu of such net income Tax),  of such  Participant
or its applicable lending office, or any branch, or any affiliate thereof);


                                      -49-

<PAGE>




                  (ii) shall  impose,  modify or hold  applicable  any  reserve,
         special  deposit,  compulsory  loan or similar  requirement  (including
         without limitation any requirement imposed by the Board of Governors of
         the Federal  Reserve  System) against assets held by, deposits or other
         liabilities  in or  for  the  account  of,  advances,  loans  or  other
         extensions  of credit  by, or any other  acquisition  of funds by,  any
         office  of such  Participant  which is not  otherwise  included  in the
         determination of LIBOR hereunder;

                  (iii) shall  impose on such  Participant  any other  condition
         (excluding any Tax of any kind whatsoever); or

                  (iv) shall impose upon any Indemnified Party any other expense
         (including,   without  limitation,   reasonable   attorneys'  fees  and
         expenses,  and  expenses  of  litigation  or  preparation  therefor  in
         contesting any of the foregoing)  with respect to this  Agreement,  the
         other Operative Agreements, the ownership,  maintenance or financing of
         the Loan  Advances or Holder  Advances or payments of amounts due under
         the Operative  Agreements or any obligation of any Indemnified Party to
         advance funds under the Operative Agreements,  the Loan Advances by the
         Lenders,  the Holder Advances by the Holders or otherwise in respect of
         this  Agreement,  the  other  Operative  Agreements  or the  ownership,
         maintenance or financing of the Loans or the Holder Advances;

and the result of any of the foregoing in (i),  (ii),  (iii) or (iv) above is to
increase the cost to such Participant, by an amount which such Participant deems
to be  material,  of  continuing  or  maintaining  the Loan  Advances  or Holder
Advances,  as the case may be, based upon LIBOR,  then, upon notice to the Owner
Trustee from such Participant,  through the Administrative  Agent, in accordance
herewith,  the Owner  Trustee  shall be  obligated  to promptly  pay (with funds
provided by the Lessee as Supplemental Rent) to such Participant, within 10 days
after  its  demand,   any  additional   amounts  necessary  to  compensate  such
Participant for such increased cost or reduced amount receivable.

     (d) If a  Participant  becomes  entitled  to claim any  additional  amounts
pursuant to this Section 8.1, it shall provide  prompt written notice thereof to
the Owner Trustee,  through the Administrative Agent, certifying (x) that one of
the  events  described  in this  Section  8.1 has  occurred  and  describing  in
reasonable  detail the nature of such  event,  (y) as to the  increased  cost or
reduced amount  resulting  from such event and (z) as to the  additional  amount
demanded  by such  Participant  and a  reasonably  detailed  explanation  of the
calculation  thereof.  Such a certificate as to any additional  amounts  payable
pursuant to this Section 8.1 submitted by such Participant to the Owner Trustee,
through the Administrative Agent, shall be conclusive and binding on the parties
hereto in the absence of manifest error.

                             8.2 Withholding Taxes.

     (a) Except as provided  below in this Section 8.2, all payments made by the
Owner Trustee under this Agreement, any Operative Agreements,  the Notes and the
Certificates,

                                      -50-

<PAGE>




as the case may be,  shall be made free and clear of, and without  deduction  or
withholding  for or on account of, any present or future income,  stamp or other
Taxes, now or hereafter imposed, levied, collected,  withheld or assessed by any
court or Governmental  Authority excluding Taxes measured by or imposed upon the
overall net income of any Participant or its applicable  lending office,  or any
branch or affiliate  thereof,  and all  franchise  Taxes or Taxes on the overall
capital or net worth of any Participant or its applicable lending office, or any
branch or  affiliate  thereof,  in each case  imposed  in lieu of income  Taxes,
imposed:  (i) by the  jurisdiction  under  the Laws of which  such  Participant,
applicable lending office, branch or affiliate is organized or is located, or in
which its principal executive office is located, or any nation within which such
jurisdiction is located or any political  subdivision thereof, or (ii) by reason
of  any  connection  between  the  jurisdiction   imposing  such  Tax  and  such
Participant,  applicable  lending  office,  branch  or  affiliate  other  than a
connection  arising solely from such Participant  having executed,  delivered or
performed  its  obligations,   or  received  payment  under  or  enforced,  this
Agreement, the Operative Agreements, the Notes, or the Certificates, as the case
may be. If any such non-excluded Taxes ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Administrative Agent or any Participant
hereunder or under the Notes or the Certificates,  (A) the amounts so payable to
the  Administrative  Agent or such Participant  shall be increased to the extent
necessary  to  yield to the  Administrative  Agent  or such  Participant  (after
payment of all  Non-Excluded  Taxes)  interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement,  the Notes
or the Certificates; provided, however, that the Owner Trustee shall be entitled
to deduct and  withhold  any  Non-Excluded  Taxes and shall not be  required  to
increase any such amounts payable to such Participant if such Participant is not
organized  under the Laws of the United States of America or a state thereof and
such Participant  fails to comply with the requirements of paragraph (b) of this
subsection whenever any Non-Excluded Taxes are payable by the Owner Trustee, and
(B) as promptly  as  possible  thereafter  the Owner  Trustee  shall send to the
Administrative Agent for its own account or for the account of such Participant,
as the case may be, a certified copy of an original official receipt received by
the Owner Trustee showing payment thereof. If the Owner Trustee fails to pay any
Non-Excluded  Taxes when due to the  appropriate  taxing  authority  or fails to
remit to the  Administrative  Agent  the  required  receipts  or other  required
documentary evidence,  the Owner Trustee shall indemnify (with funds provided by
the Lessee as Supplemental  Rent) the  Administrative  Agent and any Participant
for any incremental Taxes,  interest or penalties that may become payable by the
Administrative Agent or such Participant as a result of any such failure.

