$70,000,000

                                CREDIT AGREEMENT

                                   DATED AS OF

                                DECEMBER 10, 1997

                                      AMONG

                               APPLE SOUTH, INC.,

                                   AS BORROWER

                       WACHOVIA BANK, NATIONAL ASSOCIATION

                                       AND

                      ANY OTHER BANK OR BANKS LISTED ON THE
                            SIGNATURE PAGE(S) HEREOF,

                                    AS BANKS

                                       AND

                       WACHOVIA BANK, NATIONAL ASSOCIATION

                             AS AGENT FOR THE BANKS







<PAGE>




                                TABLE OF CONTENTS



ARTICLE 1.  DEFINITIONS........................................................1
         SECTION 1.1.  Definitions.............................................1
         SECTION 1.2.  Accounting Terms and Determinations....................13
         SECTION 1.3.  References.............................................13
         SECTION 1.4.  Use of Defined Terms...................................13
         SECTION 1.5.  Terminology............................................14

ARTICLE 2.  THE CREDIT........................................................14
         SECTION 2.1.  Commitments to Lend....................................14
         SECTION 2.2.  Method of Borrowing....................................14
         SECTION 2.3.  Notes..................................................16
         SECTION 2.4.  Maturity of Revolving Loans............................16
         SECTION 2.5.  Interest Rates.........................................17
         SECTION 2.6.  Fees...................................................18
         SECTION 2.7.  Termination or Reduction of Commitments................18
         SECTION 2.8.  Optional Prepayments...................................19
         SECTION 2.9.  Mandatory Prepayments..................................19
         SECTION 2.10.  General Provisions as to Payments.....................19
         SECTION 2.11.  Computation of Interest and Fees. ....................20

ARTICLE 3.  CONDITIONS TO BORROWINGS..........................................20
         SECTION 3.1.  Conditions to First Borrowing..........................20
         SECTION 3.2.  Conditions to All Borrowings...........................21

ARTICLE 4.  REPRESENTATIONS AND WARRANTIES....................................21
         SECTION 4.1.  Corporate Existence and Power..........................21
         SECTION 4.2.  Corporate and Governmental Authorization; No 
                       Contravention..........................................22
         SECTION 4.3.  Binding Effect.........................................22
         SECTION 4.4.  Financial Information; No Material Adverse Effect......22
         SECTION 4.5.  No Litigation..........................................23
         SECTION 4.6.  Compliance with Laws Generally; Compliance with ERISA..23
         SECTION 4.7.  Taxes..................................................23
         SECTION 4.8.  Subsidiaries...........................................23
         SECTION 4.9.  Not a Holding Company, Public Utility, Investment 
                       Company, Investment Adviser............................24
         SECTION 4.10.  Ownership of Property; Liens..........................24
         SECTION 4.11.  No Default............................................24
         SECTION 4.12.  Full Disclosure.......................................24
         SECTION 4.13.  Environmental Matters.................................24

                                        i

<PAGE>




         SECTION 4.14.  Capital Stock.........................................25
                        -------------
         SECTION 4.15.  Margin Stock..........................................25
                        ------------
         SECTION 4.16.  Solvency..............................................25
                        --------
         SECTION 4.17.  Possession of Franchises, Licenses, Etc...............25
                        ---------------------------------------
         SECTION 4.18.  Insurance.............................................26
                        ---------

ARTICLE 5.  COVENANTS.........................................................26
         SECTION 5.1.  Information............................................26
         SECTION 5.2.  Inspection of Property, Books and Records..............27
         SECTION 5.3.  Adjusted Funded Debt/Adjusted Capitalization Ratio.....28
         SECTION 5.4.  Minimum Stockholders' Equity.  ........................28
         SECTION 5.5.  Fixed Charge Coverage Ratio............................28
         SECTION 5.6.  Total Funded Debt/Cash Flow Coverage Ratio.............28
         SECTION 5.7.  Negative Pledge........................................28
         SECTION 5.8.  Maintenance of Existence...............................29
         SECTION 5.9.  Dissolution............................................29
         SECTION 5.10.  Consolidations, Mergers and Sales of Assets...........30
         SECTION 5.11.  Use of Proceeds.......................................30
         SECTION 5.12.  Compliance with Laws; Payment of Taxes................30
         SECTION 5.13.  Insurance.............................................31
         SECTION 5.14.  Change in Fiscal Year.................................31
         SECTION 5.15.  Maintenance of Property...............................31
         SECTION 5.16.  Environmental Notices.................................31
         SECTION 5.17.  Environmental Matters.................................31
         SECTION 5.18.  Environmental Releases................................31
         SECTION 5.19.  Investments...........................................32
         SECTION 5.20.  Subsidiary Debt.......................................34

ARTICLE 6.  DEFAULTS..........................................................34
         SECTION 6.1.  Events of Default......................................35
         SECTION 6.2.  Notice of Default......................................38

ARTICLE 7.  THE AGENT.........................................................38
         SECTION 7.1.  Appointment; Powers and Immunities.....................38
         SECTION 7.2.  Reliance by Agent......................................39
         SECTION 7.3.  Defaults...............................................39
         SECTION 7.4.  Rights of Agent as a Bank..............................39
         SECTION 7.5.  Indemnification........................................40
         SECTION 7.6.  Payee of Note Treated as Owner.........................40
         SECTION 7.7.  Nonreliance on Agent and Other Banks...................40
         SECTION 7.8.  Failure to Act.........................................41
         SECTION 7.9.  Resignation of Agent...................................41


                                       ii

<PAGE>




ARTICLE 8.  CHANGE IN CIRCUMSTANCES; COMPENSATION.............................41
         SECTION 8.1.  Basis for Determining Interest Rate Inadequate 
                       or Unfair..............................................41
         SECTION 8.2.  Illegality.............................................42
         SECTION 8.3.  Increased Cost and Reduced Return......................42
         SECTION 8.4.  Base Rate Loans Substituted for Affected Euro-Dollar 
                       Rate Loans.............................................43
         SECTION 8.5.  Replacement of a Lender................................44
         SECTION 8.6.  Compensation...........................................44

ARTICLE 9.  MISCELLANEOUS.....................................................45
         SECTION 9.1.  Notices................................................45
         SECTION 9.2.  No Waivers.............................................45
         SECTION 9.3.  Expenses; Documentary Taxes............................45
         SECTION 9.4.  Indemnification........................................45
         SECTION 9.5.  Sharing of Setoffs.....................................46
         SECTION 9.6.  Amendments and Waivers.................................46
         SECTION 9.7.  No Margin Stock Collateral.............................47
         SECTION 9.8.  Successors and Assigns.................................47
         SECTION 9.9.  Confidentiality........................................49
         SECTION 9.10.  Representation by Banks...............................50
         SECTION 9.11.  Obligations Several...................................50
         SECTION 9.12.  GEORGIA LAW...........................................50
         SECTION 9.13.  Interpretation........................................50
         SECTION 9.14.  CONSENT TO JURISDICTION...............................50
         SECTION 9.15.  Counterparts..........................................51
         SECTION 9.16.  Survival..............................................51
         SECTION 9.17.  Entire Agreement; Amendment; Severability.............51
         SECTION 9.18.  TIME OF THE ESSENCE...................................51
         SECTION 9.19.  Banks Not a Joint Venturer............................51



                                       iii

<PAGE>





EXHIBITS

EXHIBIT A                  Form of Assignment and Acceptance

EXHIBIT B                  Form of Revolving Loan Note

EXHIBIT C                  Form of Notice of Borrowing

EXHIBIT D                  Form of Opinion of Counsel for Borrower

EXHIBIT E                  Form of Closing Certificate

EXHIBIT F                  Form of Secretary's Certificate

EXHIBIT G                  Form of Compliance Certificate


SCHEDULES

SCHEDULE 4.8               Existing Subsidiaries

SCHEDULE 5.7               Existing Permitted Liens


                                       iv

<PAGE>




                                CREDIT AGREEMENT


     THIS CREDIT  AGREEMENT,  dated as of December 10, 1997, is made among APPLE
SOUTH,  INC., as Borrower;  WACHOVIA BANK,  NATIONAL  ASSOCIATION  and any other
party or  parties  listed as a "Bank" or the  "Banks" on the  signature  page(s)
hereof,  as Banks;  and WACHOVIA BANK,  NATIONAL  ASSOCIATION,  as Agent for the
Banks.

                  The parties hereto agree as follows:


                             ARTICLE 1. DEFINITIONS

                            SECTION 1.1. Definitions.

     The terms as defined in this  Section  1.1 shall for all  purposes  of this
Agreement  and any  amendment  hereto  (except  as  herein  otherwise  expressly
provided or unless the context otherwise requires),  have the meanings set forth
herein:

     "Adjusted  Capitalization"  shall be  equal to the sum at any date of:  (i)
Adjusted Funded Debt; plus (ii) Stockholders' Equity.

     "Adjusted Funded Debt" shall mean and include the sum (without duplication)
of  the  following,   at  any  date,  for  the  Borrower  and  its  Consolidated
Subsidiaries  on a  consolidated  basis:  (i) Total Funded  Debt;  plus (ii) the
present value  (discounted at ten percent (10%) per annum) of the minimum amount
of  noncancellable  operating  lease  payments  owing by  Borrower  and such Sub
sidiaries at such date  (excluding,  however,  for this purpose,  any such lease
payments  owing  under the DR  Holdings  Lease);  plus (iii) the  present  value
(discounted  at ten  percent  (10%) per annum) of the total  payments  of "Rent"
owing by the  Borrower  under the DR  Holdings  Lease for the  entire  remaining
"Lease Term"  (inclusive of the original term and all renewal terms,  whether or
not then ef fective), with the terms "Rent" and "Lease Term" as used hereinabove
having the meanings given to such terms in the DR Holdings Lease;  plus (iv) all
Redeemable Preferred Stock.

     "Adjusted Funded Debt/Adjusted  Capitalization  Ratio" shall mean the ratio
which  (i) the  Adjusted  Funded  Debt  of the  Borrower  and  its  Consolidated
Subsidiaries  at any  date  bears  to (ii) the  Adjusted  Capitalization  of the
Borrower and its Consolidated Subsidiaries at such date.

     "Adjusted  LIBOR  Rate,"  applicable  to any  Interest  Period,  means that
interest  rate per annum  determined  by the  Agent to be equal to the  quotient
obtained (rounded  upwards,  if neces sary, to the next higher 1/100th of 1%) by
dividing (i) the  applicable  LIBOR Rate for such  Interest  Period by (ii) 1.00
minus the then applicable Euro-Dollar Reserve Percentage (if any).

     "Affiliate" means, as to any Person (i) any other Person that directly,  or
indirectly  through  one  or  more  intermediaries,   controls  such  Person  (a
"Controlling Person"), (ii) any other Per son which is controlled by or is under
common control with such Person or a Controlling Person, or

                                       -1-

<PAGE>




(iii) any other Person of which such Person owns, directly or indirectly, twenty
percent (20%) or more of the common stock or  equivalent  equity  interests.  As
used herein, the term "control" means possession, directly or indirectly, of the
power to  direct or cause the  direction  of the  management  or  policies  of a
Person,  whether  through the  ownership  of voting  securities,  by contract or
otherwise.

     "Agent" means  Wachovia  Bank,  National  Association,  a national  banking
association  organized  under the laws of the United  States of America,  in its
capacity as agent for the Banks  hereunder,  and its  successors  and  permitted
assigns in such capacity.

     "Agent's  Address"  means the address of Agent  referred to or specified in
Section 9.1.

     "Agreement" means this Credit  Agreement,  together with all amendments and
modifications hereto.

     "Announcement  Date" shall mean that date on which the  Borrower  announces
publicly,  such as by issuance of a press  release,  that it has entered  into a
letter of intent,  agreement in principle or similar arrangement with Applebee's
International,  Inc.  and  one or more  other  franchisees  designated  by it in
respect of the Applebee's Spinoff.

     "Applebee's Spinoff" means the sale or other disposition by the Borrower to
Applebee's  International,  Inc.  and one or more other  franchisees,  acting in
concert, of at least one hundred thirteen (113) Applebee's store locations owned
by  the  Borrower  for  not  less  than  Two  Hundred  Fifty   Million   Dollars
($250,000,000),  in cash, payable in full upon closing, with closing to occur as
soon as  practicable  but in any event on or before  March  31,  1998,  and with
Applebee's  International,  Inc. being the purchaser of at least sixty-five (65)
of such locations for a cash purchase  price of at least One Hundred  Sixty-Five
Million Dollars ($165,000,000).

     "Applicable  Margin" means:  (i) for any Base Rate Loan, zero percent (0%);
and (ii) for any  Euro-Dollar  Rate  Loan,  one and  one-fourth  of one  percent
(1-1/4%) per annum;  plus in each case, for both clauses (i) and (ii) the BumpUp
(if any).

     "Assignee" has the meaning set forth in Section 9.8.3.

     "Assignment and Acceptance" means an Assignment and Acceptance  executed in
accordance with Section 9.8.3 in the form attached hereto as Exhibit A.

     "Authority" has the meaning set forth in Section 8.2.

     "Bank"  means  each  bank or  other  financial  institution  listed  on the
signature  pages  hereof and  identified  therein as a "Bank." As of the Closing
Date, Wachovia is the only Bank.

     "Base  Rate"  means for any Base Rate Loan for any day,  the rate per annum
equal to the higher as of such day of (i) the Prime Rate,  and (ii)  one-half of
one percent (1/2%) per annum

                                       -2-

<PAGE>




above the Federal Funds Rate. For purposes of determining  the Base Rate for any
day,  changes in the Prime Rate or the Federal  Funds Rate,  as the case may be,
shall be effective on the date of each such change.

     "Base Rate Loan" means a Revolving  Loan made at the Base Rate  pursuant to
Section 2.1.

     "Borrower"  means  Apple  South,  Inc.,  a  Georgia  corporation,  and  its
successors and permitted assigns.

     "Borrowing" means a borrowing hereunder  consisting of Revolving Loans made
to the  Borrower  at the  same  time by the  Banks  pursuant  to  Article  II. A
Borrowing is a "Base Rate Borrowing" if such Revolving Loans are Base Rate Loans
or a "Euro-Dollar  Rate Borrowing" if such Revolving Loans are Euro-Dollar  Rate
Loans.

     "BumpUp" shall mean: (i) in respect of the Applicable  Margin,  an increase
of  one-fourth  of one  percent  (1/4%) per annum for each  increase in interest
rates payable  thereunder (other than any related to changes in the Base Rate or
Eurodollar Rate described therein) made effective pursuant to the Other Wachovia
Credit Agreement (defined below) in accordance with the terms thereof;  and (ii)
in respect of the  commitment  fees  payable  under  Section  2.6.2  hereof,  an
increase of  seventy-five  thousandths of one percent (.075%) per annum for each
increase in commitment fees payable  thereunder  made effective  pursuant to the
Other Wachovia Credit Agreement.  The "Other Wachovia Credit Agreement" shall be
as described in Section 6.1.14 below.

     "Capital  Stock" means any  nonredeemable  capital stock of the Borrower or
any  Consolidated  Subsidiary  (to the extent  issued to a Person other than the
Borrower), whether common or preferred.

     "Capitalized  Lease  Obligations"  shall  mean  those  liabilities  of  the
Borrower and its Consolidated Subsidiaries under any leases that are required to
be capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such liabilities  shall be the capitalized  amount of such liabilities
as determined in accordance with GAAP.

     "Cash Flow"  shall  mean,  for any fiscal  period of the  Borrower  and its
Consolidated  Subsidiaries,   that  amount  equal  to  the  sum,  determined  in
accordance  with GAAP, of: (i) the  Consolidated  Net Income of the Borrower and
its  Consolidated  Subsidiaries  for such  period,  plus (ii)  depreciation  and
amortization expense and any other non-cash charges for such period, minus (iii)
any non-cash gains recorded in such period.

     "CERCLA" means the Comprehensive  Environmental  Response  Compensation and
Liability Act, 42 U.S.C. ss. 9601 et seq. and its  implementing  regulations and
amendments.


                                       -3-

<PAGE>




     "CERCLIS" means the Comprehensive  Environmental  Response Compensation and
Liability Inventory System established pursuant to CERCLA.

     "Change of Law" shall have the meaning set forth in Section 8.2.

     "Closing Certificate" has the meaning set forth in Section 3.1.4.

     "Closing  Date"  means  the  date of this  Agreement,  as  first  inscribed
hereinabove.

     "Code"  means  the  Internal  Revenue  Code of  1986,  as  amended,  or any
successor Federal tax code.

     "Commitment" means Thirty Million Dollars  ($30,000,000),  in the aggregate
as to all Banks,  until the  Announcement  Date,  and  Seventy  Million  Dollars
($70,000,000)  thereafter;  in each instance, as such amount may be reduced from
time to time pursuant to Section 2.7 or Section 8.5.

     "Compliance Certificate" has the meaning set forth in Section 5.1.3.

     "Consolidated  Net  Income,"  for any  period,  means the net income of the
Borrower and its  Consolidated  Subsidiaries  for such period,  determined  on a
consolidated  basis  in  accordance  with  GAAP,  excluding,  however,  (i)  any
extraordinary  items  and  (ii)  any  equity  interest  of the  Borrower  or any
Consolidated  Subsidiary in the unremitted earnings of any Person which is not a
Subsidiary,  in each case as  likewise  determined  on a  consolidated  basis in
accordance with GAAP.

     "Consolidated  Subsidiary" means at any date any Subsidiary or other entity
the accounts of which, in accordance with GAAP, would be consolidated with those
of the Borrower in its consolidated financial statements as of such date.

     "Controlled  Group" means all members of a controlled group of corporations
and all trades or businesses  (whether or not incorporated) under common control
which,  together  with the  Borrower,  are  treated as a single  employer  under
Section 414 of the Code.

     "Default"  means  any  condition  or event  which  constitutes  an Event of
Default  or which  with the  giving of  notice  or lapse of time or both  would,
unless cured and waived, become an Event of Default.

     "Default Rate" means,  with respect to any Revolving  Loan, on any day, the
sum of two percent (2%) per annum in excess of the interest rate  otherwise then
or thereafter  payable on such Revolving Loan, but, in any event,  not less than
two percent (2%) per annum in excess of the Base Rate.

     "Dollars" or "$" means  dollars in lawful  currency of the United States of
America.


                                       -4-

<PAGE>




     "Domestic  Business  Day" means any day except a Saturday,  Sunday or other
day on which  commercial  banks are not  required to be open for business in the
State of Georgia.

     "DR Holdings Lease" shall mean the Lease and Development  Agreement,  dated
as of March 2, 1995, between DR Holdings,  L.P., as lessor, and the Borrower, as
lessee,  together with Appendix "A" thereto and each "Lease Supplement"  thereto
(as defined  therein),  all "Operative  Documents" (as also defined therein) and
all amendments and modifications thereto made from time to time hereafter.

     "Environmental   Authorizations"  means  all  licenses,   permits,  orders,
approvals,  notices,  registrations or other legal  prerequisites for conducting
the business of the  Borrower or any  Subsidiary  required by any  Environmental
Requirement.

     "Environmental  Authority"  means any  foreign,  federal,  state,  local or
regional  government  that exercises any form of jurisdiction or authority under
any Environmental Requirement.

