Exhibit 10.18



                          UNITED STATES DISTRICT COURT

                        FOR THE DISTRICT OF MASSACHUSETTS


* * * * * * * * * * * * * * * * * * * * * * * * *
                                                         *
RITA VENTURINO, COSMOS PHILLIPS                          *
and MATTHEW MINOGUE on behalf of                         *
themselves and all others similarly situated,            *
                                                         *
                  Plaintiffs,                            *
                                                         *
         v.                                              *      CIVIL ACTION
                                                         *      NO. 96-12109-GAO
DAKA INTERNATIONAL, INC. and                             *
WILLIAM H. BAUMHAUER,                                    *
                                                         *
                  Defendants.                            *
                                                         *
* * * * * * * * * * * * * * * * * * * * * * * * *


                     STIPULATION AND AGREEMENT OF SETTLEMENT

         This  stipulation and agreement of settlement  dated as of December __,
1997 (the  "Stipulation") is submitted  pursuant to Rule 23 of the Federal Rules
of Civil  Procedure.  Subject to the approval of the Court,  this Stipulation is
entered  into among  Plaintiffs  Rita  Venturino,  Cosmos  Phillips  and Matthew
Minogue,   and  the  Class  (as  hereinafter   defined),   and  defendants  DAKA
International,  Inc.  ("DAKA"  or  the  "Company"),  and  William  H.  Baumhauer
("Baumhauer")  (DAKA and Baumhauer are  collectively  referred to hereinafter as
the "Defendants"), by and through their respective counsel.
         
WHEREAS:

         A. The  above-captioned  action was initially  filed in this Court (the
"Court") on or about  October 18, 1996,  and is  hereinafter  referred to as the
"Action".


<PAGE>




         B. The Complaint  filed in the Action  generally  alleges,  among other
things,  that this is a securities fraud class action seeking to pursue remedies
under the Securities Exchange Act of 1934 (the "Exchange Act") and related state
law. This Complaint alleges a fraudulent scheme and deceptive course of business
that  allegedly  injured  purchasers of DAKA common stock  throughout  the Class
Period (as defined below).

         C. The Complaint alleged that prior to and throughout the Class Period,
DAKA  portrayed  itself as a rapidly  expanding  company which was  experiencing
rising sales and profitability,  while at the same time significantly  expanding
its  restaurant  and  foodservice  operations.  The  Complaint  alleged that the
Defendants disseminated materially false and misleading statements and omissions
regarding  sales  results at the  Company's  Fuddruckers,  Inc.  ("Fuddruckers")
subsidiary,  which sales were  necessary  to maintain  their  aggressive  growth
plans.

         D. It was further alleged that at all relevant  times,  the Company had
caused or encouraged  positive  earnings  estimates by financial  analysts which
were false,  misleading and lacking in reasonable  basis due to  the-undisclosed
impact  of  the  adverse  factors  identified  in  this  Complaint.   Allegedly,
Defendants'  scheme  artificially  inflated DAKA's share price to a Class Period
high of $33 per share on May 13,  1996 and that when the  allegedly  true  facts
came to  light,  the  price of DAKA  common  stock  fell to as low as $8 5/8 per
share.

         E. The  Complaint  alleged that by virtue of the  allegedly  fraudulent
scheme the price of DAKA common stock was artificially  inflated at all relevant
times,  through and  including  a series of partial  public  disclosures  of the
actual adverse facts impacting Fuddruckers, sales results following the close of
the Company's fiscal 1996 year and attendant share price decline.  The Complaint
also alleges that before any such  disclosures  were made,  however,  defendants
successfully  completed three  acquisitions,  paying for the acquired  companies
with more than 2.5 million shares of DAKA common stock. The full truth allegedly
did not emerge until the end of the Class Period when defendants,  for the first
time,  allegedly  revealed that the problems with their  Fuddruckers  operations
were  more  serious  and  difficult  to  remedy  than had been  previously  been
revealed,  and were  projected to continue and adversely  impact DAKA's  results
throughout fiscal 1997.