     (b) If any  Participant  is not  incorporated  under the laws of the United
States of America or any state thereof such Participant shall:

                  (i) on or before the date of any payment by the Owner  Trustee
         under this Agreement,  the Notes or the  Certificates,  as the case may
         be,  to  such  Participant,  deliver  to  the  Owner  Trustee  and  the
         Administrative  Agent (A) two duly  completed  copies of United  States
         Internal  Revenue  Service Form 1001 or 4224,  or successor  applicable
         form,  as the case may be,  certifying  that it is  entitled to receive
         payments under this  Agreement,  the Notes or the  Certificate,  as the
         case may be, without deduction or withholding of any

                                      -51-

<PAGE>




         United States federal income Taxes and (B) an Internal  Revenue Service
         Form W-8 or W- 9, or any successor applicable form, as the case may be,
         certifying  that it is entitled  to an  exemption  from  United  States
         backup withholding Tax;

                  (ii) deliver to the Owner Trustee and the Administrative Agent
         two further copies of any such form or  certification  on or before the
         date that any such form or  certification  expires or becomes  obsolete
         and after the  occurrence  of any event  requiring a change in the most
         recent form previously delivered by it to the Owner Trustee; and

                  (iii)  (A)  obtain  such  extensions  of time for  filing  and
         complete such forms or certifications as may reasonably be requested by
         the Owner Trustee or the Administrative Agent in order to establish the
         legal  entitlement of such Participant to an exemption from withholding
         with  respect  to  payments  under  this  Agreement,  the  Notes or the
         Certificate, as the case may be; or

                           (B) in the case of any such Participant that is not a
         "bank"  within the  meaning of Section  881(c)(3)(A)  of the Code,  (1)
         represent  to the Lessee and the Owner  Trustee (for the benefit of the
         Owner  Trustee  and  the  Administrative  Agent)  that it is not a bank
         within the meaning of Section  881(c)(3)(A)  of the Code,  (2) agree to
         furnish to the Owner  Trustee  on or before the date of any  payment by
         the Owner Trustee, with a copy to the Administrative Agent two accurate
         and complete  original  signed copies of Internal  Revenue Service Form
         W-8, or any successor  applicable form, as the case may be,  certifying
         to such Participant's legal entitlement at the date of such certificate
         to an  exemption  from U.S.  withholding  Tax under the  provisions  of
         Section  881(c) of the Code with  respect to  payments to be made under
         this Agreement, the Notes or the Certificates,  as the case may be (and
         to deliver to the  Lessee,  the Owner  Trustee  and the  Administrative
         Agent two further  copies of such form on or before the date it expires
         or becomes  obsolete and after the occurrence of any event  requiring a
         change in the most recently provided form and, if necessary, obtain any
         extensions  of time  reasonably  requested  by the  Lessee,  the  Owner
         Trustee or the  Administrative  Agent for filing  and  completing  such
         forms),  and (3) agree,  to the extent legally  entitled to do so, upon
         reasonable  request by the Lessee or the Owner  Trustee,  to provide to
         the Lessee and the Owner  Trustee (for the benefit of the Owner Trustee
         and the  Administrative  Agent) such other  forms as may be  reasonably
         required  in  order  to  establish  the  legal   entitlement   of  such
         Participant to an exemption from  withholding  with respect to payments
         under this Agreement,  the Notes or the  Certificates,  as the case may
         be.

Notwithstanding  the above,  if any  change in treaty or other Law has  occurred
after the date such Person  becomes a  Participant  hereunder  which renders all
such forms  inapplicable  or which  would  prevent  such  Participant  from duly
completing and delivering any such form with respect to it and such  Participant
so advises the Owner Trustee and the Administrative  Agent then such Participant
shall be  exempt  from  such  requirements.  Each  Person  that  shall  become a
Participant or a participant of a Participant  shall,  upon the effectiveness of
the related transfer, be required to

                                      -52-

<PAGE>




provide all of the forms,  certifications  and statements  required  pursuant to
this  Section  8.2(b);  provided,  that  in  the  case  of  a  participant  of a
Participant the obligations of such participant of such Participant  pursuant to
this  Section  8.2(b)  shall  be  determined  as  if  the  participant  of  such
Participant were a Participant  except that such participant of such Participant
shall furnish all such required  forms,  certifications  and  statements to such
Participant from which the related participation shall have been purchased.

                                8.3 Compensation.

     The Owner Trustee  promises to indemnify (with funds provided by the Lessee
as  Supplemental  Rent) and to hold each  Participant  harmless from any loss or
expense  which such  Participant  may sustain or incur as a  consequence  of the
failure of the Lessee to close on any funding to be made on a Commencement  Date
as identified in any  Certificate of Delivery and Acceptance or as a consequence
of the making of any  payment  of Basic  Rent or Renewal  Rent on any date other
than a Scheduled Payment Date. Such indemnification  shall be an amount equal to
(i) the  amount of  interest  or yield,  as the case may be,  which  would  have
accrued or been  realized  on the amount not funded or the amount  paid,  as the
case may be,  for the  period  from the  date of such  failure  to close or such
payment,  as the case may be, to the next succeeding  Scheduled  Payment Date at
the rate of interest  yield,  as the case may be,  provided for in the Operative
Agreements  minus (ii) the amount of interest (as reasonably  determined by such
Participant)  which  would have  accrued to such  Participant  on such amount by
placing such amount on deposit for a comparable period with leading banks in the
London interbank market.