     "Environmental Judgments and Orders" means all judgments, decrees or orders
arising  from or in any way  associated  with  any  Environmental  Requirements,
whether or not entered  upon consent or pursuant to written  agreements  with an
Environmental  Authority  or any  other  entity,  arising  from  or in  any  way
associated with any Environmental Requirement, whether or not incorpo rated in a
judgment, decree or order.

     "Environmental   Liabilities"   means  any  liabilities   whether  accrued,
contingent  or  otherwise,  arising  from  and in any way  associated  with  any
Environmental Requirements.

     "Environmental Notices" means notice from any Environmental Authority or by
any other Person, of possible or alleged  noncompliance  with or liability under
any Environmental  Require ment,  including,  without limitation any complaints,
citations,  demands or requests  from any  Environmental  Authority  or from any
other Person for correction of any violation of any Environmental Requirement or
any investigations concerning any violation of any Environmental Requirement.

     "Environmental   Proceedings"   means  any   judicial   or   administrative
proceedings  arising  from  or in any  way  associated  with  any  Environmental
Requirement.

     "Environmental Releases" means "releases" as defined in CERCLA or under any
applicable state or local environmental law or regulation.

     "Environmental  Requirements"  means  any  legal  requirement  relating  to
health, safety or the environment and applicable to the Borrower, any Subsidiary
or any  Property,  including,  but not  limited to, any such  requirement  under
CERCLA or similar  state  legislation  and all  federal,  state and local  laws,
ordinances, regulations, orders, writs, decrees and common law.

                                       -5-

<PAGE>




     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, or any successor  law. Any reference to any provision
of ERISA shall also be deemed to be a reference  to any  successor  provision or
provisions thereof.

     "Euro-Dollar  Business  Day"  means  any  Domestic  Business  Day in  which
dealings in Dollar deposits are carried out in the London interbank  Euro-Dollar
market.

     "Euro-Dollar Rate," applicable to any Interest Period,  means that interest
rate per annum equal to the sum of (i) the Adjusted LIBOR Rate for such Interest
Period, plus (ii) the Ap plicable Margin.

     "Euro-Dollar Rate Loan" means a Revolving Loan made at the Euro-Dollar Rate
pursuant to Section 2.1.

     "Euro-Dollar   Reserve  Percentage"  means  for  any  day  that  percentage
(expressed  as a decimal)  which is in effect on such day, as  prescribed by the
Board of  Governors  of the  Federal  Re serve  System  (or any  successor)  for
determining  the maximum  reserve  requirement  for a member bank of the Federal
Reserve System in respect of  "Eurocurrency  liabilities"  (or in respect of any
other category of liabilities  which includes deposits by reference to which the
interest  rate on  Euro-Dollar  Rate  Loans is  determined  or any  category  of
extensions of credit or other assets which includes loans by a non-United States
office of any Bank to United States residents). The Adjusted LIBOR Rate shall be
adjusted  automatically  on and as of the  effective  date of any  change in the
Euro-Dollar Reserve Percentage.

     "Event of Default" has the meaning set forth in Section 6.1.

     "Federal  Funds  Rate"  means,  for any day,  the rate per  annum  (rounded
upward,  if necessary,  to the next higher  1/100th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal  Reserve  System  arranged  by Federal  funds  brokers  on such day,  as
published by the Federal  Reserve Bank of New York on the Domestic  Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be  determined  is not a Domestic  Business Day, the Federal Funds Rate for such
day  shall be such  rate on such  transactions  on the next  preceding  Domestic
Business Day as so published on the next succeeding  Domestic  Business Day, and
(ii) if such rate is not so published  for any day,  the Federal  Funds Rate for
such day  shall be the  average  rate  charged  to the Agent on such day on such
transactions, as determined by the Agent.

     "Fiscal Quarter" means any fiscal quarter of the Borrower.

     "Fiscal Year" means any fiscal year of the Borrower.

     "Fixed Charge Coverage Ratio" shall mean, for any fiscal period,  the ratio
which (A) the sum of: (i) Consolidated Net Income for such period; plus (ii) the
sum (without duplication) of

                                       -6-

<PAGE>




(a) interest expense for such period,  (b) any dividends paid in respect of
Redeemable  Preferred  Stock  during  such  period,  and (c) any  payments  made
(howsoever   denominated  or  construed)  in  respect  of  any  tax  deductible,
convertible  preferred  stock  ("TECONS") or similar  tax-advantaged  investment
vehicles,  regardless of maturity or the timing of any  redemption or repurchase
rights  granted  in regard  thereto  (the sum of (a),  (b) and (c)  above  being
called,  collectively,  "Investment Costs");  plus (iii) any provision for taxes
and operating lease expense; in each case, for the Borrower and its Consolidated
Subsidiaries for such period; bears to (B) the sum (without duplication) of: (i)
all Investment Costs;  plus (ii) operating lease expense;  in each case, for the
Borrower and its  Consolidated  Subsidiaries  for the same such  period;  all as
determined under GAAP.

     "Franchise  Rights" shall mean all rights,  privileges and interests of the
Borrower  and  its  Consolidated   Subsidiaries  to  own,  operate  and  develop
franchised  restaurants as a franchisee,  whether now or hereafter existing, and
whether  with  respect to the  operation of any  "Applebee's"  restaurants,  any
"Hardee's" restaurants or otherwise.

     "GAAP" means generally  accepted  accounting  principles applied on a basis
consistent  with those which,  in accordance with Section 1.2, are to be used in
making the calculations  for pur poses of determining  compliance with the terms
of this Agreement.

     "Guarantee" or "Guaranty" by any Person means any obligation, contingent or
otherwise,  of such Person directly or indirectly guaranteeing any debt or other
obligation  of any other  Person and,  without  limiting the  generality  of the
foregoing, any obligation,  direct or indirect, contingent or otherwise, of such
Person  (i) to  secure,  purchase  or pay (or  advance  or supply  funds for the
purchase or payment of) such debt or other obligation (whether arising by virtue
of  partnership  arrangements,  by agreement to keep-well,  to purchase  assets,
goods, securities or services, to provide collateral security to take-or-pay, or
to maintain  financial  statement  conditions or otherwise) or (ii) entered into
for the  purpose of  assuring  in any other  manner the  obligee of such debt or
other  obligation of the payment thereof or to protect such obligee against loss
in respect  thereof (in whole or in part),  provided  that the term  "Guarantee"
shall not include  endorsements for collection or deposit in the ordinary course
of  business.  The  terms  "Guarantee"  or  "Guaranty"  used  as a  verb  has  a
corresponding meaning.

     "Hazardous Materials" includes,  without limitation, (a) solid or hazardous
waste,  as defined in the Resource  Conservation  and  Recovery Act of 1980,  42
U.S.C. ss. 6901 et seq. and its implementing  regulations and amendments,  or in
any  applicable  state or local law or regulation,  (b)  "hazardous  substance,"
"pollutant," or  "contaminant"  as defined in CERCLA,  or in applicable state or
local law or  regulation,  (c)  gasoline,  or any  other  petroleum  product  or
by-product,   including,   crude  oil  or  any  fraction  thereof,   (d)  "toxic
substances",  as defined in the Toxic Substances  Control Act of 1976, or in any
applicable state or local law or regulation,  and (e) insecticides,  fungicides,
or  rodenticides,  as  defined  in  the  Federal  Insecticide,   Fungicide,  and
Rodenticide Act of 1975, or in any applicable  state or local law or regulation,
as each such Act, statute or regulation may be amended from time to time.

 "Interest  Period"  means:  (1)  with  respect  to  each  Euro-Dollar  Rate
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically  corresponding  date in the first,  second,  third or sixth calendar
month  thereafter,  as the  Borrower  may  elect  in the  applicable  Notice  of
Borrowing; provided that:

     (a) any Interest Period (other than an Interest Period determined  pursuant
to  paragraph  (c)  below)  which  would  otherwise  end on a day which is not a
Euro-Dollar  Business Day shall be extended to the next  succeeding  Euro-Dollar
Business  Day unless such  Euro-Dollar  Business  Day falls in another  calendar
month,  in which  case such  Interest  Period  shall  end on the next  preceding
Euro-Dollar Business Day;


                                       -7-

<PAGE>
    

     (b) any Interest Period which begins on the last  Euro-Dollar  Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the ap propriate  subsequent calendar month) shall,  subject to paragraph
(c)  below,  end on  the  last  Euro-Dollar  Business  Day  of  the  appropriate
subsequent calendar month; and

     (c) any Interest Period which begins before the Termination  Date and would
otherwise end after the Termination Date shall end on the Termination Date.

     (2) with respect to each Base Rate Borrowing,  the period commencing on the
date of such  Borrowing and ending on the date on which such Base Rate Borrowing
is fully paid or converted to a Euro-Dollar Rate Borrowing; provided that:

     (a) any Interest Period (other than an Interest Period determined  pursuant
to  paragraph  (b)  below)  which  would  otherwise  end on a day which is not a
Domestic Business Day shall be extended to the next succeeding Domestic Business
Day;

     (b) any Interest Period which begins before the Termination  Date and would
otherwise end after the Termination Date shall end on the Termination Date.

     "Lending  Office" means, as to each Bank, its office located at its address
set forth on the signature  pages hereof (or  identified on the signature  pages
hereof as its Lending  Office) or such other office in the United States as such
Bank may hereafter designate as its Lending Office by notice to the Borrower and
the Agent.

     "LIBOR Rate" means,  for any Euro-Dollar  Rate Loan for the Interest Period
of such Euro-Dollar Rate Loan, the rate per annum determined by the Agent on the
basis of the offered rate for deposits in Dollars of amounts equal or comparable
to the  principal  amount  of such  Euro-Dollar  Rate  Loan  offered  for a term
comparable to such Interest Period, which rate appears on the display designated
as page "3750" of the  Telerate  Service (or such other page as may replace page
3750 of that  service or such other  service or services as may be  nominated by
the British Bankers'  Association for the purpose of displaying London interbank
offered rates for U.S.  dollar  deposits),  determined as of 11:00 A.M.,  London
time, two (2) Euro-Dollar Business Days prior to the first day of such In terest
Period,  provided  that (i) if more than one such  offered  rate appears on such
page,  the "LIBOR  Rate" will be the  arithmetic  average  (rounded  upward,  if
necessary,  to the next higher 1/100th of 1%) of such offered rates;  (ii) if no
such  offered  rates  appear on such page,  the "LIBOR  Rate" for such  Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher  1/100th of 1%) of rates  quoted by not less than two (2) major  banks in
New York City, selected by the Agent, at approximately 10:00 A.M., New York City
time, two (2) Euro-Dollar  Business Days prior to the first day of such Interest
Period,  for deposits in Dollars offered to leading  European banks for a period
comparable  to such  Interest  Period in an amount  comparable  to the principal
amount of such Euro-Dollar Loan.

     "Lien" means, with respect to any asset, any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, security interest, security title or other,
preferential  arrangement,  which has the  practical  effect of  constituting  a
security  interest or  encumbrance,  or  encumbrance or servitude of any kind in
respect  of such  asset to secure or assure  payment  of a debt or a  Guarantee,
whether by  consensual  agreement  or by  operation of statute or other law. For
purposes of this  Agreement,  the Borrower or any Subsidiary  shall be deemed to
own  subject to a Lien any asset which it has  acquired or holds  subject to the
interest of a vendor or lessor under any  conditional  sale  agreement,  capital
lease or other title retention agreement relating to such asset.

     "Loan  Documents"  means  this  Agreement,  the Notes,  any other  document
evidencing  or  relating  to  the  Revolving  Loans,  and  any  other  document,
instrument,   certificate  or  agreement   delivered  in  connection  with  this
Agreement,  the Notes or the Revolving  Loans, as such  documents,  instruments,
certificates and agreements may be amended or modified from time to time.

     "Margin Stock" means "margin stock" as defined in Regulations G, T, U or X.

     "Material Adverse Effect" means, with respect to any event, act,  condition
or occurrence of whatever  nature  (including any adverse  determination  in any
litigation,  arbitration, or governmental investigation or proceeding),  whether
singly or in conjunction with any other event or events, act or acts,  condition
or  conditions,  occurrence or  occurrences,  whether or not related,  that such



                                       -8-

<PAGE>


event or events,  act or acts,  condition or  conditions,  and/or  occurrence or
occurrences  results in a material  adverse change in, or has a material adverse
effect  upon,  any of (a) the  financial  condition,  operations,  business,  or
properties of Borrower and its Consolidated  Subsidiaries  taken as a whole, (b)
the rights and remedies of the Agent or the Banks under the Loan  Documents,  or
the ability of the Borrower to perform its obligations  under the Loan Documents
to  which  it is a  party,  as  applicable,  or (c) the  legality,  validity  or
enforceability of this Agreement, any Note or any Loan Document.

     "Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3)
of ERISA.

     "Notes"  means,   collectively,   the  promissory  notes  of  the  Borrower
evidencing the Revolving Loans,  each to be substantially in the form of Exhibit
B, together with all amendments,  consolidations,  modifications,  renewals, and
supplements thereto.

     "Notice of Borrowing" has the meaning set forth in Section 2.2.1.

     "Participant" has the meaning set forth in Section 9.8.2.

     "PBGC"  means  the  Pension  Benefit  Guaranty  Corporation  or any  entity
succeeding to any or all of its functions under ERISA.

     "Person"  means  an   individual,   a   corporation,   a  partnership,   an
unincorporated  association,  a  trust  or any  other  entity  or  organization,
including,  but not limited to, a  government  or  political  subdivision  or an
agency or instrumentality thereof.

     "Plan" means at any time an employee  pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum  funding  standards under Section
412 of the Code and is either (i) maintained by a member of the Controlled Group
for employees of any member of the Controlled Group or (ii) maintained  pursuant
to a collective  bargaining  agreement or any other arrangement under which more
than one employer  makes  contributions  and to which a member of the Controlled
Group is them making or  accruing an  obligation  to make  contributions  or has
within the preceding five plan years made contributions.

     "Prime  Rate"  refers  to  that  interest  rate so  denominated  and set by
Wachovia from time to time as an interest rate basis for  borrowings.  The Prime
Rate is but one of several interest rate bases used by Wachovia.  Wachovia lends
at interest rates at, above and below the Prime Rate.

     "Prior  Credit  Agreement"  shall  mean the Credit  Agreement,  dated as of
October  20,  1997,  among the parties  hereto,  which is being  superseded  and
replaced by this Agreement.

     "Properties" means all property owned,  leased or otherwise used,  operated
or occupied by the Borrower or any  Subsidiary,  wherever  located,  and whether
real property or personal property.

     "Purchase  Money Liens" means Liens  securing the repayment of any purchase
money debt permitted  hereunder incurred to finance the purchase of any Property
hereafter  acquired by the Borrower or any Consolidated  Subsidiary,  so long as
such Liens are  limited  solely to the  Property  so  acquired,  secure only the
purchase money debt so incurred and are terminated  upon payment in full of such
purchase money debt.

     "Redeemable Preferred Stock" of any Person means any preferred stock issued
by such  Person  which is at any time prior to the  Termination  Date either (i)
mandatorily  redeemable  (by sinking fund or similar  payments or  otherwise) or
(ii) redeemable at the option of the holder thereof.

                                       -9-

<PAGE>




     "Regulation D" means  Regulation D of the Board of Governors of the Federal
Reserve  System,  as in effect  from time to time,  together  with all  official
rulings and interpretations issued thereunder.

     "Regulation G" means  Regulation G of the Board of Governors of the Federal
Reserve  System,  as in effect  from time to time,  together  with all  official
rulings and interpretations issued thereunder.

     "Regulation T" means  Regulation T of the Board of Governors of the Federal
Reserve  System,  as in effect  from time to time,  together  with all  official
rulings and interpretations issued thereunder.

     "Regulation U" means  Regulation U of the Board of Governors of the Federal
Reserve  System,  as in effect  from time to time,  together  with all  official
rulings and interpretations issued thereunder.

     "Regulation X" means  Regulation X of the Board of Governors of the Federal
Reserve  System,  as in effect  from time to time,  together  with all  official
rulings and interpretations issued thereunder.

     "Required Banks" means any Bank or Banks having (i) more than fifty percent
(50%) of the aggregate amount of the Commitments or (ii), if the Commitments are
no longer in effect, more than fifty percent (50%) of the aggregate  outstanding
principal amount of the Notes.

     "Revolving  Loan" means,  as to any Bank, a Base Rate Loan or a Euro-Dollar
Rate Loan made by such Bank pursuant to Section 2.1.

     "Solvent" means as to any Person,  that such Person (i) owns Property whose
fair  saleable  value is  greater  than the amount  required  to pay all of such
Person's total debts, direct or indirect,  contingent or otherwise, (ii) is able
to pay all of such  debts as and when such debts  mature  and (iii) has  capital
sufficient to carry on the business and  transactions in which it is engaged and
all business and transactions in which it is about to engage.

     "Stockholders'  Equity" means, at any time, the stockholders' equity of the
Borrower  and its  Consolidated  Subsidiaries,  as set forth or reflected on the
most recent  consolidated  balance  sheet of the Borrower  and its  Consolidated
Subsidiaries  prepared in accordance  with GAAP,  but  excluding any  Redeemable
Preferred  Stock  of the  Borrower  or any  of  its  Consolidated  Subsidiaries.
Shareholders'  Equity generally would include, but not be limited to (i) the par
or stated value of all outstanding  Capital Stock,  (ii) capital surplus,  (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock,  (B) valuation  allowances,  (C)  receivables  due from an employee stock
ownership plan, and (D) employee stock ownership plan debt Guarantees.


                                      -10-

<PAGE>




     "Subsidiary"  means any corporation or other entity of which  securities or
other  ownership  interests  having ordinary voting power to elect a majority of
the board of directors or other Persons  performing similar functions are at the
time directly or indirectly owned by the Borrower.

     "Synthetic   Lease"  shall  mean  any  agreement,   or  series  of  related
agreements,  between  the  Borrower  and one or more  other  parties  which  are
intended to be treated, for accounting purposes,  as an operating lease with the
Borrower as lessee and, for tax purposes,  as a financing  arrangement  with the
Borrower as debtor.

     "Tangible Net Worth" shall mean the  difference at any time between (i) the
Stockholders  Equity of the Borrower and its  Consolidated  Subsidiaries at such
time and (ii) the sum of all those assets of the  Borrower and its  Consolidated
Subsidiaries  at such  time  constituting  (A)  goodwill,  patents,  copyrights,
trademarks,  trade names and other intangible  assets, as determined under GAAP,
plus (B) write-ups of any assets occurring subsequent to December 31, 1996, plus
(C) unamortized  debt discount and expense,  as determined  under GAAP, plus (D)
deferred charges,  as determined under GAAP, plus (E) any indebtedness  owing to
such Person by any Affiliate of such Person.

     "Termination Date" has the meaning set forth in Section 2.7.1.

     "Third Parties" means all lessees, sublessees, licensees and other users of
the  Properties,  excluding those users of the Properties in the ordinary course
of the Borrower's business and on a temporary basis.

