APPLEBEE'S INTERNATIONAL, INC.

                                       AND

                            APPLE CAPITOL GROUP, LLC

                            ASSET PURCHASE AGREEMENT

                                  JULY 16, 2002





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                                TABLE OF CONTENTS

                                                                                                                Page


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ARTICLE I:        PURCHASE AND SALE OF ASSETS.....................................................................1

   Section 1.1    Purchased Assets................................................................................1

   Section 1.2    Excluded Assets.................................................................................3

   Section 1.3    Mechanism of Sale...............................................................................3

   Section 1.4    Commencement of Bankruptcy Proceeding...........................................................3


ARTICLE II:       PURCHASE PRICE OF ASSETS........................................................................4

   Section 2.1    Purchase Price, Deposit and Additional Purchase Price...........................................4

   Section 2.2    Adjustment of Purchase Price....................................................................5

   Section 2.3    [Reserved]......................................................................................5

   Section 2.4    Certain Liabilities and Obligations.............................................................5

   Section 2.5    Taxes...........................................................................................6

   Section 2.6    Allocation of Purchase Price....................................................................6


ARTICLE III:      CLOSING.........................................................................................6

   Section 3.1    Date, Time and Place of Closing.................................................................6

   Section 3.2    Deliveries by Sellers at Closing................................................................6

   Section 3.3    Deliveries by Buyer at Closing..................................................................7

   Section 3.4    Transfer of Operations..........................................................................8

   Section 3.5    Assignment by Buyer.............................................................................8


ARTICLE IV:       REPRESENTATIONS AND WARRANTIES OF SELLERS.......................................................8

   Section 4.1    Existence.......................................................................................8

   Section 4.2    Power and Authority.............................................................................8

   Section 4.3    Execution and Delivery Permitted; Consents......................................................9

   Section 4.4    The Purchased Assets............................................................................9

   Section 4.5    Binding Effect..................................................................................11

   Section 4.6    Condition of Purchased Assets...................................................................11

   Section 4.7    Absence of Other Assets.........................................................................11

   Section 4.8    Ownership of Assets.............................................................................12

   Section 4.9    Real Property...................................................................................12

   Section 4.10   [Reserved]......................................................................................12


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   Section 4.11   Documents Sufficient............................................................................12

   Section 4.12   Litigation or Condemnation......................................................................12

   Section 4.13   Taxes...........................................................................................13

   Section 4.14   Assumed Contracts...............................................................................13

   Section 4.15   Accuracy of Information and Representations and Warranties......................................14

   Section 4.16   Employment Matters..............................................................................14

   Section 4.17   Employee Benefit Plans..........................................................................14

   Section 4.18   Licensure.......................................................................................16

   Section 4.19   Insurance Coverage..............................................................................16

   Section 4.20   Environmental Matters...........................................................................16

   Section 4.21   Restaurant Operations...........................................................................18

   Section 4.22   [Reserved]......................................................................................18

   Section 4.23   Affiliated Transactions.........................................................................18

   Section 4.24   Subsidiaries....................................................................................18

   Section 4.25   [Reserved]......................................................................................19

   Section 4.26   Financial Statements............................................................................19

   Section 4.27   Right to Inspect................................................................................19

   Section 4.28   Development Rights..............................................................................19


ARTICLE V:        COVENANTS OF SELLERS............................................................................20

   Section 5.1    Employee Benefit Plans..........................................................................20

   Section 5.2    Performance of Real Property Leases and Assumed Contracts.......................................21

   Section 5.3    Transfer of Licenses and Permits................................................................21

   Section 5.4    Liabilities of Seller...........................................................................21

   Section 5.5    Agreements Respecting Employees of Sellers......................................................21

   Section 5.6    Conduct of Business.............................................................................21

   Section 5.7    Broker's Fees...................................................................................23

   Section 5.8    Access to Information...........................................................................23

   Section 5.9    Bankruptcy Motion...............................................................................23

   Section 5.10   [Reserved]......................................................................................24

   Section 5.11   [Reserved]......................................................................................24

   Section 5.12   [Reserved]......................................................................................24

   Section 5.13   Change of Name..................................................................................24

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   Section 5.14   Insurance.......................................................................................24

   Section 5.15   Renegotiation of Assumed Leases.................................................................24

   Section 5.16   Confidentiality.................................................................................24

   Section 5.17   [Reserved]......................................................................................24

   Section 5.18   Employee Receivables............................................................................24

   Section 5.19   Survey and Title Report.........................................................................25

   Section 5.20   Reporting Requirements..........................................................................25

   Section 5.21   Cooperation.....................................................................................25

   Section 5.22   Subsequent Contracts............................................................................26

   Section 5.23   Prorations and Purchase Price Adjustment Data...................................................26

   Section 5.24   Continued Compliance with Franchise Agreements..................................................26

   Section 5.25   Repairs and Replacements........................................................................26


ARTICLE VI:       REPRESENTATIONS AND WARRANTIES OF BUYER.........................................................27

   Section 6.1    Corporate Existence.............................................................................27

   Section 6.2    Corporate Power and Authority...................................................................27

   Section 6.3    Execution and Delivery Permitted................................................................27

   Section 6.4    Adequate Assurances Regarding Executory Contracts...............................................28

   Section 6.5    Availability of Funds, etc......................................................................28


ARTICLE VII:      COVENANTS OF BUYER..............................................................................28

   Section 7.1    Buyer Performance...............................................................................28

   Section 7.2    Confidentiality.................................................................................28

   Section 7.3    Sellers' Employees..............................................................................28

   Section 7.4    Cooperation.....................................................................................29

   Section 7.5    Liquor Licenses.................................................................................29

   Section 7.6    Broker's Fees...................................................................................29


ARTICLE VIII:     ESCROWED AMOUNTS; PURCHASE PRICE ADJUSTMENTS; CONDITIONS TO CLOSING.............................29

   Section 8.1    Escrowed Amounts................................................................................29

   Section 8.2    Purchase Price Adjustments/Gift Certificate True-Up.............................................30

   Section 8.3    Buyer's Conditions to Closing...................................................................32

   Section 8.4    Sellers' Conditions to Closing..................................................................33

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ARTICLE IX:       MISCELLANEOUS...................................................................................34

   Section 9.1    Notices.........................................................................................34

   Section 9.2    Applicable Law..................................................................................35

   Section 9.3    Binding on Successors; Assignment...............................................................35

   Section 9.4    Payment of Costs; Post-Closing Payments.........................................................36

   Section 9.5    Closing Not to Prejudice Claim for Damages......................................................37

   Section 9.6    Additional Documents............................................................................37

   Section 9.7    Time is of the Essence..........................................................................37

   Section 9.8    Interpretation..................................................................................37

   Section 9.9    Entire Agreement................................................................................37

   Section 9.10   Counterparts....................................................................................38

   Section 9.11   Termination.....................................................................................38

   Section 9.12   Sellers' Representative.........................................................................39


LIST OF EXHIBITS AND SCHEDULES....................................................................................42


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                           ASSET PURCHASE AGREEMENT

         This Asset  Purchase  Agreement (the  "Agreement")  is made and entered
into this 16th day of July 2002 by and among Apple Capitol Group, LLC, a Florida
limited liability company ("Apple Capitol Group"), Apple Prince Georges Maryland
Group, LLC, a Florida limited liability company ("Apple Prince Georges"),  Apple
Washington  MD  Group,   LLC,  a  Florida  limited   liability  company  ("Apple
Washington"), Apple St. Marys MD Group, LLC, a Florida limited liability company
("Apple St. Marys"),  Apple Calvert MD Group,  LLC, a Florida limited  liability
company  ("Apple  Calvert"),  Apple  Charles MD Group,  LLC, a Maryland  limited
liability  company  ("Apple  Charles"),  and Berkeley  WVA, LLC, a West Virginia
limited liability company ("Berkeley WVA" and together with Apple Capitol Group,
Apple Prince Georges,  Apple  Washington,  Apple St. Marys,  Apple Calvert,  and
Apple Charles are referred to herein individually as a "Seller" and collectively
as the "Sellers"),  and Applebee's  International,  Inc., a Delaware corporation
("Buyer");

         WHEREAS,  Sellers own various items of personal  property and interests
in real property (the  "Purchased  Assets," as more fully defined in Section 1.1
below) used in the operation and development of Applebee's  Neighborhood Grill &
Bar  restaurants  listed on  Exhibit  1.1 (the  "Restaurants")  pursuant  to the
Franchise  Agreements (the "Franchise  Agreements")  listed on Exhibit 1.1(a) to
this Agreement;

         WHEREAS, Sellers desire to sell the Purchased Assets to Buyer;

         WHEREAS,  Buyer desires to purchase the Purchased  Assets from Sellers;
and

         WHEREAS, Buyer and Sellers have agreed upon the terms and conditions of
such sale and desire to reduce the same to writing.

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
agreements,  covenants,  representations,  warranties  and  promises  set  forth
herein,  and in order to prescribe the terms and conditions of such purchase and
sale, the parties hereto agree as follows:


                                   ARTICLE I
                           PURCHASE AND SALE OF ASSETS

         Section  1.1     Purchased  Assets. Subject to the terms and conditions
set forth in this  Agreement,  Sellers  hereby  agree  that at the  Closing  (as
defined in Section 3.1, below) they shall sell, transfer,  convey, and assign to
Buyer  free and  clear  of all  mortgages,  taxes,  liens,  security  interests,
pledges, encumbrances and Claims (other than Permitted Liens and Encumbrances as
defined on Schedule 1.1), and Buyer hereby agrees at the Closing to purchase and
accept  from  Sellers all of Sellers'  right,  title and  interest in and to all
items of personal property, whether tangible or intangible, and all interests in
real estate,  whether  owned in fee or held under lease or license,  used in the
operation of the Restaurants, held or used for Restaurants under development, or
located in the Restaurants (the "Purchased  Assets"),  including but not limited
to the following:

               (a) The  Franchise  Agreements  listed on Exhibit  1.1(a) and the
         items described in Section 3.2(f), below;

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               (b) Each Seller's  interest as lessee in and to the Real Property
         Leases (as defined in Section  4.4(c),  below),  including  all of each
         such Seller's interest under the Real Property Leases in the buildings,
         fixtures,   signs,  parking  facilities,   trash  facilities,   fences,
         utilities,  other  leasehold  improvements,  and any and all easements,
         rights, privileges, tenements,  appurtenances and hereditaments related
         to such Real Property Leases;

               (c) All Owned  Real  Property  (as  defined  in  Section  4.4(a),
         below), including all of Sellers' interest in the buildings,  fixtures,
         signs, parking facilities,  trash facilities,  fences, utilities, other
         improvements, and any and all easements, rights, privileges, tenements,
         appurtenances and hereditaments related to the Owned Real Property;

               (d) All Assumed Contracts (as listed on Schedule 4.4(j));

               (e) All equipment and leasehold  improvements  used in the normal
         and customary  operations of the Restaurants (whether or not located or
         installed in a Restaurant), including but not limited to the furniture,
         machinery,   equipment,   tables,  chairs,  cash  registers,   computer
         equipment,  ovens,  refrigerators,  display cases,  shelves,  utensils,
         tools, pans, lights,  uniforms,  signs, menus, glasses, plates, dishes,
         silverware,  pitchers,  smallwares,  books,  cabinets,  racks,  towels,
         decor, bars, and bar equipment (the "Equipment");

               (f) All inventories of foodstuffs,  beverages (including liquor),
         paper   products,   cleaning   supplies   and   other   supplies   (the
         "Inventories")  which are in the  Restaurants  on the Closing  Date (as
         defined in Section 3.1, below);

               (g) All of Sellers'  other rights and  property  interests of any
         nature which are customarily  used in the operation of the Restaurants,
         including,  but  not  limited  to  rights  to use  existing  Restaurant
         telephone numbers and rights arising under equipment  warranties to the
         extent assignable;

               (h) All assignable  computer  software and related manuals,  data
         transmission   equipment  and  related   software,   software  licenses
         ("Transferred   Licenses"),   and  portable  computers  used  by  field
         personnel and used in connection with the operation of the Restaurants,
         including those items set forth on Schedule 1.1(h) hereto;

               (i) Stock in any entity (other than a Seller) owned by any Seller
         which holds assets related to the Restaurants;

               (j) All original records and files (the Sellers may retain copies
         thereof)  related to the Real  Property  (as defined in Section  4.4(b)
         below) such as rent  calculations,  landlord  correspondence,  purchase
         agreements, deeds, construction documents, title reports, environmental
         and engineering reports, appraisals, surveys, etc.;

               (k) All  original  accounting  records and files (the Sellers may
         retain  copies  thereof)  related to Retained  Employees (as defined in
         Section 5.5(a)) in or assigned to the Restaurants who accept employment
         with Buyer as of the Effective Time (as defined in Section 3.4 below);

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               (l) All rights under all warranties, express or implied, or other
         claims  for  damages  or loss  (unless  any such  Purchased  Assets are
         replaced  prior to the  Closing  Date or the  Purchase  Price  has been
         reduced to reflect the loss of any such Purchased Asset) related to any
         of the Purchased Assets; and

               (m) All cash in  amounts  normally  used to open the  Restaurants
         (not including prior day's receipts held for deposit), provided that in
         no event shall such cash be more or less than $1,000 per Restaurant.

         Section   1.2     Excluded   Assets.  Excluded  from  sale  under  this
Agreement are the assets of Sellers  listed or described on Schedule 1.2 to this
Agreement.  At any time  prior to the  entry of the Sale  Order (as  defined  in
Section 1.3 below),  Buyer may,  in its sole  discretion,  elect to add any Real
Property  Leases as it so determines to Schedule 1.2,  provided that there shall
be no adjustment to the Purchase Price as a result of such election. If Buyer so
elects,  Buyer will  nevertheless  purchase the Purchased Assets related to such
Restaurant located on the property subject to such Lease and the removal of such
assets from such Restaurant shall be at Buyer's expense and risk of loss.

         Section 1.3     Mechanism of Sale. Under the   terms of this Agreement,
Buyer's  obligation  to acquire and Sellers'  obligation  to sell the  Purchased
Assets is conditioned upon, among other things,  Sellers' filing of a Chapter 11
petition  (the  "Bankruptcy")  in the  United  States  Bankruptcy  Court for the
Southern  District of Florida (the "Bankruptcy  Court") as more specifically set
forth in Section 1.4 hereof and the entry of an order (or orders) pursuant to 11
U.S.C.  ss.  363  approving  the sale of the  Purchased  Assets to Buyer and the
assumption  and  assignment  to Buyer of the Real  Property  Leases and  Assumed
Contracts, upon the terms and conditions of this Agreement (the "Sale Order") as
set forth in  Exhibit  1.3,  or as  otherwise  modified,  in form and  substance
reasonably  satisfactory to Buyer, Sellers and Lehman Brothers Holdings, Inc. or
its designee or assignee ("Lehman").

         Section  1.4     Commencement  of Bankruptcy  Proceeding.  Subject  to,
and as part of, the terms and  conditions set forth in this  Agreement,  Sellers
shall file a Chapter  11  petition  in the  Bankruptcy  Court  (the  "Bankruptcy
Proceeding") immediately following the execution of this Agreement.


                                   ARTICLE II
                            PURCHASE PRICE OF ASSETS

         Section  2.1     Purchase Price, Deposit and Additional Purchase Price.

               (a) Purchase  Price.  The purchase  price paid for the  Purchased
         Assets  shall be Thirty Two Million  Seven  Hundred and Fifty  Thousand
         Dollars ($32,750,000), adjusted as set forth in Section 2.2, below (the
         "Purchase  Price").  Upon the Bankruptcy  Court's  approval of Sellers'
         motion to approve  the  bidding  procedures  (the  "Bidding  Procedures
         Motion"),  as set forth in Exhibit  2.1(a)(i),  Buyer  shall  provide a
         deposit,  consistent  with the Order  approving the Bidding  Procedures
         Motion,  in the  amount  of Three  Million  Dollars  ($3,000,000)  (the
         "Deposit"),  which sum shall be held in escrow by UMB Bank,  n.a., (the
         "Escrow Agent")  pursuant to an Escrow  Agreement  substantially in the
         form  attached  hereto as Exhibit  8.1,  and paid to  Sellers  upon the

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         Closing of this  transaction;  otherwise,  such Deposit  shall be fully
         refundable  (including interest thereon) to Buyer except as provided in
         Section 9.11(b).  The Purchase Price shall be paid at Closing,  subject
         to the Bankruptcy Court's issuance of a final, nonappealable,  unstayed
         Sale Order (or orders) as set forth in Section 8.3(n), by wire transfer
         of federal  funds to Seller by (i) the Escrow  Agent in the case of the
         Deposit  and (ii)  Buyer,  in the case of the  balance of the  Purchase
         Price (less the Escrowed  Amounts  described in Section  8.1),  in each
         case at and in favor of  Lehman,  up to the  extent  of the  amount  of
         Sellers'  then  outstanding  indebtedness  to  Lehman,  but  subject to
         disgorgement in the event Lehman's  security  interest in the Purchased
         Assets is  determined  to be invalid.  Buyer and Sellers agree that the
         Purchase Price shall be allocated to the Purchased  Assets as set forth
         in Exhibit 2.1(a)(ii).

               (b) Additional Purchase Price.

                   (i) In addition to the adjusted  purchase price as determined
               in accordance  with Sections  2.1(a) and 2.2,  Buyer shall pay to
               Sellers an additional  purchase price (the  "Additional  Purchase
               Price")  equal  to 50% of the  excess,  if any,  of the 12  Month
               EBITDA over $8.15 million ($8.15 million, as adjusted as provided
               in Schedule 2.1(b),  "Threshold  EBITDA").  The "12 Month EBITDA"
               shall be  determined  in accordance  with  Schedule  2.1(b).  The
               "Measurement  Period" shall be the 12 monthly  accounting periods
               of Buyer  beginning with the first such period  following the end
               of the sixth full monthly  accounting  period of Buyer  following
               Closing. Any Additional Purchase Price shall be paid within sixty
               (60) days  following the  Measurement  Period by wire transfer of
               federal funds to Sellers (for purposes of this Section 2.1(b) and
               Schedule  2.1(b),  Sellers  shall include any assignee of Sellers
               entitled  to receive  amounts due to Sellers  under this  Section
               2.1(b)),  at and in  favor of  Lehman,  up to the  extent  of the
               amount of Sellers' then outstanding  indebtedness to Lehman,  but
               subject to disgorgement in the event Lehman's  security  interest
               in the Purchased Assets is determined to be invalid.

                   (ii) In the event that Buyer or any  affiliate of Buyer sells
               all or  substantially  all  of the  assets  of  one  (1) or  more
               Restaurants, whether in one or a series of good faith arms length
               transactions,  prior to or during  the  Measurement  Period,  and
               receives  sale  consideration   therefor  (and  for  any  related
               territory  rights) in the aggregate of $5,000,000 or more,  Buyer
               will pay to  Sellers by wire  transfer  of funds to  Sellers,  an
               amount  equal  to 5% of  the  first  $10,000,000  of  total  sale
               consideration  received  by  Buyer  and  10%  of the  total  sale
               consideration   received  by  Buyer  in  excess  of  $10,000,000;
               provided,  that no amounts  will be  payable by Buyer  under this
               Section 2.1(b)(ii) unless the total sale  consideration  received
               by  Buyer  for all  Restaurants  (and for any  related  territory
               rights) sold during the Measurement  Period,  when divided by the
               total number of Restaurants  sold,  equals more than  $1,725,000.
               Any amounts due Sellers  under this Section  2.1(b)(ii)  shall be
               calculated in the aggregate at the end of the Measurement  Period
               and shall be paid to Sellers within sixty (60) days following the

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               Measurement  Period by wire  transfer of federal funds to Sellers
               and in  favor  of  Lehman,  up to the  extent  of the  amount  of
               Sellers' then outstanding  indebtedness to Lehman, but subject to
               disgorgement  in the  event  Lehman's  security  interest  in the
               Purchased Assets is determined to be invalid.