                            SECTION 9. MISCELLANEOUS

                                  9.1 Consents.

     Each Holder  hereby  covenants  and agrees  that it shall not  unreasonably
withhold  its consent to any consent  requested of the Owner  Trustee  under the
terms of the Operative  Agreements  that by its terms is not to be  unreasonably
withheld by the Owner Trustee.

                            9.2 Appointment of Agent.

     The Owner Trustee, the Holders and the Lenders hereby designate and appoint
the Administrative  Agent as the agent for each such Person under this Agreement
and the other Operative  Agreements to take such action on behalf of such Person
under the  provisions  of Section  6.9 of this  Agreement,  to receive  notices,
documents and other items under the  Operative  Agreements  (including,  without
limitation,  pursuant to Sections 2.3(c), 2.8, 3.2(l),  3.3(m),  4.1(a), 4.2(c),
5.3,  5.4, 5.6 and 5.8 of this  Agreement and Sections 19 and 21.1 of the Lease)
and to take such other  action,  exercise such powers and perform such duties as
are  expressly  delegated  to the  Administrative  Agent  by the  terms  of this
Agreement and the other Operative Agreements, together with such other powers as
are reasonably incidental thereto. The Owner Trustee and the

                                      -53-

<PAGE>




Holders, as applicable, hereby designate and appoint the Administrative Agent as
the  collateral  agent for each such Person under this  Agreement  and the other
Operative  Agreements to accept and hold the Liens (a) securing the obligations,
agreements  and covenants of the Owner Trustee in favor of the Holders under the
Operative  Agreements  and  granted  by  the  Owner  Trustee  in  favor  of  the
Administrative Agent for the benefit of the Holders under the Loan Agreement and
(b) securing the  obligations,  agreements and covenants of the Lessee under the
Lease and the other Operative  Agreements (to the extent such obligations run in
favor of the Owner Trustee or the Holders) granted by the Lessee in favor of the
Owner Trustee for the benefit of the Holders under the Lease and assigned by the
Owner Trustee in favor of the  Administrative  Agent pursuant to various Uniform
Commercial Code financing  statements.  The Owner Trustee hereby  designates and
appoints the  Administrative  Agent as its  attorney-in-fact  for the purpose of
executing  UCC-1  financing  statements  and UCC-3  assignments on behalf of the
Owner Trustee to evidence the  assignment to the  Administrative  Agent of UCC-1
financing  statements  granted by the Lessee in favor of the Owner Trustee.  The
Administrative Agent hereby accepts such appointments and agrees,  promptly upon
receipt by the  Administrative  Agent,  to forward  copies of all such  notices,
documents and other items (referenced in the first sentence of this Section 9.2)
to the Owner  Trustee,  the Holders and the Lenders.  The  Administrative  Agent
further  agrees for the benefit of the Owner  Trustee and each Holder and Lender
to act on behalf of such  parties  respecting  Uniform  Commercial  Code filings
pertaining to the Equipment and other filings evidencing Liens on the Equipment,
to the extent such Uniform  Commercial  Code filings and other filings relate to
Liens in favor of any such  party and are made in  connection  with the  Overall
Transaction.  The  preceding  sentence  is intended  as an  agreement  among the
Administrative Agent, the Owner Trustee, and each Holder and Lender and shall in
no way impact or diminish  the  obligations  of the Lessee  under the  Operative
Agreements.  For purposes of this Section 9.2, the Lenders hereby reaffirm their
appointment  of the  Administrative  Agent  under  the Loan  Agreement,  and the
Administrative  Agent hereby reaffirms its acceptance of such  appointment.  The
parties to this Agreement further agree that any successor  Administrative Agent
appointed  pursuant to the terms of the Loan Agreement  shall also be subject to
approval by the Required Holders.

                                  9.3 Notices.

     Unless otherwise  expressly specified or permitted by the terms hereof, all
communications  and  notices  provided  for  herein  shall be in writing or by a
telecommunications  device  capable of creating a written  record,  and any such
notice shall become  effective (a) upon  personal  delivery  thereof,  including
without limitation by express mail or courier service, (b) in the case of notice
by United States mail, certified or registered,  postage prepaid, return receipt
requested,  upon  receipt  thereof  or (c) in  the  case  of  notice  by  such a
telecommunications   device,   upon   transmission   thereof;   provided,   such
transmission  is promptly  confirmed  by any of the methods set forth in clauses
(a) or (b) above or this clause (c), in each case addressed to each party hereto
at its address set forth below or, in the case of any such party hereto, at such
other address as such party may from time to time designate by written notice to
the other parties hereto:


                                      -54-

<PAGE>




If to the Lessee:          Apple South, Inc.
                           Corporate Headquarters
                           Hancock at Washington
                           Madison, Georgia  30650
                           Attention:      Mr.  Erich J.  Booth,
                                           Chief Financial Officer
                            Telephone: (706) 342-4552
                            Facsimile: (706) 342-7890