     "Total Funded Debt" shall mean that portion of the total liabilities of the
Borrower and its Consolidated Subsidiaries at any date equal to the sum (without
duplication)  of:  (i)  all in  debtedness  for  borrowed  money  at  such  date
(including,  for  this  purpose,  indebtedness  in  respect  of any  outstanding
bankers' acceptances);  plus (ii) all Capitalized Lease Obligations  outstanding
at such date;  plus  (iii) all  debts,  liabilities  and  obligations  which are
Guaranteed by the Borrower or any Consolidated  Subsidiary as of such date; plus
(iv) all debts,  liabilities or obligations at such date to any seller  incurred
to pay the  deferred  price of property or services  having a deferred  purchase
price of One Million  Dollars  ($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; plus (v) all debts, liabilities and obligations
outstanding  at  such  date  in  respect  of  any  Synthetic  Leases,  excluding
therefrom,  however, any debts, liabilities or obligations under the DR Holdings
Lease up to a maximum thereof of Twenty-Eight Million Dollars ($28,000,000),  it
being  understood  and  agreed  that,  subject  to such  limitation,  no  debts,
liabilities or obligations (including any constituting  Guaranteed  Obligations)
under the DR Holdings  Lease shall be included in the definition of Total Funded
Debt.

     "Transferee" has the meaning set forth in Section 9.8.4.


                                      -11-

<PAGE>




     "Unfunded Vested  Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested  nonforfeitable
benefits  under such Plan  exceeds (ii) the fair market value of all Plan assets
allocable to such benefits,  all determined as of the then most recent valuation
date for such  Plan,  but only to the  extent  that  such  excess  represents  a
potential  liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.

     "Unused  Commitment" means at any date, with respect to any Bank, an amount
equal to its Commitment less the aggregate  outstanding  principal amount of its
Revolving Loans.

     "Voluntary Store Closing" shall mean any voluntary  closing by the Borrower
or any Subsidiary of any franchised  restaurant  location in the ordinary course
of its business which does not cause, or result in, the forfeiture,  suspension,
loss, rejection, disclaimer,  impairment,  curtailment,  alteration of, or other
adverse  effect on, any  Franchise  Rights  with  respect  to the  operation  or
development of any other existing or future  franchised  restaurant  location or
locations.

     "Wachovia" means Wachovia Bank,  National  Association,  a national banking
associa tion, and its successors.

                SECTION 1.2. Accounting Terms and Determinations.

     Unless otherwise  specified  herein,  all terms of an accounting  character
used herein shall be interpreted,  all accounting determinations hereunder shall
be made, and all financial  statements  required to be delivered hereunder shall
be prepared in accordance with GAAP,  applied on a basis consistent  (except for
changes  concurred  with by the  Borrower's  independent  public ac countants or
otherwise  required  by a change  in GAAP)  with the then  most  recent  audited
consolidated   financial   statements  of  the  Borrower  and  its  Consolidated
Subsidiaries delivered to the Banks; provided,  however, that upon any change in
GAAP material to Borrower occurring hereafter, the Banks shall have the right to
require either that  conforming  adjustments be made to any financial  covenants
hereafter set forth, or the components thereof,  affected by such change or that
the  Borrower  report  its  financial  condition  based  on  GAAP  as in  effect
immediately prior to such change occurring.

                            SECTION 1.3. References.

     Unless  otherwise  indicated,  references in this  Agreement to "Articles,"
"Exhibits,"  "Schedules,"  "Sections" and other  Subdivisions  are references to
articles, exhibits, schedules, sections and other subdivisions hereof.

                       SECTION 1.4. Use of Defined Terms.

     All terms defined in this  Agreement  shall have the same defined  meanings
when used in any of the other Loan Documents,  unless otherwise  defined therein
or unless the context shall re quire otherwise.

                                      -12-

<PAGE>




                            SECTION 1.5. Terminology.

     All  personal  pronouns  used  in  this  Agreement,  whether  used  in  the
masculine,  feminine or neuter  gender,  shall  include all other  genders;  the
singular  shall  include the plural,  and the plural shall include the singular.
Titles of Articles and Sections in this Agreement are for convenience  only, and
neither limit nor amplify the provisions of this Agreement.


                              ARTICLE 2. THE CREDIT

                        SECTION 2.1. Commitments to Lend.

     Each Bank severally  agrees,  on the terms and conditions set forth herein,
to  make Re  volving  Loans  to the  Borrower  from  time  to  time  before  the
Termination Date;  provided that, im mediately after each such Revolving Loan is
made, (i) the aggregate  principal  amount of Revolving Loans by such Bank shall
not exceed the amount of its Commitment, and (ii) the aggregate principal amount
of  Revolving  Loans by all  Banks  shall  not  exceed  Thirty  Million  Dollars
($30,000,000),   until  the  Announcement  Date,  and  Seventy  Million  Dollars
($70,000,000)  thereafter.  Each  Borrowing  under this  Section  shall be in an
aggregate  principal  amount of One Million  Dollars  ($1,000,000) or any larger
multiple of Five Hundred Thousand Dollars  ($500,000),  in the case of Base Rate
Loans, and in an aggregate principal amount of Two Million Dollars  ($2,000,000)
or any larger  multiple  of One  Million  Dollars  ($1,000,000),  in the case of
Euro-Dollar  Rate Loans (except that any such  Borrowing may be in the aggregate
amount of the  Unused  Commitments),  and shall be made from the  several  Banks
ratably in  proportion  to their  respective  Commitments.  Within the foregoing
limits,  the  Borrower may borrow  under this  Section,  repay or, to the extent
permitted by Section 2.8, prepay Revolving Loans and reborrow under this Section
at any time or from time to time before the Termination Date.

                        SECTION 2.2. Method of Borrowing.

     2.2.1. Notice to Agent. The Borrower shall give the Agent notice (a "Notice
of Borrowing"), which shall be substantially in the form of Exhibit C, not later
than 11:00 a.m.  (Atlanta,  Georgia  time) on the Domestic  Business Day of each
Base Rate  Borrowing  and not later than 11:00 a.m.  (Atlanta,  Georgia time) at
least three (3)  Euro-Dollar  Business Days before each  Euro-Dollar  Borrowing,
specifying:

     (a) the date of such Borrowing,  which shall be a Domestic  Business Day in
the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,

     (b) the aggregate amount of such Borrowing,


                                      -13-

<PAGE>




     (c) whether the Revolving  Loans  comprising  such Borrowing are to be Base
Rate Loans or Euro-Dollar Rate Loans, and

     (d) the duration of the Interest Period applicable thereto,  subject to the
provisions of the definition of Interest Period.

     2.2.2  Notice to Banks.  Upon receipt of a Notice of  Borrowing,  the Agent
shall  promptly  notify  each Bank of the  contents  thereof  and of such Bank's
ratable  share of such Bor  rowing  and  such  Notice  of  Borrowing  shall  not
thereafter be revocable by the Borrower.

     2.2.3 When Revolving Loans Made. Not later than 1:00 P.M. (Atlanta, Georgia
time) on the date of each Base Rate  Borrowing  and not later  than  11:00  A.M.
(Atlanta,  Georgia time) on the date of each  Euro-Dollar  Borrowing,  each Bank
shall (except as provided in Section  2.2.4) make available its ratable share of
such  Borrowing,  in federal or other funds  immediately  available  in Atlanta,
Georgia,  to the Agent at the Agent's address.  Unless the Agent determines that
any  applicable  condition  specified in Article 3 has not been  satisfied,  the
Agent will make the funds so received  from the Banks  available to the Borrower
at the Agent's  Address.  Unless the Agent  receives  notice from a Bank, at the
Agent's Address, no later than 12:00 noon (Atlanta, Georgia time) on the date of
a Base Rate Borrowing and no later than 4:00 P.M. (Atlanta, Georgia time) on the
Domestic  Business Day before the date of a Euro-Dollar  Rate Borrowing  stating
that such Bank will not make a Revolving Loan in connection with such Borrowing,
the Agent shall be entitled to assume that such Bank will make a Revolving  Loan
in connection with such Borrowing and, in reliance on such assumption, the Agent
may (but shall not be obligated to) make  available such Bank's ratable share of
such  Borrowing to the Borrower for the account of such Bank on the date of such
Borrowing.  If the Agent  makes  such  Bank's  ratable  share  available  to the
Borrower and such Bank does not in fact make its ratable share of such Borrowing
available  on such date,  the Agent  shall be  entitled  to recover  such Bank's
ratable  share from such Bank or the  Borrower  (and for such  purpose  shall be
entitled to charge such amount to any account of the  Borrower  maintained  with
the Agent),  together with interest  thereon for each day during the period from
the date of such  Borrowing  until  such sum shall be paid in full at a rate per
annum equal to the rate at which the Agent determines that it obtained (or could
have  obtained)  overnight  Federal funds to cover such amount for each such day
during  such  period,  provided  that any such  payment by the  Borrower of such
Bank's  ratable  share and interest  thereon  shall be without  prejudice to any
rights  that the  Borrower  may have  against  such Bank.  If the Agent does not
exercise  its option to  advance  funds for the  account of such Bank,  it shall
forthwith notify the Borrower of such decision.

     2.2.4 Application of Certain  Proceeds.  If any Bank makes a Revolving Loan
hereunder  on a day on which  the  Borrower  is to  repay  all or any part of an
outstanding Revolving Loan from such Bank, such Bank shall apply the proceeds of
its new  Revolving  Loan to make such  repayment and only an amount equal to the
difference  (if any)  between the amount  being  borrowed  and the amount  being
repaid shall be made  available by such Bank to the Agent as provided in Section
2.2.3, or remitted by the Borrower to the Agent, as the case may be.


                                      -14-

<PAGE>




     2.2.5 No Borrowing Upon Default.  Notwithstanding  anything to the contrary
contained  in this  Agreement,  no  Borrowing  may be made if there  shall  have
occurred a Default, which Default shall not have been cured or waived.

     2.2.6 Certain  Payments Deemed Made. If the Borrower is otherwise  entitled
under this  Agreement  to repay any  Revolving  Loans  maturing at the end of an
Interest Period applicable thereto with the proceeds of a new Borrowing, and the
Borrower fails to repay such  Revolving  Loans using its own moneys and fails to
give a Notice of Borrowing in connection with such new Borrowing,  the Banks, at
their election (and without  obligation) may deem that a new Base Rate Borrowing
shall have been made on the date such Revolving  Loans mature in an amount equal
to the  principal  amount of the Revolving  Loans so maturing,  with an Interest
Period of not greater than one (1) month.

     2.2.7  Limitation on Borrowings.  Notwithstanding  anything to the contrary
contained  herein,  there  shall  not be  more  than  six (6)  Euro-Dollar  Rate
Borrowings outstanding at any given time.

                               SECTION 2.3. Notes.

     2.3.1 Single Notes.  The Revolving Loans of each Bank shall be evidenced by
a single  Revolving  Loan Note payable to the order of such Bank for the account
of its Lending  Office in an amount  equal to the original  principal  amount of
such Bank's Commitment.

     2.3.2  Endorsements to Notes.  Upon receipt of each Bank's Note pursuant to
Section  3.1.2,  the Agent shall  deliver such Note to such Bank.  Each Bank may
record and,  prior to any  transfer of its Note shall,  endorse on the  schedule
forming a part thereof  appropriate  notations to evidence the date,  amount and
maturity of each  Revolving Loan made by it, the date and amount of each payment
of  principal  made by the  Borrower  with  respect  thereto  and  whether  such
Revolving Loan is a Base Rate Loan or  Euro-Dollar  Rate Loan, and such schedule
shall constitute  rebuttable  presumptive evidence of the principal amount owing
and unpaid on such Bank's  Note;  provided  that the failure of any Bank to make
any such  recordation  or  endorsement  shall not affect the  obligation  of the
Borrower  hereunder  or  under  the  Notes.  Each  Bank  is  hereby  irrevocably
authorized  by the  Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.

                    SECTION 2.4. Maturity of Revolving Loans.

     Each  Revolving  Loan  included  in any  Borrowing  shall  mature,  and the
principal  amount  thereof  shall  be due and  payable,  on the  last day of the
Interest Period applicable to such Borrowing.

                          

                                      -15-

<PAGE>

                          SECTION 2.5. Interest Rates.

                      Subject to the terms of Section 8.1:

     2.5.1 Base Rate Loans.  Each Base Rate Loan shall bear  interest on the out
standing principal amount thereof,  for the Interest Period applicable  thereto,
at a rate per annum  equal to the Base Rate,  as it may change from time to time
during such Interest Period,  plus the Applicable Margin. Such interest shall be
payable monthly,  in arrears, on the last day of each calendar month, in respect
of interest  accrued in such month (or portion  thereof),  commencing on October
31, 1997 (with the first  payment date to cover the period from the Closing Date
until October 31, 1997),  until maturity and  thereafter on demand.  Any overdue
principal of and, to the extent permitted by applicable law, overdue interest on
any Base Rate Loan shall bear  interest,  payable on demand,  for each day until
paid at a rate per annum equal to the Default Rate.

     2.5.2  Euro-Dollar  Rate  Loans.  Each  Euro-Dollar  Rate Loan  shall  bear
interest on the outstanding  principal  amount thereof,  for the Interest Period
applicable  thereto,  at the  Euro-Dollar  Rate for such Interest  Period.  Such
interest  shall be payable  for each  Interest  Period on the last day  thereof;
provided, however, if any Interest Period is for a period of more than three (3)
months,  accrued  interest  shall  also  be due and  payable  at the end of each
consecutive three (3) month period within such Interest Period,  commencing with
the first day thereof, as well as on the last day thereof. Any overdue principal
of and, to the extent  permitted  by law,  overdue  interest on any Euro- Dollar
Rate Loan shall bear interest,  payable on demand,  for each day until paid at a
rate per annum equal to the Default Rate;  provided that the mere application of
the Default Rate to these Revolving Loans shall not give rise to the breakage of
an Interest Period,  but only an increased margin  applicable to these Revolving
Loans.

     2.5.3 Agent to Determine.  The Agent shall  determine each interest rate ap
plicable to the Revolving Loans hereunder. The Agent shall give prompt notice to
the Borrower and the Banks by telecopier of each rate of interest so determined,
and its  determination  thereof  shall be  conclusive in the absence of manifest
error.

     2.5.4 Savings  Clause.  In no contingency or event  whatsoever,  whether by
reason of advancement of the proceeds hereof or otherwise, shall the amount paid
or agreed to be paid to the Banks for the use, forbearance or detention of money
advanced  hereunder  exceed the highest  lawful rate  permissible  under any law
which a court of competent jurisdiction may deem applicable hereto. In the event
that such a court  determines  that any Bank has  charged or  received  interest
hereunder  in  excess  of  the  highest   applicable   rate,   such  rate  shall
automatically  be reduced to the maximum rate  permitted by  applicable  law and
such Bank shall  promptly  refund to the Borrower any interest  received by such
Bank in excess of the maximum  lawful rate or, if so requested by the  Borrower,
shall apply such excess to the principal  balance of that Bank's Note. It is the
intent  hereof that the  Borrower not pay or contract to pay, and that the Banks
not  receive or  contract  to  receive,  directly  or  indirectly  in any manner
whatsoever,  interest in excess of that which may be paid by the Borrower  under
applicable law.

                              

                                      -16-

<PAGE>

                               SECTION 2.6. Fees.


     2.6.1  Upfront  Fee.  On the Closing  Date,  the Banks shall have earned an
upfront fee of Two Hundred Thousand Dollars  ($200,000),  which shall be paid as
follows:  (i) a portion of such fee, equal to Forty Thousand Dollars  ($40,000),
shall be credited  to  Borrower's  account and deemed paid on the Closing  Date,
provided  that,  by such date,  the  Borrower  has paid in full the  upfront fee
payable pursuant to Section 2.6.1 of the Prior Credit Agreement;  (ii) a portion
of such fee, equal in amount, to Thirty-Five  Thousand Dollars ($35,000),  shall
be paid to the Agent on the Closing Date for the account of each Bank; and (iii)
the remainder of such fee, equal in amount to One Hundred  Twenty-Five  Thousand
Dollars ($125,000), shall be due and payable to the Agent for the account of the
Banks on the Announcement Date.

     2.6.2  Commitment Fees. The Borrower shall pay to the Agent for the account
of each Bank an unused commitment fee calculated at the per annum rate described
below on the  average  daily  amount  of such  Bank's  Unused  Commitment.  Such
commitment  fees shall accrue from and including the Closing Date and be due and
payable quarterly in arrears,  commencing on December 31, 1997 and continuing on
each succeeding December 31, March 31, June 30 and September 30 thereafter.  The
per annum rate applicable to the payment of the foregoing  commitment fees shall
be thirty hundredths of one percent (.30%) per annum plus the BumpUp (if any).

     2.6.3 Other Fees. The Borrower shall pay to the Agent,  for the account and
sole  benefit  of the  Agent,  such fees and other  amounts at such times as set
forth in any present or subsequent  agreement  made between the Borrower and the
Agent.

              SECTION 2.7. Termination or Reduction of Commitments.

     2.7.1  Termination of Commitments.  The Commitments shall terminate on that
date (the "Termination  Date"),  which is the earlier to occur of: (i) March 31,
1998,  or (ii)  the  date  on  which  the  Borrower  or any of its  Consolidated
Subsidiaries incurs any indebtedness for borrowed money (howsoever  denominated,
created or  incurred,  and  whether  direct or  indirect,  or as maker,  surety,
endorser,  guarantor or otherwise) not in existence on, or contracted for, as of
the  Closing  Date;  or (iii)  the  date on  which  the  Applebee's  Spinoff  is
consummated.  For purposes of clause (ii) above, (A) any increase  subsequent to
the Closing  Date in credit  lines or credit  facilities,  of  whatsoever  sort,
existing  on the  Closing  Date,  or (B) any  refinancing  (other than any where
Wachovia is the agent and a lender) of indebtedness  under the credit  agreement
described in Section  6.1.14 shall be considered new  indebtedness  for borrowed
money, triggering a Termination Date.

     2.7.2 Voluntary Ratable Reductions of Commitments.  The Borrower shall have
the further right to reduce ratably the  Commitments of the Banks at any time or
from time to time, in the minimum  amount of Five Million  Dollars  ($5,000,000)
per reduction and integral multiples of One Million Dollars  ($1,000,000) beyond
such minimum  amount,  provided that (i) the Borrower shall have given the Agent
at least  three (3)  Domestic  Business  Days'  advance  written  notice of such
election,  (ii) as necessary,  the Borrower shall have reduced,  by repayment or
prepayment in accordance  with the terms of Section 2.9, as the case may be, its
Borrowings by that amount  necessary to cause total  Borrowings then outstanding
not to exceed the aggregate amount

                                      -17-

<PAGE>




of  the  reduced   Commitments  and  (iii  any Commitments once so reduced shall
not be reinstated by the Banks.

                       SECTION 2.8. Optional Prepayments.

     The Borrower  may, on any Business  Day, upon giving notice to the Agent by
not later than 11:00 A.M.  (Atlanta,  Georgia  time) on such  Business  Day, and
making  payment  to the Agent,  for the  ratable  benefit of the Banks,  on such
Business Day of any  compensation  required by Section 8.6, prepay any Base Rate
Borrowing  in  whole  at any  time,  or from  time  to  time in part in  amounts
aggregating at least One Million Dollars  ($1,000,000) and integral multiples of
Five Hundred Thousand Dollars  ($500,000),  by paying the principal amount to be
prepaid together with accrued  interest thereon to the date of prepayment.  Each
such optional  prepayment shall be applied to prepay ratably the Revolving Loans
of the several Banks  included in such  Borrowing.  Upon receipt of a no tice of
prepayment  pursuant to this Section 2.8, the Agent shall  promptly  notify each
Bank  of the  con  tents  thereof  and of  such  Bank's  ratable  share  of such
prepayment and such notice shall not thereafter be revocable by the Borrower.