                   (iii)  Buyer  shall  provide  Sellers  with such  back-up and
               supporting  information  as Sellers shall  reasonably  request in
               order to review the  calculation  of any  amounts  due to Sellers
               pursuant to Section 2.1(b).

         Section  2.2     Adjustment of Purchase Price. At the Closing,  Sellers
shall deliver to Buyer an itemized  statement of purchase price  adjustments and
prorations  as set  forth in  Section  8.2 of this  Agreement  for  Buyer's  and
Lehman's   review  and  approval  and  the  Purchase  Price  shall  be  adjusted
accordingly.

         Section 2.3     [Reserved].


         Section 2.4     Certain Liabilities and Obligations.

               (a)  Liabilities  Not  Assumed.  Except for the  liabilities  and
         obligations specifically assumed pursuant to and referred to in Section
         2.4(b), Buyer shall not assume, take subject to and shall not be liable
         for, any  liabilities  or  obligations  of any kind or nature,  whether
         absolute, contingent, accrued, known or unknown, of Sellers.

               (b) Assumed  Liabilities.  On the  Closing  Date,  Sellers  shall
         assign  to  Buyer,  and  Buyer  shall  assume:   (i)  all  of  Sellers'
         post-closing  obligations  with respect to the Real Property Leases and
         the Assumed Contracts;  however, Buyer shall not be responsible for any
         obligation,  whether  under  the  Real  Property  Leases,  the  Assumed
         Contracts,  or  otherwise,  relating  to  events  or  operation  of the
         Restaurants  occurring  on or  prior to the  Closing  Date,  except  as
         expressly provided for in this Agreement; (ii) all liabilities incurred
         by Sellers prior to the Closing in the ordinary  course of business and
         consistent  with Sellers' past practice for goods and services that are
         delivered and performed after the Closing for the direct benefit of the
         operation  of the  Restaurants;  (iii) all  liabilities  of Sellers for
         outstanding gift  certificates;  and (iv) the value of all vacation and
         other paid time off  benefits,  accrued  in  accordance  with  Sellers'
         standard  policy,  and  unused  as of  the  Closing,  of  all  Retained
         Employees  of Seller  who are hired by Buyer but only to the  extent of
         any Purchase Price adjustment  occurring  pursuant to Section 8.2(a)(v)
         (collectively,  (i),  (ii),  (iii)  and  (iv)  are  referred  to as the
         "Assumed Liabilities.")

         Section  2.5     Taxes.  Sellers and Buyer shall share equally all use,
transfer taxes, sales taxes or fees, in accordance with Section 9.4(c),  payable
in connection  with the purchase,  sale or transfer of the Purchased  Assets to,
and the  assumption  of the  Assumed  Liabilities  by,  Buyer  pursuant  to this
Agreement.  Sellers shall use their  Reasonable  Best Efforts to assist Buyer in
minimizing  such  taxes  or  fees,  consistent  with  the  other  terms  of this
Agreement.

         Section  2.6     Allocation  of Purchase Price. Buyer and Sellers agree
that the Purchase Price shall be allocated in a manner as reasonably  determined
by Buyer.  Such allocation shall be binding on Buyer and Sellers for purposes of
reporting gain or loss and  determination of basis for income tax purposes,  and

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<PAGE>

each of the parties hereto agrees that it or they will file a statement  setting
forth such allocation with its or their federal income tax returns and will also
file such further  information or take such further  actions as may be necessary
to comply with the Treasury  Regulations that have been promulgated  pursuant to
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").

                                  ARTICLE III
                                     CLOSING

         Section  3.1     Date,  Time and Place of Closing.  The consummation of
the transactions  contemplated hereby (the "Closing") shall be held on the first
Monday  following or coinciding  with, at Buyer's  option,  the later of (i) the
eleventh  (11th) day after the Sale Order is issued by the Bankruptcy  Court; or
(ii) the day on which all closing conditions have been met, satisfied or waived.

         Section  3.2     Deliveries  by Sellers at Closing. At the Closing, and
thereafter  as may be  reasonably  requested  by Buyer,  Sellers  shall  convey,
transfer,  assign,  and deliver all of their  right,  title and  interest in and
possession of the Purchased Assets to Buyer, and shall also deliver to Buyer the
following:

               (a)  Such  bills  of  sale,   easements,   assignments,   leases,
         subleases, lease assignments, special warranty deeds regarding the real
         property  and  improvements  to be conveyed  in fee  simple,  and other
         appropriate  instruments  of  transfer as Buyer has  requested,  all in
         recordable form, of content reasonably  acceptable to Buyer and Buyer's
         counsel and  sufficient to vest in Buyer good and  marketable  title to
         all of the Purchased Assets which, (i) with regard to interests in real
         property,  is subject to no exception to title insurance coverage which
         could, in Buyer's sole reasonable discretion,  substantially affect the
         value of the Purchased Assets taken as a whole, and (ii) with regard to
         both real and personal  property,  is free and clear of all  mortgages,
         deeds of trust, liens,  security agreements,  charges,  encumbrances or
         Claims (other than Permitted Liens and Encumbrances);

               (b) Certified copies of duly adopted resolutions of each Seller's
         Board  of  Advisers  authorizing,  approving,  and  consenting  to  the
         execution and delivery of this  Agreement,  to the  consummation of the
         transactions  contemplated herein, and to performance of the agreements
         set forth herein;

               (c) Proof  that all real and  personal  property  taxes have been
         paid that could create a lien on the Purchased  Assets after their sale
         to Buyer pursuant to the Sale Order;

               (d) A duly executed Cross-Receipt;

               (e) A duly  executed  Release  and  Waiver in favor of Buyer from
         Sellers, substantially in the form of Exhibit 3.2(e) to this Agreement;

               (f) All operating manuals,  recipes,  proprietary information and
         similar  documents and  information  held by Sellers in connection with
         Sellers'  status as a  franchisee  of Buyer and all copies and extracts
         therefrom;


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               (g) Duly  executed  Liquor  Service and  Operating  Agreements as
         reasonably agreed to among the parties;

               (h) A certified  final,  nonappealable,  unstayed  Sale Order (or
         orders);

               (i)  A  copy  on  computer  disk,  or  other  electronic   medium
         acceptable to Buyer,  of Sellers'  detailed fixed asset records related
         to the Purchased Assets updated through the Closing Date; and

               (j) The original  payroll and human  resources  records and files
         (the  Sellers  may retain a copy  thereof) of  Retained  Employees,  as
         defined in Section 5.5(a), below.

         Section  3.3     Deliveries by Buyer at Closing.  Upon receipt,  review
and acceptance by Buyer's  counsel of all of the documents  specified in Section
3.2 above, duly authorized and validly executed,  Buyer shall deliver to Sellers
at Closing:

               (a) The Purchase Price;

               (b) A duly executed Cross-Receipt;

               (c) Certified copies of duly adopted resolutions of Buyer's Board
         of Directors  authorizing,  approving,  and consenting to the execution
         and delivery of this Agreement, to the consummation of the transactions
         contemplated  herein,  and to  performance  of the agreements set forth
         herein;

               (d) A duly executed  Release and Waiver in favor of Sellers under
         the Franchise  Agreements,  substantially in the form of Exhibit 3.2(e)
         to this Agreement; and

               (e) Duly  executed  Liquor  Service and  Operating  Agreements as
         reasonably agreed to among the parties.

         Section  3.4     Transfer  of  Operations.  Buyer  shall be entitled to
immediate possession of, and to exercise all rights arising under, the Purchased
Assets  from and after the time that the  Restaurants  open for  business on the
Closing Date, and operation of the Restaurants  shall transfer at such time (the
"Effective Time"). Except as provided hereby, all profits, losses,  liabilities,
claims,  or injuries arising before such transfer shall be solely to the benefit
or the risk of Sellers.  All such occurrences  after transfer shall be solely to
the  benefit  or the risk of Buyer.  The risk of loss or damage by fire,  storm,
flood,  theft,  or other casualty or cause shall be in all respects upon Sellers
prior to such transfer and upon Buyer thereafter.

         Section 3.5     Assignment by Buyer.

               (a) Buyer may assign any or all of its rights and benefits  under
         this  Agreement to any entity or entities that control,  are controlled
         by or are under  common  control  with Buyer,  upon  written  notice to
         Sellers of such assignment.

               (b) No assignment by Buyer pursuant to this Section shall relieve
         Buyer of its obligations under this Agreement.


                                       7
<PAGE>


                                   ARTICLE IV
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

         As an inducement to Buyer to enter this Agreement and to consummate the
transactions contemplated hereby, each Seller, jointly and severally, represents
and warrants to Buyer as follows:

         Section  4.1     Existence.  Each of the  Sellers  is  duly  organized,
validly existing, and in good standing under the laws of the State of Florida or
the State of West  Virginia  respectively,  and each is qualified to do business
and is in good standing in the  respective  states listed in Schedule 4.1, which
Schedule  includes all  jurisdictions  where  Sellers'  activities  require such
qualification, except where the failure to be so qualified, licensed, or in good
standing would not reasonably be expected to have (a) a material  adverse effect
on the business, results of operations, or condition (financial or otherwise) of
the business  operated by Sellers (taken as a whole),  or (b) a material adverse
effect  on (i)  the  transactions  contemplated  by  this  Agreement,  (ii)  the
legality,  validity,  or enforceability of this Agreement and the agreements and
instruments to be entered into in connection  herewith,  or (iii) the ability of
Sellers to perform their  obligations  under this  Agreement  (each, a "Material
Adverse Effect").

         Section  4.2     Power  and  Authority.  Each Seller has the  corporate
power and authority to own its properties  and Purchased  Assets and to carry on
its  business  as now  conducted.  Subject to the  Bankruptcy  Code and the Sale
Order,  Sellers  have the  requisite  corporate  power and  authority to convey,
assign, and transfer the Purchased Assets as set forth in this Agreement.

         Section  4.3     Execution  and   Delivery  Permitted;   Consents.  The
execution, delivery and performance of this Agreement will not violate or result
in a breach of any term of each Seller's Operating Agreement, result in a breach
of or constitute a default  under any term in any agreement or other  instrument
to which each Seller is a party,  such default having not been previously waived
by the other party to any such  agreement or otherwise  resolved by order of the
Bankruptcy  Court in such a manner as to not  materially  adversely  affect  the
rights  and  assets of  Sellers  or the  ability  of  Sellers  to  complete  the
transactions  contemplated by this  Agreement,  or violate any law or any order,
rule or  regulation  applicable  to Sellers,  of any court or of any  regulatory
body,  administrative  agency  or  other  governmental   instrumentality  having
jurisdiction  over  Sellers  or their  properties;  and will not  result  in the
creation  or  imposition  of any lien,  charge,  or  encumbrance  of any  nature
whatsoever  upon any of the Purchased  Assets after their sale to Buyer pursuant
to the Sale  Order.  The Board of  Advisers  of each Seller has taken all action
required by law (other than any action required by the Bankruptcy  Court) and by
each  Seller's  Operating  Agreement to authorize  the execution and delivery of
this Agreement,  and the transfer of the Purchased Assets to Buyer in accordance
with  this  Agreement.  With  respect  to each  Seller,  except  as set forth on
Schedule 4.3, the execution,  delivery and performance of this Agreement and the
other agreements  executed in connection  herewith,  and the consummation of the
transactions  contemplated  hereby and thereby do not  require any filing  with,
notice to or consent,  waiver or approval of any third party,  including but not
limited to, any governmental body or entity.  Schedule 4.3 identifies separately
each notice,  consent,  waiver or approval by  reference  to each Real  Property
Lease and to each Assumed Contract to which it is applicable.

         Section 4.4     The Purchased Assets. Except for the Excluded Assets:

                                       8
<PAGE>

               (a) Attached hereto as Schedule 4.4(a) is a complete and accurate
         list of each  parcel  of real  property  owned  by  Sellers  on which a
         Restaurant  is  located  or which is being  held for  development  of a
         Restaurant  (the  "Owned  Real  Property"),   separated  by  Restaurant
         location and listing the street address;

               (b) Attached hereto as Schedule 4.4(b) is a complete and accurate
         list of each parcel of real estate leased by Sellers or in which it has
         a leasehold or other interest on which a Restaurant is located or which
         is  being  held for  development  of a  Restaurant  (the  "Leased  Real
         Property"),  separated  by  Restaurant  location,  listing  the  street
         address of such  property  and the name and  address of the  landlord's
         agent to which Sellers are obligated to provide  notices  regarding the
         Leased Real  Property  (collectively,  the Owned Real  Property and the
         Leased Real Property are referred to as the "Real Property");

               (c) Attached hereto as Schedule 4.4(c) is a complete and accurate
         list of all  agreements or documents  under which Sellers claim or hold
         such leasehold or other interest or right to the use of the Leased Real
         Property (the "Real Property Leases") separated by Restaurant  location
         and  showing  the  street  address,  each  amendment,  modification  or
         extension thereof,  and the dates of each such amendment,  modification
         or extension;

               (d) Attached hereto as Schedule 4.4(d) is a complete and accurate
         list by Restaurant of the original basis and  accumulated  depreciation
         for  financial  and tax  reporting  purposes of (i) fixed assets (other
         than inventory and supplies)  being conveyed  hereunder as of the month
         end immediately  preceding the date of this  Agreement,  and (ii) land,
         buildings and leaseholds  being conveyed  hereunder as of the month end
         immediately preceding the date of this Agreement;

               (e) Attached hereto as Schedule 4.4(e) is a complete and accurate
         list  of  all  liens,  claims,  encumbrances  and  restrictions  on the
         Equipment;

               (f) Attached hereto as Schedule 4.4(f) is a complete and accurate
         list of all leases of personal  property  used in the  operation of the
         Restaurants  (the  "Equipment  Leases"),  identified by parcel of Owned
         Real  Property or Leased Real  Property  where the leased  equipment is
         located,  separated by Restaurant  location and identifying the parties
         thereto, the property leased thereunder;

               (g) Attached hereto as Schedule 4.4(g) is a complete and accurate
         list of all loan agreements,  indentures,  mortgages, pledges, security
         agreements, guarantees, leases or lease purchase agreements (not listed
         on  Schedule  4.4(c) or 4.4(f)) to which each  Seller is a party and by
         which any of the Purchased Assets are bound;

               (h) Attached hereto as Schedule 4.4(h) is a complete and accurate
         list  of  all  other  contracts,   agreements,   commitments  or  other
         understandings  or  arrangements to which each Seller is a party and by
         which any of the  Purchased  Assets are bound or  affected,  other than
         such   contracts,   agreements  or  commitments   terminable  at  will,
         identified  by parcel of Owned Real Property or Leased Real Property to
         which such is  applicable;  and each item on such Schedule that applies
         to any  restaurants or assets of Sellers that are not being conveyed to
         Buyer hereunder is so noted;

                                       9
<PAGE>

               (i) Attached hereto as Schedule 4.4(i) is a complete and accurate
         list  of all  contracts,  agreements,  commitments,  understandings  or
         arrangements  affecting  or  relating  to the  Purchased  Assets or the
         Restaurants  to which any  Affiliate  of Sellers is a party or by which
         any such Affiliate is bound;

               (j) The items listed in the above Schedules constitute all of the
         matters  required to be shown on such  Schedules.  A true and  complete
         copy, or with respect to oral agreements an accurate  summary,  of each
         item listed on the above  Schedules has been  delivered to Buyer.  Each
         Real  Property  Lease  separately  is  acknowledged  by  Sellers  to be
         material  to  operation  of  the  applicable  Restaurant,  and  to  the
         Purchased  Assets,  business and  financial  condition of Sellers.  The
         contracts listed on Schedule 4.4(j) constitute the "Assumed Contracts";
         and

               (k) With respect to the Assumed Contracts,  Sellers shall provide
         notice to all other parties to the Assumed Contracts in the Sale Motion
         (referenced  in  Section  5.9) of the  amounts  necessary  to cure  any
         defaults  currently  existing  under the Assumed  Contracts  (the "Cure
         Amounts")  through Closing and will,  upon Closing,  promptly cure such
         defaults,  including, without limitation, any and all unpaid royalties,
         advertising  fees and finance charges due and owing under the Franchise
         Agreements as of the Closing Date, being approximately $1,570,000 as of
         July 10, 2002.

         Section 4.5     Binding Effect. This Agreement and each other agreement
required to be executed and  delivered by Sellers in connection  herewith,  when
executed  and  delivered,  will be the legal,  valid and binding  obligation  of
Sellers,  enforceable  against each of them in accordance with its terms, except
as  enforceability  may be  limited  by (i) the  Bankruptcy  Proceeding  and the
applicable bankruptcy,  reorganization,  insolvency, moratorium and similar laws
affecting the  enforcement  of  creditors'  rights  generally,  and (ii) general
equitable  principles  (regardless of whether  enforceability is considered in a
proceeding in equity or at law).

         Section  4.6     Condition of Purchased Assets.  Except as set forth in
Schedule 4.6,

               (a)  Each  Restaurant  contains  all  Equipment  required  by the
         applicable  Franchise Agreement and necessary to operate the Restaurant
         in accordance with Sellers' historical  practices.  Except as set forth
         in the initial inspection list (the "Initial Inspection List") prepared
         by Buyer  and  acknowledged  by  Sellers,  a copy of which is  attached
         hereto as Schedule 4.6(a), each Restaurant's  Equipment is in operating
         condition, no major repairs are necessary concerning the Equipment, and
         to  Sellers'  Knowledge  (as defined in Schedule  1.1),  the  Equipment
         complies in all material  respects  with all  federal,  state and local
         laws, rules and regulations, and all occupational safety and health act
         regulations.

               (b) To Sellers' Knowledge, all Inventories are saleable or usable
         in the ordinary  course of business for their  intended use (except for
         normal spoilage) and exist in such quantity as necessary to operate the
         Restaurants in accordance with Sellers' historical practices.

                                       10
<PAGE>

               (c)  The   buildings,   fixtures,   parking   facilities,   trash
         facilities, fences, utilities and other improvements, appurtenances and
         hereditaments  at or on each Restaurant are in operating  condition and
         to Sellers' Knowledge,  in compliance in all material respects with all
         federal,  state and local laws,  rules and  regulations  and leases and
         lease provisions.

         Section   4.7     Absence  of  Other  Assets.  Except  as  specifically
provided in this Agreement or on Schedule 4.7, there is no asset,  property,  or
right of any nature which is not being  transferred to Buyer  hereunder that has
been customarily employed, owned, held, or used in connection with the operation
or ownership of any Restaurant  (except as listed on Schedule  4.7),  other than
permits that are not transferable or assignable, all of which permits are listed
on Schedule  4.7. All  Equipment  and  Inventories  used in the operation of any
Restaurant are situated entirely upon the premises of such Restaurant (except as
listed on  Schedule  4.7).  All  assets  located  at the  Restaurants  are being
conveyed to Buyer pursuant to this Agreement.