If to the Owner
Trustee:                   First Security Bank, National Association
                           79 South Main Street, 3rd Floor
                           Salt Lake City, Utah 84111
                           Attention:       Mr.  Val T.  Orton
                                            Vice President
                           Telephone:       (801) 246-5300
                           Facsimile:       (801) 246-5053

with a copy to:            the Holder at the address set forth below

If to the Holder:          SunTrust Bank, Atlanta
                           25 Park Place, Mail Code 130
                           Atlanta, Georgia 30303
                           Attention:       Mr. Mark T. MacElroy
                           Telephone:       (404) 724-3513
                           Facsimile:       (404) 827-6695

If to the Administrative
Agent:                     SunTrust Bank, Atlanta
                           25 Park Place, Mail Code 126
                           Atlanta, Georgia 30303
                           Attention:       Mr.  Thomas R.  Banks
                           Telephone:       (404) 724-3293
                           Facsimile:       (404) 588-8833

If to any Lender:          To the addresses of such Lender set forth on the 
                              signature pages to the Loan Agreement

If to any Person  which  becomes a party to this  Agreement  (including  without
limitation  as a Lender)  after the Closing Date, to such address as such Person
may from time to time designate by written notice to the other parties hereto.

                           

                                      -55-

<PAGE>

                          9.4 Successors and Assigns.



     This Agreement shall be binding upon and shall inure to the benefit of, and
shall be enforceable by, the parties hereto and their respective  successors and
assigns  as  permitted  by and in  accordance  with the  terms of the  Operative
Agreements,  including,  without  limitation,  each  successive  holder  of  any
Certificate and each successive holder of any Note issued and delivered pursuant
to this  Agreement,  the  Trust  Agreement  or the  Loan  Agreement.  Except  as
expressly provided herein or in the other Operative Agreements,  no party hereto
may assign its interests herein without the consent of the parties hereto.

                 9.5 Governing Law; Submission To Jurisdiction.

     THIS  AGREEMENT  SHALL BE IN ALL  RESPECTS  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF  GEORGIA,  INCLUDING  ALL  MATTERS  OF
CONSTRUCTION,   VALIDITY  AND   PERFORMANCE,   WITHOUT   GIVING  EFFECT  TO  ANY
CONFLICT-OF-LAWS  RULES.  EACH  PARTY TO THIS  AGREEMENT  AND  THEIR  RESPECTIVE
SUCCESSORS AND ASSIGNS PERMITTED  HEREUNDER,  (I) HEREBY IRREVOCABLY SUBMITS FOR
ITSELF AND ITS PROPERTY TO THE  NONEXCLUSIVE  JURISDICTION  OF THE COURTS OF THE
STATE OF GEORGIA IN FULTON COUNTY, AND TO THE NON-EXCLUSIVE  JURISDICTION OF THE
UNITED  STATES  DISTRICT  COURT FOR THE  NORTHERN  DISTRICT OF GEORGIA,  FOR THE
PURPOSES OF ANY SUIT,  ACTION OR OTHER PROCEEDING  ARISING OUT OF THIS AGREEMENT
OR ANY OTHER OPERATIVE  AGREEMENT TO WHICH IT IS A PARTY,  THE SUBJECT MATTER OF
ANY THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY
ANY PARTY OR PARTIES  THERETO,  OR THEIR  SUCCESSORS  OR  ASSIGNS,  (II)  HEREBY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE,  OR OTHERWISE,
IN ANY SUCH SUIT,  ACTION OR PROCEEDING,  TO THE EXTENT  PERMITTED BY APPLICABLE
LAW, THAT THE SUIT,  ACTION OR PROCEEDING IS BROUGHT IN AN  INCONVENIENT  FORUM,
THAT THE  VENUE OF THE SUIT,  ACTION OR  PROCEEDING  IS  IMPROPER,  OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT TO WHICH IT IS A PARTY OR THE SUBJECT
MATTER OF ANY THEREOF OR ANY OF THE TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY
MAY NOT BE ENFORCED IN OR BY SUCH COURTS AND (III) HEREBY  WAIVES ITS RIGHT TO A
JURY TRIAL TO THE  FULLEST  EXTENT  PERMITTED  BY  APPLICABLE  LAW.  EACH OF THE
PARTIES TO THIS AGREEMENT  CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH  PROCEEDING  BY THE MAILING OF COPIES OF SUCH  PROCESS TO SUCH PARTY AT ITS
ADDRESS SPECIFIED IN SECTION 9.3.

                                      -56-

<PAGE>





                                9.6 Severability.

     Whenever possible, each provision of this Agreement shall be interpreted in
such  manner as to be  effective  and valid  under  applicable  Law,  but if any
provision of this Agreement  shall be prohibited by or invalid under the Laws of
any applicable jurisdiction, such provision, as to such jurisdiction,  shall be,
to the extent permitted by Law, ineffective to the extent of such prohibition or
invalidity,  without  invalidating  the  remainder  of  such  provision  or  the
remaining  provisions  of this  Agreement in such  jurisdiction  or in any other
jurisdiction.

                                9.7 Counterparts.

     This Agreement may be executed in any number of  counterparts  (and each of
the parties hereto shall not be required to execute the same counterpart).  Each
counterpart of this Agreement including a signature page executed by each of the
parties hereto shall be an original counterpart of this Agreement,  but all such
counterparts together shall constitute one instrument.