                       SECTION 2.9. Mandatory Prepayments.

     On each date, if any, on which the  Commitments  are  terminated or reduced
pursuant to Section  2.7,  the  Borrower  shall  repay or prepay such  principal
amount of the outstanding  Revolving  Loans, if any, as may be necessary so that
after such payment the aggregate  unpaid principal amount of the Revolving Loans
is  reduced  to zero,  in the case of any  termination,  or does not  exceed the
aggregate  amount  of the  Commitments  as  then  reduced,  in the  case  of any
reduction,  plus,  in  each  case,  accrued  interest  thereon  to the  date  of
prepayment and any compensation required by Section 8.6.

                SECTION 2.10. General Provisions as to Payments.

     2.10.1  Timing.  The Borrower  shall make each payment of principal of, and
interest on, the Revolving Loans and of commitment and other fees hereunder, not
later than 11:00 A.M.  (Atlanta,  Georgia time) on the date when due, in federal
or other  funds  immediately  available  in  Atlanta,  Georgia,  to the  Agent's
Address.  The Agent will promptly  distribute to each Bank its rat able share of
each such payment received by the Agent for the account of the Banks.

     2.10.2 Next Banking Day.  Whenever any payment of principal of, or interest
on,  any Base Rate  Loans or of  commitment  or other fees shall be due on a day
which is not a Domestic  Business  Day,  the date for payment  thereof  shall be
extended to the next succeeding  Domestic  Business Day. Whenever any payment of
principal  of or interest on, the  Euro-Dollar  Rate Loans shall be due on a day
which is not a Euro-Dollar  Business Day, the date for payment  thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day.

                                      -18-

<PAGE>




                 SECTION 2.11. Computation of Interest and Fees.

     Interest on the Revolving Loans shall be computed on the basis of a year of
360 days and paid for the actual number of days  elapsed,  calculated as to each
Interest  Period from and  including  the first day thereof to but excluding the
last day thereof.  Commitment fees and any other fees payable hereunder on a per
annum  basis  shall be  computed on the basis of a year of 360 days and paid for
the actual  number of days elapsed  (including  the first day but  excluding the
last day).


                       ARTICLE 3. CONDITIONS TO BORROWINGS

                   SECTION 3.1. Conditions to First Borrowing.

     The obligation of each Bank to make a Revolving Loan on the occasion of the
first  Borrowing is subject to the  satisfaction  of the conditions set forth in
Section 3.2 and receipt by the Agent of the following in a sufficient  number of
counterparts (except as to the Notes) for delivery of a counterpart to each Bank
and retention of one counterpart by the Agent):

     3.1.1 This Agreement.  From each of the parties hereto of either (i) a duly
executed  counterpart of this Agreement signed by such party or (ii) a facsimile
transmission  stating that such party has duly  executed a  counterpart  of this
Agreement and sent such counterpart to the Agent;

     3.1.2 Notes.  A duly executed  Note for the account of each Bank  complying
with the provisions of Section 2.3;

     3.1.3  Opinion.  An opinion  (together  with any opinions of local  counsel
relied on therein) of legal  counsel for the  Borrower,  dated as of the Closing
Date,  substantially  in the form of  Exhibit  D and  covering  such  additional
matters  relating to the  transactions  contemplated  hereby as the Agent or any
Bank may reasonably request;

     3.1.4 Closing Certificate. A certificate ("Closing Certificate"),  dated as
of the Closing Date, substantially in the form of Exhibit E, signed by the chief
financial  officer  of the  Borrower,  to the  effect  that (i) no  Default  has
occurred  and is  continuing  on the date of the  first  Borrowing  and (ii) the
representations  and warranties of the Borrower  contained in Article 4 are true
on and as of the Closing Date;

     3.1.5  Other  Documents.  All  documents  which  the  Agent or any Bank may
reasonably  request  relating to the  existence of the  Borrower,  the corporate
authority for and the validity of this  Agreement,  the Notes and the other Loan
Documents,  and any other  matters  relevant  hereto,  all in form and substance
satisfactory  to the Agent,  including,  without  limitation,  a certificate  of
incumbency of the Borrower, signed by the Secretary or an Assistant Secretary of
the  Borrower,  in  substantially  the form of Exhibit F,  certifying  as to the
names, true signatures and incumbency of

                                      -19-

<PAGE>




the officer or officers of the  Borrower  authorized  to execute and deliver the
Loan  Documents  and the action  taken by the Board of Directors of the Borrower
authorizing  the  Borrower's   execution,   delivery  and  performance  of  this
Agreement.

                 3.1.6 Borrowing Notice. A Notice of Borrowing.

     In addition,  the credit facility  created pursuant to the credit agreement
described in the first sentence of Section 5.11 below shall have been terminated
in  conjunction   with,  and  as  part  of,  the  refinancing  of  the  existing
indebtedness of Borrower thereunder on the Closing Date.

                   SECTION 3.2. Conditions to All Borrowings.

     The  obligation  of each Bank to make a Revolving  Loan on the  occasion of
each Borrowing is subject to the satisfaction of the following conditions:

     3.2.1 Notice. Receipt by the Agent of a Notice of Borrowing;

     3.2.2  No  Default.  The fact  that,  immediately  before  and  after  such
Borrowing, no Default shall have occurred and be continuing;

     3.2.3  Truth of  Representations.  The fact  that the  representations  and
warranties  of the Borrower  contained in Article 4 of this  Agreement  shall be
true on and as of the date of such Borrowing; and

     3.2.4 Not Overadvance. The fact that, immediately after such Borrowing, the
aggregate  outstanding principal amount of the Revolving Loans of each Bank will
not exceed the amount of its Commitment.

Each Borrowing  hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in Sections
3.2.2, 3.2.3 and 3.2.4.


                    ARTICLE 4. REPRESENTATIONS AND WARRANTIES

                   The Borrower represents and warrants that:

                   SECTION 4.1. Corporate Existence and Power.

     Each of the Borrower and each  Subsidiary 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,

                                      -20-

<PAGE>




or obtain such  licenses,  authorizations,  consents or  approvals  could not be
reasonably expected to have or cause a Material Adverse Effect.

    SECTION 4.2. Corporate and Governmental Authorization; No Contravention.

     The execution,  delivery and performance by the Borrower of this Agreement,
the Notes and the other Loan Documents (i) are within the  Borrower's  corporate
powers, (ii) have been duly authorized by all necessary corporate action,  (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 regulation or of the articles of incorporation or
by-laws of the  Borrower  or, to the best of the  Borrower's  knowledge,  of any
material  agreement,  judgment,  injunction,  order,  decree or other instrument
binding upon the Borrower or any of its  Subsidiaries,  and (v) do not result in
the  creation or  imposition  of any Lien on any asset of the Borrower or any of
its Subsidiaries.

                          SECTION 4.3. Binding Effect.

     This  Agreement  constitutes a valid and binding  agreement of the Borrower
enforceable  in  accordance  with its  terms,  and the Notes and the other  Loan
Documents,  when executed and delivered in accordance with this Agreement,  will
constitute  valid  and  binding  obligations  of the Bor  rower  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 enforcement of creditors'
rights generally.

         SECTION 4.4. Financial Information; No Material Adverse Effect.

     The audited balance sheet of the Borrower and its Consolidated Subsidiaries
as of the Fiscal  Year ended  closest to  December  31,  1996,  and the  related
consolidated  audited statements of income,  shareholders' equity and cash flows
of the  Borrower  and its  Consolidated  Subsidiaries  for the Fiscal  Year then
ended,  copies  of which  have  been  delivered  to each of the  Banks,  and the
unaudited financial statements of the Borrower and its Consolidated Subsidiaries
as of and for the Fiscal Quarter ended closest to June 30, 1997, copies of which
have been delivered to each of the Banks,  fairly  present,  in conformity  with
GAAP, the financial  position of the Borrower 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  representations  as to the matters set forth in
this sentence shall be deemed to refer to the most recent  financial  statements
delivered  pursuant to Sections 5.1.1 and 5.1.2.  Since December 31, 1996, 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 Borrower pursuant
to Section 5.1.1.

                                      -21-

<PAGE>





                           SECTION 4.5. No Litigation.

     There is no action,  suit or proceeding pending, or to the knowledge of the
Borrower   threatened,   against  or  affecting  the  Borrower  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 Borrower to
perform its obligations  under,  this  Agreement,  the Notes or any of the other
Loan Documents.

       SECTION 4.6. Compliance with Laws Generally; Compliance with ERISA.

     The Borrower and each Subsidiary are in compliance in all material respects
with applicable  laws  (including,  but not limited to, ERISA),  regulations 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 Borrower's knowledge,
(i) the Bor rower 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  Borrower  nor any  member  of the  Controlled  Group  is or ever  has  been
obligated to contribute to any Multiemployer Plan.

                               SECTION 4.7. Taxes.

     There have been filed on behalf of the  Borrower 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  Borrower  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  Borrower  and its  Subsidiaries  in
respect  of taxes or other  governmental  charges  are,  in the  opinion  of the
Borrower, adequate.

                           SECTION 4.8. Subsidiaries.

     As of the Closing Date,  the Borrower has no  Subsidiaries,  except for the
Subsidiaries   set  forth  on  Schedule  4.8,  all  of  which  are  Consolidated
Subsidiaries.

     SECTION 4.9. Not a Holding Company, Public Utility, Investment Company,
                              Investment Adviser.

     Neither  the  Borrower  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

                                      -22-

<PAGE>




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.

                   SECTION 4.10. Ownership of Property; Liens.

     The Borrower 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 5.8.

                            SECTION 4.11. No Default.

     Neither the Borrower  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 Default has occurred and is con tinuing.

                         SECTION 4.12. Full Disclosure.

     All written information and, to the best of the Borrower's  knowledge,  all
other information, heretofore furnished by the Borrower to the Agent or any Bank
for  purposes  of or in  connection  with  this  Agreement  or  any  transaction
contemplated  hereby is, and all such  information  hereafter  furnished  by the
Borrower to the Agent or any Bank 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 Borrower has disclosed to the Banks in
writing any and all facts which could  reasonably be expected to have or cause a
Material Adverse Effect.

                      SECTION 4.13. Environmental Matters.

     To the best of the Borrower's  knowledge,  (i) neither the Borrower nor any
Subsidiary is subject to any Environmental Liability which could have or cause a
Material  Adverse  Effect and neither the Borrower nor any  Subsidiary  has been
designated  as a potentially  responsible  party under CERCLA or under any state
statute similar to CERCLA.  None of the Properties located in the United States,
owned by either the Borrower 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; (ii) to the
best of the Borrower's knowledge,  no Hazardous Materials have been or are being
used, produced, manufactured,  processed, treated, recycled, gener ated, 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 Borrower or a Subsidiary, or, to the best of the
knowledge of the Borrower, at or from any adjacent site or facility,  except for
Hazardous Materials, such as cleaning solvents,  pesticides and other materi als
used, produced,  manufactured,  processed, treated, recycled, generated, stored,
disposed of,

                                      -23-

<PAGE>




managed,  or otherwise  handled in the ordinary course of business in compliance
with all  applicable  Environmental  Requirements;  and (iii) to the best of the
Borrower's  knowledge,  the Borrower and its Subsidiaries are in compliance with
all  Environmental  Requirements  in  connection  with  the  ownership,  use and
operation of the Properties and the Borrower's and such Subsidiary's  respective
businesses.

                          SECTION 4.14. Capital Stock.

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

                           SECTION 4.15. Margin Stock.

     Neither the Borrower 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 Revolving 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.

                             SECTION 4.16. Solvency.

     After giving effect to the execution and delivery of the Loan Documents and
the making of the  Revolving  Loans under this  Agreement,  the Borrower will be
Solvent.

             SECTION 4.17. Possession of Franchises, Licenses, Etc.

     The  Borrower  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 Borrower 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 Borrower and its Subsidiaries  possess all Franchise Rights necessary
for the  ownership,  operation  and  development  of its (or  their)  franchised
restaurant  business as  conducted,  or  contemplated  to be  conducted,  by the
Borrower 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.


                                      -24-

<PAGE>




                            SECTION 4.18. Insurance.

     The Borrower and each of its Subsidiaries  maintains 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.


                              ARTICLE 5. COVENANTS

     The Borrower agrees that, so long as any Bank has any Commitment  hereunder
or any amount payable hereunder or under any Note remains unpaid:

                            SECTION 5.1. Information.

                 The Borrower will deliver to each of the Banks:

     5.1.1 Annual  Audit.  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
Borrower and its Con  solidated  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  certified  by  independent  public
accountants of nationally  recognized  standing,  with such  certification to be
free  of  any  material  exceptions  and  qualifications;   provided  that,  the
information  required  by  this  paragraph  may be  satis  fied by  delivery  of
information pursuant to Section 5.1.5 or Section 5.1.6;

     5.1.2  Interim  Statements.  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 con  solidated  balance  sheet  of the  Borrower  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 Borrower;  provided that the
information  required  by  this  paragraph  may  be  satisfied  by  delivery  of
information pursuant to Section 5.1.5 or Section 5.1.6;

     5.1.3 Compliance Certificates. Simultaneously with the delivery of each set
of financial  statements referred to in Sections 5.1.1 and 5.1.2, a certificate,
substantially  in the form of  Exhibit G (a  "Compliance  Certificate"),  of the
chief financial  officer of the Borrower (i) setting forth in reasonable  detail
the  calculations  required to establish  whether the Borrower was in compliance
with the  requirements  of Sections  5.3,  5.4, 5.5, 5.6 and 5.19 on the date of
such  financial  statements  and (ii) stating  whether any Default exists on the
date of such certificate and, if any

                                      -25-

<PAGE>




Default then exists,  setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;

     5.1.4 Default Notice. Promptly (and, in any event, within five (5) Domestic
Business  Days)  after  the  Borrower  becomes  aware of the  occurrence  of any
Default,  a certificate of the chief financial  officer of the Borrower  setting
forth  the  details  thereof  and the  action  which the  Borrower  is taking or
proposes to take with respect thereto;

     5.1.5 Proxy.  Promptly upon the mailing thereof to the  shareholders of the
Borrower  generally,  copies  of all  financial  statements,  reports  and proxy
statements so mailed;

     5.1.6 Registration Statements.  Promptly upon the filing thereof, copies of
all registration  statements and annual,  quarterly or monthly reports which the
Borrower shall have filed with the Securities and Exchange Commission;

     5.1.7 ERISA  Notices.  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  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

     5.1.8  Other  Reports.  From  time  to  time  such  additional  information
regarding  the   financial   position  or  business  of  the  Borrower  and  its
Subsidiaries as the Agent, at the request of any Bank, may reasonably request.

             SECTION 5.2. Inspection of Property, Books and Records.

     The Borrower 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 Bank at such Bank's expense prior
to the  occurrence  of a  Default  and  at  the  Borrower's  expense  after  the
occurrence  and during the  continuance of a 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  Borrower  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.


                                      -26-

<PAGE>




        SECTION 5.3. Adjusted Funded Debt/Adjusted Capitalization Ratio.

     The Adjusted Funded Debt/Adjusted Capitalization Ratio will not at any time
exceed .65:1.

                   SECTION 5.4. Minimum Stockholders' 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  Borrower  from any  offering  of  equity  securities  (other  than
Redeemable  Preferred  Stock) by Borrower  subsequent to the Closing Date; plus,
without  duplication,  (iv)  seventy-five  percent  (75%)  of any  net  proceeds
received by Borrower from any  conversion of debt into equity  subsequent to the
Closing Date; 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 Stockholders'  Equity resulting from the issuance or exchange of
any equity securities in furtherance of any acquisition constituting a permitted
investment under Section 5.19.

                    SECTION 5.5. Fixed Charge Coverage Ratio.

     Borrower's  Fixed  Charge  Coverage  Ratio,  measured on a rolling four (4)
Fiscal Quar ters' basis as of the end of each Fiscal  Quarter,  commencing  with
the Fiscal  Quarter ended  closest to December 31, 1996,  shall be not less than
2:1.

            SECTION 5.6. Total Funded Debt/Cash Flow Coverage Ratio.

     The  ratio  which  (i)  the  Total  Funded  Debt  of the  Borrower  and its
Consolidated Subsidiaries at the end of any Fiscal Quarter,  commencing with the
Fiscal  Quarter ended closest to December 31, 1996,  bears to (ii) the Cash Flow
of the Borrower 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 December 31, 1996, shall be less than 4.5:1.

                          SECTION 5.7. Negative Pledge.

     The  Borrower  will not, nor will the Borrower  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 Borrower,  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

                                      -27-

<PAGE>




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  Borrower  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  compensation,
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) Pur chase  Money  Liens;  (x)  Liens on any  Properties  acquired  by
Borrower 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 Borrower or such  Subsidiary
except the acquired  Properties,  (C) the amount of such debt so secured thereby
is not increased at or subse quent 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, 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;  (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 Borrower or such
Subsidiary  at the  expiration  of the  lease  term or as to  which  no  bargain
purchase  option  exists;  and (xii) rights of lessors in respect of  Properties
leased to the Borrower or its Subsidiaries under operating leases.

                     SECTION 5.8. Maintenance of Existence.

     Except as permitted in Section 5.10,  the Borrower  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 Borrower 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  Borrower  and  such
Subsidiaries, except with respect to Voluntary Store Closings.

                            SECTION 5.9. Dissolution.

     Neither the  Borrower  nor any of its  Subsidiaries  shall suffer or permit
dissolution or liquidation  either in whole or in part, except through corporate
reorganization to the extent permitted by Section 5.10.


                                      -28-

<PAGE>




           SECTION 5.10. Consolidations, Mergers and Sales of Assets.

     The Borrower 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 5.19,
the Borrower or any  Subsidiary  may merge with another Person (which is not the
Borrower 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  Borrower  or such
Subsidiary  (as the case may be) is the  corporation  surviving  such merger and
(iii)  immediately  after giving  effect to such merger,  no Default  shall have
occurred and be continuing; and, provided, further, that any Subsidiaries of the
Borrower may (i) merge or  consolidate  with each other or with the Borrower (so
long as the Borrower is the  corporation  surviving  such merger),  or (ii) sell
assets to each other or to the Borrower. Notwithstanding the foregoing, however,
the  Applebee's  Spinoff,  if made on the terms set forth within the  definition
thereof, and if all obligations of the Borrower arising under this Agreement are
then fully paid and satisfied with the net proceeds therefrom, shall be exempted
from the prohibition on asset  dispositions of such size set forth  hereinabove.
To  facilitate  the  foregoing,  the  Borrower  shall  provide  the Agent on the
Announcement  Date  with a copy of the  press  release  and  letter  of  intent,
agreement in principle or like arrangement  described in the "Announcement Date"
definition in respect of the Applebee's Spinoff.