         F. The Defendants deny all of the allegations in the Complaint,  as set
forth above, and deny any wrongdoing whatsoever and this Stipulation shall in no
event be construed or deemed to be evidence of or an admission or  concession on
the part of any Defendant with respect to any allegation in the Complaint or any
claim or of any fault or liability or  wrongdoing or damage  whatsoever,  or any
infirmity in the defenses that Defendants have asserted.  Defendants  recognize,
however, that the case is being settled to avoid the costs, expense and risks of
litigation. This Stipulation shall not be construed or deemed to be a concession
by any plaintiff of any infirmity in the claims asserted in the Action.

         G.  Plaintiffs,  by  their  counsel,  have  conducted  discussions  and
arms'-length  negotiations  with  counsel  for  Defendants  with  respect  to  a
compromise  and  settlement  of the Action with a view to settling the issues in
dispute and achieving the best relief possible  consistent with the interests of
the Class;

         H. Based upon their investigation and pretrial  discovery,  counsel for
Plaintiffs  and the Class have  concluded  that the terms and conditions of this
Stipulation are fair,  reasonable and adequate to Plaintiffs and the Class,  and
in their best  interests,  and have  agreed to settle  the claims  raised in the
Action  pursuant  to  the  terms  and  provisions  of  this  Stipulation,  after
considering (a) the substantial  benefits that Plaintiffs and the members of the
Class will receive from  settlement of the Action,  (b) the attendant  costs and
risks of litigation, and (c) the desirability of permitting the Settlement to be
consummated as provided by the terms of this Stipulation.

         NOW  THEREFORE,  without any  admission  or  concession  on the part of
Plaintiffs  of any lack of merit  of the  Action  whatsoever,  and  without  any
admission or  concession  of any liability or wrongdoing or lack of merit in the
defenses  whatsoever by Defendants,  it is hereby  STIPULATED AND AGREED, by and
among the  parties to this  Stipulation,  through  their  respective  attorneys,
subject to approval of the Court  pursuant to Rule 23(e) of the Federal Rules of
Civil Procedure,  in consideration of the benefits flowing to the parties hereto
from the  Settlement,  that all Settled Claims (as defined below) as against the
Released Parties (as defined below) shall be compromised,  settled, released and
dismissed  with  prejudice,   upon  and  subject  to  the  following  terms  and
conditions:

                               CERTAIN DEFINITIONS

         1. As used in this  Stipulation,  the  following  terms  shall have the
following meanings:

                  a. "Class" and "Class Members" means, for the purposes of this
Stipulation  only, all persons and entities who purchased or otherwise  acquired
DAKA common stock during the time period from October 30, 1995 through September
9,  1996,  inclusive  (the  "Class  Period").  Excluded  from the  Class are the
Defendants  in this  Action,  members of the  immediate  families of each of the
Defendants,  any person, firm, trust, corp oration,  officer,  director or other
individual or entity in which any Defendant has a controlling  interest or which
is  related  to or  affiliated  with  any  of  the  Defendants,  and  the  legal
representatives,  heirs,  successors in interest or assigns of any such excluded
party.  Also excluded from the Class are any putative  Class Members who exclude
themselves by filing a request for exclusion in accordance with the requirements
set forth in the Notice.

                  b.  "Authorized  Claimant"  means a Class Member who submits a
timely and valid Proof of Claim form to the Claims Administrator.

                  c. "Class Period" means,  for the purposes of this Stipulation
only,  the period of time from  October  30,  1995  through  September  9, 1996,
inclusive.

                  d.  "Defendants'  Counsel"  means  the law  firm  of  GOODWIN,
PROCTER & HOAR LLP.

                  e.  "Effective  Date of Settlement" or "Effective  Date" means
the date upon which the Settlement contemplated by this Stipulation shall become
effective, as set forth in paragraph 23 below.

                  f.  "Notice"  means the Notice of  Pendency  of Class  Action,
Hearing On Proposed Settlement and Attorneys' Fee Petition,  and Notice of Right
to Share in Settlement  Fund, which is to be sent to members of the Class in the
form attached hereto as Exhibit 1 to Exhibit A.

                  g. "Order and Final  Judgment" means the proposed order in the
form attached hereto as Exhibit B.

                  h. "Order for Notice and Hearing"  means the proposed order in
the form attached hereto as Exhibit A.

                  i.  "Plaintiffs'  Co-Lead  Counsel"  means  the law  firms  of
MILBERG WEISS BERSHAD HYNES & LERACH LLP and SCHIFFRIN & CRAIG, LTD.