         Section  4.8     Ownership of Assets.  Sellers have good and marketable
title to the Purchased Assets,  which title is, or will be at Closing,  free and
clear of all  mortgages,  taxes (except for taxes that are prorated  pursuant to
Section 8.2(e)),  liens,  security interests,  pledges,  encumbrances and Claims
(other than Permitted Liens and Encumbrances);  Sellers have the full,  absolute
and  unrestricted  right to assign,  transfer and convey to Buyer the  Purchased
Assets,  subject only to  Bankruptcy  Court orders and such  consents as Sellers
shall  deliver to Buyer at Closing;  no person or entity  other than Sellers has
any interest in the Purchased  Assets other than the lessors under Real Property
Leases or the Assumed Contracts;  and all Equipment employed in the operation of
the  Restaurants  which is leased under leases other than Assumed  Contracts has
been  acquired and the  purchase  price  therefor  fully paid,  or  arrangements
satisfactory  to Buyer have been made to apply such amount of the Purchase Price
as may be necessary to fully pay the purchase price therefor.

         Section 4.9     Real  Property.  Sellers have good and marketable title
to all of the Owned Real  Property and to all of the  lessee's  interests in and
under the Real Property Leases and has the full, absolute and unrestricted right
to assign, transfer and convey to Buyer said Real Property,  subject only to (a)
Bankruptcy Court orders,  (b) such consents as Sellers shall deliver to Buyer at
Closing,  and (c) any  Permitted  Liens,  Encumbrances  and  Claims.  Each  Real
Property  Lease is in full force and  effect;  the terms  contained  in the Real
Property  Leases  have not been  modified  or amended in any  respect  except as
disclosed on Schedule 4.4(c),  and each constitutes the legal, valid and binding
obligation  of the parties  thereto (to Sellers'  Knowledge  with respect to any
party other than  Sellers),  enforceable  against them in accordance  with their
terms,  except as  enforceability  may be limited by (i) applicable  bankruptcy,
reorganization,   insolvency,   moratorium   and  similar  laws   affecting  the
enforcement  of  creditors'  rights   generally,   and  (ii)  general  equitable
principles  (regardless of whether  enforceability is considered in a proceeding
in equity or in law).  Sellers  are current in all  obligations  under each Real
Property  Lease.  The  consummation  of the  transactions  contemplated  by this
Agreement will not (and will not give any person a right to) terminate or modify
any material  rights of, or  accelerate  or increase any material  obligation of
Sellers under any Real Property Lease.

                                       11
<PAGE>

         Section 4.10     [Reserved].

         Section  4.11     Documents  Sufficient.  The  documents  delivered  by
Sellers  to Buyer  pursuant  to  Section  3.2 of this  Agreement  will be valid,
sufficient  and  effective to completely  transfer to Buyer good and  marketable
title to all of the Purchased Assets.

         Section  4.12     Litigation  or  Condemnation.  Except as set forth on
Schedule 4.12(a) to this Agreement,  there are no suits,  actions,  condemnation
actions,  investigations,   complaints,  or  other  proceedings  of  any  nature
whatsoever  in law or in  equity,  which  are  pending  or,  to the best of each
Seller's  Knowledge,  threatened  against, or which affect in any manner, any of
the  Purchased  Assets,  by or before any federal,  state,  municipal,  or other
governmental court,  department,  commission,  board,  bureau,  agency, or other
instrumentality  (whether  domestic or foreign).  No Seller is in default in any
material respect with respect to any order, writ, injunction, garnishment, levy,
or  decree  of any  federal,  state,  municipal,  or other  governmental  court,
department, commission, board, bureau, agency, or instrumentality,  and the use,
occupancy,  ownership,  or transfer of the Purchased  Assets do not constitute a
default thereunder.  To Sellers' Knowledge, the operation of the Restaurants and
the condition of the Purchased Assets do not violate in any material respect any
federal,  state, or municipal law,  regulation or rule (including any applicable
zoning or  similar  use  regulation  or law).  Except  as set forth on  Schedule
4.12(b), during Sellers' operation of the Restaurants no Restaurant has received
a citation,  warning,  or  reprimand  for, or  otherwise  been  notified of, any
material violation of any law, rule or regulation governing alcoholic beverages,
or any health,  environmental,  or similar  municipal,  state, or federal law or
regulation.  To Sellers' Knowledge,  since Sellers' operation of the Restaurants
Sellers have not served any food or foodstuff which is adulterated,  spoiled, or
contains foreign  substances,  nor has any Seller served any food item which has
or,  except as set forth on Schedule  4.12(c) to this  Agreement,  is claimed to
have caused any illness or injury to the consumer thereof.

         Section  4.13     Taxes.  All  ad  valorem  and  other  property  taxes
relating to the Purchased Assets have been fully paid for 2001 and all prior tax
years and there are no delinquent  property tax liens or  assessments  that will
result in the creation or imposition of any lien,  charge, or encumbrance of any
nature  whatsoever  upon any of the Purchased  Assets.  Sellers have also timely
filed (or will timely file) all federal,  state, local and other tax returns and
reports of whatever  kind  required to be filed by Sellers for all periods up to
and including the Closing Date, and no request (other than  extensions  filed by
Sellers with respect to their  federal tax returns with respect to calendar year
2001) has been made for any  extension of time within which to file such returns
and reports.  Sellers have paid (or will timely pay) all taxes of whatever kind,
including any interest, penalties, governmental charges, duties, fees, and fines
imposed  by  the   United   States,   foreign   countries,   states,   counties,
municipalities,  and  subdivisions,  and by all other  governmental  entities or
taxing  authorities,  which are due and payable  (or which  relate to any period
prior to, and including,  the Closing Date) or for which  assessments  have been
received, the nonpayment of which would result in a lien on any of the Purchased
Assets.  Except as set forth on  Schedule  4.13,  there  are no  audits,  suits,
actions,  claims,  investigations,  inquiries,  or  proceedings  pending  or  to
Sellers'  Knowledge,  threatened  against  any  Seller  with  respect  to taxes,
interest,  penalties,  governmental charges,  duties, or fines, nor are any such
matters under  discussion with any governmental  authority,  nor have any claims
for additional taxes, interest,  penalties,  charges, fines, fees or duties been
received by, or to Sellers' Knowledge, assessed against any Seller.

                                       12
<PAGE>

         Section 4.14     Assumed  Contracts.  Subject to the consents delivered
to Buyer at Closing,  or the entry of an order by the Bankruptcy Court approving
the assumption and  assignment of the Assumed  Contracts to Buyer,  Sellers have
full,  absolute and unrestricted  right to assign,  transfer and convey to Buyer
the Assumed  Contracts.  Each Assumed Contract is in full force and effect;  the
terms  contained in the Assumed  Contracts  have not been modified or amended in
any  respect  except  as  disclosed  on  Schedule  4.4(j)  and to  the  Sellers'
Knowledge,  each  constitutes  the legal,  valid and binding  obligation  of the
parties thereto, enforceable against them in accordance with their terms, except
as enforceability may be limited by (i) applicable  bankruptcy,  reorganization,
insolvency,  moratorium and similar laws affecting the enforcement of creditors'
rights generally,  and (ii) general equitable principles  (regardless of whether
enforceability  is  considered in a proceeding in equity or in law). To Sellers'
Knowledge,  except as set forth on Schedule  4.14,  there have been no events of
default,  and no state of facts exists which with notice or the passage of time,
or both,  would constitute an event of default under any Assumed  Contract.  The
consummation  of the  transactions  contemplated by this Agreement will not (and
will not give any  person a right to)  terminate  or modify  any  rights  of, or
accelerate or increase any obligation of any Seller under any Assumed Contract.

         Section   4.15     Accuracy  of  Information  and  Representations  and
Warranties. All representations and warranties made by Sellers in this Agreement
or any  Schedule  or  Exhibit  hereto or in any  certificate  or other  document
furnished by any of them pursuant to this  Agreement are true and correct in all
material respects on and as of the date hereof.

         Section 4.16     Employment Matters.

               (a)   No employees of the Restaurants are on strike, nor are such
         employees  threatening to strike, and there is no strike in progress in
         any  collective  bargaining  unit of any union to which  each  Seller's
         employees  belong. To Sellers'  Knowledge,  no labor union has recently
         attempted,  or is presently  attempting,  to organize the  Restaurants'
         employees  into a  collective  bargaining  unit,  and no  group  of the
         Restaurants'   employees  is  presently  organized  into  a  collective
         bargaining unit.

               (b)   Schedule  4.16(b)  hereto is a true and complete list as of
         June 25,  2002,  (i) of each  person  employed in  connection  with the
         operation of the Restaurants from and including each assistant  manager
         and assistant  kitchen  manager up through area  director;  and (ii) of
         each other  employee  whose  duties are  primarily  related to Sellers'
         Restaurant operations. For each such person, Schedule 4.16(b) shows the
         full name, job title or duty, wages or salary and estimated bonus.

               (c)   Sellers have, to their Knowledge,  operated all Restaurants
         in accordance  with all local,  state and federal laws and  regulations
         related to employment matters including, but not limited to, payment of
         wages and benefits and employee discrimination.

                                       13
<PAGE>

         Section 4.17     Employee Benefit Plans.

               (a) Schedule  4.17(a)  contains a true and complete  list of each
         pension, profit sharing, other deferred compensation,  bonus, incentive
         compensation,  stock purchase,  stock option,  supplemental retirement,
         severance or termination pay, medical, hospitalization, life insurance,
         dental,  disability,   salary  continuation,   vacation,   supplemental
         unemployment benefits plan, program,  arrangement or contract, and each
         other  employee  benefit  plan,   program,   arrangement  or  contract,
         maintained,  contributed  to, or required to be contributed to, by each
         Seller or any Related  Party  (hereinafter  defined) for the benefit of
         any  current or former  employee,  director  or agent of Sellers or any
         Related Party,  whether or not any of the foregoing is funded,  whether
         formal or informal,  whether or not subject to the Employee  Retirement
         Income  Security Act of 1974, as amended  ("ERISA") and whether legally
         binding or not (collectively,  the "Benefit Plans").  Sellers and their
         Related  Parties do not have any express or implied  plan or  contract,
         whether legally  binding or not, to create any additional  Benefit Plan
         or modify any existing  Benefit Plan,  other than as may be required to
         comply  with the Tax  Reform Act of 1986.  Sellers  have  delivered  to
         Buyer,  with  respect  to each  applicable  Benefit  Plan  (1) true and
         complete copies of all documents  embodying or relating to each Benefit
         Plan including, without limitation, the plan and trust or other funding
         arrangement  relating  thereto,  summary  plan  descriptions,  employee
         handbooks  or  personnel  manuals and all  amendments  and  supplements
         thereto;  (2) the  most  recent  annual  report  (Series  5500  and all
         schedules thereto),  if any, required by ERISA; and (3) the most recent
         determination   letter  received  from  the  Internal  Revenue  Service
         ("IRS"), if any. "Related Party" means any member of a controlled group
         of  corporations,  a group of trades or businesses under common control
         or an affiliated  service group,  within the meaning of Section 414(b),
         (c), (m) or (o) of the Code, of Sellers;

               (b) The Benefit Plans that are intended by Sellers or any Related
         Party to meet the  requirements  of Section 401(a) of the Code now meet
         and since their inception have met, the requirements for  qualification
         under  Section  401(a) of the Code and the related  trusts are now, and
         since their  inception  have been,  exempt from taxation  under Section
         501(a) of the Code and nothing has occurred or, in connection  with the
         transaction  contemplated  by this  Agreement,  will  occur that has or
         could  have an  adverse  affect  on the  qualified  status  of any such
         Benefit Plan.

               (c) Sellers and any Related Party have  performed in all material
         respects  obligations  required to be performed by them under,  and are
         not in default  under or in  violation  of, any and all of the  Benefit
         Plans, and each Benefit Plan has been operated in all material respects
         in accordance with its provisions and in compliance with all applicable
         laws and regulations. Neither any Benefit Plan or fiduciary nor Sellers
         or any  Related  Party  has  taken  any  action,  or failed to take any
         action,  that could subject it or any other person to any liability for
         any excise tax under  Chapter 43 of the Code or for breach of fiduciary
         duty with respect to or in connection with a Benefit Plan;

               (d) At no time have Sellers or any Related Party been required to
         contribute to any  "multiemployer  plan" (within the meaning of Section
         3(37) of ERISA) and Sellers and their Related Parties have no liability
         (contingent  or  otherwise)  relating  to  the  withdrawal  or  partial
         withdrawal from a multiemployer plan. Sellers and their Related Parties
         do not participate in any "multiple employer plans," within the meaning
         of ERISA;

                                       14
<PAGE>

               (e) No Benefit  Plan  provides or is  required  to provide  group
         health,  medical,  death or survivor  benefits to any former or retired
         employee of Sellers or  beneficiary  thereof,  except to the extent (1)
         required  under any state  insurance  law  providing  for a  conversion
         option  under a group  insurance  policy  or (2) under  Section  601 of
         ERISA;

               (f) No "reportable event" (as defined in ERISA) has occurred with
         respect to any  Benefit  Plan.  No  liability  to the  Pension  Benefit
         Guaranty  Corporation  ("PBGC")  has been  incurred,  or is expected by
         Sellers or any Related Party to be incurred,  by Sellers or any Related
         Party  with  respect  to any  Benefit  Plan  and no  Benefit  Plan  has
         "unfunded benefit liabilities" within the meaning of Title IV of ERISA.
         No steps have been taken to terminate any Benefit Plan which is subject
         to Title IV of ERISA and no proceeding  has been  initiated by the PBGC
         to  terminate  any  such  Benefit  Plan  or to  appoint  a  Trustee  to
         administer any such Benefit Plan;

               (g)  Neither  any Benefit  Plan or  fiduciary  nor Sellers or any
         Related  party has any  liability to any  participant,  beneficiary  or
         other person under any provision of ERISA or any other  applicable  law
         by reason of any  payment  of, or  failure  to pay,  benefits  or other
         amounts with respect to or in connection with any Benefit Plan;

               (h)  Subject  to  Section  5.1(e),   each  Benefit  Plan  may  be
         terminated  by Sellers or their  Related  Parties on the  Closing  Date
         without  acceleration or additional vesting of any benefits (other than
         vesting of contributions made by Sellers on behalf of certain employees
         to  Sellers'  401(k)  plan)  and  without  payment  of any  amount as a
         penalty, bonus, premium, severance pay or other compensation or amount;
         and

               (i)  Sellers  do not have any  ESOP  and  have  not  granted  any
         employee  any  option or right to  acquire  an equity  interest  in any
         Seller.

         Section  4.18     Licensure.  All  governmental  permits  and  licenses
necessary  to operate  each  Restaurant  are  listed on  Schedule  4.18  hereto,
identified by Restaurant  and  separated by  Restaurant  location  ("Licenses").
Sellers have all such Licenses and are in compliance with all  requirements  and
limitations set forth in such Licenses in all respects, except where the failure
to have any such License or be in  compliance  will not have a Material  Adverse
Effect as defined in Section 4.1 hereof.  All  Licenses  are now, and at Closing
will be, in full force and effect,  except where the failure to be in full force
and effect will not have a Material Adverse Effect.

         Section  4.19     Insurance  Coverage.  Schedule  4.19  is a  true  and
accurate list and brief description of all property, fire, casualty,  liability,
life, worker's  compensation,  and other forms of insurance of any kind owned or
held by Sellers  regarding the  Purchased  Assets or the  Restaurants.  All such
policies  (a) are in full  force  and  effect,  (b) are  valid  and  outstanding
policies,  (c) insure against risks of the kind customarily  insured against and
in the amounts  customarily  carried by  entities  similarly  situated,  and (d)
provide that they will remain in full force and effect through the Closing Date.

                                       15
<PAGE>

         Section 4.20     Environmental Matters.

               (a)  To  Sellers'  Knowledge,  Hazardous  Materials  (as  defined
         below),  except for de minimis quantities of Hazardous  Materials which
         have been utilized in the ordinary course of Sellers'  operation of the
         Restaurant  and which have not resulted in any  violation of applicable
         Environmental Laws (as defined below), have not been at any time during
         Sellers' ownership of the Owned Real Property or Sellers' possession of
         the Leased Real Property, and to Sellers' Knowledge and belief have not
         been during any other time, generated, stored, discharged, disposed of,
         spilled,  dumped,  poured,  emptied,  or released and are not currently
         present at, on, in, beside,  above, or under the real estate underlying
         or  used  in  connection  with  the  Restaurant  locations  (the  "Real
         Estate").  Underground  storage  tanks are not and have not been at any
         time during  Sellers'  ownership of the Owned Real Property or Sellers'
         possession of the Leased Real Property,  and to Sellers'  Knowledge and
         belief have not been during any other time, located on the Real Estate.
         Sellers have at all times  operated the Real Estate in compliance  with
         all Environmental Laws (as defined below).

               (b) Each Seller, jointly and severally, unconditionally agrees to
         indemnify  and hold  harmless  Buyer,  for any and all losses,  claims,
         damages,   penalties,   liabilities,   costs  and  expenses  (including
         attorney's  fees,  administrative  expenses,  prejudgment  interest and
         court costs), fines, injuries, penalties, response costs (including the
         cost of any required or necessary investigation,  testing,  monitoring,
         repair, clean up, detoxification,  decontamination,  preparation of any
         closure or other required plans,  removal,  response or remedial action
         at or relating to the Real Estate) (collectively,  "Claims and Costs"),
         with  respect to, as a direct or indirect  result of, or arising out of
         any contamination,  requirement,  lawsuit, notice of violation,  notice
         letter,  warning  letter,   administrative  order,   compliance  order,
         enforcement  action,  settlement,  agreement,  consent order, decree or
         judgment,  injunction,  restraining order or prohibition  (collectively
         "Action") relating to the generation,  presence,  storage,  management,
         disposal,  release,  discharge,  escape, emission,  spilling,  seepage,
         leakage,  dumping,  pumping, pouring, emptying or clean up of Hazardous
         Materials (as herein defined) at, on, in, beside,  above, from or under
         all or a  portion  of the Real  Estate  which  occurs  from  activities
         undertaken  during Sellers'  ownership or possession of the Real Estate
         prior to Closing.

               (c) For  the  purpose  of this  Agreement,  the  term  "Hazardous
         Materials" shall include,  but not be limited to: any substance defined
         as "hazardous  substances,"  "hazardous air  pollutant,"  "pollutants,"
         "contaminants,"   "hazardous  materials,"  "hazardous  wastes,"  "toxic
         chemicals,"  "petroleum or petroleum  products,"  "toxics,"  "hazardous
         chemicals," "extremely hazardous  substances,"  "pesticides" or related
         materials,  including but not limited to radon and asbestos, as now, in
         the past,  or hereafter  defined in any  applicable  federal,  state or
         local law, regulation,  ordinance, policy or directive,  including, but
         not limited to, the Comprehensive Environmental Response,  Compensation
         and Liability Act of 1980, as amended by the Superfund  Amendments  and
         Reauthorization Act of 1986, 42 U.S.C.ss.  9601 et. seq.; the Emergency
         Planning and Community  Right-to-Know  Act, 42 U.S.C.ss.1101  et. seq.;


                                       16
<PAGE>

         the Resource  Conservation and Recovery Act, 42 U.S.C.ss.6901 et. seq.;
         the Hazardous Materials  Transportation Act of 1974, 49 U.S.C.ss.  1801
         et. seq.; the Federal Water  Pollution  Control Act, 33 U.S.C.ss.  1251
         et. seq.;  the Clean Air Act, 42 U.S.C.ss.  4701 et. seq.;  the Federal
         Insecticide,  Fungicide and Rodenticide  Act, 7 U.S.C.ss.136  et. seq.;
         the Safe  Drinking  Water Act, 42  U.S.C.ss.3001  et.  seq.;  the Toxic
         Substances  Control Act, 15 U.S.C.ss.  2601 et. seq.; the Oil Pollution
         Act of 1990, 33 U.S.C.ss.  2701 et. seq.;  and any laws  regulating the
         use of biological agents or substances  including medical or infectious
         wastes  and  the  corresponding  State  laws,   regulations  and  local
         ordinances, etc. which may be applicable, ("Environmental Laws") as any
         such acts may be amended.