                         SECTION 5.11. Use of Proceeds.

     The proceeds of the initial Revolving Loan shall be used to pay in full all
obligations of the Borrower under the Prior Credit Agreement  outstanding on the
Closing Date. The proceeds of any subsequent Revolving Loans will be used by the
Borrower  solely  for  working  capital,  and  for  no  other  purpose.  Without
limitation of the foregoing,  no portion of the proceeds of the Revolving  Loans
will be  used by the  Borrower  (i) in  connection  with,  whether  directly  or
indirectly,  any  tender  offer  for,  or  other  acquisition  of,  stock of any
corporation  with a view towards  obtaining  control of such other  corporation,
(ii) directly or indirectly,  for the purpose, whether immediate,  incidental or
ultimate,  of  purchasing  or carrying any Margin  Stock,  (iii)  generally,  to
finance investments, even if such investments are otherwise permitted hereunder,
(iv) for any other purpose in violation of any term of this  Agreement or of any
applicable law or regulation.

              SECTION 5.12. Compliance with Laws; Payment of Taxes.

     The Borrower 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),  regulations  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  Borrower  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 Borrower or any

                                      -29-

<PAGE>




Subsidiary,  except liabilities being contested in good faith and against which,
if requested by the Agent,  the Borrower will set up reserves in accordance with
GAAP.

                            SECTION 5.13. Insurance.

     The Borrower  will  maintain,  and will cause each of its  Subsidiaries  to
maintain (either in the name of the Borrower 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.

                      SECTION 5.14. Change in Fiscal Year.

     The  Borrower  will not change its Fiscal  Year  without the consent of the
Required Banks.

                     SECTION 5.15. Maintenance of Property.

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

                      SECTION 5.16. Environmental Notices.

     The  Borrower  shall  furnish to the  Agent,  promptly  after the  Borrower
becomes aware thereof, written notice of all Environmental Liabilities, pending,
threatened  Environmental  Proceedings,   Environmental  Notices,  Environmental
Judgments and Orders and  Environmental  Re leases,  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.

                      SECTION 5.17. Environmental Matters.

     The  Borrower  will  not,  and will not  permit  any Third  Party to,  use,
produce,  manufac ture, 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.

                      SECTION 5.18. Environmental Releases.

     The Borrower  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),

                                      -30-

<PAGE>




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.

                           SECTION 5.19. Investments.

     The Borrower will not make (nor will the Borrower  permit any Subsidiary to
make) any  investment in any Person or Property  (which term  "investment,"  for
purposes hereof, shall mean and include, 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,  the making of any
loan, advance,  extension of credit, credit accommodation,  Guarantee or capital
contribution to or on behalf of any Person, and the leasing or subleasing of any
property to any Person), provided, however, that, notwithstanding the foregoing,
the  Borrower  (or any  Subsidiary)  may,  from  time  to  time,  undertake  the
following,  without the  necessity of  obtaining  the  Required  Lenders'  prior
written consent thereto:

     (i) 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);

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

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

     (iv) 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;

     (v) 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 in struments in connection therewith;

     (vi) Surplus  Cash.  Consistent at all times with the  Borrower'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;
  
(vii) Subsidiaries.  Make investments in those Consolidated Subsidiaries of
the Borrower which are wholly-owned, directly or indirectly, by the Borrower, in
the ordinary  course of, and  pursuant to the  reasonable  requirements  of, the
Borrower'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  consolidated  total assets of Borrower  and its  Consolidated
Subsidiaries  at any time prior to December  30,  1997,  (B) seven and  one-half
percent  (7-1/2%) of consolidated  total assets of Borrower and its Consolidated
Subsidiaries  on or at any time after  December 31, 1997,  but prior to June 30,
1998, and (C) five percent (5%) of consolidated total assets of Borrower and its
Consolidated  Subsidiaries  on or after June 30, 1998; it being  understood  and
agreed that (a) there shall be excluded  from such  calculation  any  investment
deemed made by the Borrower in DF&R Restaurants, Inc., a Texas corporation which
is a  wholly-owned,  Consolidated  Subsidiary of the  Borrower,  pursuant to the
accounting for the prior  acquisition  of such  corporation by the Borrower as a
pooling of  interests;  (b) there shall be deducted in any event from the amount

                                      -31-

<PAGE>
   
of investments in  Subsidiaries  which may be made pursuant to this clause (vii)
the aggregate amount of Capitalized Lease Obligations of all Subsidiaries  which
are at any time  outstanding,  if and to the extent not already  counted against
such  amount  as  an  investment  of  Borrower;  i.e.,  as a  Capitalized  Lease
Obligation  owing to Borrower as lessor or sublessor;  and (c) the provisions of
this clause  (vii) shall be the  exclusive  means by which the  Borrower (or any
Subsidiary)  may  make   investments  in  any   Subsidiaries   (whether  or  not
wholly-owned  Subsidiaries)  and shall  override  any other  provisions  of this
Section 5.19 (including,  particularly, clauses (x), (xi) and (xii) below) which
may be construed otherwise to permit such investments.

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

     (ix) Special Life  Insurance  Program.  The Borrower may invest up to Eight
Hundred  Fifty  Thousand  Dollars  ($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 Fifty Million
Dollars  ($50,000,000),  provided,  however,  that (i) such investments are made
over a period not to exceed ten (10) Fiscal Years and (ii) Borrower 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;

     (x) 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 (x) or any other  provision of this  Section,  except with the prior
written consent of the Required Lenders;

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

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

     The  Borrower  shall  notify  the  Agent  from  time to time,  but not less
frequently than quarterly,  or at any time at Agent's request, of the nature and
amount of any  investments  made  pursuant to clauses (x), (xi) and (xii) hereof
which,  individually or in the aggregate,  exceed One Hundred  Thousand  Dollars
($100,000).

     In the event that,  and to the extent that, as of the Closing Date,  any of
the terms or  conditions  set forth in this  Section  5.19 (or in  Section  5.20
below) shall operate to restrict the ability of any  Consolidated  Subsidiary to
(i) pay dividends or make  distributions  permitted under  applicable law on any
capital stock of such Subsidiary owned by the Borrower or any other Consolidated
Subsidiary,  (ii) pay any  indebtedness or other obligation owed to the Borrower
or any other  Consolidated  Subsidiary,  (iii)  make  loans or  advances  to the
Borrower  or any other  Consolidated  Subsidiary,  or (iv)  transfer  any of its
property  or  assets  to  Borrower  or any other  Consolidated  Subsidiary  (the
"Subsidiary  Activities"),  and the  imposition of such  restriction on any such
Subsidiary   Activities  pursuant  hereto  is  expressly  prohibited  under,  or
constitutes  an event of default  under,  the terms of the  Borrower's  existing
indenture for its 9-3/4% senior notes of due June 1, 2006, then, notwithstanding
the foregoing, such Subsidiary Activities shall be permitted.


                                      -32-

<PAGE>


                         SECTION 5.20. Subsidiary Debt.

     Except solely to the extent expressly  permitted in clause (vii) of Section
5.19 of this Agreement, the Borrower will not permit any Consolidated Subsidiary
of the Borrower which is a wholly-owned Subsidiary,  directly or indirectly,  of
the  Borrower,  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 Ten  Million  Dollars
($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 One Million
Dollars  ($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.


                               ARTICLE 6. DEFAULTS

                         SECTION 6.1. Events of Default.


     If one or more of the  following  events  ("Events of Default")  shall have
occurred and be continuing:

     6.1.1  Non-Payment.  The  Borrower  (i)  shall  fail  to pay  when  due any
principal  of any  Revolving  Loan or (ii) shall fail to pay any interest on any
Revolving Loan within five (5) Domestic  Business Days after such interest shall
become due, or (iii) shall fail to pay any fee or other amount payable hereunder
or under any Loan Document within five (5) Domestic Business Days after such fee
or other amount becomes due; or

     6.1.2  Failure to Observe  Certain  Covenants.  The Borrower  shall fail to
observe or perform any covenant  contained  in Sections  5.3 through 5.9,  5.10,
5.11, 5.12, 5.15 or 5.19, inclusive; or

     6.1.3 Failure to Observe  Covenants  Generally.  The Borrower shall fail to
observe or perform any  covenant  or  agreement  contained  or  incorporated  by
reference  in this  Agreement  (other than those  covered by Sections  6.1.1 and
6.1.2) and such failure shall not have been cured within ten (10) days after the
earlier to occur of (i) written notice thereof has been given to the Borrower by
the Agent at the request of any Bank or (ii) an executive,  senior  financial or
accounting  officer of the Borrower otherwise becomes aware of any such failure;
or

     6.1.4  Misrepresentation.  Any representation,  warranty,  certification or
statement  made  by the  Borrower  in  Article  IV of this  Agreement  or in any
certificate,  financial  statement or other document  delivered pursuant to this
Agreement  shall prove to have been  incorrect  or  misleading  in any  material
respect when made (or deemed made); or

     6.1.5 Cross-Default.  The Borrower or any Subsidiary shall fail to make any
payment in respect of any debt, liability or obligation outstanding individually
or in the aggregate with all other such debts, liabilities or obligations, equal
to or in excess of Five  Hundred  Thousand  Dollars  ($500,000),  other than the
Notes, when due or within any applicable grace period; or any event or condition
shall occur which results in the  acceleration of the maturity of any such debt,
liability  or  obligation   outstanding   of  the  Borrower  or  any  Subsidiary
individually  or in the  aggregate  with all other such  debts,  liabilities  or
obligations equal to or in excess of Five Hundred Thousand Dollars ($500,000) or
the mandatory  prepayment or purchase of any such debt,  liability or obligation
by the  Borrower  (or  its  designee)  or  such  Subsidiary  (or  its  designee)
individually  or in the  aggregate  with all other such  debts,  liabilities  or
obligations  equal to or in excess of Five Hundred Thousand  Dollars  ($500,000)
prior to the  scheduled  maturity  thereof,  or enables (or,  with the giving of
notice or lapse of time or both,  would  enable)  the  holders of any such debt,
liability or obligation  individually  or in the  aggregate  with all other such
debts, liabilities or obligations equal to or in excess of Five Hundred Thousand
Dollars  ($500,000) or any Person  acting on such holders'  behalf to accelerate
the maturity  thereof or require the mandatory  prepayment  or purchase  thereof
prior to the scheduled maturity thereof,  without regard to whether such holders
or other Person shall have exercised or waived their right to do so; or


                                      -33-

<PAGE>




     6.1.6 Voluntary Bankruptcy. The Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,  reorganization or other
relief with respect to itself or its debts under any  bankruptcy,  insolvency or
other  similar law now or  hereafter in effect or seeking the  appointment  of a
trustee, receiver, liquidator,  custodian or other similar official of it or any
substantial part of its property,  or shall consent to any such relief or to the
appointment of or taking  possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the  benefit  of  creditors,  or shall fail  generally  to pay its debts as they
become  due,  or  shall  take  any  corporate  action  to  authorize  any of the
foregoing; or

     6.1.7 Involuntary Bankruptcy. An involuntary case or other proceeding shall
be  commenced  against  the  Borrower  or any  Subsidiary  seeking  liquidation,
reorganization  or other  relief  with  respect  to it or its  debts  under  any
bankruptcy,  insolvency  or other  similar  law now or  hereafter  in  effect or
seeking the appointment of a trustee, receiver,  liquidator,  custodian or other
similar  official  of it or any  substantial  part  of its  property,  and  such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of sixty (60) days;  or an order for relief shall be entered  against the
Borrower or any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect; or

     6.1.8 ERISA.  The Borrower or any member of the Controlled Group shall fail
to pay when due any material  amount which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA;  or notice of intent to terminate
a Plan or Plans  shall be filed  under  Title IV of ERISA by the  Borrower,  any
member of the Controlled Group, any plan administrator or any combination of the
foregoing;  or the PBGC shall institute  proceedings  under Title IV of ERISA to
terminate or to cause a trustee to be appointed to  administer  any such Plan or
Plans or a  proceeding  shall be  instituted  by a fiduciary of any such Plan or
Plans to enforce  Section 515 or 4219(c)(5) of ERISA and such  proceeding  shall
not have been dismissed within thirty (30) days thereafter; or a condition shall
exist  by  reason  of which  the  PBGC  would  be  entitled  to  obtain a decree
adjudicating that any such Plan or Plans must be terminated; or

     6.1.9  Judgments.  One or more judgments or orders for the payment of money
in an aggregate  amount equal to or greater than Five Hundred  Thousand  Dollars
($500,000)  shall be rendered  against the Borrower or any  Subsidiary  and such
judgment or order shall continue unsatisfied and unstayed for a period of thirty
(30) days; or

     6.1.10 Tax Liens.  A federal tax Lien shall be filed  against the  Borrower
under  Section 6323 of the Code or a Lien of the PBGC shall be filed against the
Borrower or any  Subsidiary  under Section 4068 of ERISA and in either case such
Lien shall remain  undischarged  for a period of thirty (30) days after the date
of filing; or

     6.1.11  Change  of  Control.  Tom E.  DuPree,  Jr.  shall  cease to own and
control,  beneficially and with power to vote, at least fifteen percent (15%) of
the outstanding shares of the voting common stock of the Borrower; or any Person
(other than Tom E. DuPree, Jr.) or two

                                      -34-

<PAGE>




or more  Persons  acting in concert  shall have  acquired  beneficial  ownership
(within  the meaning of Rule 13d-3 of the  Securities  and  Exchange  Commission
under the  Securities  Exchange Act of 1934) of twenty  percent (20%) or more of
the outstanding shares of the voting common stock of the Bor rower; or as of any
date,  a  majority  of the  Board  of  Directors  of the  Borrower  consists  of
individuals  who  were  not  either  (A)  directors  of the  Borrower  as of the
corresponding  date of the  previous  year,  (B) selected or nominated to become
directors by a Board of Directors of the Borrower of which a majority  consisted
of  individuals  described in clause (A), or (C) selected or nominated to become
di  rectors  by the  Board of  Directors  of the  Borrower  of which a  majority
consisted of individuals  described in clause (A) and  individuals  described in
clause (B); or

     6.1.12 Loss of  Franchise  Rights.  If any of the  Franchise  Rights of the
Borrower or its  Subsidiaries  shall be forfeited,  suspended,  lost,  rejected,
disclaimed,  impaired,  curtailed or otherwise  adversely altered or affected in
any manner, in whole or in any material part, for any reason whatsoever, whether
or not related to the Borrower's or such Subsidiary's  performance of its duties
and  obligations as franchisee at any time hereafter  except with respect to any
Voluntary Store Closing; or there shall occur any default by the Borrower or any
such  Subsidiary  in the  payment,  performance  or  observance  of  any  terms,
covenants or conditions of any franchise or development  agreements  giving rise
to the existence and/or continuation of any such Franchise Rights, and any grace
or cure period relative  thereto granted therein shall have expired without such
default being waived or cured; or

     6.1.13  Material  Adverse  Effect.   The  occurrence  of  any  event,  act,
occurrence, or condition which the Required Banks determine either does or has a
reasonable  probability of causing,  or resulting in, a Material Adverse Effect;
or

     6.1.14 Other Wachovia Credit Agreement. An "Event of Default" (as that term
is defined therein) shall occur and be continuing under that certain Amended and
Restated Credit  Agreement,  dated as of September 9, 1997,  among the Borrower,
the Agent,  Wachovia  and  certain  other  banks  listed  therein,  as it may be
modified or amended from time to time.

then, and in every such event,  the Agent shall (i) if requested by the Required
Banks,  by notice to the  Borrower  terminate  the  Commitments  and they  shall
thereupon  terminate,  and (ii) if requested by the Required Banks, by notice to
the Borrower declare the Notes (together with accrued  interest  thereon) to be,
and the Notes  shall  thereupon  become,  immediately  due and  payable  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby  waived by the  Borrower,  together  with  interest at the  Default  Rate
accruing on the principal  amount  thereof from and after the date of such Event
of Default; provided that if any Event of Default specified in Sections 6.1.6 or
6.1.7 above occurs with respect to the Borrower or any  Subsidiary,  without any
notice  to the  Borrower  or any  other  acts by the  Agent  or the  Banks,  the
Commitments  shall  thereupon  terminate  and the Notes  (together  with accrued
interest thereon) shall become immediately due and payable without  presentment,
demand,  protest or other notice of any kind,  all of which are hereby waived by
the Borrower, together with interest thereon at the Default Rate accruing on the
principal  amount  thereof  from and  after the date of such  Event of  Default.
Notwithstanding the foregoing, the Agent shall

                                      -35-

<PAGE>




have available to it all other remedies at law or equity, and shall exercise any
one or all of them at the request of the Required Banks.

                         SECTION 6.2. Notice of Default.

     The Agent shall give notice to the  Borrower of any Default  under  Section
6.1.3  promptly  upon being  requested to do so by any Bank and shall  thereupon
notify all the Banks thereof.


                              ARTICLE 7. THE AGENT

                SECTION 7.1. Appointment; Powers and Immunities.

     Each Bank hereby  irrevocably  appoints and  authorizes the Agent to act as
its agent  hereunder and under the other Loan  Documents with such powers as are
specifically  delegated to the Agent by the terms  hereof and thereof,  together
with such other powers as are  reasonably  incidental  thereto.  The Agent:  (a)
shall have no duties or  responsibilities  except as expressly set forth in this
Agreement  and the  other  Loan  Documents,  and  shall  not by  reason  of this
Agreement or any other Loan Document be a trustee for any Bank; (b) shall not be
responsible  to the  Banks  for any  recitals,  statements,  representations  or
warranties  contained in this  Agreement or any other Loan  Document,  or in any
certificate or other document referred to or provided for in, or received by any
Bank under,  this  Agreement or any other Loan  Document,  or for the  validity,
effectiveness,  genuineness,  enforceability or sufficiency of this Agreement or
any other Loan Document or any other document referred to or provided for herein
or therein or for any failure by the Borrower to perform any of its  obligations
hereunder  or  thereunder;  (c) shall not be required to initiate or conduct any
litigation or collection  proceedings hereunder or under any other Loan Document
except to the extent requested by the Required Banks, and then only on terms and
conditions  satisfactory to the Agent;  and (d) shall not be responsible for any
action  taken or  omitted  to be taken by it  hereunder  or under any other Loan
Document or any other document or instrument  referred to or provided for herein
or therein or in  connection  herewith  or  therewith,  except for its own gross
negligence   or   willful   misconduct.   The  Agent  may   employ   agents  and
attorneys-in-fact  and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care. The
provi sions of this  Article VII are solely for the benefit of the Agent and the
Banks,  and the Borrower shall not have any rights as a third party  beneficiary
of any of the  provisions  hereof.  In performing its functions and duties under
this Agreement and under the other Loan Documents, the Agent shall act solely as
agent of the Banks and does not assume  and shall not be deemed to have  assumed
any  obligation  towards  or  relationship  of agency  or trust  with or for the
Borrower.  The duties of the Agent shall be ministerial  and  administrative  in
nature,  and the Agent shall not have by reason of this  Agreement  or any other
Loan Document a fiduciary relationship in respect of any Bank.


                                      -36-

<PAGE>




                         SECTION 7.2. Reliance by Agent.