                  j. "Plaintiffs'  Counsel" means the law firms of MILBERG WEISS
BERSHAD HYNES & LERACH LLP;  SCHIFFRIN & CRAIG,  LTD;  SHAPIRO HABER & URMY LLP;
and LAW OFFICES OF ALFRED G. YATES JR.

                  k.  "Publication  Notice" means the summary notice of proposed
Settlement  and hearing  for  publication  in the form  attached as Exhibit 3 to
Exhibit A.

                  l. "Released Parties" means each of the Defendants, and DAKA's
past or present subsidiaries,  parents,  successors and predecessors,  officers,
directors,  shareholders, agents, employees, attorneys, advisors, and investment
advisors,  auditors,  accountants  and any  person,  firm,  trust,  corporation,
officer,  director or other individual or entity in which DAKA has a controlling
interest or which is related to or affiliated with DAKA, and  Baumhauer's  legal
representatives, heirs, successors in interest or assigns.

                  m. "Settled Claims" means any and all claims, rights or causes
of action or liabilities  whatsoever,  whether based on federal,  state,  local,
statutory or common law or any other law,  rule or  regulation,  including  both
known and  unknown  claims,  that have been or could have been  asserted  in any
forum by the Class Members or any of them or the  successors  and assigns of any
of  them,  whether  directly,  indirectly,  representatively  or  in  any  other
capacity,  against any of the Released  Parties  which arise out of or relate in
any  way to the  allegations,  transactions,  facts,  matters  or  occurrences,,
representations or omissions involved, set forth, referred to or that could have
been asserted in the Complaint  relating to the purchase or other acquisition of
shares of the common stock of DAKA during the Class Period.

                  n. "Settled  Defendants' Claims" means (a) all claims asserted
in the  Action,  and (b) all claims,  rights or causes of action or  liabilities
whatsoever,  whether based on federal,  state, local, statutory or common law or
any other law, rule or regulation, including both known and unknown claims, that
have been or could have been  asserted in any forum by the  Defendants or any of
them or the successors and assigns of any of them, whether directly, indirectly,
representatively or in any other capacity, against any of the Plaintiffs,  Class
Members  or their  attorneys,  which  arise  out of or  relate in any way to the
allegations,  transactions,  facts,  matters or occurrences,  representations or
omissions  involved,  set forth or asserted in the  Complaint or relating in any
way to the purchase or other  acquisition  of shares of DAKA common stock during
the Class Period,  including but not limited to the  institution and prosecution
of the Action.

                  o.  "Settlement"  means the  settlement  contemplated  by this
Stipulation.


                  p.  "Claims  Administrator"  means  the firm of  Gilardi & Co.
which shall administer the Settlement.

Scope and Effect of Settlement

         2. The obligations  incurred  pursuant to this Stipulation  shall be in
full and final  disposition of the Action with prejudice and any and all Settled
Claims as against  all  Released  Parties  and any and all  Settled  Defendants,
claims.

         3.       a. Upon the Effective Date of this Settlement, Plaintiffs  and
members  of  the  Class  on  behalf  of  themselves,   their  heirs,  executors,
administrators,  successors and assigns, and any persons they represent,  shall,
with respect to each and every Settled Claim release and forever discharge,  and
shall forever be enjoined from prosecuting the Released Parties.

                  b. Upon the Effective Date of this Settlement, each Defendant,
on behalf of  themselves  and the Released  Parties,  shall  release and forever
discharge each and every of the Settled  Defendants' Claim, and shall forever be
enjoined  from  prosecuting  the  Settled  Defendants'  Claims.  The  Settlement
Consideration

         4. Defendants  shall pay within five (5) days from the date hereof into
escrow on behalf of Plaintiffs and the Class $3,500,000.00 (the "Cash Settlement
Amount").  The Cash  Settlement  Amount and any interest earned thereon shall be
the Gross Settlement Fund.