                                      -57-

<PAGE>




                   9.8 The Lessee's Right to Quiet Enjoyment.

     Each party to this  Agreement  acknowledges  notice of, and consents in all
respects to, the terms of the Lease,  and expressly  agrees that with respect to
the Lease,  so long as no Lease Event of Default has occurred and is  continuing
thereunder, it or any Person acting on its authority,  shall not, through its or
any such Person's actions or inactions, interfere with the Lessee's rights under
the Lease,  including without limitation the right to possession,  use and quiet
enjoyment  by the Lessee or any  permitted  sublessee  of the  Equipment  leased
thereunder.

                          9.9 Limitations of Liability.

     (a)  Neither  the  Lenders,   the  Owner  Trustee,   the  Holders  nor  the
Administrative  Agent shall have any  obligation  or duty to the Lessee,  to any
other party  hereto or to others with respect to the  transactions  contemplated
hereby,  except those  obligations or duties of such parties expressly set forth
in this Agreement and the other Operative  Agreements,  and neither the Lenders,
the Owner Trustee,  the Holders nor the Administrative Agent shall be liable for
performance  by any other  party  hereto of such other  party's  obligations  or
duties  hereunder.  Without  limiting the generality of the foregoing,  under no
circumstances  whatsoever shall the Lenders,  the Holders or the  Administrative
Agent be liable to the Lessee or any other  Person for any action or inaction on
the part of the Owner Trustee in connection with the  transactions  contemplated
herein,  whether  or not such  action  or  inaction  is  caused  by the  willful
misconduct  or gross  negligence  of the Owner  Trustee,  unless  such action or
inaction is at the direction of the Lenders,  the Holders or the  Administrative
Agent, as the case may be.

     (b) It is expressly  understood  and agreed by and among the Owner Trustee,
the Lessee,  the Holders,  the Lenders and the  Administrative  Agent, and their
respective  successors  and  permitted  assigns  that,  subject  to the  proviso
contained  in  this  Section  9.9(b),   all   representations,   warranties  and
undertakings  of the Owner  Trustee  hereunder  shall be binding  upon the Owner
Trustee only in its capacity as the Owner Trustee under the Trust Agreement, and
(except as expressly  provided  herein) the Owner Trustee shall not be liable in
its  individual  capacity  (i) for any  breach  thereof,  except  for its  gross
negligence  or  willful  misconduct,  or  (ii)  for  breach  of  its  covenants,
representations and warranties contained herein,  except to the extent expressly
covenanted or made in its individual capacity;  provided,  however, that nothing
in this Section  9.9(b) shall be construed to limit in scope or substance  those
representations  and  warranties  of the Owner  Trustee  made  expressly  in its
individual  capacity set forth herein.  The term "Owner Trustee" as used in this
Agreement shall include any successor trustee under the Trust Agreement.

                              9.10 Confidentiality.

     Each of the Owner Trustee,  the Lenders, the Holders and the Administrative
Agent agrees to exercise its best efforts (and, in any event,  with at least the
same degree of care as it  ordinarily  exercises  with  respect to  confidential
information of its other customers) to keep any information

                                      -58-

<PAGE>




delivered or made available by the Lessee to it, including,  without limitation,
information  obtained  by the Owner  Trustee,  such  Lender,  such Holder or the
Administrative  Agent, as the case may be, by reason of a visit or investigation
by any Person contemplated in Section 5.2,  confidential from any one other than
persons employed or retained by the Owner Trustee,  such Lender,  such Holder or
the Administrative  Agent, as the case may be, who are or are expected to become
engaged in evaluating,  approving, structuring or administering the transactions
contemplated by the Operative Agreements;  provided, however that nothing herein
shall prevent the Owner Trustee,  any Lender,  any Holder or the  Administrative
Agent from  disclosing  such  information  (i) to the Owner  Trustee,  any other
Lender, any other Holder or the  Administrative  Agent, as the case may be, (ii)
upon the order of any court or administrative  agency, (iii) upon the request or
demand of any regulatory agency or authority having  jurisdiction over the Owner
Trustee,  such Lender, such Holder or the Administrative  Agent, as the case may
be, (iv) which has been publicly  disclosed  other than by an act or omission of
the Owner Trustee,  such Lender, such Holder or the Administrative Agent, as the
case may be, except as permitted herein,  (v) to the extent reasonably  required
in connection with any litigation  (with respect to this  Agreement,  any of the
other  Operative  Agreements,  in connection  with any of the foregoing,  or any
other  obligations of the Lessee or any  Subsidiary  owing to the Owner Trustee,
any Lender, any Holder or the Administrative Agent, as the case may be) to which
the Owner Trustee,  such Lender, such Holder, the Administrative  Agent or their
respective  Affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (vii) to legal counsel and
independent  auditors  of the Owner  Trustee,  such  Lender,  such Holder or the
Administrative  Agent,  as the case may be, and (viii) to any actual or proposed
participant, assignee or other transferee of all or part of its rights hereunder
which has agreed in writing to be bound by the provisions of this Section 9.10.