     The Agent shall be entitled to rely upon any certification, notice or other
com munication (including any thereof by telephone,  telefax, telegram or cable)
believed  by it to be genu ine and correct and to have been signed or sent by or
on behalf of the proper  Person or Persons,  and upon advice and  statements  of
legal counsel,  independent  and  accountants  or other experts  selected by the
Agent.  As to any matters not  expressly  provided for by this  Agreement or any
other Loan Document,  the Agent shall in all cases be fully protected in acting,
or in  refraining  from acting,  hereunder and  thereunder  in  accordance  with
instructions signed by the Required Banks, and such instructions of the Required
Banks in any action taken or failure to act pursuant thereto shall be binding on
all of the Banks.

                             SECTION 7.3. Defaults.

     The Agent  shall not be deemed to have  knowledge  of the  occurrence  of a
Default or an Event of Default  (other than the  nonpayment  of  principal of or
interest on the  Revolving  Loans)  unless the Agent has received  notice from a
Bank or the  Borrower  specifying  such  Default or Event of Default and stating
that such notice is a "Notice of Default".  In the event that the Agent receives
such a notice of the  occurrence of a Default or an Event of Default,  the Agent
shall give prompt  notice  thereof to the Banks.  The Agent shall give each Bank
prompt  notice of each  nonpayment  of principal of or interest on the Revolving
Loans  whether  or not it has  received  any  notice of the occur  rence of such
nonpayment.  The Agent shall (subject to Section 9.6) take such action hereunder
with  respect to such  Default or Event of Default as shall be  directed  by the
Required  Banks,  provided that,  unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such action,
or refrain  from taking such  action,  with  respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.

                     SECTION 7.4. Rights of Agent as a Bank.

     With respect to the Revolving Loans made by it, Wachovia in its capacity as
a Bank  hereunder  shall have the same rights and powers  hereunder as any other
Bank and may  exercise  the same as though it were not acting as the Agent,  and
the term  "Bank" or "Banks"  shall,  unless  the  context  otherwise  indicates,
include  Wachovia in its individual  capacity.  The Agent may (without having to
account  therefor to any Bank) accept deposits from, lend money to and generally
engage in any kind of banking,  trust or other  business  with the Borrower (and
any of its Affiliates) as if it were not acting as the Agent,  and the Agent may
accept  fees and other  consideration  from the Bor rower  (in  addition  to any
agency fees and arrangement fees heretofore  agreed to between the Bor rower and
the Agent) for  services in  connection  with this  Agreement  or any other Loan
Document or otherwise without having to account for the same to the Banks.


                                      -37-

<PAGE>




                          SECTION 7.5. Indemnification.

     Each Bank severally  agrees to indemnify the Agent, to the extent the Agent
shall not have been  reimbursed by the Borrower,  ratably in accordance with its
Commitment,  for  any  and  all  liabilities,   obligations,   losses,  damages,
penalties,  actions,  judgments,  suits,  costs,  expenses  (including,  without
limitation,  counsel fees and  disbursements)  or  disbursements of any kind and
nature  whatsoever  which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this  Agreement or any other Loan
Document  or any other  documents  con  templated  by or  referred  to herein or
therein or the transactions contemplated hereby or thereby (excluding, unless an
Event of Default has occurred and is continuing, the normal administrative costs
and expenses  incident to the performance of its agency duties hereunder) or the
enforcement  of any of the terms hereof or thereof or any such other  documents;
provided,  however that no Bank shall be liable for any of the  foregoing to the
extent they arise from the gross negligence or willful  misconduct of the Agent.
If any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence,  to do the acts indemnified  against until
such additional indemnity is furnished.

                  SECTION 7.6. Payee of Note Treated as Owner.

     The Agent may deem and treat the payee of any Note as the owner thereof for
all  purposes  hereof  unless and until a written  notice of the  assignment  or
transfer  thereof  shall have been filed  with the Agent and the  provisions  of
Section  9.8 have been  satisfied.  Any  requests,  authority  or consent of any
Person  who at the time of making  such  request  or giving  such  authority  or
consent  is the  holder  of any Note  shall be  conclusive  and  binding  on any
subsequent  holder,  transferee or assignee of that Note or of any Note or Notes
issued in exchange therefor or replacement thereof.

               SECTION 7.7. Nonreliance on Agent and Other Banks.

     Each Bank agrees  that it has,  independently  and without  reliance on the
Agent or any other Bank, and based on such  documents and  information as it has
deemed appropriate, made its own credit analysis of the Borrower and decision to
enter into this Agreement and that it will,  independently  and without reliance
upon the Agent or any other Bank, and based on such documents and information as
it shall deem  appropriate  at the time,  continue to make its own  analysis and
decisions  in taking or not taking  action  under this  Agreement  or any of the
other Loan Documents. The Agent shall not be required to keep itself informed as
to the performance or observance by the Borrower of this Agreement or any of the
other Loan Documents or any other document referred to or provided for herein or
therein or to  inspect  the  properties  or books of the  Borrower  or any other
Person.  Except  for  notices,  reports  and  other  documents  and  information
expressly  required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other  information  concerning  the affairs,
financial  condition  or business of the Borrower or any other Person (or any of
their Affiliates) which may come into the possession of the Agent.

                                      -38-

<PAGE>




                          SECTION 7.8. Failure to Act.

     Except for action  expressly  required of the Agent  hereunder or under the
other Loan Documents, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder  and  thereunder  unless it shall  receive  further
assurances to its satisfaction by the Banks of their indemnification obligations
under  Section  7.5  against  any and all  liability  and  expense  which may be
incurred  by the Agent by reason of taking,  continuing  to take,  or failing to
take any such action.

                       SECTION 7.9. Resignation of Agent.

     Subject to the  appointment and acceptance of a successor Agent as provided
below,  the Agent may resign at any time by giving notice  thereof to the Banks.
Upon any such resignation,  the Required Banks shall have the right to appoint a
successor  Agent.  If no  successor  Agent shall have been so  appointed  by the
Required Banks and shall have accepted such appointment  within thirty (30) days
after the retiring  Agent's notice of resignation,  then the retiring Agent may,
on behalf of the Banks,  appoint a successor  Agent.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent,  such successor Agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring  Agent,  and the retiring  Agent shall be  discharged
from  its  duties  and  obligations   hereunder.   After  any  retiring  Agent's
resignation  or removal  hereunder as Agent,  the  provisions  of this Article 7
shall  continue  in effect for its  benefit in respect of any  actions  taken or
omitted to be taken by it while it was acting as the Agent hereunder.


                ARTICLE 8. CHANGE IN CIRCUMSTANCES; COMPENSATION

     SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair.

     If on or  prior  to the  first  day  of  any  Interest  Period,  the  Agent
determines  that deposits in Dollars (in the  applicable  amounts) are not being
offered in the relevant market for such Interest  Period,  or the Required Banks
advise the Agent that the Adjusted LIBOR Rate, as determined by the Agent,  will
not adequately and fairly reflect the cost to such Banks of funding the relevant
Euro-Dollar Rate Loans for such Interest Period, then, the Agent shall forthwith
give notice  thereof to the  Borrower and the Banks,  whereupon  until the Agent
notifies the Borrower that the  circumstances  giving rise to such suspension no
longer exist,  the obligations of the Banks to make the  Euro-Dollar  Rate Loans
specified in such notice shall be  suspended.  Unless the Borrower  notifies the
Agent at least two (2) Domestic  Business  days before the date of any Borrowing
of such  Euro-Dollar  Rate Loans for which a Notice of Borrowing has  previously
been  given  that it elects not to borrow on such  date,  such  Borrowing  shall
instead be made as a Base Rate Borrowing.


                                      -39-

<PAGE>




                            SECTION 8.2. Illegality.

     If, after the date  hereof,  the adoption of any  applicable  law,  rule or
regulation,  or any  change  therein,  or any  change in the  interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency  charged  with the  interpretation  or  administration  thereof (any such
agency being referred to as an "Authority"  and any such event being referred to
as a "Change of Law"),  or compliance  by any Bank (or its Lending  Office) with
any  request  or  directive  (whether  or not  having  the  force of law) of any
Authority  shall make it  unlawful  or  impossible  for any Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Rate Loans and such Bank shall
so notify the Agent,  the Agent shall forthwith give notice thereof to the other
Banks and the Borrower,  whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation  of such Bank to make  Euro-Dollar  Rate  Loans  shall be  suspended.
Before giving any notice to the Agent pursuant to this Section,  such Bank shall
designate a different Lending Office if such designation will avoid the need for
giving  such notice and will not, in the  judgment  of such Bank,  be  otherwise
disadvantageous  to such Bank, in any re spect deemed  material by such Bank. If
such Bank shall determine that it may not lawfully continue to maintain and fund
any of its outstanding  Euro-Dollar  Rate Loans to maturity and shall so specify
in  such  notice,  the  Borrower  shall  immediately  prepay  in full  the  then
outstanding  principal  amount  of each  Euro-Dollar  Rate  Loan  of such  Bank,
together with accrued interest  thereon.  Concurrently  with prepaying each such
Euro-Dollar Rate Loan, the Borrower shall borrow,  pursuant to Sec tion 2.2.3, a
Base Rate Loan in an equal  principal  amount from such Bank (on which  interest
and principal shall be payable  contemporaneously  with the related  Euro-Dollar
Rate Loans of the other Banks), and such Bank shall make such a Base Rate Loan.

                 SECTION 8.3. Increased Cost and Reduced Return.

     8.3.1  Change  of Law.  If  after  the  date  hereof,  a  Change  of Law or
compliance  by any Bank (or its Lending  Office)  with any request or  directive
(whether  or not having  the force of law) of any  Authority  either:  (i) shall
subject any Bank (or its Lending  Office) to any tax,  duty or other charge with
respect to its Revolving  Loans,  its Note or its  obligation to make  Revolving
Loans,  or shall  change the basis of  taxation  of payments to any Bank (or its
Lending  Office) of the principal of or interest on its  Revolving  Loans or any
other amounts due under this Agreement in respect of its Revolving  Loans or its
obligation to make Revolving Loans (except for changes in the rate of tax on the
overall  net  income  of  such  Bank  or  its  Lending  Office  imposed  by  the
jurisdiction in which such Bank's  principal  executive office or Lending Office
is  located);  or (ii) shall  impose,  modify or deem  applicable  any  reserve,
special deposit insurance or similar requirement (including, without limitation,
any such  requirement  imposed by the Board of Governors of the Federal  Reserve
System, but excluding any such requirement included in an applicable Euro-Dollar
Reserve  Percentage)  against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Lending  Office);  or (iii) shall impose on
any Bank (or its  Lending  Office)  or the  London  Interbank  Market  any other
similar condition  affecting its Revolving Loans, its Notes or its obligation to
make Revolving  Loans; and the result of any of the foregoing is to increase the
cost to such Bank (or its Lending Office) of making or maintaining any Revolving
Loan, or to reduce the amount of any such received

                                      -40-

<PAGE>




or receivable by such Bank (or its Lending Office) under this Agreement or under
its Notes with respect thereto, by an amount deemed by such Bank to be material,
then,  within  fifteen  (15) days after  demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost or reduction.

     8.3.2 Capital  Adequacy.  If any Bank shall have  determined that after the
date hereof the adoption of any  applicable  law, rule or  regulation  regarding
capital adequacy,  or any change therein, or any change in the interpretation or
administration  thereof,  or compliance by any Bank (or its Lending Office) with
any request or directive  regarding  capital adequacy (whether or not having the
force of law) of any  Authority,  has or would have the effect of  reducing  the
rate of  return on such  Bank's  capital  as a  consequence  of its  obligations
hereunder to a level below that which such Bank could have achieved but for such
adoption,  change or compliance  (taking into consideration such Bank's policies
with  respect  to  capital  adequacy),  by an  amount  deemed by such Bank to be
material,  then from time to time, within fifteen (15) days after demand by such
Bank, the Borrower shall pay to such Bank such  additional  amount or amounts as
will compensate such Bank for such reduction.

     8.3.3 Notice of Determination.  Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,  occurring  after the date
hereof,  which will en title such Bank to compensation  pursuant to this Section
and will designate a different Lending Office if such designation will avoid the
need for,  or reduce the  amount  of,  such  compensation  and will not,  in the
judgment of such Bank, be otherwise disadvantageous to such Bank, in any respect
deemed  material by such Bank. A certificate  of any Bank claiming  compensation
under this Section and setting forth the additional amount or amounts to be paid
to it  hereunder  shall be  conclusive  in the  absence of  manifest  error.  In
determining  such  amount,  such  Bank  may use  any  reasonable  averaging  and
attribution methods.

     8.3.4  Assignees  Covered.  The  provisions of this Section 8.3 shall be ap
plicable  with  respect  to any  Assignee  or other  Transferee  (excluding  any
Participants),  and any  calculations  required by such provisions shall be made
based upon the circumstances of such Assignee or other Transferee.

  SECTION 8.4. Base Rate Loans Substituted for Affected Euro-Dollar Rate Loans.

     If (i) the  obligation  of any Bank to make or  maintain  Euro-Dollar  Rate
Loans has been  suspended  pursuant to Section 8.2 or (ii) any Bank has demanded
compensation  under Section 8.3.1,  and the Borrower shall, by at least five (5)
Euro-Dollar  Business  Days' prior notice to such Bank  through the Agent,  have
elected  that the  provisions  of this Section  shall apply to such Bank,  then,
unless and until such Bank notifies the Borrower that the  circumstances  giving
rise to such  suspension or demand for  compensation  no longer  apply:  (i) all
Revolving Loans which would  otherwise be made by such Bank as Euro-Dollar  Rate
Loans,  shall be made  instead  as Base Rate  Loans (in all cases  interest  and
principal on such Revolving  Loans shall be payable  contemporaneously  with the
related  Euro-Dollar Rate Loans of the other Banks),  and (ii) after each of its
Euro-Dollar Rate Loans has

                                      -41-

<PAGE>




been repaid, all payments of principal which would otherwise be applied to repay
such  Euro-Dollar  Rate  Loans  shall be  applied  to repay its Base Rate  Loans
instead.

                      SECTION 8.5. Replacement of a Lender.

     In addition to the  foregoing,  if (i) the  obligation of any Bank (but not
all  Banks)  to make or  maintain  Euro-Dollar  Rate  Loans  has been  suspended
pursuant  to  Section  8.2 or (ii) any Bank  (but not all  Banks)  has  demanded
compensation  under Section 8.3,  then, in either such case,  the Borrower shall
have the  right,  at its  option,  upon  giving  at least  five (5)  Euro-Dollar
Business  Days'  prior  notice to such  Bank  through  the  Agent,  either:  (i)
notwithstanding  any  term of  Section  2.7.3 to the  contrary,  to  reduce  the
Commitment  of such Bank to zero, in which case the Borrower  shall  reduce,  by
repayment or prepayment,  as the case may be, its  Borrowings  from such Bank to
zero  effective  upon such  Commitment  reduction  becoming  effective,  and the
Commitment of each remaining Bank shall  remained  unchanged;  or (ii) to obtain
one or more Banks or Assignees  willing to replace such Bank,  in which case the
Bank which is being  replaced shall execute and deliver to such Bank or Assignee
an Assignment  and  Acceptance in accordance  with Section 9.8.3 with respect to
such Bank's entire interest under this Agreement and the Notes.

                           SECTION 8.6. Compensation.

     Upon the request of any Bank,  delivered to the Borrower and the Agent, the
Borrower shall pay to such Bank such amount or amounts as shall  compensate such
Bank for any loss, cost or expense incurred by such Bank (in connection with the
relevant Interest Period) as a result of: (i) any payment or prepayment (whether
pursuant to Section 8.2 or otherwise) of a Euro-Dollar Rate Loan on a date other
than the last day of an Interest Period for such  Euro-Dollar Rate Loan; or (ii)
any fail ure by the Borrower to prepay a  Euro-Dollar  Rate Loan on the date for
such  prepayment  specified in the relevant notice of prepayment  hereunder;  or
(iii) any failure by the Borrower to borrow a Euro- Dollar Rate Loan on the date
for the  Euro-Dollar  Borrowing  of which such  Euro-Dollar  Rate Loan is a part
specified in the applicable  Notice of Borrowing  delivered  pursuant to Section
2.2. Such compensation shall include, without limitation, an amount equal to the
excess,  if any, of (x) the amount of interest  which would have  accrued on the
amount so paid or prepaid or not  prepaid or  borrowed  for the period  from the
date of such payment,  prepayment or failure to prepay or borrow to the last day
of the then current  Interest Period for such  Euro-Dollar Rate Loan (or, in the
case of a failure to prepay or borrow,  the Interest Period for such Euro-Dollar
Rate Loan which would have  commenced  on the date of such  failure to prepay or
borrow)  at the  applicable  rate of  interest  for such  Euro-Dollar  Rate Loan
provided  for  herein   (excluding,   however,   therefrom  the  amount  thereof
attributable to the imposition of the Applicable  Margin) over (y) the amount of
interest (as  reasonably  determined  by such Bank) such Bank would have paid on
deposits in Dollars of comparable amounts having terms comparable to such period
placed with it by leading banks in the London Interbank Market.


                                             

                                      -42-

<PAGE>



                            ARTICLE 9. MISCELLANEOUS

                              SECTION 9.1. Notices.

     All notices,  requests and other  communications  to any party hereunder or
under any Loan Document shall be in writing (including bank wire,  telecopier or
similar  writing) and shall be given to such party at its address or  telecopier
number  set  forth on the  signature  pages  hereof  or such  other  address  or
telecopier  number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice,  request or other  communication shall be
effective (i) if given by  telecopier,  when such telecopy is transmitted to the
telecopier number specified in this Section and the appropriate  confirmation is
received, (ii) if given by mail, seventy-two (72) hours after such communication
is  deposited  in the United  States  mails with first  class  postage  prepaid,
addressed as aforesaid or (iii) if given by any other means,  when  delivered at
the address specified in this Section;  provided that notices to the Agent under
Article 2 or Article 8 shall not be effective until received.

                            SECTION 9.2. No Waivers.

     No failure or delay by the Agent or any Bank in exercising any right, power
or privilege  hereunder or under any Note shall operate as a waiver  thereof nor
shall any  single or  partial  exercise  thereof  preclude  any other or further
exercise  thereof or the exercise of any other right,  power or  privilege.  The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

                    SECTION 9.3. Expenses; Documentary Taxes.

     The  Borrower  shall  pay  (i) all  out-of-pocket  expenses  of the  Agent,
including fees and disbursements of special counsel for the Banks and the Agent,
in  connection  with  the  preparation  of this  Agreement  and the  other  Loan
Documents, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default hereunder or thereunder and (ii) if
a Default occurs, all out-of-pocket expenses incurred by the Agent and any Bank,
including fees and disbursements of counsel  (including a reasonable  allocation
of the  cost  of  internal  counsel),  in con  nection  with  such  Default  and
collection and other enforcement  proceedings  resulting  therefrom,  in cluding
out-of-pocket expenses incurred in enforcing this Agreement, the Notes and other
Loan Documents. The Borrower shall indemnify the Agent and each Bank against any
transfer taxes, docu mentary taxes, assessments or charges made by any Authority
by reason of the  execution  and  delivery of this  Agreement,  the Notes or the
other Loan Documents.

                          SECTION 9.4. Indemnification.