         5. The Gross  Settlement  Fund, net of any taxes on the income thereof,
shall be used to pay (i) the Notice and Administration Costs referred to in P. 7
hereof,  (ii) the  attorneys,  fee and expense award referred to in P. 8 hereof,
(iii) the  remaining  administration  expenses  referred to in P. 9 hereof.  The
balance of the Gross  Settlement  Fund after the above payments shall be the Net
Settlement  Fund which  shall be  distributed  to the  Authorized  Claimants  as
provided in P. P. 10-12 hereof. Any sums required to be held in escrow hereunder
prior to the  effective  date shall be held by  Milberg  Weiss  Bershad  Hynes &
Lerach LLP ("Milberg Weiss") as Escrow Agents for the Settlement Fund. All funds
held by the Escrow  Agents shall be deemed to be in custodia  legis of the Court
and shall remain subject to the jurisdiction of the Court until such time as the
funds  shall  be  distributed  or  returned  to  Defendants   pursuant  to  this
Stipulation and/or further order of the Court. The Escrow Agent shall invest any
funds in excess of  $100,000  in United  States  Government  obligations  with a
maturity  of 180 days or less,  and shall  collect  and  reinvest  all  interest
accrued thereon. Any funds held in escrow in an amount of less than $100,000 may
be held in an interest  bearing  bank account  insured by the FDIC.  The parties
hereto agree that the Settlement  Fund is intended to be a Qualified  Settlement
Fund  within the  meaning of Treasury  Regulation  1.468B-1  and that the Escrow
Agent  (Milberg  Weiss),  as  administrator  of the  Settlement  Fund within the
meaning of  Treasury  Regulation  ss.1.468B-2(k)(3),  shall be  responsible  for
filing tax returns for the Settlement  Fund and paying from the Settlement  Fund
any taxes owed with respect to the Settlement Fund. Counsel for Defendants agree
to provide  promptly to the Escrow  Agent the  statement  described  in Treasury
Regulation ss. 1.468B-3 (e) . (i) Administration

         6. The Claims  Administrator  shall  administer  the  Settlement  under
Plaintiffs' Co-Lead Counsel's supervision and subject to the jurisdiction of the
Court. Except as stated in P. 14 hereof, Defendants shall have no responsibility
for the  administration  of the  Settlement  and shall have no  liability to the
Class  in  connection  with  such  administration.   Defendants'  Counsel  shall
cooperate  in the  administration  of the  Settlement  to the extent  reasonably
necessary to effectuate  its terms,  including  providing all  information  from
their  transfer  records  concerning  the  identity  of class  members and their
transactions.

         7. Prior to the Effective Date, Plaintiffs,  Co-Lead Counsel may expend
from the Settlement Amount,  without further approval from the Defendants or the
Court,  up to the sum of $100,000.00  to pay the  reasonable  costs and expenses
associated  with  the  administration  of  the  Settlement,   including  without
limitation,  the costs of  identifying  members of the Class and effecting  mail
Notice and Publication Notice.  Such amounts shall include,  without limitation,
the actual costs of publication, printing and mailing the Notice, reimbursements
to nominee  owners for forwarding  notice to their  beneficial  owners,  and the
reasonable  administrative  expenses  incurred  and fees  charged  by the Claims
Administrator  in connection  with  providing  notice and  processing the claims
filed.

         8.  Plaintiffs'  Counsel  will apply to the Court for an award from the
Gross  Settlement  Fund of attorneys' fees not to exceed thirty (30%) percent of
the  Gross  Settlement  Fund and  reimbursement  of  expenses.  Nothing  in this
Stipulation shall be construed as an agreement with or approval of the amount of
attorneys, fees sought by Plaintiffs,  Counsel. Such attorneys' fee and expenses
as are  awarded  by the Court  shall be paid from the Gross  Settlement  Fund to
Plaintiffs' Counsel immediately upon award, notwithstanding the existence of any
timely  filed  objections  thereto,  or  potential  for  appeal  therefrom,   or
collateral attack on the settlement or any part thereof,  subject to Plaintiffs'
Counsel's obligation to make appropriate refunds or repayments to the settlement
fund plus  accrued  interest,  if and when,  as a result  of any  appeal  and/or
further proceedings on remand, or successful  collateral attack, the fee or cost
award is reduced or reversed. (iii) Administration Expenses

         9.  Plaintiffs'   Counsel  will  apply  to  the  Court,  on  notice  to
Defendants' Counsel, for an order (the "Class Distribution Order") approving the
Claims Administrator's  administrative  determinations concerning the acceptance
and  rejection of the claims filed herein and approving the fees and expenses of
the Claims  Administrator,  and, if the Effective  Date has occurred,  directing
payment of the Net Settlement Fund to Authorized Claimants.