                 9.11 Effectiveness and Survival of Indemnities.

     All  indemnification   obligations  of  the  Lessee,   including,   without
limitation, the indemnities set forth in Section 2.5 and Sections 7 and 8, shall
apply from the date of the  execution of this  Agreement  and shall  survive the
expiration  or  earlier  termination  of this  Agreement,  the  other  Operative
Agreements,  and all other  documents,  instruments,  agreements  and  contracts
entered into in connection herewith or otherwise relating to the Equipment,  and
are  expressly  made for the  benefit  of,  and shall be  enforceable  by,  each
Indemnified Person.  Notwithstanding  anything in this Agreement or in any other
document or  agreement to the  contrary,  any  indemnity  provided by any Person
hereunder  (including without limitation  Sections 7.1, 7.2, 8.1, 8.2 or 8.3) or
in  any  other  Operative  Agreement  shall  survive  the  termination  of  this
Agreement, the Lease and any other Operative Agreement.

                          9.12 Compliance Certificate.

     The Compliance  Certificate,  as required to be delivered from time to time
by the terms of the Operative  Agreements,  shall be executed by the  President,
any Vice President, the Treasurer

                                      -59-

<PAGE>




or the Chief  Financial  Officer of the Lessee and  delivered as required by the
applicable provisions of the Operative Agreements.



                                      -60-

<PAGE>




         IN WITNESS WHEREOF,  the parties hereto have caused this  Participation
Agreement to be executed and delivered by their  respective  officers  thereunto
duly authorized, all as of the date first above written.

                                                APPLE SOUTH, INC., as the Lessee


                                                     By:
                                                     Name:
                                                     Title:



                           [Signature Pages Continued]


                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                                     FIRST     SECURITY    BANK,
                                                     NATIONAL  ASSOCIATION,  not
                                                     in its individual  capacity
                                                     except     as     expressly
                                                     provided herein, but solely
                                                     as  Owner   Trustee   under
                                                     Apple South Trust No. 97-1


                                                     By:
                                                     Name:
                                                     Title:


                           [Signature Pages Continued]


                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                      SUNTRUST BANK, ATLANTA, as Administrative
                                      Agent



                                                     By:
                                                     Name:
                                                     Title:


                                                     By:
                                                     Name:
                                                     Title:

                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                            SUNTRUST BANK, ATLANTA, as
                                            a Lender



                                                     By:
                                                     Name:
                                                     Title:


                                                     By:
                                                     Name:
                                                     Title:



                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                         SOUTHTRUST BANK, NATIONAL
                                         ASSOCIATION



                                                     By:
                                                     Name:
                                                     Title:


                          [Signatures Pages Continued]

                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                           FIRST UNION NATIONAL BANK



                                                     By:
                                                     Name:
                                                     Title:


                          [Signatures Pages Continued]



                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                              BANKBOSTON, N.A.



                                                     By:
                                                     Name:
                                                     Title:


                          [Signatures Pages Continued]


                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                  AMSOUTH BANK


                                                     By:
                                                     Name:
                                                     Title:


                          [Signatures Pages Continued]

                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                         SUNTRUST BANK, ATLANTA,
                                         as the Holder



                                                     By:
                                                     Name:
                                                     Title:


                                                     By:
                                                     Name:
                                                     Title:




                   [SIGNATURE PAGE TO PARTICIPATION AGREEMENT]

<PAGE>




                                  ATTACHMENT A

                (Form of Certificate of Delivery and Acceptance)

                     CERTIFICATE OF DELIVERY AND ACCEPTANCE

     THIS CERTIFICATE OF DELIVERY AND ACCEPTANCE dated as of____________,  ____,
199_ is given by APPLE  SOUTH,  INC.,  as  Lessee,  under  that  certain  Master
Equipment Lease Agreement (Apple South Trust No. 97-1) dated as of September 24,
1997 (as  amended,  modified,  supplemented,  restated or replaced  from time to
time, the "Lease")  between Lessor and Lessee,  pursuant to the terms of Section
2.3(b) of the  Participation  Agreement (such term and other  capitalized  terms
used herein and not otherwise  defined  herein shall have the meanings  provided
therefor in the Agreement).  The Lessee hereby makes the following  requests and
certifications:

         1.       The Lessee requests that:

                  a.       The  Units  described  in  Annex  1  (the  "Class  of
                           Equipment")  be leased to the Lessee  pursuant to the
                           Lease.

                  b.       The Commencement Date for  funding of  the  Class  of
                           Equipment is---------.

         2.       The Lessee certifies that:

                  a.       The aggregate Equipment Cost of the Class of 
                           Equipment is $_________.

                  b.       The  allocation of the Equipment Cost of the Class of
                           Equipment  by  state  is set  forth in Annex 2 and is
                           true and correct.

                  c.       As  between  the Lessee  and the  Lessor,  the Lessee
                           unconditionally accepts all of the Units in the Class
                           of  Equipment  listed  on the  attached  Annex  1 and
                           hereby subjects such Units to the Lease.

                  d.       As  between  the Lessee  and the  Lessor,  all of the
                           Units  in the  Class of  Equipment  are  adequate  to
                           operate in commercial  service,  comply with all Laws
                           governing  the  service in which such Units are being
                           placed by the Lessee and have been delivered directly
                           by the  applicable  Seller  to the  Lessee,  and  the
                           Lessee is unaware of any defects in or damage to such
                           Units.

                  e.       The  undersigned  person  signing  on  behalf  of the
                           Lessee is duly authorized to execute and deliver this
                           Certificate of Delivery and Acceptance.

                                      A-1-

<PAGE>




                  f.       No  Lease  Event  of  Default  has  occurred  and  is
                           continuing,  and no Loan  Agreement  Event of Default
                           has occurred and is continuing.


                          [The remainder of this page has been intentionally 
                           left blank.]