               (d) Sellers agree and consent to the performance of environmental
         testing on the Real Estate at Buyer's expense; provided,  however, that
         neither the  performance  of nor failure to perform such tests by Buyer
         will  negate  or  affect  Sellers'  representations  or  warranties  or
         agreement to indemnify contained herein.

         Section  4.21     Restaurant  Operations. To Sellers' Knowledge, in all
material  respects the  activities  carried on in all  buildings,  structures or
improvements  included as part of, or located on or at the Restaurants,  and the
buildings,  structures and improvements themselves,  are not in violation of, or
in conflict with, any applicable zoning or health regulation or ordinance or any
other  similar  law.  There  is no  pending,  or to the  best of  each  Seller's
Knowledge,  threatened or proposed  proceeding or governmental  action to modify
the  zoning  classification  of, or to  condemn  or take by the power of eminent
domain (or to purchase in lieu thereof), or to impose special assessments on, or
otherwise  to take or restrict in any way the right to use,  alter or occupy all
or any part of any of the Restaurants in any material respect.

         Section 4.22     [Reserved].

         Section  4.23     Affiliated  Transactions.  Except  as  set  forth  on
Schedule  4.23,  Sellers have not been a party to, and there does not now exist,
any  transaction  affecting the Restaurants or the Purchased  Assets  (including
without  limitation the purchase,  sale or exchange of property or the rendering
of any service) with any Affiliate of Sellers or any entity in which any of them
owns a beneficial  interest.  For purposes of this Agreement,  "Affiliate" means
any  person or entity  that owns or  controls  more than a 10%  interest  in any
Seller  (a  "Controlling  Affiliate")  or in which any  Seller or a  Controlling
Affiliate owns or controls more than a 5% interest. Nothing in this Agreement is
intended  to  preclude  any  Affiliate  of Seller  from  bidding to acquire  the
Purchased Assets.

         Section 4.24     Subsidiaries.

               (a) Schedule  4.24 is a correct and complete  list of each entity
         in which any  Seller  has a direct or  indirect  interest  that has any
         direct or indirect interest in any of the Purchased Assets, showing the
         following  as of the date of this  Agreement  with respect to each such
         entity:

                                       17
<PAGE>

                   (i) the jurisdiction of its organization;

                   (ii) the title of each  authorized  class or series of voting
               interests or securities;

                   (iii) the  number of those  voting  interests  or  securities
               outstanding;

                   (iv) the number of such  outstanding  interests or securities
               owned directly or indirectly by Sellers;

                   (v)  the   percentage  of  such   outstanding   interests  or
               securities owned directly or indirectly by Sellers; and

                   (vi)  the  Purchased  Assets  in  which  such  entity  has an
               interest and the extent of such interest.

         Section 4.25     [Reserved].

         Section  4.26     Financial  Statements.  Attached  hereto as  Schedule
4.26, are unaudited  financial  statements of Sellers'  business,  including (i)
consolidated  statement of operations  and related  statement of cash flows for,
and  balance  sheet as of the end of fiscal  year 2000 as reviewed by Agatheas &
Wagner,  P.A.,  including  explanatory  notes;  (ii)  consolidated  statement of
operations  and  balance  sheet  as of  the  end  of  fiscal  year  2001;  (iii)
consolidated  monthly  statements of operations  and balance sheets from January
2000  through  and up to the month  end prior to  signing  this  Agreement,  and
updated at  Closing;  and (iv)  monthly  individual  Restaurant  profit and loss
statements for the same period. All such financial  statements set forth in this
Section 4.26 (the "Financial  Statements")  shall be prepared in accordance with
generally accepted accounting principles,  except in the case of (ii), (iii) and
(iv) for the  absence of  explanatory  notes and except as  otherwise  expressly
described therein.  The Financial  Statements  accurately reflect the operations
and  financial  condition of Sellers for the periods  presented  and as of their
respective  dates, and the books and records of Sellers from which the Financial
Statements  were  prepared  are  true,  correct  and  complete  in all  material
respects.

         Section  4.27     Right  to  Inspect.  Buyer  shall  have the  right to
inspect  each  Restaurant  location at or prior to the Closing  Date hereof (the
"Final  Inspection").  Buyer's Final  Inspection  shall be conducted in order to
review,  revise  and add to the  Initial  Inspection  List  attached  hereto  as
Schedule 4.6(a).  The Final Inspection list (the "Final  Inspection List") shall
be prepared by an inspection  that is consistent in scope to the inspection used
to prepare the Initial  Inspection  List (attached  hereto as Schedule 4.27 is a
"Master  Inspection  List" used in connection with such  inspection),  and shall
identify  equipment and facilities that are not in working order and that are in
need of repair or replacement. A management-level representative of Sellers' for
each  Restaurant  location  shall  review and  acknowledge  in  writing  Buyer's
completed list after the Final  Inspection.  In the event of any dispute between
Buyer and  Sellers  regarding  the  contents of the Final  Inspection  List with
respect to a particular  Restaurant(s),  at Sellers'  request Buyer will provide
Sellers  with a copy of the  original  report  prepared by Buyer with respect to
such  Restaurant(s)  utilizing the Master  Inspection List referenced above. Any
such dispute shall be resolved in accordance  with the  procedures  set forth in
Section 5.25(d).

                                       18
<PAGE>

         Section 4.28     Development Rights. Sellers acknowledge (i) that Apple
Capitol  Group  defaulted in its  obligations  under the  Development  Agreement
between Apple Capitol  Group and Buyer,  (ii) that based on such defaults  Buyer
properly and validly  terminated said agreement  effective on or before June 27,
2001,  and (iii) that said  agreement is of no force and effect and Sellers have
no rights  whatsoever  under  said  agreement,  or under  any  other  agreement,
document,  or  legal  or  equitable  claim,  to  develop,  open or  operate  any
Applebee's restaurant other than the 21 Restaurants listed on Exhibit 1.1.

                                   ARTICLE V
                              COVENANTS OF SELLERS

         Each Seller, jointly and severally, covenants and agrees as follows:

         Section 5.1     Employee Benefit Plans.

               (a) Buyer is not obligated to assume any liability, obligation or
         other  responsibility  under any  Benefit  Plan.  With  respect  to any
         "defined  benefit" Benefit Plan,  Sellers shall treat all employees who
         are hired by Buyer at the Closing as if they terminated employment with
         Sellers on the Closing Date. With respect to any "defined contribution"
         Benefit  Plan,  Sellers shall pay all amounts owed to the related trust
         with  respect to each  transferred  employee as of the Closing  Date as
         soon  as  reasonably  practicable  thereafter.   Sellers  shall  remain
         responsible and liable for all payments required under the terms of any
         "employee welfare benefit plan" as defined in Section 3(1) of ERISA for
         claims  incurred and expenses and payments  accrued on and prior to the
         Closing Date.

               (b) Sellers and their Related  Parties agree to pay and be liable
         to Buyer and shall  indemnify and hold harmless  Buyer from and against
         all losses,  expenses and  liabilities,  arising under Section 4980B of
         the Code  arising  from the  failure  to comply  with the  continuation
         requirements  of Section 4980B of the Code and sections 601 through 608
         of ERISA occurring on or prior to the date of Closing.

               (c)  Sellers  and their  Related  Parties  (as defined in Section
         4.17)  shall not permit any event or  condition  to exist or occur that
         would give rise to a  "reportable  event"  (as  defined in ERISA) or to
         liabilities  or  taxes  under  ERISA or the Code  with  respect  to any
         Benefit Plan or incur any commitment to increase their obligation under
         any Benefit Plan.  Upon becoming aware of the occurrence or forthcoming
         occurrence of any of the above,  Sellers shall provide a written notice
         to Buyer  specifying  the  nature  of the  event  and  action  taken or
         proposed or threatened to be taken by Sellers,  their Related  Parties,
         or any governmental body with respect to such events.

               (d) With  respect to all  employees  of Sellers  who are hired by
         Buyer,  Sellers  shall cause all  retirement  plan  benefits  and other
         benefits, to fully vest as of the Closing Date.

                                       19
<PAGE>

               (e)  Notwithstanding  Section  4.17(h)  above,  Sellers shall not
         cancel, for a period of at least 90 days after the Closing Date, any of
         the Company's  existing  medical plans to the extent necessary in order
         to allow Sellers' employees to obtain COBRA insurance coverage.

         Section   5.2     Performance  of  Real  Property  Leases  and  Assumed
Contracts. From the date hereof through the Closing Date, except as provided for
in  this  Agreement   (including  Section  5.24,  which  governs  the  Franchise
Agreements),  Sellers shall in all material  respects continue to faithfully and
diligently  perform each and every  continuing  obligation  of Sellers,  if any,
under each of the Real Property Leases and the Assumed  Contracts  arising after
commencement of the Bankruptcy Proceedings.

         Section  5.3     Transfer of Licenses and Permits. Subject to the terms
of Section 7.5,  Sellers shall use their  Reasonable  Best Efforts and cooperate
fully in assisting Buyer with the assumption,  transfer or reissuance of any and
all  required  state,  county  or city  licenses  or  permits  required  for the
operation of the Restaurants, including those shown on Schedule 4.18.

         Section 5.4     Liabilities of Seller. From the date hereof through the
Closing Date,  all  liabilities of Sellers  related to the Purchased  Assets and
Restaurants arising after the commencement of the Bankruptcy Proceedings will be
promptly  paid by Sellers  as they come due in  accordance  with the  Bankruptcy
Code,  including all trade payables,  employee wages,  benefits,  and other such
compensation,  and royalties and advertising  fees,  miscellaneous  expenses and
finance  charges,  except  (i) to the  extent  that any such  amounts  are being
disputed  in good faith by any  Seller;  and (ii) to the extent  Sellers are not
permitted to pay such amounts,  or such amounts are modified,  by the Bankruptcy
Court.

         Section 5.5     Agreements Respecting Employees of Sellers.

               (a) From the date hereof  through the Closing  Date,  without the
         prior written approval of Buyer, Sellers shall not transfer or reassign
         any  employee   involved  in  the  operation  or   supervision  of  the
         Restaurants,  including  supervisory  personnel through the director of
         operations level ("Restaurant  Personnel"),  other than in the ordinary
         course  of  business.   Through  the  Closing,  Sellers  will  maintain
         employment  staffing at historic levels. At the Effective Time, Sellers
         shall terminate  Restaurant  Personnel who have accepted positions with
         Buyer (the  "Retained  Employees").  For a period of 12 months from the
         Closing  Date,  no Seller will  solicit,  offer to employ or employ any
         Restaurant Personnel without the prior written approval of Buyer.

               (b) From the date hereof through the Closing Date,  Sellers shall
         be solely  responsible  for, and at Closing  shall pay,  any  severance
         payments,  employee  wages or other such benefits  (except  accrued and
         unused  vacation)  in the  amounts  due or granted by Sellers to any of
         Sellers'  employees  and  Restaurant  Personnel,  except to the  extent
         Sellers are not  obligated  to pay such  amounts  under the  Bankruptcy
         Code, or such amounts are modified, by the Bankruptcy Court.

         Section  5.6     Conduct of Business.  From the date hereof through the
Closing Date,  Sellers shall operate the Restaurants as they are currently being
operated and only in the ordinary course, using their Reasonable Best Efforts to




                                       20
<PAGE>

preserve and maintain the services of their employees,  their relationships with
suppliers and  customers,  and to preserve  their current level of sales volume,
and shall  continue to insure the Purchased  Assets under  existing  policies of
insurance at current  levels.  Sellers shall pay all bills and debts incurred by
them  and  related  to  the  operation  of the  Restaurants  arising  after  the
commencement of the Bankruptcy  Proceedings  promptly as they become due, except
(i) to the extent that any such amounts are being  disputed in good faith by any
Seller, and (ii) to the extent Sellers are not permitted to pay such amounts, or
such amounts are modified,  by the  Bankruptcy  Court.  Sellers shall consult in
advance  with Buyer on all  decisions  relating to the  Purchased  Assets or the
Restaurants that are not in the ordinary course of business, not consistent with
Sellers' past practices, or not contemplated in the Operating Budget attached as
Schedule 5.6.

               (a) In  particular,  and without  limiting  the  foregoing,  with
         respect to the Restaurants, Sellers shall:

                   (i)  continue  to  conduct  the  advertising  activities  and
               efforts as set forth on Schedule 5.6(a)(i);

                   (ii) continue to repair and replace the  Purchased  Assets in
               accordance with the maintenance  operating expenditure budget set
               forth on Schedule 5.6(a)(ii);

                   (iii)  continue  to  conduct  on a timely  basis  all  normal
               periodic asset maintenance;

                   (iv) continue to purchase and maintain  inventories  for each
               Restaurant in such quantities and quality as necessary to operate
               the Restaurants in accordance with Sellers' historical  practice,
               but in no case  less  than 7 days  inventory  at each  Restaurant
               (except perishable items in the normal course of business);

                   (v) continue to operate the  Restaurants  in accordance  with
               all  material  applicable  local,  state  and  federal  laws  and
               regulations; and

                   (vi) consistent with the requirements of the Bankruptcy Code,
               continue  to use its  Reasonable  Best  Efforts to  preserve  and
               maintain  its  business  relationships  with its  critical  trade
               creditors.

               (b) Further, with respect to the Restaurants,  Sellers shall not,
         without the express prior written approval of Buyer:

                   (i)  change in any  manner  the  ownership  of the  Purchased
               Assets;

                   (ii) other than as described on Schedule 5.6(b)(ii), increase
               the rate of compensation to its officers or employees  beyond the
               usual and  customary  annual  merit  increases  or bonuses  under
               established compensation plans;

                                       21
<PAGE>

                   (iii)  except  pursuant to an order of the  Bankruptcy  Court
               (including,   without   limitation,   in   connection   with  any
               debtor-in-possession   financing   obtained  by  Sellers  or  any
               adequate  protection  order of the Bankruptcy  Court),  mortgage,
               pledge or subject to lien any of the Purchased Assets;

                   (iv) sell or otherwise  dispose of any Purchased Asset except
               in the ordinary course of business;

                   (v)  enter  into  or  commit  to  enter  into  any  contract,
               agreement or commitment that would be required to be set forth on
               Schedule 4.4(h) hereto except in the ordinary course of business;
               and

                   (vi) Other than in the ordinary course of business, cancel or
               terminate or consent to or accept any cancellation or termination
               of any Assumed  Contract  or any Real  Property  Lease,  amend or
               otherwise  modify any of its material terms or provisions or give
               any consent,  waiver or approval  with respect to the  agreement,
               waive any breach of any of its material  terms or  provisions  or
               take any other action in connection with any Assumed  Contract or
               any  Real  Property  Lease  that  would  materially   impair  the
               interests  or  rights  of  Sellers  to be  transferred  to  Buyer
               hereunder.

         Section   5.7     Broker's   Fees.  Each  Seller  shall,   jointly  and
severally,  indemnify  and hold  Buyer  harmless  in  respect  to any  claim for
brokerage  or finder's  fees or  commissions  with  respect to the  transactions
contemplated herein by anyone claiming to have acted on behalf of Sellers.

         Section 5.8     Access to Information.  Sellers shall afford Buyer, its
counsel,  financial  advisors,  auditors,  lenders,  lenders'  counsel and other
authorized  representatives  reasonable  access for any purpose  consistent with
this  Agreement from the date hereof until the Closing,  during normal  business
hours, to the offices, properties, books, and records of Sellers with respect to
the  Purchased  Assets  and the  Restaurants  and shall  furnish  to Buyer  such
additional  financial and operating  data and other  information  as Sellers may
possess  and as Buyer may  reasonably  request,  subject to Buyer's  obligations
regarding the  confidentiality  of such  information as set forth in Section 7.2
hereof.

         Section  5.9     Bankruptcy  Motion.  Simultaneous  with the Chapter 11
petition in Section 1.3 above,  Sellers shall file a motion with the  Bankruptcy
Court (the "Sale Procedures  Motion"),  in the form set forth in Exhibit 5.9, or
as otherwise  modified in form and substance  reasonably  satisfactory to Buyer,
Sellers and Lehman, and the Bidding Procedures Motion requesting orders that (i)
a hearing  regarding the Section 363 sale be scheduled  within  forty-three (43)
days of the  commencement of the Bankruptcy  Proceeding;  (ii) this Agreement be
the sole agreement that any other potential bidders in the Bankruptcy Proceeding
be allowed to bid on; and (iii) the Buyer, if Buyer is not the successful bidder
for the Purchased  Assets,  be allowed  reimbursement  for actual  out-of-pocket
expenses  incurred  by Buyer  in an  amount  up to and  including  Four  Hundred
Thousand Dollars  ($400,000),  in relation to the negotiation and preparation of
this  Agreement  and its due  diligence  investigation  related  thereto  and in
preparing,  submitting  and  pursuing  any bid Buyer may make in the  Bankruptcy
Proceeding.

                                       22
<PAGE>

         Section 5.10     [Reserved].

         Section 5.11     [Reserved].

         Section 5.12     [Reserved].

         Section 5.13     Change of Name. Seller shall change its corporate name
and shall  cause to be  changed  the name of any  affiliated  entities  upon the
Closing to delete the use of the name "Apple," "Applebee's" and other similar or
derivative  names.  Immediately upon the Closing,  Sellers shall cease using the
name "Apple" and "Applebee's" in all of their activities, promotions, brochures,
stationery,   products,   and  in  all  other  respects  (except  in  Bankruptcy
Proceedings)  and  thereafter  Sellers  agree not to use the names  "Apple"  and
"Applebee's" in any business. Notwithstanding the foregoing, Buyer hereby grants
to Sellers a limited license and right to use the "Apple" and "Applebee's" names
solely (A) as required for the Case including without limitation the publication
of any notices  required by the Bankruptcy  Court or (B) for the purposes of (i)
pursuing  rights and claims against third  parties,  (ii) filing of tax returns,
insurance claims and any other necessary  filings;  and (iii) selling any of the
Excluded Assets.

         Section  5.14     Insurance.  Sellers shall  continuously keep in force
through the  Closing  Date the  insurance  policies  listed on Schedule  4.19 at
Sellers' sole cost.

         Section  5.15     Renegotiation of Assumed Leases. Sellers will provide
reasonable  assistance as requested by Buyer in Buyer's  efforts to  renegotiate
the Real Property Leases.