(iv)      Distribution To Authorized Claimants

         10. The Claims Administrator shall determine each Authorized Claimant's
pro  rata  share of the "Net  Settlement  Fund"  (the  Gross  Settlement  Amount
including  interest net of taxes and less all approved  costs fees and expenses)
based upon each Authorized Claimant's Recognized Claim (as defined in below).

         11.  An  Authorized  Claimant's   "Recognized  Claim"  shall  mean  the
difference,  if any,  between the amount paid for DAKA common  stock  during the
Class Period (including brokerage commissions and transaction charges),  and the
sum for which said shares were sold at a loss on or before September 9, 1996. As
to those shares which an Authorized  Claimant  continued to hold as of the close
of business on September 9, 1996, Recognized Claim shall mean the difference, if
any,  between  the amount  paid for each such share  purchased  during the Class
Period and $8-5/8 per share.  Transactions resulting in a gain shall be deducted
from any losses. In the event a Class Member has more than one purchase or sale,
all purchases and sales shall be matched on a First In First Out ("FIFO") basis.

         12.      a.Each Authorized Claimant shall be allocated a pro rata share
of the Net Settlement Fund based on his or her Recognized  Claim compared to the
total  Recognized  Claims of all accepted  claimants.  The Claims  Administrator
shall pay each Authorized Claimant its distribution amount.

                  b. This is not a claims-made settlement.  Defendants will have
no ability to get back any of the settlement monies once the Settlement  becomes
final. Defendants will have no involvement in reviewing or challenging claims.

Administration of the Settlement

         13.  Any  member of the Class who does not file a valid  Proof of Claim
will not be  entitled  to receive any of the  proceeds  from the Net  Settlement
Amount but will otherwise be bound by all of the terms of this  Stipulation  and
the Settlement,  including the terms of the Judgment to be entered in the Action
and the  releases  provided  for herein,  and will be barred from  bringing  any
action against the Released Parties concerning the Settled Claims.

         14.  Plaintiffs'  Co-Lead  Counsel shall be responsible for supervising
the administration of the Settlement and disbursement of the Net Settlement Fund
by the Claims  Administrator.  Except for their obligation to pay the Settlement
Amount,  and to cooperate in the production of  information  with respect to the
identification of class members from the company's shareholder transfer records,
as  provided  herein,   Defendants  shall  have  no  liability,   obligation  or
responsibility  for the  administration of the Settlement or disbursement of the
Net Settlement Fund.  Plaintiffs,  Co-Lead Counsel shall have the right, but not
the obligation, to waive what they deem to be formal or technical defects in any
Proofs of Claim filed in the interests of achieving substantial justice.

         15. For purposes of  determining  the extent,  if any, to which a Class
Member  shall  be  entitled  to be  treated  as an  "Authorized  Claimant",  the
following conditions shall apply:

                  a. Each Class  Member  shall be  required to submit a Proof of
Claim (see attached  Exhibit 3 to Exhibit A), supported by such documents as are
designated  therein,  including  proof of the  Claimant's  loss,  or such  other
documents or proof as Plaintiffs' Co-Lead Counsel, in their discretion, may deem
acceptable;

                  b. All Proofs of Claim must be submitted by the date specified
in the Notice  unless such  period is extended by order of the Court.  Any Class
Member who fails to file a Proof of Claim by such date  shall be forever  barred
from receiving any payment pursuant to this Stipulation (unless, by Order of the
Court, a later filed Proof of Claim by such Class Member is approved), but shall
in all other respects be bound by all of the terms of this  Stipulation  and the
Settlement  including  the terms of the Judgment to be entered in the Action and
the releases  provided for herein,  and will be barred from  bringing any action
against the Released  Parties  concerning the Settled  Claims.  A Proof of Claim
shall be deemed to have been submitted when posted,  if received with a postmark
indicated  on the  envelope  and  if  mailed  first-class  postage  prepaid  and
addressed in accordance with the instructions  thereon.  In all other cases, the
Proof of Claim shall be deemed to have been submitted when actually  received by
Plaintiffs, Counsel or its designee;

                  c. Each Proof of Claim shall be  submitted  to and reviewed by
the Claims Administrator,  under the supervision of Plaintiffs' Co-Lead Counsel,
who shall determine in accordance with this  Stipulation the extent,  if any, to
which each claim  shall be allowed,  subject to review by the Court  pursuant to
subparagraph e. below;