     The  Borrower  shall  indemnify  the  Agent,  the Banks and each  affiliate
thereof and their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses,  liabilities,  claims or
damages  to which  any of them  may  become  subject,  insofar  as such  losses,
liabilities,  claims  or  damages  arise  out of or  result  from any  actual or
proposed use by the  Borrower of the proceeds of any  extension of credit by any
Bank hereunder or breach by the

                                      -43-

<PAGE>




Borrower  of this  Agreement,  the Notes or any other Loan  Document or from any
investigation,   litigation  or  other  proceeding   (including  any  threatened
investigation or proceeding)  relating to the foregoing,  and the Borrower shall
reimburse  the  Agent  and each  Bank,  and each  affiliate  thereof  and  their
respective  directors,  officers,  employees  and  agents,  upon  demand for any
expenses (including, without limitation, legal fees) incurred in connection with
any  such   investigation   or  proceeding;   but  excluding  any  such  losses,
liabilities,  claims,  damages  or  expenses  incurred  by  reason  of the gross
negligence  or  willful  misconduct  of  the  Person  to  be  indemnified.   The
indemnification  provisions  (including,  without  limitation,   provisions  for
default  interest,  to the extent that this  Section 9.4 might be  construed  as
duplicating  the  Borrower's  obligation  to pay interest at the Default Rate as
required elsewhere in this Agreement) set forth in this Section 9.4 are meant to
be without duplication of any other indemnification provisions set forth in this
Agreement.

                        SECTION 9.5. Sharing of Setoffs.

     Each Bank agrees  that if it shall,  by  exercising  any right of setoff or
counterclaim  or  otherwise,  receive  payment of a proportion  of the aggregate
amount of principal and interest owing with respect to the Note held by it which
is  greater  than the  proportion  received  by any other Bank in respect of the
aggregate  amount of all principal  and interest  owing with respect to the Note
held by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other Banks owing to
such other Banks, and such other  adjustments  shall be made, as may be required
so that all such  payments of principal  and interest  with respect to the Notes
held by the Banks  owing to such  other  Banks  shall be shared by the Banks pro
rata;  provided  that (i) nothing in this Section  shall impair the right of any
Bank to exercise  any right of setoff or  counterclaim  it may have and to apply
the amount  subject to such  exercise  to the  payment  of  indebtedness  of the
Borrower  other than its  indebtedness  under the Notes,  and (ii) if all or any
portion of such payment received by the purchasing Bank is thereafter  recovered
from such purchasing Bank, such purchase from each other Bank shall be rescinded
and such other Bank shall repay to the  purchasing  Bank the  purchase  price of
such  participation to the extent of such recovery together with an amount equal
to such other Bank's  ratable  share  (according  to the  proportion  of (x) the
amount of such  other  Bank's  required  repayment  to (y) the  total  amount so
recovered  from the  purchasing  Bank) of any  interest or other  amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.  The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law,  that any holder of a  participation  in a Note,  acquired  pursuant to the
foregoing arrangements,  may exercise rights of setoff or counterclaim and other
rights  with re spect to such  participation  as  fully as if such  holder  of a
participation  were a direct  creditor  of the  Borrower  in the  amount of such
participation.

                      SECTION 9.6. Amendments and Waivers.

     Any provision of this Agreement,  the Notes or any other Loan Documents may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Borrower and the Required  Banks (and,  if the rights or duties
of the Agent  are  affected  thereby,  by the  Agent);  provided  that,  no such
amendment or waiver shall,  unless signed by all Banks,  (i) except as otherwise
provided in Section 8.5,  change the  Commitment of any Bank or subject any Bank
to any additional  obligation,  (ii) change the principal of or rate of interest
on any Revolving  Loan or any fees or other  amounts  payable  hereunder,  (iii)
change  the date  fixed for any  payment  of  principal  of or  interest  on any
Revolving  Loan or any fees  hereunder,  (iv)  change the  amount of  principal,
interest,  fees or other amounts payable hereunder due on any date fixed for the
payment  thereof,  (v)  change  the  percentage  of  the  Commitments  or of the
aggregate unpaid amount of the Notes, or the percentage of Banks, which shall be
required  for the Banks or any of them to take any action  under this Section or
any other provision of this Agreement,  (vi) change the manner of application of
any payments made under this Agreement or the Notes, (vii) release or substitute
all or any substantial  part of the collateral (if any) held as security for the
Revolving  Loans,  (viii) release any Guarantee  given to support payment of the
Revolving  Loans;  (ix) change any terms of clause (vii) of Section 5.19; or (x)
change any terms of Section 5.20. In connection with the 

                                      -44-

<PAGE>

foregoing,  the  Borrower  will not solicit,  request or  negotiate  for or with
respect to any proposed  waiver or amendment  of any of the  provisions  of this
Agreement  unless  each Bank shall be  informed  thereof by the  Borrower or the
Agent and shall be afforded an opportunity of considering  the same and shall be
supplied by the Borrower  with  sufficient  information  to enable it to make an
informed  decision with respect thereto.  Executed or true and correct copies of
any waiver or consent  effected  pursuant to the  provisions  of this  Agreement
shall be delivered by the requisite  percentage of Banks. The Borrower will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional  interest,  fee or otherwise,  to any Bank (in its
capacity as a Bank) as  consideration  for or as an  inducement  to the entering
into by such Bank of any waiver or amendment of any of the terms and  provisions
of this Agreement  unless such  remuneration is  concurrently  paid, on the same
terms, ratably to all such Banks.

                    SECTION 9.7. No Margin Stock Collateral.

     Each of the Banks  represents  to the Agent,  the  Borrower and each of the
other  Banks  that it in good  faith is not,  (i)  directly  or  indirectly  (by
negative  pledge or  otherwise),  relying upon any Margin Stock as collateral in
the extension or  maintenance  of the credit  provided for in this  Agreement or
(ii)  entering  into this  Agreement  with an immediate  intention to resell its
Commitment or Revolving Loans.

                      SECTION 9.8. Successors and Assigns.

     9.8.1 No Assignment by Borrower.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors  and assigns;  provided that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement.

     9.8.2 Participation.  Any Bank may, without the consent of the Borrower, at
any  time  sell to one or more  Persons  (each  a  "Participant")  participating
interests in any Revolving  Loan owing to such Bank, any Note held by such Bank,
any  Commitment  of such  Bank  hereunder  or any  other  interest  of such Bank
hereunder.  In the event of any such sale by a Bank of a par ticipating interest
to a Participant,  such Bank's  obligations under this Agreement shall remain un
changed,  such Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any such Note for all  purposes  under this
Agreement,  and the  Borrower  and the Agent  shall  continue to deal solely and
directly  with such Bank in connection  with such Bank's rights and  obligations
under this  Agreement.  In no event shall a Bank that sells a  participation  be
obligated to the Participant to take or refrain from taking any action hereunder
except  that such Bank 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 related  Revolving Loan
or Revolving Loans, (ii) the change of the amounts of any principal, interest or
fees due on any date fixed for the payment  thereof  with respect to the related
Revolving  Loan or  Revolving  Loans,  (iii) the change of the  principal or the
related  Revolving Loan or Revolving Loans, (iv) any change in the rate at which
either  interest is payable  thereon or (if the  Participant  is entitled to any
part thereof) a commitment  fee is payable  hereunder from the rate at which the
Participant is entitled to receive interest or a commitment fee (as the case may
be) in respect of such participation,  (v) the release or substitution of all or
any  substantial  part of the  collateral  (if  any)  held as  security  for the
Revolving  Loans,  or (vi) the release of any Guarantee given to support payment
of the  Revolving  Loans.  Each Bank  selling a  participating  interest  in any
Revolving Loan,  Note,  Commitment or other interest under this Agreement shall,
within ten (10) Domestic  Business  Days of such sale,  provide the Borrower and
the Agent with  written  notification  stating  that such sale has  occurred and
identifying  the  Participant  and the interest  purchased by such  Participant.
Except as otherwise  expressly  provided in Article 8, the Agent,  the Banks and
the Borrower  agree that each  Participant  shall be entitled to the benefits of
Article 8 with respect to its  participation in Revolving Loans outstanding from
time to time,  but only to the extent  that such Bank  which  sold the  relevant
participation  would have been  entitled  thereto  pursuant to the terms of this
Agreement.

     9.8.3 Assignments.  Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its  rights and  obligations  under this  Agreement  and the Notes,  and such
Assignee shall assume all such rights and obligations, pursuant to an Assignment
and  Acceptance,  executed by such Assignee,  such transferor Bank and the Agent
(and,  in the case of an  Assignee  that is not then a Bank,  by the  Borrower);
provided  that (i) no interest  may be sold by a Bank  pursuant to this  Section
unless the Assignee  shall agree to assume  ratably  equivalent  portions of the


                                      -45-

<PAGE>

transferor   Bank's   Commitment,   (ii)  the  amount of the  Commitment  of the
transferor Bank subject to such assignment  (determined as of the effective date
of the assignment) shall be equal to at least Five Million Dollars ($5,000,000),
(iii) no interest may be sold by a Bank pursuant to this Section to any Assignee
that is not then a Bank or an  Affiliate  of a Bank  without  the consent of the
Borrower  and the Agent (which  consent  shall not be unreason  ably  withheld),
except  after the  occurrence  of, and during  the  continuance  of, an Event of
Default,  and (iv) during the term of this  Agreement,  a Bank may not have more
than two Assignees  that are not then Banks at any one time.  Upon (A) execution
of the Assignment and Acceptance by such  transferor  Bank,  such Assignee,  the
Agent and (if applicable) the Borrower,  (B) delivery of an executed copy of the
Assignment  and  Acceptance  of the Borrower and the Agent,  (C) payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee,  and (D) payment of a processing
and recordation fee of Two Thousand Five Hundred Dollars  ($2,500) to the Agent,
such Assignee shall for all purposes be a Bank party to this Agreement and shall
have all the rights and  obligations  of a Bank under this Agreement to the same
extent as if it were an original  party hereto with a Commitment as set forth in
such  instrument of assumption,  and the transferor  Bank shall be released from
its future  obligations  hereunder  to a  corresponding  extent,  and no further
consent or action by the  Borrower,  the Banks or the Agent  shall be  required.
Upon the  consummation  of any transfer to an Assignee  pursuant to this Section
9.8.3,  the transferor  Bank, the Agent and the Borrower shall make  appropriate
arrangements so that, if required, a new Note is issued to such Assignee.

     9.8.4  Disclosures.  Subject to the provisions of Section 9.9, the Borrower
authorizes  each  Bank  to  disclose  to  any  Participant,  Assignee  or  other
transferee  (each a  "Transferee")  and any  prospective  Transferee any and all
information  in such Bank's  possession  concerning  the Borrower which has been
delivered to such Bank by the Borrower  pursuant to this  Agreement or which has
been  delivered  to such Bank by the  Borrower  in  connection  with such Bank's
credit evaluation prior to entering into this Agreement.

     9.8.5 Status of Transferee.  No Transferee shall be entitled to receive any
greater  payment  under  Section  8.3 than the  transferor  Bank would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent or by reason of the provisions
of Section 8.2 or 8.3  requiring  such Bank to  designate  a  different  Lending
Office under certain  circumstances or at a time when the  circumstances  giving
rise to such greater payment did not exist.

                          SECTION 9.9. Confidentiality.

     Each Bank and the 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  delivered  or made  available  by the  Borrower  to it,  including,
without limitation,  information obtained by the Agent or such Bank 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 such Bank who are or are
expected  to  become   engaged  in   evaluating,   approving,   structuring   or
administering the Revolving Loans;  provided,  however that nothing herein shall
prevent any Bank from disclosing such  information (i) to the Agent or any other
Bank, (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
such  Bank,  (iv)  which has been  publicly  disclosed  other  than by an act or
omission of the Agent or any Bank except as permitted herein,  (v) to the extent
reasonably  required in  connection  with any  litigation  (with respect to this
Agreement,  any of the  other  Loan  Documents,  in  connection  with any of the
foregoing,  or any other  obligations of the Borrower or any Subsidiary owing to
the  Agent or any  Bank)  to  which  the  Agent,  any  Bank 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 such Bank's legal  counsel
and  independent  auditors  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 9.9.

                                      -46-

<PAGE>




                     SECTION 9.10. Representation by Banks.

     Each Bank hereby  represents  that it is a  commercial  lender or financial
institution  which makes  Revolving Loans in the ordinary course of its business
and that it will make its Revolv ing Loans  hereunder for its own account in the
ordinary  course of such business;  provided,  however that,  subject to Section
9.8, the disposition of a Note or the Notes held by that Bank shall at all times
be within its exclusive control.

                       SECTION 9.11. Obligations Several.

     The  obligations of each Bank  hereunder are several,  and no Bank shall be
responsible  for the  obligations  or  commitment  of any other Bank  hereunder.
Nothing contained in this Agreement and no action taken by Banks pursuant hereto
shall be deemed to constitute the Banks to be a partnership,  an association,  a
joint  venture  or any other  kind of entity.  The  amounts  payable at any time
hereunder to each Bank shall be a separate and  independent  debt, and each Bank
shall be  entitled  to  protect  and  enforce  its  rights  arising  out of this
Agreement or any other Loan Document and it shall not be necessary for any other
Bank to be joined as an additional party in any proceeding for such purpose.

                           SECTION 9.12. GEORGIA LAW.

     THIS  AGREEMENT,  EACH NOTE AND EACH OTHER LOAN DOCUMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF GEORGIA.

                          SECTION 9.13. Interpretation.

     No provision of this Agreement or any of the other Loan Documents  shall be
construed  against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.

                     SECTION 9.14. CONSENT TO JURISDICTION.

     THE BORROWER,  AND EACH OF THE BANKS AND THE AGENT IR REVOCABLY (A) SUBMITS
TO THE NONEXCLUSIVE  PERSONAL  JURISDICTION IN THE STATE OF GEORGIA,  THE COURTS
THEREOF  AND  THE  UNITED  STATES  DISTRICT  COURTS  SITTING  THEREIN,  FOR  THE
ENFORCEMENT  OF THIS  AGREEMENT,  THE NOTES AND THE OTHER  LOAN  DOCUMENTS,  (B)
WAIVES ANY AND ALL PERSONAL  RIGHTS UNDER THE LAW OF ANY  JURISDICTION TO OBJECT
ON  ANY  BASIS  (INCLUDING,  WITHOUT  LIMITATION,  INCONVENIENCE  OF  FORUM)  TO
JURISDICTION  OR VENUE WITHIN THE STATE OF GEORGIA FOR THE PURPOSE OF LITIGATION
TO ENFORCE THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, AND (C) AGREES
THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN THE MANNER  PRESCRIBED IN SECTION
9.1

                                      -47-

<PAGE>




FOR THE GIVING OF NOTICE TO THE BORROWER.  NOTHING  HEREIN  CONTAINED,  HOWEVER,
SHALL  PREVENT  THE AGENT  FROM  BRINGING  ANY ACTION OR  EXERCISING  ANY RIGHTS
AGAINST ANY SECURITY AND AGAINST THE BORROWER PERSONALLY, AND AGAINST ANY ASSETS
OF THE BORROWER, WITHIN ANY OTHER STATE OR JURISDICTION.

                           SECTION 9.15. Counterparts.

     This Agreement may be signed in any number of  counterparts,  each of which
shall be an  original,  with the same  effect as if the  signatures  thereto and
hereto were upon the same instrument.

                             SECTION 9.16. Survival.

     All representations, warranties and covenants made herein shall survive the
execution and delivery of all of the Loan Documents. The terms and provisions of
this Agreement  shall continue in full force and effect until the payment of the
Notes and termination of the Commitments.

            SECTION 9.17. Entire Agreement; Amendment; Severability.

     This  Agreement  shall  constitute the entire  agreement  among the parties
hereto with respect to the subject matter hereof. Neither this Agreement nor any
provision  hereof may be changed,  waived,  discharged,  modified or  terminated
orally,  but only by an instrument in writing in accordance with Section 9.6. If
any  provision of any of the Loan  Documents or the  application  thereof to any
party thereto or circumstances  shall be invalid or unenforceable to any extent,
the remainder of such Loan Documents and the  application of such  provisions to
any other party thereto or circumstance  shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.

                       SECTION 9.18. TIME OF THE ESSENCE.

     TIME IS OF THE  ESSENCE  IN THIS  AGREEMENT,  THE NOTES AND THE OTHER  LOAN
DOCUMENTS.

                    SECTION 9.19. Banks Not a Joint Venturer.

     Neither  this  Agreement  nor any  agreements,  instruments,  documents  or
transactions  contemplated  hereby (including the Loan Documents),  shall in any
respect be  interpreted,  deemed or  construed as making any Bank or the Agent a
partner  or  joint  venturer  with  the  Borrower  or as  creating  any  similar
relationship or entity.


                                      -48-

<PAGE>




     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed,  under seal, by their respective  authorized officers,  as of the
day and year first above written.


                                            "BORROWER"

                                            APPLE SOUTH, INC.
                                            (SEAL)


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


                                            Attest:_____________________________
                                             Tonya Benjamin, Assistant Secretary

                                            Apple South, Inc.
                                            Corporate Headquarters
                                            Hancock at Washington
                                            Madison, Georgia  30650
                                            Attn:  Erich J. Booth,
                                            Chief Financial Officer
     
                                            Telecopier Number: (706) 342-4057



                                      -49-

<PAGE>





                                            "BANKS"

                                            WACHOVIA BANK, NATIONAL
                                            ASSOCIATION, as the Agent and as
                                            a Bank
                                            (SEAL)


                                            By:________________________________
                                               W. Tompkins Rison, Vice President


                                            Lending Office:

                                            Wachovia Bank, N.A.
                                            191 Peachtree Street, N.E.
                                            30th Floor
                                            Atlanta, Georgia  30303-1757
                                            Attention: Georgia Corporate
                                            Commercial Group

                                            Telecopier Number:  (404) 332-6920



                                      -50-

<PAGE>




                                    EXHIBIT A

                        FORM OF ASSIGNMENT AND ACCEPTANCE


                            ASSIGNMENT AND ACCEPTANCE

                             Dated ________ __, 19__


     Reference  is made to the Credit  Agreement  dated as of December  10, 1997
(together with all amendments and modifications  thereto, the "Credit Agreement"
among Apple South, Inc., a Georgia  corporation (the "Borrower"),  the Banks (as
defined in the Credit  Agreement) and Wachovia Bank,  National  Association,  as
Agent (the "Agent"). Terms defined in the Credit Agree ment are used herein with
the same meaning.

         ________________________________________ (the "Assignor") and
        ________________________________________ (the "Assignee") agree
                                  as follows:

     1. The Assignor hereby sells and assigns to the Assignee,  and the Assignee
hereby purchases and assumes from the Assignor,  a ________%  interest in and to
all of the Assignor's  rights and obligations  under the Credit  Agreement as of
the Effective Date (as defined below) (including,  without limitation,  a _____%
interest  (which on the Effective Date hereof is  $__________) in the Assignor's
Commitment  and a  _____  interest  (which  on  the  Effective  Date  hereof  is
$__________)  in the  Revolving  Loans  owing  to  the  Assignor  (which  on the
Effective Date hereof is $__________).