         Section   5.16     Confidentiality.    Sellers   shall   maintain   all
Confidential  Information  (as  defined  below)  gained  from  Buyer  in  strict
confidence,  and shall take all  precautions  necessary  to prevent  disclosure,
access to, or transmission of the Confidential Information, or any part thereof,
to any third party,  except as required by order of any court  having  competent
jurisdiction or as may be otherwise required by law, the Bankruptcy Court, or as
may be necessary to consult with their  professional  advisors in their capacity
as such  (provided  that they shall use their best  efforts to ensure that their
professional  advisors shall keep the  Confidential  Information  confidential),
regardless of the availability of any such information from any other source. In
the event the Closing does not occur for any reason, Sellers shall,  immediately
upon  Buyer's  request,  return all copies and  recordings  of the  Confidential
Information  in their  possession  or under their control and delete all records
thereof  in any data  storage  system  maintained  by or for  Sellers.  The term
"Confidential Information" means the negotiations, discussions and any valuation
methodology used in connection with the transactions  contemplated  hereunder or
thereunder.

         Section 5.17     [Reserved].

         Section  5.18     Employee  Receivables.  As of the Closing Date, there
will be no employee  receivables  in existence  with  respect to any  Restaurant
employees or Restaurant Personnel in excess of $5,000 in the aggregate.

         Section  5.19     Survey  and  Title  Report.  Buyer has  received  (i)
current  ALTA/ACSM   "as-built"   surveys  of  each   free-standing   Restaurant
(collectively,  the "Surveys" and each, a "Survey"), and (ii) current ALTA title
commitments  issued by the Title  Company for each parcel of Owned Real Property
and Leased Real Property  (collectively,  the "Title Reports" and each, a "Title
Report").

                                       23
<PAGE>

         Section  5.20     Reporting  Requirements.  Through the  Closing  Date,
Sellers shall furnish to Buyer:

               (a) Adverse events. Promptly after the occurrence,  or failure to
         occur,  of any such event,  information  with  respect to any event (i)
         which  materially  adversely  affected,  or  is  reasonably  likely  to
         materially  adversely  affect,  the Purchased  Assets,  the operations,
         business  prospects  or  condition  (financial  or  otherwise)  of  the
         Restaurants  or the ability of Sellers to perform any of their material
         obligations  hereunder,  (ii)  which,  if  known as of the date of this
         Agreement,  would have been  required to be disclosed to Buyer or (iii)
         which  causes any  representation  or warranty  contained  herein to be
         untrue or inaccurate in any material respect;

               (b) Monthly Financial Statements. As soon as available and in any
         event within twenty (20) business days after the end of each month, the
         statement of operations and balance sheets on a consolidated basis, all
         in reasonable  detail and stating in  comparative  form the  respective
         consolidated  figures  for the  corresponding  date and  period  in the
         previous fiscal year and unaudited but certified by the chief executive
         manager  and the  controller  of  Sellers,  and all  normally  prepared
         monthly or periodic management  analytical reports with respect to each
         Restaurant, including monthly profit and loss statements;

               (c)  Management  letters.  Promptly upon  receipt,  copies of all
         reports   submitted  to  Sellers  by   independent   certified   public
         accountants in connection with examination of the financial  statements
         of Sellers made by such accountants;

               (d) Notice of litigation. Promptly after the commencement of each
         such matter, notice of all actions, charges, orders or other directives
         affecting  any  Restaurant   that,  if  adversely   determined,   could
         materially  adversely  affect the  Purchased  Assets,  the  operations,
         business,  prospects  or  condition  (financial  or  otherwise)  of the
         Restaurants  or the  ability of Sellers  to perform  their  obligations
         hereunder;

               (e) General  Information.  Such other information  respecting the
         Purchased  Assets or the  operations,  business  prospects or condition
         (financial or otherwise) of the  Restaurants  as Buyer may from time to
         time reasonably request; and

               (f)  Operating  Budget.  Promptly,  and  simultaneous  with,  any
         provision  (whether voluntary or involuntary) of an operating budget to
         the Bankruptcy  Court or any lender,  Sellers shall also provide a copy
         of such operating budget to Buyer.

         Section  5.21     Cooperation.  Upon approval of this  Agreement by the
Bankruptcy Court,  Sellers will use their respective  Reasonable Best Efforts to
facilitate and cause the consummation of the transactions  contemplated  hereby;
and obtain from all  persons,  and take all other  actions  with respect to, all
consent or  approvals  required  on the part of such  party with  respect to the
consummation of those transactions.

                                       24
<PAGE>

         Section 5.22     Subsequent  Contracts. From the date of this Agreement
to the Closing Date, Sellers shall (a) include in any written agreements entered
into by Sellers relating in any way to the Restaurants  ("Subsequent Contracts")
a provision  permitting the assignment of any such Subsequent  Contract to Buyer
and providing that upon such assignment,  Buyer shall succeed to all of Sellers'
rights,  title and interests  thereunder subject to Buyer's assumption of all of
Sellers' duties, powers and obligations under such Subsequent Contract,  and (b)
ensure that no Subsequent  Contract  contains any provision which would limit in
any way the rights, title and interests of Sellers in the Purchased Assets.

         Section  5.23     Prorations  and Purchase  Price  Adjustment  Data. At
least 3 days  prior to the  Closing  Date,  Sellers  shall  deliver to Buyer all
information and documents  necessary for Buyer to review the itemized  statement
required under Section 2.2,  above,  regarding the prorations and Purchase Price
adjustments set forth in Section 8.2 below.

         Section 5.24     Continued  Compliance with Franchise Agreements. Until
the Closing,  Sellers shall continue to be bound by and to use their  Reasonable
Best  Efforts  to  comply  with  the  operational  provisions  of the  Franchise
Agreements in a manner reasonably  designed to maintain the current  operations,
provided  that the  foregoing  shall not  require  Sellers to cure any  defaults
existing  on  the  date  hereof  under  the  Franchise  Agreements,   except  as
specifically required by Sections 4.4(k) and 8.3(l) hereof.

         Section 5.25     Repairs and Replacements.

               (a) Initial Inspection:  Repairs and Replacements.  Sellers shall
         repair  or  replace  any  and  all  items  identified  on  the  Initial
         Inspection  List as not in good  working  order.  The  value or cost of
         repair or  replacement  of items  identified on the Initial  Inspection
         List not  repaired  or  replaced  within  three  (3) days  prior to the
         Closing Date shall be a  corresponding  reduction to the Purchase Price
         in accordance with Section 8.2.

               (b) Final Inspection: Repairs and Replacements.  Buyer shall have
         the right to conduct a Final  Inspection of each  Restaurant  location.
         The value or cost of repair or replacement  identified on Buyer's Final
         Inspection  List shall be a  corresponding  reduction  to the  Purchase
         Price in accordance with Section 8.2.

               (c) Valuation of Repairs and Replacements.  The value of a repair
         or replacement  identified on Buyer's Initial Inspection List and Final
         Inspection which is not repaired or replaced prior to Closing, shall be
         agreed to by Buyer and Sellers at or prior to Closing.

               (d) Dispute Procedure.  If the parties cannot agree to the amount
         of the  value or cost of a repair  or  replacement  (and  corresponding
         reduction  to the  Purchase  Price)  in  subsection  (a) or (b) of this
         Section,  (i) the amount that is agreed upon (the "Undisputed  Amount")
         shall be reduced from the Purchase Price, and (ii) the remaining amount
         (the  "Disputed  Amount") shall be a disputed claim against the General
         Escrowed  Amount  pursuant  to Section  8.1.  Resolution  of a Disputed
         Amount shall be settled in good faith and by mutual  agreement  between
         authorized  representatives,  one each from Buyer and Sellers  prior to
         thirty (30)  business  days after  Closing.  Any  determination  by the


                                       25
<PAGE>

         authorized  representatives  that all or a portion of a Disputed Amount
         is to be paid in favor of Buyer shall be a  corresponding  reduction of
         the  General  Escrowed  Amount  as set  forth in  Section  8.1.  If the
         authorized  representatives  cannot agree on a Disputed Amount, after a
         good faith  attempt  within the thirty  (30) days,  each party shall be
         charged with obtaining in good faith either a reasonable, bona fide bid
         for repair or a reasonable,  bona fide quote of replacement  costs,  as
         the case may be, and submitting  such bid (or quote) to the other party
         within  twenty (20)  business  days after the  initial  thirty (30) day
         period has  expired.  The  average of the two bids (or  quotes),  after
         subtracting the Undisputed Amount, will be the "Settlement Amount." The
         Settlement Amount, if positive, shall be paid to Buyer from the General
         Escrowed Amount.

                                   ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         As  an  inducement to Sellers  to  enter  into  this  Agreement  and to
consummate the transactions contemplated  hereby, Buyer  represents and warrants
to Sellers as follows:

         Section  6.1     Corporate  Existence.  Buyer is a corporation  validly
existing and in good standing  under the laws of the State of Delaware and as of
the Closing Date will be  qualified to do business and in good  standing in each
of the states where the Purchased Assets are located.

         Section 6.2     Corporate Power and Authority.  Buyer has all requisite
corporate power and authority to own its properties and assets,  and to carry on
the  business  in which it is now  engaged.  Buyer has the  corporate  power and
authority to purchase the Purchased Assets, take assignment of the Real Property
Leases and Assumed Contracts,  and perform the respective covenants of Buyer set
forth in this Agreement.

         Section   6.3     Execution  and  Delivery  Permitted.  The  execution,
delivery  and  performance  of this  Agreement  will not  violate or result in a
breach of any term of Buyer's  Certificate of  Incorporation or Bylaws or result
in a breach of or  constitute a default under any term in any agreement or other
instrument to which Buyer is a party,  such default  having not been  previously
waived by the other party to such  agreements,  or violate any law or any order,
rule or regulation  applicable to Buyer, of any court or of any regulatory body,
administrative agency or other governmental  instrumentality having jurisdiction
over Buyer or its  properties,  or result in the creation or  imposition  of any
mortgage,  lien, charge, or encumbrance of any nature whatsoever upon any of the
Purchased Assets purchased by Buyer  hereunder.  Buyer's Board of Directors,  or
authorized  committees  thereof,  has taken all action  required by law,  and by
Buyer's  Certificate of  Incorporation,  Bylaws,  and otherwise to authorize the
purchase of the Purchased  Assets in accordance with this  Agreement.  Except as
set forth on Schedule  6.3,  the  execution,  delivery and  performance  of this
Agreement  and the other  agreements  executed in connection  herewith,  and the
consummation of the transactions  contemplated hereby and thereby do not require
any filing  with,  notice to or consent,  waiver or approval of any third party,
including but not limited to, any governmental body or entity.

         Section  6.4     Adequate  Assurances Regarding Executory Contracts. As
of the  Bankruptcy  Court hearing on approval of entry of the Sale Order,  Buyer
will be capable of satisfying the conditions contained in sections  365(b)(1)(c)
and (f) of the  Bankruptcy  Code with respect to the Assumed  Contracts and Real
Property Leases.

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<PAGE>

         Section  6.5     Availability of Funds, etc. Buyer will at Closing have
available  funds  sufficient  to allow  it to pay its  obligations  pursuant  to
Section  2.1 at the times and in the  manner  set  forth in this  Agreement.  In
furtherance  and not in limitation of the  foregoing,  Buyer hereby  represents,
covenants  and agrees that as of the date  hereof and through the Closing  Date:
(i) it has and will maintain cash, cash equivalents and availability under lines
of credit in an amount  greater than the  Purchase  Price (free and clear of any
liens and restrictions) and such funds or the applicable portion thereof will be
available  (free  and clear of any liens or  restrictions)  to pay the  Purchase
Price on the Closing Date and (ii) its net worth (i.e., the fair value of all of
Buyer's assets minus all its  liabilities)  is and will be at least $35 million.
Buyer  acknowledges  and  agrees  that  Sellers  are  relying  on the  foregoing
representation   and  covenant  in  connection  with  their  execution  of  this
Agreement.

                                  ARTICLE VII
                               COVENANTS OF BUYER

         Section 7.1     Buyer Performance. Buyer hereby covenants and agrees to
accept  conveyance of the Purchased  Assets and  assignment of the Real Property
Leases,  and to assume and perform the  obligations of Sellers under the Assumed
Contracts after the Closing Date.

         Section  7.2     Confidentiality.  Buyer shall maintain all information
gained  from  Sellers in  connection  with its  evaluation  of the  transactions
contemplated  by this  Agreement  (the  "Confidential  Information")  in  strict
confidence,  and shall take all  precautions  necessary  to prevent  disclosure,
access to, or transmission of the Confidential Information, or any part thereof,
to any third party, except for the exclusive purpose of evaluating the Purchased
Assets and the business of Sellers.  In the event the Closing does not occur for
any reason,  Buyer shall,  immediately upon Sellers' request,  return all copies
and  recordings of the  Confidential  Information in its possession or under its
control and delete all records thereof in any data storage system  maintained by
or for Buyer.

         Section  7.3     Sellers'  Employees.  Buyer shall offer  employment to
such  Restaurant  employees as Buyer may  determine,  upon terms and  conditions
substantially  equivalent to those  provided by Sellers prior to the  Bankruptcy
Proceeding of which Buyer has been informed in writing and, with respect to each
of the Retained Employees, Buyer shall grant an immediate right of participation
under Buyer's employee pension,  health and welfare benefit plans, as such terms
are defined in Sections 3(1) and (2) of ERISA,  for purposes of  eligibility  to
participate  under  such plans for all such  Retained  Employee's  service  with
Sellers.  In  addition,  Buyer  will  provide  vacation  and other paid time off
benefits to each Retained Employee equal to the amount accrued for such employee
included in the accrual amount provided for in Section 8.2(a)(v).

         Section  7.4     Cooperation.  Upon  approval of this  Agreement by the
Bankruptcy Court,  Buyer will use its Reasonable Best Efforts to: (a) facilitate
and cause the consummation of the transactions  contemplated  hereby; (b) obtain
from all  persons,  and take all other  actions  with respect to, all consent or
approvals required on the part of such party with respect to the consummation of
those  transactions;  and (c)  encourage  Sellers'  trade  creditors to continue
providing  goods and  services  to the  Sellers  after the  commencement  of the
Bankruptcy  Proceedings,  provided Sellers are paying such creditors  consistent
with the terms of Section 5.6 of this Agreement.

                                       27
<PAGE>

         Section 7.5     Liquor Licenses. Buyer will not submit any applications
for liquor  licenses  prior to the  issuance of the Sale  Procedures  Order.  In
addition,  Buyer will promptly  withdraw any  applications  for liquor  licenses
submitted with respect to any of the  Restaurants  after the date this Agreement
is signed in the event the Bankruptcy  Court enters an order  approving a bidder
other than Buyer or requiring such withdrawal.  Notwithstanding  anything to the
contrary  contained  herein,  no transfer of any liquor  license held by Sellers
shall occur prior to the Closing.

         Section  7.6     Broker's  Fees. Buyer shall indemnify and hold Sellers
harmless in respect to any claim for brokerage or finder's  fees or  commissions
with respect to the transactions  contemplated herein by anyone claiming to have
acted on behalf of Buyer.

                                  ARTICLE VIII
                  ESCROWED AMOUNTS; PURCHASE PRICE ADJUSTMENTS;
                              CONDITIONS TO CLOSING

         Section  8.1     Escrowed  Amounts. At Closing,  Buyer shall deliver to
the Escrow  Agent,  pursuant to an Escrow  Agreement  substantially  in the form
attached  hereto  as  Exhibit  8.1,  the sum of 95% of the  face  amount  of all
outstanding,  untendered gift certificates issued by Sellers through the Closing
(the "Gift Certificate  Escrowed Amount") and (ii) Five Hundred Thousand Dollars
($500,000) (the "General Escrowed Amount").  Claims against the General Escrowed
Amount shall be limited to claims made by Buyer under  Sections 1.1, 4.6 through
4.9, 4.12, 4.13, 4.14, 4.17, 4.21, Article V, and Section 8.2(a).

               (a) Escrowed Amounts Dispute Procedures. Any disputes between the
         parties  with  regard  to the Gift  Certificate  Escrowed  Amount,  the
         General  Escrowed Amount or the Deposit shall be resolved in accordance
         with the dispute procedures set forth in the Escrow Agreement.

         Section  8.2     Purchase Price  Adjustments/Gift  Certificate True-Up.
The items  listed  below shall be prorated  between  Buyer and Sellers as of the
Closing Date, or paid by one party on or after the Closing Date, in each case as
set forth below, and shall constitute an adjustment to the Purchase Price.

               (a) The Purchase Price will be reduced,  without duplication,  by
         the following:

                   (i) The face amount of any gift  certificates  redeemed prior
               to 12  months  after  Closing  and  paid to  Buyer  from the Gift
               Certificate Escrowed Amount (any such redemption will be deducted
               from  the  Gift  Certificate  Escrowed  Amount  and  any  amounts
               remaining  in the Gift  Certificate  Escrow  after  such 12 month
               period  will be paid to Sellers or at and in favor of Lehman,  up
               to the  extent of the  amount of the  Sellers'  then  outstanding
               indebtedness to Lehman);

                                       28
<PAGE>

                   (ii) The amount of any claim  against  the  General  Escrowed
               Amount made within 120 days after  Closing that is  determined to
               be a resolved  claim (any amounts above all resolved  claims paid
               from and the  amount of all  claims  still  pending  against  the
               General  Escrowed Amount remaining after such 120 day period will
               be paid to Sellers or at and in favor of Lehman, up to the extent
               of the amount of the Sellers' then  outstanding  indebtedness  to
               Lehman);

                   (iii)  The  value or cost of any  Undisputed  Amount  for the
               repair or replacement of items  identified on (a) Buyer's Initial
               Inspection  List not  repaired or replaced  within three (3) days
               prior to of the Closing Date, and (b) Buyer's Final Inspection;

                   (iv) The amount of the Apportioned  Obligations (as hereafter
               defined),  if any, for which Sellers are responsible  pursuant to
               the proration provisions of Section 8.2(e) below;

                   (v) The  value  of all  vacation  and  other  paid  time  off
               benefits,  accrued in accordance with Sellers'  standard  policy,
               and unused as of the Closing, of all Retained Employees of Seller
               who are hired by Buyer;

                   (vi) Any and all  outstanding  sums  due and  owing as of the
               Closing Date pursuant to Section 5.4;

                   (vii) Any and all of Sellers'  portion of the shared costs as
               set forth in Section 9.4(c), not previously paid by Sellers;

                   (viii) Any Cure Amount under the Assumed  Contracts  not paid
               by Sellers prior to the Closing; and

                   (ix) Any Gift  Certificate  True-Up  amount  owed to Buyer or
               other franchisees of Buyer by Sellers as calculated in accordance
               with subsection (d) hereof.

               (b) The Purchase Price will be increased by the following:

                   (i) All rentals or other amounts paid by Sellers with respect
               to the Real  Property  Leases  which  apply to  periods  past the
               Closing Date,  including  prepaid rentals,  percentage rents, and
               common area maintenance charges;

                   (ii) All prepaid  insurance  premiums on  insurance  policies
               covering  the  Purchased  Assets and  regarding  welfare  benefit
               programs,  but only if Buyer elects to have said coverage  remain
               in effect;

                   (iii) Any Gift Certificate  True-Up amount owed to Sellers by
               Buyer as calculated in accordance with subsection (d) hereof;

                   (iv) Any amounts  paid by Sellers with respect to the Assumed
               Contracts for services extending beyond the Closing Date;

                                       29
<PAGE>

                   (v) Any prepaid expenses including deposits,  associated with
               the  operation of a Restaurant  which were paid by Sellers in the
               ordinary course of business, including, without limitation, items
               such as deposits,  service contracts,  telephone  expenses,  real
               estate  taxes and utility  charges,  but only to the extent Buyer
               receives the benefit of such item after Closing; and

                   (vi) The amount of the Apportioned  Obligations,  if any, for
               which Buyer is responsible  pursuant to the proration  provisions
               of Section 8.2(e) below.