                     DATED: ____________1 APPLE SOUTH, INC.




                                                     By:
                                                     Name:
                                                     Title:


--------
         1        Notice must be dated no later than 15 Business Days prior to 
                  the requested Commencement Date.

                                      A-2-

<PAGE>




                                     ANNEX 1
                    to Certificate of Delivery and Acceptance

                   DESCRIPTION OF THE EQUIPMENT/EQUIPMENT COST

                                       Per            Store Location
                                       Unit    Total     (County
Make   Model   Serial No.  Quantity    Cost    Cost      and State)      Store #
----   -----   ------ --   --------    ----    ----      --- ------      ----- -



                                      A-3-

<PAGE>




                                     ANNEX 2
                    to Certificate of Delivery and Acceptance

             Allocation of Equipment Cost among the Approved States



                                      A-4-

<PAGE>




                                  ATTACHMENT B

                        (Form of Compliance Certificate)

                             COMPLIANCE CERTIFICATE

     Reference  is made to that  certain  Participation  Agreement  dated  as of
September  24, 1997 (as  modified  and  supplemented  and in effect from time to
time, the  "Participation  Agreement")  among Apple South,  Inc. (the "Lessee"),
First  Security Bank National  Association,  in its capacity as Owner Trustee of
Apple South Trust No. 97-1,  SunTrust Bank,  Atlanta, as the Holder, the Lenders
from time to time party thereto,  and SunTrust Bank as  Administrative  Agent as
ascribed thereto in the Participation Agreement.

     Pursuant to Section 5.1(c) of the Participation Agreement, the undersigned,
the [Chief Financial  Officer/Chief  Accounting  Officer] of the Lessee,  hereby
certifies  that  (i)  attached  hereto  as  Annex 1 are the  true  and  accurate
calculations  required to establish  whether the Lessee was in  compliance  with
Sections 5.3, 5.4,  5.5, 5.6 and 5.11 of the  Participation  Agreement as of the
end of the Fiscal  [Quarter/Year]  ended  __________,  19__,  each determined in
accordance  with the  requirements of the  Participation  Agreement and (ii) [no
Event of Default, Potential Default, Lease Event of Default, Lease Default, Loan
Agreement  Default or Loan Agreement Event of Default exists on the date hereof]
[the following Event of Defaults,  Potential Defaults,  Lease Event of Defaults,
Lease  Defaults,  Loan Agreement  Defaults or Loan  Agreement  Events of Default
(including  the details  thereof)  exist and the Lessee is taking or proposes to
take the following actions with respect thereto]:

                             ======================
                             ======================

     In addition,  the attached [audited]  [unaudited] financial statements have
been prepared by the Lessee in accordance  with  generally  accepted  accounting
principles and, in the judgment of management,  present fairly and  consistently
the Lessee's financial position and results of operations.



                                      B-1-

<PAGE>




     IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate in his
capacity  as  [Chief  Financial   Officer/Chief   Accounting  Officer]  and  not
personally as of the ____ day of __________, 199___.



                                                    
                                            By:_________________________________
                                                    _______________________,
                                                    as    _________________,
                                                    for  and  on  behalf  of
                                                    Apple South, Inc.




                                      B-2-

<PAGE>




                                  ATTACHMENT C

                  (Form of Assignment and Assumption Agreement)

                       ASSIGNMENT AND ASSUMPTION AGREEMENT


     Reference is made to the Loan and Security Agreement, dated as of September
24,  1997  (together  with  all  amendments  and  modifications   thereto,   the
"Agreement"),  by and among First Security Bank, National Association,  as Owner
Trustee  under  Apple  South  Trust No.  97-1  (the  "Owner  Trustee"),  certain
financial institutions party thereto (the "Lenders") and SunTrust Bank, Atlanta,
as Administrative Agent (the "Administrative  Agent"). Terms used herein and not
otherwise  defined herein or in the Agreement shall have the meanings  specified
therefor  in Appendix A to that  certain  Participation  Agreement,  dated as of
September  24,  1997 (as it may be amended or  otherwise  modified  from time to
time, (the  "Participation  Agreement"),  by and among Apple South, Inc., as the
Lessee (the "Lessee"), the Owner Trustee, SunTrust Bank, Atlanta (the "Holder"),
the Administrative Agent and the Lenders.

     [Name of  Assignor],  in its  capacity  as Lender  under the  Participation
Agreement (the "Assignor") and [Name of Assignee] (the "Assignee")  hereby agree
as follows:

     1. The Assignor hereby sells and assigns to the Assignee,  and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the Notes,
the Loans and all of the Assignor's right, title, interest and obligations under
the  Agreement  (the  "Assignor's  Interest"),  such  interest  acquired  by the
Assignee  hereunder  expressed as a percentage of all rights and  obligations of
the  Lenders  being  equal  to the  percentage  equivalent  of a  fraction,  the
numerator  of  which  is  $[__________]  and the  denominator  of  which  is the
aggregate Lender Commitments of all Lenders.

     2. The  Assignor  (i)  represents  and  warrants  that it is the  legal and
beneficial  owner of the Assignor's  Interest being assigned by it hereunder and
that such Assignor's  Interest is free and clear of any Lien created by it; (ii)
makes no representation  or warranty and assumes no responsibility  with respect
to any statements,  warranties or representations  made in or in connection with
the Operative  Agreements,  the Notes or the Loans or the  execution,  legality,
validity,  enforceability,  genuineness,  sufficiency  or value of the Operative
Agreements,  the  Notes or the  Loans;  and  (iii)  makes no  representation  or
warranty and assumes no responsibility  with respect to the financial  condition
of the Owner Trustee or the Lessee or the performance or observance by the Owner
Trustee or the Lessee of any of its respective  obligations  under the Agreement
or any instrument or document furnished pursuant thereto.