     2. The  Assignor  (i) makes no  representation  or warranty  and assumes no
responsibility  with respect to any  statements,  warranties or  representations
made in or in connection with the Credit  Agreement or the execution,  legality,
validity,  enforceability,  genuineness,  sufficiency  or  value  of the  Credit
Agreement or any other instrument or document furnished pursuant thereto,  other
than that it is the legal and beneficial owner of the interest being assigned by
it hereunder, that such interest is free and clear of any adverse claim and that
as of the date  hereof its  Commitment  (without  giving  effect to  assignments
thereof which have not yet become  effective) is  $__________  and the aggregate
outstanding  principal  amount of  Revolving  Loans owing to it (without  giving
effect  to  assignments   thereof  which  have  not  yet  become  effective)  is
$__________;   (ii)  makes  no   representation   or  warranty  and  assumes  no
responsibility  with respect to the  financial  condition of the Borrower or the
performance  or observance by the Borrower of any of its  obligations  under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iii)  attaches  the Note(s)  referred to in  paragraph 1 above and requests
that the Agent exchange such Note(s) for [a new Note dated  __________,  ____ in
the principal  amount of $__________  payable to the order of the Assignee) (new
Notes as follows: a Note dated __________, ____ in the principal amount of

                                       -1-

<PAGE>




$__________  payable to the order of the Assignor  and a Note dated  __________,
____  in the  principal  amount  of  $__________  payable  to the  order  of the
Assignee].

     3. The  Assignee  (i)  confirms  that it has  received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 4.4.1 thereof (or any more recent  financial  statements of the Borrower
delivered  pursuant to Sections 5.1.1 or 5.1.2 thereof) 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 Acceptance; (ii) agrees that it will,
independently  and without  reliance  upon the Agent,  the Assignor or any other
Bank 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 Credit Agreement; (iii) confirms that it is a bank or financial
institution; (iv) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise  such  powers  under the Credit  Agreement  as are
delegated to the Agent by the terms  thereof,  together  with such powers as are
reasonably  incidental  thereto;  (v) agrees that it will perform in  accordance
with  their  terms  all of the  obligations  which by the  terms  of the  Credit
Agreement  are required to be performed by it as a Bank;  (vi)  specifies as its
Lending  Office (and address for notices) the office set forth  beneath its name
on the signature pages hereof, (vii) represents and warrants that the execution,
delivery  and  performance  of this  Assignment  and  Acceptance  are within its
corporate  powers  and have  been duly  authorized  by all  necessary  corporate
action, and (viii) attaches the forms prescribed by the Internal Revenue Service
of the United  States  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 Credit  Agreement and the Notes or
such other  documents as are  necessary to indicate  that all such  payments are
subject to such taxes at a rate reduced by an applicable tax treaty.

     4. The Effective  Date for this  Assignment  and  Acceptance  shall be (the
"Effective Date"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for execution and acceptance by the Agent (and to
the Borrower for execution by the Borrower.  If Assignee is organized  under the
laws of a jurisdiction outside the United States.

     5. Upon such  execution  and  acceptance  by the Agent and execution by the
Borrower,  if the Assignee is not a Bank prior to the Effective  Date,  from and
after  the  Effective  Date,  (i) the  Assignee  shall be a party to the  Credit
Agreement and, to the extent rights and obligations  have been transferred to it
by this  Assignment and  Acceptance,  have the rights and  obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent its rights and obligations
have  been  transferred  to the  Assignee  by this  Assignment  and  Acceptance,
relinquish its rights (other than under Section 8.3 of the Credit Agreement) and
be released from its obligations under the Credit Agreement.

     6. Upon such  execution  and  acceptance  by the Agent and execution by the
Borrower,  if the Assignee is not a Bank prior to the Effective  Date,  from and
after the  Effective  Date,  the Agent shall make all payments in respect of the
interest assigned hereby to the Assignee. The

                                       -2-

<PAGE>




Assignor and Assignee  shall make all  appropriate  adjustments  in payments for
periods prior to such acceptance by the Agent directly between themselves.

     7. This  Assignment and  Acceptance  shall be governed by, and construed in
accordance with, the laws of the State of Georgia.

                                                     [NAME OF ASSIGNOR]


                                                     By:
                                                          Title:


                                                     [NAME OF ASSIGNEE]


                                                     By:
                                                          Title:


                                                     Lending Office:
                                                     [Address]

                                                     WACHOVIA BANK, NATIONAL 
                                                     ASSOCIATION, as Agent


                                                     By:
                                                          Title:


                                                     APPLE SOUTH, INC.
                                                     If  the  Assignee  is not a
                                                     Bank prior to the Effective
                                                     Date.


                                                     By:
                                                          Title:


                                       -3-

<PAGE>




                                    EXHIBIT B

                           FORM OF REVOLVING LOAN NOTE


                               REVOLVING LOAN NOTE

                                Atlanta, Georgia
                                December 10, 1997


     For  value  received,   APPLE  SOUTH,  INC.,  a  Georgia  corporation  (the
"Borrower"),  promises to pay to the order of WACHOVIA BANK,  N.A. (the "Bank"),
for the  account  of its  Lending  Office,  the  principal  sum of up to Seventy
Million Dollars  ($70,000,000),  or such lesser amount as shall equal the unpaid
principal  amount  of  each  Revolving  Loan  made by the  Bank to the  Borrower
pursuant  to the Credit  Agreement  referred  to below,  on the dates and in the
amounts provided in the Credit Agreement.  The Borrower promises to pay interest
on the unpaid  principal  amount of this Revolving Loan Note on the dates and at
the rate or rates  provided  for in the  Credit  Agreement  referred  to  below.
Interest  on any  overdue  principal  of and,  to the extent  permitted  by law,
overdue  interest on the  principal  amount  hereof  shall bear  interest at the
Default  Rate,  as pro vided for in the Credit  Agreement.  All such payments of
principal  and interest  shall be made in lawful  money of the United  States in
Federal or other  immediately  available  funds at the office of Wachovia  Bank,
National Association,  191 Peachtree Street, N.E., Atlanta,  Georgia 30303-1757,
or such other  address as may be  specified  from time to time  pursuant  to the
Credit Agreement.

     All Revolving  Loans made by the Bank, the respective  maturities  thereof,
the interest rates from time to time applicable  thereto,  and all repayments of
the  principal  thereof may be recorded by the Bank and,  prior to any  transfer
hereof,  endorsed  by  the  Bank  on  the  schedule  attached  hereto,  or  on a
continuation of such schedule attached to and made a part hereof;  provided that
the failure of the Bank to make any such  recordation or  endorsement  shall not
affect the obligations of the Borrower hereunder or under the Credit Agreement.

     This  Revolving  Loan Note is one of the Notes  referred  to in the  Credit
Agreement dated as of December 10, 1997, among the Borrower, the Banks listed on
the signature pages thereof and Wachovia Bank,  National  Association,  as Agent
(as the same  may be  amended  and  modified  from  time to  time,  the  "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings.  Reference is made to the Credit  Agreement for the provisions for the
optional and mandatory  prepayment and the repayment hereof and the acceleration
of the maturity hereof.

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



                                      -1-

<PAGE>




                            APPLE SOUTH, INC. (SEAL)


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


                                              Attest:___________________________
                                                     Tonya Benjamin, Assistant
                                                     Secretary



                                       -2-

<PAGE>




                          Revolving Loan Note (cont'd)


                    REVOLVING LOANS AND PAYMENTS OF PRINCIPAL


        Base Rate          Amount       Amount of
         or Euro-            of         Principal      Maturity        Notation
Date    Dollar Loan    Revolving Loan    Repaid         Date           Made By


-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------



                                       -3-

<PAGE>




                                    EXHIBIT C

                           FORM OF NOTICE OF BORROWING


                               NOTICE OF BORROWING

                             ________________, 199_


Wachovia Bank, National
  Association, as Agent
191 Peachtree Street, N.W.
Atlanta, Georgia 30303-1757
Attention:  Commercial Group

         Re:      Credit  Agreement  (as amended or modified  from time to time,
                  the "Credit  Agreement") dated as of December 10, 1997, by and
                  among Apple South, Inc., Wachovia Bank, National  Association,
                  as a Bank and as the Agent,  and the other  Banks from time to
                  time party thereto.

Ladies and Gentlemen:

         Unless otherwise  defined herein,  capitalized  terms used herein shall
have the meanings attributable thereto in the Credit Agreement.

         This Notice of Borrowing is delivered to you pursuant to Section 2.2 of
the Credit Agreement.

         The Borrower  hereby  requests a Borrowing in the  aggregate  principal
amount  of  $________________  to be  made  on  ______________,  199__,  and for
interest to accrue thereon at the rate  established by the Credit  Agreement for
(check one):

         1.       _____    Base Rate Loans
         2.       _____    Euro-Dollar Rate Loans

         The duration of the Interest Period with respect thereto in the case of
Euro-Dollar Rate Loans shall be (check one):

         1.       _____    1 month
         2.       _____    2 months
         3.       _____    3 months
         4.       _____    6 months

                                       -1-

<PAGE>




     If,  immediately  after the Borrowing  requested  herein,  the  outstanding
balance of the Revolving Loans following such Borrowing will be in excess of the
aggregate  outstanding  principal  balance of the  Revolving  Loans  immediately
preceding such Borrowing,  the Borrower  hereby  represents and warrants that on
the date the Borrowing requested hereunder is made (both before and after giving
effect  to the  making  of such and  after  giving  effect  to the  application,
directly or indirectly, of the proceeds thereof):

                  (a)      no Default has occurred and is continuing; and

                  (b)  the   representations  and  warranties  of  the  Borrower
         contained in Article IV of the Credit Agreement are true.

     The  Borrower  has caused  this  Notice of  Borrowing  to be  executed  and
delivered  by its duly  authorized  officer  as of this ____ day of  __________,
199__.

                                                     APPLE SOUTH, INC.



                                                     By:
                                                          Title:


                                       -2-

<PAGE>




                                    EXHIBIT D


                               FORM OF OPINION OF
                            COUNSEL FOR THE BORROWER


                                December 10, 1997


To the Banks and the Agent
  Referred to below
c/o Wachovia Bank,
  National Association, as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia  30303-1757

Ladies and Gentlemen:

     We have acted as legal  counsel to Apple South,  Inc. (the  "Borrower")  in
connection  with the  Credit  Agreement  (the  "Credit  Agreement")  dated as of
December  10,  1997,  among the  Borrower,  the Banks from time to time  parties
thereto, and Wachovia Bank, National Association, as Agent. Terms defined in the
Credit Agreement are used herein as therein defined.

     We have examined original or copies,  certified or otherwise  identified to
our satisfaction,  of such documents,  corporate records, certificates of public
officials and other instruments and have conducted such other  investigations of
fact and law as we have  deemed  necessary  or  advisable  for  purposes of this
opinion.  We have  assumed for purposes of our opinions set forth below that the
executed and delivery of the Credit Agreement by each Bank and by the Agent have
been duly authorized by each Bank and by the Agent.

     When facts relevant to these opinions were not independently established by
us, we have relied upon the  certificate  of the Secretary of the  Borrower.  We
have  assumed  the  genuineness  of  all  signatures,  the  authenticity  of all
documents  delivered to us as originals,  the legal capacity of natural persons,
the  conformity  to  original  documents  of all  documents  submitted  to us as
certified or photostatic  copies and the  authenticity  of the originals of such
letter documents.

     Upon the basis of the foregoing,  and subject to the further qualifications
and assumptions set forth below, we are of the opinion that:

     1. The Borrower is a corporation duly incorporated, validly existing and in
good  standing  under the laws of the  State of  Georgia  and has all  corporate
powers required to carry on its business as now conducted.

                                       -1-

<PAGE>




     2. The  execution,  delivery and  performance by the Borrower of the Credit
Agreement,  the Notes and the Other  Agreements  (i) are within  the  Borrower's
corporate  powers,  (ii) have been duly  authorized by all  necessary  corporate
action,  (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 (A)  applicable  law or regulation or (B) the
certificate  of  incorporation  or by-laws of the  Borrower or (C) any  material
judgment, injunction, order or decree which to our knowledge is binding upon the
Borrower or (D) any material indenture,  mortgage, deed of trust, loan agreement
or other financial  agreement or instrument (but not including  leases) known to
us which to our  knowledge  is binding on the  Borrower  and (V) do not,  to our
knowledge,  result in the creation or imposition of any Lien on any asset of the
Borrower.

     3. The Credit Agreement,  the Notes and the Other Agreements  constitutes a
valid and binding agreement of the Borrower, enforceable against the Borrower in
accordance with its terms, except as such enforceability may be limited:  (i) by
bankruptcy,   insolvency,   reorganization,   fraudulent  conveyance,   voidable
preference,  moratorium or similar laws  applicable to creditors'  rights or the
collection of debtors'  obligations  generally and (ii) by general principles of
equity (including, without limitation, the availability of equitable remedies).

     4. To our knowledge,  there is no action,  suit or proceeding  pending,  or
threatened,  against or affecting the Borrower or any of its Subsidiaries before
any court or arbitrator or any  governmental  body,  agency or official in which
there is a reasonable  possibility of an adverse decision which could materially
adversely affect the business,  consolidated  financial position or consolidated
results  of  operations  of the  Borrower  and  its  Consolidated  Subsidiaries,
considered  as a  whole,  or which  in any  manner  questions  the  validity  or
enforceability of the Credit Agreement or any Note.

     5. The Borrower is not an  "investment  company"  within the meaning of the
Investment Company Act of 1940, as amended.

     We are qualified to practice law in the State of Georgia and do not purport
to be experts on any laws other than the federal  laws of the United  States and
the laws of the State of Georgia, and this opinion is rendered only with respect
to  such  laws.  We  have  made  no  investigation  of the  laws  of  any  other
jurisdiction.

                                                              Very truly yours,


                                       -2-

<PAGE>




                                    EXHIBIT E

                           FORM OF CLOSING CERTIFICATE

                                APPLE SOUTH, INC.

                               CLOSING CERTIFICATE


     Reference is made to the Credit Agreement ("the Credit Agreement") dated as
of December 10, 1997,  among Apple South,  Inc., the Banks listed  therein,  and
Wachovia Bank, N.A., as Agent.  Capitalized  terms used herein have the meanings
ascribed thereto in the Credit Agreement.

     Pursuant to Section 3.1.4 of the Credit Agreement,  the undersigned,  Erich
J. Booth,  the duly authorized  Chief  Financial  Officer and Treasurer of Apple
South,  Inc.,  in his aforesaid  official  capacity and not  personally,  hereby
certifies  to the Agent and the  Banks on  behalf  of the  Borrower  that (i) no
Default has  occurred  and is  continuing  as of the date  hereof,  and (ii) the
representations  and warranties  contained in Article IV of the Credit Agreement
are true on and as of the date hereof.

     IN WITNESS  WHEREOF,  the undersigned has executed this  Certificate in his
aforesaid  official capacity as Chief Financial Officer and not personally as of
December 10, 1997.



                                                  By:
                                                        Erich J. Booth, as Chief
                                                        Financial Officer and
                                                        Treasurer, for and on
                                                        behalf    of    Apple
                                                        South, Inc.


                                       -1-

<PAGE>




                                    EXHIBIT F

                         FORM OF SECRETARY'S CERTIFICATE


                             SECRETARY'S CERTIFICATE


     The undersigned,  being the duly elected, qualified and acting Secretary of
APPLE  SOUTH,  INC., a Georgia  corporation  (the  "Corporation"),  and, in such
capacity,  being duly authorized and empowered to issue this  certificate on its
behalf, does hereby certify that:

     1. On or prior to the date  hereof,  by  unanimous  consent of the Board of
Directors of the  Corporation,  obtained in accordance  with and pursuant to the
Articles of Incorporation  and By-Laws of the  Corporation,  the resolutions set
forth and described on Exhibit A were  unanimously  adopted and,  being the only
effective  resolutions adopted by the Board of Directors of this Corporation (or
any committee  thereof) with respect to the matters referred to therein,  remain
unmodified and in full force and effect as of the date hereof;

     2.  The  following  are the  names  of the duly  elected  officers  of this
Corporation now holding the respective offices indicated, and that the signature
set  forth  opposite  the name of each  such  officer  is the  true and  genuine
signature of such officer (complete as applicable):


Erich J. Booth, Chief Financial                    _____________________________
 Officer and Treasurer                                      (Signature)


Tonya Benjamin, Assistant Secretary                _____________________________
                                                            (Signature)

     IN WITNESS WHEREOF, I have hereunto set my hand as Assistant  Secretary and
the seal of the Corporation as of the 10th day of December, 1997.


[CORPORATE SEAL]                              ________________________________
                                             Tonya Benjamin, Assistant Secretary

                                       -1-

<PAGE>





                                    EXHIBIT G

                         FORM OF COMPLIANCE CERTIFICATE


                             COMPLIANCE CERTIFICATE


     Reference is made to that certain Credit Agreement dated as of December 10,
1997 (as modified and  supplemented and in effect from time to time, the "Credit
Agreement") among Apple South,  Inc., the Banks from time to time party thereto,
and  Wachovia  Bank,  National  Association,  as a Bank and as Agent as ascribed
thereto in the Credit Agreement.

     Pursuant to Section 5.1.3 of the Credit  Agreement,  the  undersigned,  the
[Chief  Financial  Officer/Chief  Accounting  Officer] of the  Borrower,  hereby
certifies  that  (i)  attached  hereto  as  Annex 1 are the  true  and  accurate
calculations  required to establish  whether the Borrower was in compliance with
Sections 5.3,  5.4,  5.5, 5.6 and 5.19 of the Credit  Agreement as of the end of
the Fis cal [Quarter/Year] ended __________, 19__, each determined in accordance
with the requirements of the Credit Agreement and (ii) [no Default exists on the
date hereof] [the following  Defaults  (including the details thereof) exist and
the  Borrower is taking or proposes to take the  following  actions with respect
thereto]:

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

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



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



                                       -1-

<PAGE>




                                  SCHEDULE 4.8


A.       Apple South of Maryland, Inc.
         Hancock at Washington
         Madison, Georgia  30650

B.       Apple South of Prince George's County, Inc.
         Hancock at Washington
         Madison, Georgia  30650

C.       DF&R Restaurants, Inc.
         2350 Airport Freeway
         Suite 505
         Bedford, Tarrant County, Texas  76022

D.       DF&R Operating Company, Inc.
         2350 Airport Freeway
         Suite 505
         Bedford, Tarrant County, Texas  76022

E.       DF&R Ohio, Inc.
         2350 Airport Freeway
         Suite 505
         Bedford, Tarrant County, Texas  76022

F.       Harry N. Don's Liquor Corp.
         2350 Airport Freeway
         Suite 505
         Bedford, Tarrant County, Texas  76022

G.       DF&R Restaurants of Texas, L.P.
         2350 Airport Freeway
         Suite 505
         Bedford, Tarrant County, Texas  76022




                                       -1-

<PAGE>



                                  SCHEDULE 5.7

                                APPLE SOUTH, INC.
                                  DEBT SCHEDULE



                                                   Monthly
Description     Short-Term    Long-Term    Total   Payment   Maturity   Security
-----------     ----------    ---------    -----   -------   --------   --------



                     [TO BE COMPLETED BY APPLE SOUTH, INC.]