               (c) In  addition  to the  above,  the  Purchase  Price  shall  be
         increased for any petty cash amounts in excess of $1,000 per Restaurant
         by the  amount  of the  total of the  excess  and,  alternatively,  the
         Purchase  Price shall be decreased for any petty cash amounts less than
         $1,000 per  Restaurant  by the amount of the shortfall at the Effective
         Time.

               (d) In addition to the above,  at the Closing the Purchase  Price
         will  be  adjusted  upward  or  downward,  as  applicable,  by the  net
         difference  between (i) any  amounts  owed by Sellers to Buyer or other
         franchisees  of Buyer  for gift  certificates  issued  by  Sellers  and
         redeemed at other franchisee or Buyer  restaurants and (ii) any amounts
         due to  Sellers  from  Buyer or  other  franchisees  of Buyer  for gift
         certificates  issued by Buyer or such other franchisees and redeemed at
         the  Restaurants  (a  "Gift  Certificate  True-Up"),   for  redemptions
         occurring  through the end of the month prior to the month in which the
         Closing occurs. The preceding adjustment amount shall be calculated and
         presented by Sellers to Buyer at Closing.  Further,  within twenty (20)
         business days following the Closing a Gift  Certificate  True-Up Amount
         shall be  calculated  and  presented  by  Sellers to Buyer for the time
         period from the month's end prior to Closing  through the Closing Date,
         and Buyer or Sellers,  as applicable,  will pay to the other the amount
         shown due by such calculation  within twenty (20) business days, unless
         otherwise disputed in accordance with this Section 8.2(d).  Buyer shall
         have twenty (20) business  days after receipt of such Gift  Certificate
         True-Up  Amount to provide  written  notice to Sellers that it disputes
         such Gift Certificate  True-Up Amount.  Buyer and Sellers shall attempt
         to resolve  the  dispute in good faith and by mutual  agreement  within
         twenty  (20)  business  days of Sellers'  receipt of Buyer's  notice of
         dispute. If the parties cannot resolve the dispute,  after a good faith
         attempt,  within the twenty (20) business days, the parties will submit
         the  dispute  to  the  Bankruptcy  Court,  which  shall  make  a  final
         determination  with respect to such  dispute.  The  Bankruptcy  Court's
         decision will be conclusive and binding on the parties. Each party will
         bear its own costs in connection with any such dispute.

               (e) All ad valorem, real and personal property taxes, general and
         special  assessments,  and any other  property  taxes on the  Purchased
         Assets for a taxable  period  that  includes  (but does not end on) the
         date  preceding  the  Closing  Date  (collectively,   the  "Apportioned
         Obligations"),  shall be apportioned between Sellers and Buyer based on
         (x) the number of days of such  taxable  period up to the Closing  Date
         (with respect to any such taxable period, the "Pre-Closing Tax Period")
         and (y) the number of days of such taxable  period  including and after
         the  Closing  Date  (with  respect  to any  such  taxable  period,  the


                                       30
<PAGE>

         "Post-Closing   Tax   Period").   Sellers   shall  be  liable  for  the
         proportionate  amount  of  such  taxes  that  is  attributable  to  the
         Pre-Closing Tax Period, and Buyer shall be liable for the proportionate
         amount of such  taxes  that is  attributable  to the  Post-Closing  Tax
         Period.  The  aggregate  amount  of  Apportioned  Obligations  shall be
         calculated by Sellers and presented to Buyer prior to or on the Closing
         Date,  as provided  in Section  2.2 hereof.  If the amounts of any such
         Apportioned Obligation for such periods is not determinable at Closing,
         then such Apportioned  Obligation shall be prorated on the basis of the
         tax for the corresponding period in the immediately  preceding tax year
         and if, within 120 days after Closing the actual tax  assessment (i) is
         determined and (ii) is different  from the amount in the  corresponding
         period in the  immediately  preceding tax year, the  appropriate  party
         shall pay such difference to the other party.

         Section 8.3    Buyer's Conditions to Closing. The obligations  of Buyer
hereunder are subject to satisfaction of each of the following  conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:

               (a)  All  representations  and  warranties  of  Sellers  in  this
         Agreement  shall  be true  in all  material  respects  on and as of the
         Closing as if made as of the Closing,  and Sellers shall have delivered
         to Buyer a certificate to such effect dated as of the Closing Date;

               (b) The Purchased Assets,  taken as a whole,  shall not have been
         substantially  damaged  as a  result  of fire,  explosion,  earthquake,
         disaster,  accident,  any  action  by the  United  States  or any other
         governmental  authority,  earthquake,  flood, drought,  embargo,  riot,
         civil disturbance,  uprising,  activity of armed forces, act of God, or
         public enemies;

               (c) There shall be no material  adverse  change in the  Purchased
         Assets,  taken as a whole,  or the  operations  of Sellers,  taken as a
         whole, at the Restaurants from the date hereof to the Closing Date;

               (d) Each Seller shall have performed and complied in all material
         respects with all of its covenants and obligations under this Agreement
         which are to be performed  or complied  with by such Seller prior to or
         on the Closing Date;

               (e) Sellers shall be willing and able to deliver all of the items
         required  to be  delivered  by them  pursuant  to  Section  3.2 of this
         Agreement;

               (f) Buyer and Buyer's  counsel and Lehman and  Lehman's  counsel,
         shall have approved the form and  substance of the documents  delivered
         by  Sellers  pursuant  to  this  Agreement,  such  approval  not  to be
         unreasonably withheld;

               (g) Sellers shall have terminated the employment of all employees
         as described in Section 5.5;

               (h) Buyer shall have  obtained,  either from  Sellers or directly
         from the issuing  authority,  all permits,  licenses,  including liquor
         licenses,  and  approvals of all  governmental  and  quasi-governmental
         authorities  necessary for the operation of the Restaurants as intended
         by Buyer;  provided,  however,  that if Buyer is unable to obtain  from
         local  municipal  or county  authorities  a permit  necessary  for such
         operation of the  Restaurants,  and Buyer  reasonably  believes that it
         will be able to  obtain  such a permit  within  two (2)  months  of the
         Closing Date, Closing of the transactions  contemplated  hereunder will
         not be  delayed  if Sellers  deliver  to Buyer a duly  executed  Liquor
         Service  and  Operating  Agreement  as  reasonably  agreed to among the
         parties;

                                       31
<PAGE>

               (i)  There  shall  be no  claims,  actions  or suits  pending  or
         threatened by any  governmental  agency that would restrict or prohibit
         the consummation of the transactions contemplated herein;

               (j) Sellers  shall have paid all  outstanding  trade  payables as
         provided  for  in  Section  5.4  incurred  during  Sellers'  Bankruptcy
         Proceeding  (as  described  in  Section  1.4) in a  timely  manner  or,
         alternatively,  as soon as  practicable,  as agreed  to by the  parties
         hereto, after the Closing Date;

               (k) All  obligations  of Sellers to Retained  Employees as of the
         Closing Date shall be paid through  Closing (other than unused vacation
         and other paid time off the value of which has been  accrued by Sellers
         and  offset  against  the  Purchase  Price  under  Section  8.2(a)(v)),
         including salaries, benefits and any other such compensation, except to
         the extent  Sellers are not  obligated  to pay such  amounts  under the
         Bankruptcy Code, or such amounts are modified, by the Bankruptcy Court;

               (l) Sellers  shall have paid any and all  royalties,  advertising
         fees and  finance  charges  required  to be paid  under  the  Franchise
         Agreements  for the month of June by July 12,  2002 and shall have paid
         all such amounts accruing thereafter on a timely basis up and until the
         Closing Date;

               (m) Sellers shall have  satisfied all  obligations  under Section
         5.19; and

               (n)  The   Bankruptcy   Court   shall   have   issued   a  final,
         nonappealable, unstayed, Sale Order.

         Section  8.4     Sellers'  Conditions to Closing.  The  obligations  of
Sellers  hereunder  are  subject  to  satisfaction  of  each  of  the  following
conditions at or before  Closing,  the occurrence of which may, at the option of
Sellers, be waived:

               (a) All representations and warranties of Buyer in this Agreement
         shall be true on and as of the Closing in all  material  respects,  and
         Buyer  shall have  delivered  to Sellers a  certificate  to such effect
         dated as of the Closing Date;

               (b) Buyer  shall have  performed  and  complied  in all  material
         respects with all of its obligations  under this Agreement which are to
         be performed or complied with by Buyer prior to or on the Closing Date;

               (c) Buyer shall be willing and able to deliver the Purchase Price
         and all of the  documents  required to be delivered by it under Section
         3.3 of this Agreement;

               (d) Sellers  shall have  approved  the form and  substance of the
         documents delivered by Buyer pursuant to this Agreement; and

                                       32
<PAGE>

               (e)  The   Bankruptcy   Court   shall   have   issued   a  final,
         nonappealable, unstayed, Sale Order.

                                   ARTICLE IX
                                  MISCELLANEOUS

         Section  9.1     Notices. Except as otherwise  expressly  provided, all
notices, consents, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered  personally,
sent by facsimile  transmission with confirmation of receipt, sent by commercial
overnight  delivery  service with confirmed  receipt,  or sent by certified U.S.
mail,  return receipt  requested,  with first class postage prepaid,  and in all
cases, addressed as follows:

               (a)   If to Seller:       Apple Capitol Group, LLC
                                         490 Sawgrass Parkway
                                         Suite 330
                                         Sunrise, Florida  33325
                                         Attn:  Jay Gillespie
                                         Fax:  (954) 835-1577
                                         Phone:  (954) 851-9494

                     With copies to:     Akerman, Senterfitt & Edison, P.A.
                                         350 East Las Olas Boulevard
                                         Suite 1600
                                         Fort Lauderdale, Florida  33301
                                         Attn:  David Peck
                                         Fax:  (954) 463-2224
                                         Phone:  (954) 463-2700

                                         Krass Monroe, P.A.
                                         1650 West 82nd Street
                                         Southpoint Office Center, Suite 1100
                                         Bloomington, Minnesota 55431
                                         Attn:  John Berg
                                         Fax:  (952) 885-5969
                                         Phone: (952) 885-5965

                                         Lehman, at the address set forth below.

               (b)   If to Buyer:        Applebee's International, Inc.
                                         4551 West 107th St., Suite 100
                                         Overland Park, KS  66207
                                         Attention:  Robert T. Steinkamp
                                         Fax:  (913) 341-1696
                                         Phone:  (913) 967-4038

                                       33
<PAGE>

                     With a copy to:     James M. Ash, Esq.
                                         Blackwell Sanders Peper Martin LLP
                                         2300 Main Street, Suite 1100
                                         Kansas City, MO  64108
                                         Fax:  (816) 983-9137
                                         Phone:  (816) 983-8317

               (c)   If to Lehman:       Lehman Brothers Holdings, Inc.
                                         745 Seventh Avenue, 7th Floor
                                         New York, New York 10019
                                         Attn:  George Janes and Hal Hayward
                                         Fax:  (646) 758-2115
                                         Phone:  (212) 526-5129

                     With a copy to:     Jeffrey L. Schwartz, Esq.
                                         Hahn & Hessen LLP
                                         350 Fifth Avenue
                                         New York, New York 10118-0075
                                         Fax:  (212) 594-7167
                                         Phone:  (212) 946-0221

or to such  other  address as Buyer or Sellers  shall  have last  designated  by
notice to the other parties.

         Section  9.2     Applicable  Law. This Agreement  shall be governed by,
and construed and enforced in accordance with, the internal laws of the State of
New York.

         Section  9.3     Binding on Successors;  Assignment.  All of the terms,
provisions  and  conditions  of this  Agreement  shall be binding upon and shall
inure to the benefit of the parties hereto, their respective successors, assigns
and legal representatives. Buyer may assign this Agreement and any or all of its
rights or obligations as described in Section 3.5, above. Sellers shall have the
right to assign all or a portion of their  rights to  receive  payments  due and
owing  pursuant to the terms of this  Agreement,  but no such  assignment  shall
relieve  Sellers of their  obligations  hereunder  and any such  assignee  shall
receive  such  assignment  subject  to all claims  and  defenses  Buyer may have
against Sellers.

         Section 9.4     Payment of Costs; Post-Closing Payments.

               (a) Sellers'  Costs.  In addition to all other matters payable by
         Sellers hereunder, Sellers shall pay:

                   (1) All of Sellers' legal expenses;

                   (2) All other  costs and  expenses  incurred  by  Sellers  in
               negotiating  this Agreement and in consummating  the transactions
               contemplated   hereby,   including  any  costs   associated  with
               obtaining any consent,  waiver or approval shown on Schedule 4.3,
               and fees or commissions payable to any party representing Sellers
               in connection  with arranging or  negotiating  this Agreement and
               the   transactions   contemplated   hereby,   including   without
               limitation all investment banker or financial advisor fees;

                                       34
<PAGE>

                   (3) The costs  required  for  Sellers to perform any of their
               covenants under Article V, hereof; and

                   (4) Its portion of the costs  identified in subsection (c) of
               this Section.

               (b) Buyer  Costs.  In  addition to all other  matters  payable by
         Buyer hereunder, Buyer shall pay:

                   (1) All of Buyer's legal expenses;

                   (2) The cost of any environmental  investigations required by
               Buyer with respect to the Real Property;

                   (3) Its portion of the costs  identified in subsection (c) of
               this Section; and

                   (4) All  other  costs  and  expenses  incurred  by  Buyer  in
               negotiating  this Agreement and in consummating  the transactions
               contemplated hereby, including any fees or commissions payable to
               any party  representing  Buyer in  connection  with  arranging or
               negotiating  this  Agreement  and the  transactions  contemplated
               hereby,  including  without  limitation all investment  banker or
               financial advisor fees.

               (c) Shared Costs.  Buyer and Sellers,  by way of an adjustment to
         the Purchase  Price,  shall  equally pay the  following  costs up to an
         amount equal to $250,000 (up to $125,000 by each of Sellers and Buyer),
         with any amount hereunder in excess of $250,000 to be paid by Buyer:

                   (1) All fees,  costs and expenses  incurred in recording  all
               real estate documents  related to the  transactions  contemplated
               hereby;

                   (2) The  cost of  surveys,  the  cost of the  commitments  to
               provide and the costs of  obtaining  title  insurance on the Real
               Property for benefit of Buyer,  with endorsements for surveys and
               mechanics'  lien,  except  for  costs  related  to  extraordinary
               endorsements required by Buyer's lenders; and

                   (3) All sales, use or transfer taxes or fees arising from the
               transactions contemplated hereby arising under state law.

         Section 9.5     Closing Not to Prejudice Claim for Damages.  Closing of
the  transactions  contemplated  by this Agreement shall not prejudice any claim
for damages which any party may have  hereunder,  in law or in equity,  due to a

                                       35
<PAGE>


material  default in observance in the due and timely  performance of any of the
covenants and agreements  herein  contained or for the breach of any warranty or
representation  hereunder,  unless such observance,  performance,  warranty,  or
representation is specifically waived in writing by the party making such claim.

         Section 9.6     Additional  Documents. After Closing, each party agrees
to  furnish  such  additional   documents  as  are  necessary  to  complete  the
transactions contemplated hereby.

         Section  9.7     Time is of the Essence.  Time is of the essence in the
performance of the obligations of the parties hereunder.

         Section  9.8     Interpretation.  The  title  of the  sections  of this
Agreement are for convenience of reference only, and are not to be considered in
construing this Agreement.  Whenever  required by the context of this Agreement,
the  singular  shall  include  the plural and the  masculine  shall  include the
feminine and vice versa.

         Section  9.9     Entire  Agreement.  This  Agreement,  the Exhibits and
Schedules,  attached hereto and incorporated  herein by this reference,  and the
Sale Order and Sale Motion  contain the entire  Agreement of the parties  hereto
with respect to the transactions  contemplated  hereby and supersede any and all
prior  agreements,  arrangements,  and  understandings  between the parties with
respect  to such  transaction.  No  inducements  contrary  to the  terms of this
Agreement  exist.  No  waiver  of any  term,  provision,  or  condition  of this
Agreement,  whether by conduct or otherwise,  in any one or more instances shall
be deemed to be  construed as a further or  continuing  waiver of any such term,
provision  or  condition  or any other  term,  provision  or  condition  of this
Agreement.  This Agreement may not be modified orally and may only be amended in
a writing executed by all parties hereto.

         Section 9.10     Counterparts. This Agreement may be executed in one or
more counterparts which in the aggregate shall comprise one Agreement.

         Section 9.11     Termination.

               (a) This  Agreement  may be  terminated  prior to the  Closing as
         follows:

                   (i) At any time by the mutual consent of Sellers and Buyer;

                   (ii) by either Buyer or Sellers,  upon written  notice in the
               event of a material breach of any  representation  or warranty of
               the other party  contained  in this  Agreement or any covenant or
               agreement to be performed or complied with by such party pursuant
               to  the  terms  of  this  Agreement  ("Material  Breach"),  which
               Material  Breach  remains  uncured  for a period of ten (10) days
               following   notice   thereof  to  the  breaching   party  by  the
               non-breaching  party and would  result in a condition  to Closing
               set forth in Sections 8.3 or 8.4 hereof,  as the case may be, not
               being  satisfied  on or before  November 30, 2002 (the "Drop Dead
               Date"),  which  condition  has not been  waived in writing by the
               non-breaching party; provided, however, that Buyer or Sellers, as
               the  case  may be,  may not  elect to  terminate  this  Agreement
               pursuant to this Section  9.11(a)(ii) if the terminating party is
               itself in Material Breach;

                                       36
<PAGE>

                   (iii) by either  Buyer or  Sellers if the  Closing  shall not
               have occurred on or before the Drop Dead Date, unless the failure
               of the  Closing to occur by such date shall have been as a result
               of the Material  Breach by a party hereto,  in which case Section
               9.11(a)(ii)  shall apply;  provided  further,  however,  that the
               right to terminate this Agreement under this Section 9.11(a)(iii)
               shall not be available to any party whose  failure to fulfill any
               obligation  under this Agreement shall have been the cause of, or
               shall have resulted in, the failure of the Closing to occur on or
               prior to such date; or

                   (iv) By  either  Buyer  or  Sellers  if  Sellers  shall  have
               accepted  or  selected,  and  the  Bankruptcy  Court  shall  have
               approved,  the bid or bids of any  bidder  other  than  Buyer  to
               purchase all or any portion of the Purchased  Assets  (whether or
               not any transaction contemplated by any such bid or bids shall be
               consummated).

               (b) In the event of the termination of this Agreement pursuant to
         subparagraph 9.11 (a) (ii) above because of a Material Breach committed
         willingly or in bad faith by Sellers or Buyer,  as the case may be, the
         other party shall be entitled to pursue,  exercise, and enforce any and
         all remedies,  rights, powers, and privileges available to it at law or
         in equity.  In  addition to and not in lieu of the  foregoing,  Sellers
         shall be  entitled  to receive  the  Deposit  out of escrow only in the
         event of the  termination  of this  Agreement  by Sellers  pursuant  to
         Section 9.11(a)(ii) by reason of (i) Buyer's failure (caused by Buyer's
         bad  faith) to  satisfy  Sections  8.4(a),  (b) or (c) or (ii)  Buyer's
         failure to consummate  the Closing on the Closing Date  notwithstanding
         the satisfaction of Buyer's closing  conditions in Section 8.3 or where
         all conditions in Section 8.3 are satisfied  other than Sections 8.3(f)
         or (h) and if the failure of such  conditions  to be satisfied  results
         from  the bad  faith  of  Buyer.  Upon any  other  termination  of this
         Agreement Buyer shall be entitled to receive the Deposit out of escrow.