     3. The Assignee (i) confirms  that it has received a copy of the  Operative
Agreements and such other documents and information as it has deemed appropriate
to make its own credit  analysis and decision to enter into this  Assignment and
Assumption Agreement and purchase the

                                      C-1-

<PAGE>




Assignor's Interest from the Assignor;  (ii) agrees that it will,  independently
and without reliance upon the Administrative Agent or any of its Affiliates, the
Assignor or any other Lender and based on such  documents and  information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Operative Agreements to which the Assignor
is a party; (iii) appoints and authorizes the Administrative  Agent to take such
action as agent on its behalf and to exercise  such powers  under the  Operative
Agreements as are delegated to the  Administrative  Agent by the terms  thereof,
together with such powers as are reasonably  incidental  thereto;  (iv) appoints
the  Administrative  Agent to enforce its respective rights and interests in and
under  the  Agreement  and the  Collateral  in  accordance  with  the  Operative
Agreements;  (v) agrees that it will perform in accordance  with their terms all
of the obligations  which by the terms of the Operative  Agreements are required
to be performed by it as a Lender; (vi) specifies as its address for notices and
its account for  payments  the office and account set forth  beneath its name on
the signature pages hereof,  (vii) attaches the forms prescribed by the Internal
Revenue Service of the United States of America  certifying as to the Assignee's
status for purposes of  determining  exemption  from United  States  withholding
taxes  with  respect  to all  payments  to be made  to the  Assignee  under  the
Agreement  or such other  documents as are  necessary to indicate  that all such
payments  are  subject to such  rates at a rate  reduced  by an  applicable  tax
treaty;  and (viii)  represents and warrants to the Assignor that (A) it is duly
organized  and  in  good  standing  under  the  laws  of  its   jurisdiction  of
organization, (B) its execution, delivery and performance of this Agreement have
been  duly  authorized  and (C) this  Agreement  is  enforceable  against  it in
accordance with its terms.

     4. The effective date for this Assignment and Assumption Agreement shall be
the  later of (i) the date on  which  the  Administrative  Agent  receives  this
Assignment and Assumption Agreement executed by the parties hereto, and receives
the consent of the Lessee and the Administrative Agent, (provided,  however, the
consent of the Lessee shall not be required if a Default or Event of Default has
occurred and is continuing), and (ii) the date of this Assignment and Assumption
Agreement (the "Effective Date"). Following the execution of this Assignment and
Assumption  Agreement and the consent of the Lessee and the Administrative Agent
(provided, however, the consent of the Lessee shall not be required if a Default
or Event of  Default  has  occurred  and is  continuing),  this  Assignment  and
Assumption  Agreement  shall  be  delivered  to  the  Administrative  Agent  for
acceptance and, with respect to the Agreement,  recording by the  Administrative
Agent.

     5. Upon such  acceptance and recording,  as of the Effective  Date, (i) the
Assignee shall be a party to the Agreement  and, to the extent  provided in this
Agreement,  have the rights and obligations of a Lender  thereunder and (ii) the
Assignor  shall,  to the  extent  provided  in this  Assignment  and  Assumption
Agreement,  relinquish its rights and be released from its obligations under the
Agreement.

     6. Upon such  acceptance and recording,  from and after the Effective Date,
the Administrative  Agent shall make all payments under the Agreement in respect
of the interest assigned hereby (including,  without limitation, all payments in
respect of such interest in the

                                      C-2-

<PAGE>




related  principal of and interest on the Loans  allocable to the related Lender
and fees) to the Assignee.  The Assignor and Assignee shall make all appropriate
adjustments  in payments  under the Agreement for periods prior to the Effective
Date directly between themselves.

              7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE
         GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
                               STATE OF GEORGIA.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      C-3-

<PAGE>




         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the __ day
of ____ 199_.


                                   [ASSIGNOR]



                                                     By:
                                                     Name:
                                                     Title:

                                   [ASSIGNEE]


                                                     By:
                                                     Name:
                                                     Title:


Address for notices and Account for payments:

For Credit Matters:                         For Administrative Matters:

[NAME]                                               [NAME]

=====================                       ====================
Attn: ________________              Attn: _______________
Telephone:(___)___-____                     Telephone:(___)___-___
Telefax:(___)___-____               Telefax:(___)___-____

Account for Payments:

NAME

--------------
ABA Number:___-___-___
Account Number: _______
Attn: ________________
Re: ______________


                                      C-4-

<PAGE>




Consented to this __ day
of ________ 199_


SUNTRUST BANK, ATLANTA, as Administrative Agent


By:
Name:
Title:



By:
Name:
Title:


[if required] APPLE SOUTH, INC., as the Lessee


By:
Name:
Title:


Accepted this ___ day
of ___________, 199_


SUNTRUST BANK, ATLANTA, as Administrative Agent


By:
Name:
Title:



By:
Name:
Title:


                                      C-5-

<PAGE>




                                 SCHEDULE 3.2(h)

                                  Subsidiaries


<PAGE>



                                  SCHEDULE 5.7

                                 Existing Liens