         Section   9.12     Sellers'   Representative.    Each   Seller   hereby
irrevocably   appoints   Apple   Capitol   Group  as  its   representative   and
attorney-in-fact  to act for and on its behalf,  with full power and  authority,
including power of substitution,  to execute and deliver any and all agreements,
waivers,  compromises,  settlements  and claims arising out of or related to the
terms and provisions of this Agreement.

                   Remainder of Page Left Intentionally Blank


                                       37
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month, and year first above written.

                                  BUYER:

                                  APPLEBEE'S INTERNATIONAL, INC.,
                                  a Delaware corporation


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



                                  SELLERS:

                                  APPLE CAPITOL GROUP, LLC, a Florida limited
                                  liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



                                  APPLE PRINCE GEORGES MARYLAND GROUP, LLC,
                                  a Florida limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE WASHINGTON MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                       38
<PAGE>

                                  APPLE ST. MARYS MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE CALVERT MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE CHARLES MD GROUP, LLC, a Maryland
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  BERKELEY WVA, LLC, a West Virginia limited
                                  liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



                                       39
<PAGE>



                         LIST OF EXHIBITS AND SCHEDULES

Exhibit
1.1                        Restaurants
1.1(a)                     Franchise Agreements
1.3                        Sale Order
2.1(a)(i)                  Bidding Procedures Motion
2.1(a)(ii)                 Allocation of Purchase Price
3.2(e)                     Release and Waiver
5.9                        Sale Motion
8.1                        Escrow Agreement

Schedules
1.1                        Certain Definitions
1.1(h)                     Transferred Licenses
1.2                        Excluded Assets
2.1(b)                     12-Month EBITDA and Adjustment
4.1                        Sellers' Jurisdictions
4.3                        Consents
4.4(a)                     Owned Real Property
4.4(b)                     Leased Real Property
4.4(c)                     Real Property Leases
4.4(d)                     Fixed Asset Data
4.4(e)                     Equipment Liens
4.4(f)                     Equipment Leases
4.4(g)                     Loan Agreements, Indentures, Mortgages, Etc.
4.4(h)                     Contracts
4.4(i)                     Affiliate Contracts
4.4(j)                     Assumed Contracts
4.6(i)                     Condition of Purchased Assets
4.6(a)                     Initial Inspection List
4.7                        Nontransferable Permits
4.12(a)                    Pending Claims and Litigation
4.12(b)                    Citations, Warnings and Reprimands
4.12(c)                    Food Items
4.13                       Taxes
4.14                       Events of Default
4.16(b)                    Employee List
4.17(a)                    Employee Benefit Plans
4.18                       Licenses and Permits
4.19                       Insurance Coverage
4.23                       Affiliated Transactions
4.24                       Subsidiaries
4.26                       Financial Statements
4.27                       Master Inspection List

                                       40
<PAGE>

Schedules
5.6                        Operating Budget
5.6(a)(i)                  Advertising Activities
5.6(a)(ii)                 Maintenance Capital Expenditure Budget
5.6(b)(ii)                 Compensation Matters
6.3                        Buyer Consents


                                       41
<PAGE>


                                 Exhibit 1.1(a)
                              Franchise Agreements
<TABLE>
<CAPTION>

------------------------------------ ----------------------------------------------- -----------------------
            DOCUMENT *                                  LOCATION                              DATE
------------------------------------ ----------------------------------------------- -----------------------
<S>                                 <C>                                                    <C>
Franchise Agreement                  14441 Brookfield Tower Drive                           05/03/99
                                     Chantilly, VA 22021

Franchise Agreement                  12970 Fair Lakes Shopping Center                       05/03/99
                                     Fairfax, VA 22033

Franchise Agreement                  6310 Richmond Highway                                  05/03/99
                                     Alexandria, VA 22306

Franchise Agreement                  4100 N.W. Crain Highway                                05/03/99
                                     Bowie, MD 20716

Franchise Agreement                  3610 Crain Highway                                     05/03/99
                                     Waldorf, MD 20611

Franchise Agreement                  755 Foxcroft Drive                                     05/03/99
                                     Martinsburg, WV 25401

Franchise Agreement                  13850 Noblewood Plaza                                  05/03/99
                                     Woodbridge, VA 22193

Franchise Agreement                  45480 Miramar Way                                      05/03/99
                                     California, MD 20619

Franchise Agreement                  1050 Wayne Avenue                                      05/03/99
                                     Chambersburg, PA 17201

Franchise Agreement                  1481 Wesel Boulevard                                   (CLOSED)
                                     Hagerstown, MD 21740

Franchise Agreement                  5613 Spectrum Drive                                    05/03/99
                                     Frederick, MD 21703

Franchise Agreement                  7272 Baltimore Avenue                                  05/03/99
                                     College Park, MD 20740

Franchise Agreement                  2851 Plank Road                                        05/03/99
                                     Fredericksburg, VA 22404

Franchise Agreement                  1000 Largo Center Drive                                05/03/99
                                     Largo, MD 20772

Franchise Agreement                  127 E. Broad Street                                    05/03/99
                                     Falls Church, VA 22046

Franchise Agreement                  21048 Frederick Road                                   05/03/99
                                     Germantown, MD 20876

Franchise Agreement                  45979 Denizen Plaza                                    05/03/99
                                     Sterling, VA 20165

Franchise Agreement                  791 N. Dual Highway                                    05/03/99
                                     Seaford, DE 19973

Franchise Agreement                  105 West Lee Highway                                   05/03/99
                                     Warrenton, VA 20186

Franchise Agreement                  555 N. Solomons Island Road                            05/03/99
                                     Prince Frederick, MD 20678

Franchise Agreement                  1270 Ocean Outlet                                      05/03/99
                                     Rehoboth Beach, DE 19971

Franchise Agreement                  3447 Donnell Drive                                     05/03/99
                                     Forestville, MD 20747

</TABLE>


* Each document specified includes the original document plus all amendments or
addendums thereto.



<PAGE>




                               Exhibit 2.1(a)(ii)
                          Allocation of Purchase Price


Lehman Tranche #1                                      $6,570,048

Lehman Tranche #2                                       7,484,862

Lehman Tranche #3                                       6,521,170

Lehman Tranche #4                                       4,857,882

Lehman Tranche #5                                       7,316,038
                                                      ------------

                           Total                      $32,750,000*





* Total and individual Tranche allocations are subject to change as a result of
purchase price adjustments in accordance with the Agreement.






<PAGE>


                                 Exhibit 3.2(e)

                               RELEASE AND WAIVER

         THIS RELEASE AND WAIVER (the  "Release") is entered into this __ day of
______, 2002, by and among Apple Capitol Group, LLC, a Florida limited liability
company,  Apple Prince Georges Maryland Group,  LLC, a Florida limited liability
company,  Apple Washington MD Group, LLC, a Florida limited  liability  company,
Apple St.  Marys MD Group,  LLC,  a Florida  limited  liability  company,  Apple
Calvert MD Group,  LLC, a Florida limited  liability  company,  Apple Charles MD
Group, LLC, a Maryland limited liability company,  and Berkeley WVA, LLC, a West
Virginia limited liability  company  (collectively,  "Sellers"),  and Applebee's
International, Inc., a Delaware corporation ("Buyer");

         WHEREAS,  Buyer and Sellers  have  entered  into a number of  Franchise
Agreements  as listed on Schedule I  (collectively  and as amended  from time to
time, the "Franchise Agreements"),  relating to the development and operation of
certain Applebee's Neighborhood Grill & Bar restaurants (the "Restaurants"); and

         WHEREAS,  Buyer and Sellers have executed  that certain Asset  Purchase
Agreement dated as of July 16, 2002, (the "Acquisition Agreement"),  pursuant to
which Sellers shall sell to Buyer,  and Buyer shall purchase from Sellers all of
the Purchased Assets;

         WHEREAS,  in  connection  with the  Acquisition  Agreement,  Buyer  and
Sellers  are  willing  to release  each  other  from any  claims or  obligations
relating to the Franchise Agreements, as set forth herein.

         NOW,  THEREFORE,  in  consideration of the foregoing and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, the parties hereby agree as follows:

         1. Release.

               a.  Buyer,  on behalf of itself,  its  affiliates,  predecessors,
               successors  and  assigns,   hereby  fully  releases  and  forever
               discharges   Sellers  and  their  officers,   agents,   advisors,
               employees, predecessors, successors and assigns (other than Bruce
               Frazey,  Jason Kirschner,  Andy Typaldos and any person or entity
               affiliated  with these three (3)  individuals  other than Sellers
               (the  Nonreleased  Parties)),  of and from any and all liability,
               actions, claims, causes of action,  complaints and demands, known
               or unknown,  fixed or contingent,  whatsoever which Buyer now has
               or may hereafter have arising directly or indirectly out of or in
               any  way  related  to (i) the  operation  of the  Restaurants  or
               performance  by Sellers under the Franchise  Agreements  and (ii)
               the transfer of the Restaurants  and the Franchise  Agreements to
               Buyer pursuant to the Acquisition Agreement.

               b.  Sellers,   on  behalf  of  themselves,   their  predecessors,
               successors   and  assigns,   hereby  fully  release  and  forever
               discharge  Buyer  and  its  predecessors,   successors,  assigns,
               agents,  officers,  directors and affiliated entities,  all other
               persons, firms and corporations  whatsoever and whomsoever of and
               from any and all liability,  actions,  claims,  causes of action,
               complaints  and  demands,  known  or  unknown,  whatsoever  which


                                       1
<PAGE>

               Sellers  now  have or may  hereafter  have  arising  directly  or
               indirectly  out of or in any way  related to the  transfer of the
               Restaurants and the Franchise Agreements to Buyer pursuant to the
               Acquisition Agreement.

               c. In  addition,  Buyer,  on behalf of  itself,  its  affiliates,
               predecessors,  successors  and assigns,  will release and forever
               discharge  any  Nonreleased   Party  of  and  from  any  and  all
               liability,  actions,  claims,  causes of action,  complaints  and
               demands, known or unknown, fixed or contingent,  whatsoever which
               Buyer  now  has  or  may  hereafter  have  arising   directly  or
               indirectly  out of or in any way related to (i) the  operation of
               the Restaurants or performance by each such officer,  director or
               shareholder under the Franchise  Agreements and (ii) the transfer
               of the Restaurants and the Franchise Agreements to Buyer pursuant
               to the  Acquisition  Agreement only if and to the extent that any
               such Nonreleased  Party executes a release and waiver in favor of
               Buyer and its affiliates substantially similar to this Release.

         2.  No  Admission  of  Liability.  Nothing  in  this  Release  is to be
construed as an admission of liability on the part of Buyer or Sellers.

         3. Representations and Warranties of Buyer. Buyer hereby represents and
warrants as follows:

               a. Buyer has not assigned or  transferred  or purported to assign
               or transfer  any claim or right as against any Seller,  and Buyer
               is fully entitled to release the same.

               b. Buyer has not entered  into any  agreement  with any person or
               entity,  other than this  Release,  which would affect any matter
               referred to in this Release.

         Buyer hereby  indemnifies and agrees to hold harmless  Sellers from and
against any claim, debt, liability,  demand, obligation,  cost, expense, damage,
action,  or cause of action,  including  attorneys'  fees and costs incurred (i)
arising out of or in connection with any breach of the  representations of Buyer
contained  in this  Release or (ii) in any action  brought by Sellers to enforce
the terms of this Release.

         4.   Representations   and   Warranties  of  Sellers.   Sellers  hereby
individually and collectively represent and warrant as follows:

               a.  Sellers  have not  assigned or  transferred  or  purported to
               assign or  transfer  any  claim or right as  against  Buyer,  and
               Sellers are fully entitled to release the same.

               b. Sellers have not entered into any agreement with any person or
               entity,  other than this  Release,  which would affect any matter
               referred to in this Release.

         Sellers  hereby  indemnify  and agree to hold  harmless  Buyer from and
against any claim, debt, liability,  demand, obligation,  cost, expense, damage,
action,  or cause of action,  including  attorneys'  fees and costs incurred (i)
arising  out of or in  connection  with any  breach  of the  representations  of
Sellers  contained  in this  Release or (ii) in any  action  brought by Buyer to
enforce the terms of this Release.

                                       2
<PAGE>

         5.  Effectiveness.  The release set forth in Section 1 hereof  shall be
effective on and as of the Closing Date as defined in the Acquisition Agreement.

         6. Miscellaneous.

               a.  Should  any  provision  of this  Release  be held  invalid or
               illegal,  such  invalidity or illegality  will not invalidate the
               whole of this Release,  but rather the Release shall be construed
               as if it did not  contain  any  invalid or illegal  parts and the
               rights and  obligations  of the parties  shall be  construed  and
               enforced accordingly.

               b. This Release may be executed in one or more  counterparts that
               in the aggregate shall comprise one Release.

               c. This  Release  shall be binding on and inure to the benefit of
               the parties hereto and their respective predecessors, successors,
               assigns, agents, directors, officers and affiliated entities.

               d.  This  Release  shall be  construed  under,  and any  disputes
               arising  hereunder  shall be determined  by, the internal laws of
               the State of Kansas.


                      Remainder of Page Intentionally Blank



                                       3
<PAGE>




         IN WITNESS WHEREOF, the parties hereto have executed this Release as of
the day and year first above written.

                                  BUYER:

                                  APPLEBEE'S INTERNATIONAL, INC.,
                                  a Delaware corporation


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



                                  SELLERS:

                                  APPLE CAPITOL GROUP, LLC, a Florida limited
                                  liability company

                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                       -----------------------------------------



                                  APPLE PRINCE GEORGES MARYLAND GROUP, LLC,
                                  a Florida limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE WASHINGTON MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                       4
<PAGE>


                                  APPLE ST. MARYS MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE CALVERT MD GROUP, LLC, a Florida limited
                                  liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE CHARLES MD GROUP, LLC, a Maryland
                                 limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  BERKELEY WVA, LLC, a West Virginia limited
                                  liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                       5
<PAGE>


                                   SCHEDULE I
                              Franchise Agreements









                                       6
<PAGE>



                                   Exhibit 8.1

                                ESCROW AGREEMENT

         THIS ESCROW  AGREEMENT  is made and entered into this 16th day of July,
2002,  by and among  Apple  Capitol  Group,  LLC,  a Florida  limited  liability
company,  Apple Prince Georges Maryland Group,  LLC, a Florida limited liability
company,  Apple Washington MD Group, LLC, a Florida limited  liability  company,
Apple St.  Marys MD Group,  LLC,  a Florida  limited  liability  company,  Apple
Calvert MD Group,  LLC, a Florida limited  liability  company,  Apple Charles MD
Group, LLC, a Maryland limited liability company,  and Berkeley WVA, LLC, a West
Virginia limited liability  company  (collectively,  "Sellers"),  and Applebee's
International,  Inc., a Delaware  corporation  ("Buyer")  and UMB Bank,  n.a., a
national banking organization, as escrow agent ("Escrow Agent");

                                 R E C I T A L S

         WHEREAS,  Buyer  and  Sellers  have  entered  into  an  Asset  Purchase
Agreement  dated as of even date  herewith  (the  "Purchase  Agreement"),  which
Purchase Agreement provides,  among other things, for the delivery to the Escrow
Agent of the deposit provided for in Section 2.1(a) of the Purchase Agreement in
the sum of Three Million Dollars  ($3,000,000) (the "Deposit"),  which sum shall
be held and paid to Sellers upon the closing of the transaction  contemplated by
the Purchase Agreement; and

         WHEREAS, pursuant to Section 8.1 of the Purchase Agreement, Buyer shall
also  deliver  to the Escrow  Agent  hereunder  the sum of the Gift  Certificate
Escrowed Amount and the General Escrowed Amount (collectively referred to herein
as the "Escrow Funds"); and

         WHEREAS, this Escrow Agreement is the escrow agreement  contemplated by
the Purchase Agreement; and

         WHEREAS,  all  defined  terms  used in this  Escrow  Agreement  and not
otherwise defined shall have the meaning assigned in the Purchase Agreement.

         NOW,  THEREFORE,  in consideration of the above recitals and the mutual
covenants contained herein, the parties agree as follows:

         1.  Escrow  Agent  Designation.   Buyer  and  Sellers  (together,   the
"Principal Parties") hereby jointly designate the Escrow Agent to receive,  hold
and disburse the Deposit and Escrow Funds in accordance  with the  provisions of
the  Purchase  Agreement  and this Escrow  Agreement,  and Escrow  Agent  hereby
accepts such  designation,  upon the terms,  and subject to the conditions,  set
forth in this Escrow Agreement.

         2. Delivery of Deposit and Escrow Funds.  As provided in Section 2.1(a)
of the Purchase  Agreement,  upon the  Bankruptcy  Court's  Order  approving the
Bidding Procedures Motion,  Buyer shall deliver the Deposit to the Escrow Agent.
And, as provided in Section 8.1 of the  Purchase  Agreement,  at Closing,  Buyer
shall deliver the Escrow Funds to the Escrow Agent. The Deposit and Escrow Funds
shall be delivered by  electronic  funds  transfer to Escrow Agent to be held in
subaccounts,  including subaccounts for the Deposit (the "Deposit Account"), the
Gift Certificate  Escrowed Amount (the "Gift Certificate  Escrowed Account") and
the General Escrowed Amount (the "General Escrowed  Account")(collectively,  the
"Accounts") in accordance  with the Escrow Agent's  instructions as set forth on


                                       1
<PAGE>

Exhibit A attached hereto. Such Accounts shall be interest-bearing accounts. The
Escrow Agent shall  invest and  reinvest  monies,  and  earnings  thereon,  held
pursuant to this Escrow  Agreement in the  Federated  Treasury  Obligations  - C
overnight sweep money market mutual fund or as otherwise  directed in writing by
the Principal  Parties.  The Principal  Parties shall each furnish  Escrow Agent
with completed  Internal  Revenue  Service Form W-9  contemporaneously  upon the
Bankruptcy  Court's Order  approving the Bidding  Procedures  Motion and Buyer's
delivery to the Escrow Agent of the Deposit.

         3. Deposit.  Disbursement of the Deposit Account shall be made from the
Account as follows:

               a. Release Notice and Disbursement. Promptly after (i) all of the
               conditions  that must be fulfilled  prior to the Closing,  as set
               forth in Sections  8.3 and 8.4 of the  Purchase  Agreement,  have
               been fulfilled or waived by Buyer or Sellers,  as applicable,  or
               (ii) the  Purchase  Agreement  has been  terminated  pursuant  to
               Section 9.11  thereof,  the  Principal  Parties  shall give joint
               written notice to the Escrow Agent (the "Release Notice"), with a
               copy to Lehman, of such fact and shall direct the Escrow Agent to
               disburse,  at the time  designated  in the  Release  Notice,  the
               Deposit by electronic funds transfer to an account  designated in
               the Release Notice. A disbursement of the Deposit pursuant to (i)
               above shall  constitute  the payment of a portion of the Purchase
               Price equal to the amount of the Deposit.  The Escrow Agent shall
               disburse all accrued  interest on the Deposit by electronic funds
               transfer  to such  bank  account  as  Buyer  shall  designate  in
               writing.

               b. Final  Disbursement.  The Escrow Agent shall  continue to hold
               the Deposit in escrow pending its receipt of either (i) a Release
               Notice  or (ii) a  certified  copy of an order of the  Bankruptcy
               Court, which shall be a final order, directing the disposition of
               the Deposit and interest accrued thereon by the Escrow Agent (any
               such order, a "Disposition Order"). Upon receipt of a Disposition
               Order,  the Escrow  Agent is directed to disburse the deposit and
               accrued interest thereon as provided in such Disposition Order.

         4. Escrow Funds.  Disbursements of the Gift Certificate Escrowed Amount
and the General Escrowed Amount shall be made from the Gift Certificate Escrowed
Account as follows:

               a. Gift Certificate Escrowed Amount Reimbursement.

                   i.  Time  Period.  Subject  to  Section  4(a)(iii)  below and
               disbursements made in accordance with Section 4(a)(ii),  the Gift
               Certificate  Escrowed  Amount shall be held by Escrow Agent for a
               period of twelve  (12) months and up to forty (40) days after the
               Closing.

                                       2
<PAGE>

                   ii. Claims.  Within twenty (20) days after the end of each of
               the first twelve (12) months after Closing, Buyer shall submit to
               Escrow  Agent and Sellers a claim  (with a copy to Lehman),  with
               reasonable  supporting  evidence  substantially  in the  form  of
               Exhibit B attached hereto, for the face amount of any Seller Gift
               Certificate  that was redeemed  within the  preceding  month (the
               "Monthly Gift  Certificate  Claim").  Unless,  within twenty (20)
               days  after  receipt by  Sellers  of a Monthly  Gift  Certificate
               Claim, Escrow Agent has received from Sellers a notice, a copy of
               which  shall be sent by Sellers to Buyer (with a copy to Lehman),
               disputing the amount of the Monthly Gift  Certificate  Claim (the
               "Gift Certificate  Dispute Notice"),  Escrow Agent shall promptly
               deduct such Monthly Gift Certificate Claim from the then existing
               balance in the Gift Certificate Escrowed Account and promptly pay
               such amount to Buyer. At any time, upon request of Buyer, Sellers
               or Lehman,  Escrow Agent shall provide the requesting  party with
               the current balance in the Gift Certificate Escrowed Account.

                   iii. Final Balance and Disbursement. After receipt of Buyer's
               final  Monthly  Gift  Certificate  Claim (and the  expiration  of
               Sellers' twenty (20) day Gift  Certificate  Dispute Notice period
               or receipt of notice from Sellers that they will not be disputing
               the amount of such final  Monthly  Gift  Certificate  Claims) and
               Escrow Agent's corresponding deduction as set forth in subsection
               4(a)(ii) above, Escrow Agent shall disburse to Sellers (or at and
               in favor of Sellers', Sellers' assignee or Seller's designee) any
               remaining and undisputed balance of the Gift Certificate Escrowed
               Account,  and all accrued interest thereon.  Any amounts disputed
               pursuant to a Gift Certificate Dispute Notice shall remain in the
               Gift  Certificate  Escrowed  Account  until settled in accordance
               with this Escrow Agreement.

               b. General Escrowed Amount Reimbursement.

                   i. Claims. At any time and from time to time from the Closing
               Date until the 120th day following  Closing,  Buyer may submit to
               Escrow  Agent and  Sellers a notice of any claim  (with a copy to
               Sellers,  Sellers'  assignee or Sellers'  designee  and  Lehman),
               including  a summary of the  relevant  facts  concerning  and the
               amount  of the  claim (a  "Buyer  General  Claim"),  against  the
               General  Escrowed  Account  under  Sections 1.1, 4.6 through 4.9,
               4.12, 4.13,  4.14,  4.17, 4.21,  Article V, and Section 8.2(a) of
               the Purchase  Agreement.  Sellers shall have twenty (20) business
               days after receipt of any Buyer General Claim, to provide written
               notice to Escrow  Agent and Buyer (with a copy to Lehman) that it
               (i) disputes the facts or the amount of such Buyer  General Claim
               and the reason therefor (the "General Escrow Dispute  Notice") or
               (ii) it has cured the matter for which such Buyer  General  Claim
               has been made,  together with such supporting  documentation,  if
               any, as is reasonably necessary to evidence such cure. If Sellers
               do not, during the twenty (20) business day period above, provide
               a General  Escrow  Dispute  Notice or  written  notice of cure as
               specified  herein,  Escrow  Agent  shall  deduct from the General
               Escrowed  Account  the  amount  of the  Buyer  General  Claim and
               promptly disburse such amount to Buyer.

                                       3
<PAGE>

                   ii.  Final  Balance  and  Disbursements.  On  the  121st  day
               following the Closing Date Sellers shall be paid, at and in favor
               of Lehman,  up to the extent of the amount of the  Sellers'  then
               outstanding  indebtedness to Lehman, all amounts remaining of the
               General Escrowed  Account,  less the aggregate amount of all then
               pending  unresolved  Buyer General Claims,  with the balance paid
               thereafter  upon and in  accordance  with the  resolution of such
               unresolved  Buyer General Claims.  In addition,  if the aggregate
               amount  of  Buyer  General  Claims  made  prior  to the  61st day
               following  the Closing Date is less than  $100,000,  then on such
               61st day Sellers  shall be paid,  at and in favor of Lehman,  all
               amounts  remaining of the General  Escrowed  Account in excess of
               the sum of $300,000 plus the amount of all Buyer  General  Claims
               unresolved  as  of  such  61st  day.  Any  amounts   disputed  or
               unresolved  pursuant to a General  Escrow  Dispute  Notice  shall
               remain  in  the  General   Escrowed   Account  until  settled  in
               accordance with this Escrow Agreement.

         5. Dispute Procedure.

               a. General Escrow. In the event that Sellers provide Escrow Agent
               and Buyer a General Escrow Dispute Notice as set forth in Section
               4(b)(i)  above,  Buyer and Sellers  shall  attempt to resolve the
               dispute in good faith and by mutual agreement between  authorized
               representatives,  one each from Buyer and Sellers,  within twenty
               (20) business days of Buyer's receipt of Sellers'  General Escrow
               Dispute Notice. If the authorized  representatives cannot resolve
               the dispute,  after a good faith attempt,  within the twenty (20)
               business  days,  the  parties  will  submit  the  dispute  to the
               Bankruptcy  Court,  which shall make a final  determination  with
               respect to such dispute.  The Bankruptcy Court's decision will be
               conclusive  and binding on the parties.  Each party will bear its
               own costs in connection with any such dispute.

               b. Gift Certificate  Escrow.  In the event that Sellers dispute a
               disbursement from the Gift Certificate Escrowed Account,  Sellers
               shall  provide to the other  party and the Escrow  Agent  (with a
               copy to Lehman) a Gift  Certificate  Dispute Notice in accordance
               with Section 4(a)(ii). Buyer and Sellers shall attempt to resolve
               the dispute in good faith and by mutual  agreement  within twenty
               (20)   business   days  of  Buyer's   receipt  of  Sellers'  Gift
               Certificate  Dispute  Notice.  If the parties  cannot resolve the
               dispute,  after a good faith  attempt,  within  the  twenty  (20)
               business  days,  the  parties  will  submit  the  dispute  to the
               Bankruptcy  Court,  which shall make a final  determination  with
               respect to such dispute.  The Bankruptcy Court's decision will be
               conclusive  and binding on the parties.  Each party will bear its
               own costs in connection with any such dispute.

               c.  Deposit.  Any dispute  with  regard to the  Deposit  shall be
               settled  by (i) Buyer  and  Sellers  in good  faith and by mutual
               agreement  as  evidenced  by an executed  and  delivered  Release
               Notice pursuant to Section 3(b)(i),  or (ii) a Disposition  Order
               pursuant to Section 3(b)(ii).

         6.  Duties/Responsibilities of Escrow Agent. The Escrow Agent shall not
have any duties or  responsibilities,  except those  expressly set forth in this
Escrow Agreement,  which the parties agree are ministerial in nature. The Escrow


                                       4
<PAGE>

Agent shall not incur any  liability  by reason of its action or omission to act
in reliance  upon any notice,  instructions  or other  document  believed by the
Escrow Agent to be genuine and duly  authorized,  and shall have no liability to
any party,  except for  liability  based on its own willful  misconduct or gross
negligence.  The Escrow  Agent  shall not be  responsible  for the  validity  or
sufficiency of any notice, instructions or other document which may be delivered
to it  hereunder.  The Escrow  Agent  shall not be  required  to take any action
hereunder  involving  any expense,  unless the payment of such expense  shall be
made or provided for in a manner satisfactory to it. The Escrow Agent shall have
no responsibility for the performance by Buyer or Sellers of this Agreement. The
Principal Parties agree to and hereby do waive any suit, claim,  demand or cause
of action of any kind which it or they may have or may assert against the Escrow
Agent arising out of or relating to the execution or  performance  by the Escrow
Agent under this Escrow Agreement,  unless such suit, claim,  demand or cause of
action is based upon the gross  negligence  or willful  misconduct of the Escrow
Agent. Buyer (on the one hand) and Sellers (on the other hand) further agrees to
indemnify  and hold  harmless  the  Escrow  Agent from  one-half  of any and all
claims, demands, costs, liabilities and expenses, including reasonable attorneys
fees  and  expenses,  which  may be  asserted  against  it or to which it may be
exposed or which it may incur by reason of its  execution or  performance  under
this Agreement, except if such claims, demands, costs, liabilities,  expenses or
attorneys fees (or expenses)  result from the Escrow Agent's gross negligence or
willful  misconduct.  This Section shall survive the  termination of this Escrow
Agreement for any reason.

The Escrow Agent shall be entitled to fees and expenses for its regular services
as Escrow Agent as set forth on Exhibit C attached hereto. Sellers shall pay all
of Escrow Agent's  compensation,  costs and expenses. In the event such fees are
not paid  within  thirty  (30)  days  after the  invoice  for such fees has been
delivered  by the  Escrow  Agent,  such fees  shall be  payable  from and may be
deducted by the Escrow Agent from interest  and/or  principal of any monies held
by the Escrow Agent.

         7.  Escrow  Agent's  Right  To Rely.  As to any  questions  arising  in
connection  with the  administration  of this  Agreement and  performance of its
obligations hereunder,  Escrow Agent may rely absolutely upon the opinions given
to it by its counsel and shall be free of liability for acting or failing to act
in  reliance  on the good faith  opinion  and  instruction  of such  independent
counsel.

         8. Escrow Agent's Liability.  In the event Escrow Agent, in good faith,
should be in doubt as to what  action it should take  hereunder,  at its option,
the Escrow Agent may refuse to comply with any requests or demands made upon the
Escrow Agent, or refuse to take any other action hereunder so long as such doubt
exists; and in such event, the Escrow Agent shall not be or become liable in any
manner to any person for its  failure or refusal to act and shall be entitled to
continue to refrain from action  until (i) the rights of all parties  shall have
been fully and finally  adjudicated by the Bankruptcy Court or only in the event
the  Bankruptcy  Court  refuses to hear such  dispute,  by a court of  competent
jurisdiction,  or (ii) all  differences  shall have been adjusted and all doubts
resolved by agreement among all interested parties and the Escrow Agent shall be
notified thereof in writing by all such persons.

         9.  Resignation  of  Escrow  Agent.  Notwithstanding  anything  to  the
contrary  contained in this Escrow  Agreement,  the Escrow Agent may resign from
its duties hereunder for any reason whatsoever by giving prior written notice of


                                       5
<PAGE>

such resignation to the Principal  Parties (with a copy to Lehman)  effective on
the earlier of the  effectiveness  of the appointment of a replacement or thirty
days after such notice was given.  Upon  receiving  the  foregoing  notice,  the
Principal  Parties  shall  designate  within thirty (30) days a new escrow agent
mutually  acceptable  to them. If the  Principal  Parties  cannot agree on a new
escrow  agent  within such thirty day period,  the Escrow  Agent may  petition a
court of competent jurisdiction for appointment of a successor escrow agent.

         10. Term.  This Escrow  Agreement shall remain in full force and effect
until  terminated  in  accordance  with the  applicable  terms  of the  Purchase
Agreement.

         11. Compliance with Bankruptcy Court Orders. The Escrow Agent is hereby
authorized and directed by the Principal Parties to comply with each Disposition
Order  and any  other  order of the  Bankruptcy  Court  which  is a Final  Order
relating to the Deposit or Escrow Funds and accrued  interest,  if any,  thereon
and/or this Escrow  Agreement,  and if the Escrow Agent  complies  with any such
order, it shall not be liable to the Principal Parties or to any other person by
reason of such compliance.

         12.  Amendments  Binding  Escrow  Agent.  The Escrow Agent shall not be
bound by any amendment, modification,  cancellation or rescission of this Escrow
Agreement,  unless  and until the same is in  writing  and  signed by all of the
parties  hereto and a duly  executed  original or  counterpart  thereof has been
received by the Escrow Agent. In no event,  however,  shall any  modification of
this  Escrow  Agreement  which  shall  affect the rights or duties of the Escrow
Agent be binding on the Escrow  Agent,  unless the Escrow Agent shall have given
its prior written consent thereto.

         13. Notice. Any notice,  instruction or other communication required or
permitted to be given under this Escrow  Agreement shall be in writing and shall
be sent by certified or express mail, postage prepaid, return receipt requested,
or by  personal  delivery,  receipt  requested,  or by a  nationally  recognized
overnight  courier  guaranteeing  next day delivery,  receipt  requested,  if to
either of the Principal  Parties (or Lehman) to its address set forth in Section
9.1 of the Purchase  Agreement  and if to the Escrow Agent,  to UMB Bank,  n.a.,
Corporate Trust Department,  Attention:  K. Scott Mathews, 2401 Grand Blvd., 2nd
Floor,  Kansas City,  Missouri 64108, with a copy of each  communication sent in
like manner to the Persons indicated in the Purchase Agreement, or to such other
address(es)  as a party may from time to time  designate to the others by notice
given  in  accordance  with  the  terms  of this  Paragraph  13.  Communications
hereunder  shall  be  deemed  to have  been  duly  given  when  received  by the
recipient,  as evidenced by an executed  receipt.  A notice given by counsel for
Sellers  or Buyer  shall be  deemed a valid  notice,  if made and  addressed  in
accordance with the provisions of this Paragraph 13.

         14. Entire  Understanding.  This Escrow  Agreement  contains the entire
understanding  of the Escrow Agent,  and this Escrow  Agreement and the Purchase
Agreement  contains the entire  understanding  of the Principal  Parties hereto,
with respect to the subject  matter  contained  herein and therein.  This Escrow
Agreement  supersedes all prior agreements and  understandings  between or among
the parties  with  respect to such  subject  matter.  In the event of a conflict
between the terms of this  Escrow  Agreement  and the  Purchase  Agreement,  the
Purchase Agreement shall prevail.

                                       6
<PAGE>

         15.  Amendments.  This Escrow  Agreement  may not be orally  cancelled,
changed, modified or amended, and no cancellation,  change, waiver, modification
or amendment shall be effective or binding,  unless in writing and signed by all
the parties to this Escrow  Agreement.  No waiver  shall be deemed a  continuing
waiver or waiver in  respect of any  subsequent  breach or  default,  whether of
similar or different nature, unless expressly so stated in writing.

         16. Enforceability.  If any provision of this Escrow Agreement is found
to be void and unenforceable by the Bankruptcy  Court, the remaining  provisions
of this Escrow Agreement shall,  nevertheless,  be binding upon the parties with
the same effect as though the void or  unenforceable  part had been  severed and
deleted.

         17.  Governing  Law.  This Escrow  Agreement  shall be governed by, and
construed in accordance with, the internal  substantive laws of the State of New
York,  without  giving  effect to the choice of law rules  thereof.  The parties
hereby irrevocably  consent to (i) the jurisdiction of the Bankruptcy Court, and
(ii) service of process upon each of the parties hereto by the method prescribed
for the giving of notice pursuant to Paragraph 13 above.

         18.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of which shall be deemed an original  and all of which taken
together shall constitute one and the same agreement. Any signature delivered by
a party by facsimile  transmission  shall be deemed to be an original  signature
hereto

         IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this Escrow
Agreement as of the day and year first above written.


                             BUYER:

                                  APPLEBEE'S INTERNATIONAL, INC.,
                                  a Delaware corporation


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



                                  SELLERS:

                                  APPLE CAPITOL GROUP, LLC, a Florida limited
                                  liability company

                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                       -----------------------------------------


                                       7
<PAGE>


                                  APPLE PRINCE GEORGES MARYLAND GROUP, LLC,
                                  a Florida limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE WASHINGTON MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE ST. MARYS MD GROUP, LLC, a Florida
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  APPLE CALVERT MD GROUP, LLC, a Florida limited
                                  liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------

                                       8
<PAGE>


                                  APPLE CHARLES MD GROUP, LLC, a Maryland
                                  limited liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                  BERKELEY WVA, LLC, a West Virginia limited
                                  liability company


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------



                                  ESCROW AGENT:

                                  UMB BANK, N.A.


                                  By:
                                     -------------------------------------------
                                  Name:
                                       -----------------------------------------
                                  Title:
                                        ----------------------------------------


                                       9
<PAGE>


                                    EXHIBIT A



The escrow wiring instructions are:

         UMB Bank, n.a., Kansas City, Missouri

         ABA No.           101000695
         Account No.       9800006823
         Ref:              Apple Capitol Escrow
         Attention:        Scott Mathews, ext. 3008



                                       10
<PAGE>


                                    EXHIBIT B

<TABLE>
<CAPTION>

                    Form of Gift Certificates/Gift Card Claim

<S>                                                                                       <C>
Total of Apple Capitol gift certificates redeemed current fiscal month:
(attach copies of actual gift certificates.)                                               $
                                                                                            -------------------

Total of Apple Capitol gift cards redeemed current fiscal month:
(Attach Settlement Manager Inter-Divisional Recap Report for
Apple Capitol)                                                                             $
                                                                                            -------------------

Total Claim Amount:                                                                        $
                                                                                            ===================

</TABLE>

* Note: Gift Card claims shall be submitted pursuant to a computer generated
Settlement Manager Report in substantially the form attached hereto.



                                       11
<PAGE>


                                    EXHIBIT C


ESCROW AGENT FEES AND EXPENSES

Acceptance Fee
         Review escrow agreement and establish account                  $400.00

Annual Fee
         Maintain account, year or any part thereof                   $1,000.00

Transaction Fees
         (a)  Deposit or Escrow Funds Disbursement, per item             $10.00
         (b)  Wire Transfer Fee                                          $15.00
         (c)  Per Form 1099 (Int., B or Misc.)                            $5.00


In addition to the specified fees, all reasonable out-of-pocket expenses related
to the  administration  of the Escrow  Agreement  (other  than  normal  overhead
expenses of the regular  staff)  such as, but not limited to,  travel,  postage,
shipping, courier, telephone,  facsimile, supplies, legal fees, accounting fees,
etc., will be  reimbursable.  Monies invested in money market funds and deposits
will be subject to a 25 basis point cash management fee.






                                       12