                  d.  Proofs of Claim that do not meet the  filing  requirements
may  be  rejected.   Prior  to  rejection  of  a  Proof  of  Claim,  the  Claims
Administrator shall communicate with the Claimant in order to remedy the curable
deficiencies in the Proof of Claims submitted.  The Claims Administrator,  under
supervision of Plaintiffs,  Co-Lead  Counsel,.shall  notify, in a timely fashion
and in writing,  all  Claimants  whose Proofs of Claim they propose to reject in
whole or in part, setting forth the reasons therefor, and shall indicate in such
notice that the Claimant whose claim is to be rejected has the right to a review
by the Court if the Claimant so desires and complies  with the  requirements  of
subparagraph (e) below; and

                  e. If any Claimant  whose claim has been  rejected in whole or
in part desires to contest such rejection, the Claimant must, within twenty (20)
days after the date of mailing of the notice required in subparagraph (d) above,
serve upon the Claims Administrator a notice and statement of reasons indicating
the Claimant's  grounds for  contesting the rejection  along with any supporting
documentation,  and  requesting  a review  thereof  by the  Court.  If a dispute
concerning a claim cannot be otherwise  resolved,  Plaintiffs,  Co-Lead  Counsel
shall thereafter present the request for review to the Court.

                  f.   The   administrative   determinations   of   the   Claims
Administrator accepting and rejecting claims shall be presented to the Court, on
notice  to  Defendants'  Counsel,  for  approval  by  the  Court  in  the  Class
Distribution Order.

         16. Each Claimant shall be deemed to have submitted to the jurisdiction
of the Court with respect to the Claimant's claim, and the claim will be subject
to  investigation  and  discovery  under the Federal  Rules of Civil  Procedure,
provided  that  such  investigation  and  discovery  shall  be  limited  to that
Claimant's  status  as a  Class  Member  and  the  validity  and  amount  of the
Claimant's  claim.  No discovery shall be allowed on the merits of the Action or
Settlement in connection with processing of the Proofs of Claim.

         17.  Payment  pursuant to this  Stipulation  shall be deemed  final and
conclusive  against all Class  Members.  All Class  Members whose claims are not
approved by the Court shall be barred from  participating in distributions  from
the Net Settlement  Amount,  but otherwise shall be bound by all of the terms of
this  Stipulation and the Settlement,  including the terms of the Judgment to be
entered in the Action and the releases  provided for herein,  and will be barred
from bringing any action  against the Released  Parties  concerning  the Settled
Claims.

         18. All proceedings with respect to the administration,  processing and
determination  of  claims  described  by  P.  15 of  this  Stipulation  and  the
determination  of  all  controversies   relating  thereto,   including  disputed
questions  of law and fact with  respect to the  validity  of  claims,  shall be
subject to the jurisdiction of the Court.

         19.  The Net  Settlement  Amount  shall be  distributed  to  Authorized
Claimants by the Claims  Administrator  only after the Effective Date and after:
(i) all Claims have been  processed,  and all  Claimants  whose Claims have been
rejected or disallowed, in whole or in part, have been notified and provided the
opportunity  to be heard  concerning  such rejection or  disallowance;  (ii) all
objections with respect to all rejected or disallowed  claims have been resolved
by the Court, and all appeals  therefrom have been resolved or the time therefor
has expired;  and (iii) all matters with respect to attorneys' fees,  costs, and
disbursements  have been resolved by the Court, all appeals  therefrom have been
resolved or the time therefor has expired,  and (iv) all costs of administration
have been paid. Terms of Order for Notice and Hearing

         20.  Concurrently with their application for preliminary Court approval
of the Settlement  contemplated  by this  Stipulation,  Plaintiffs'  Counsel and
Defendants'  Counsel  jointly shall apply to the Court for entry of an Order for
Notice and Hearing, substantially in the form annexed hereto as Exhibit A. Terms
of order and Final Judgment

         21. If the Settlement  contemplated by this  Stipulation is approved by
the Court,  counsel for the parties  shall request that the Court enter an Order
and Final Judgment substantially in the form annexed hereto as Exhibit B.

Supplemental Agreement

         22.   Simultaneously   herewith,   Plaintiffs,   Co-Lead   Counsel  and
Defendants'  Counsel are  executing a  "Supplemental  Agreement"  setting  forth
certain  conditions  under which this Stipulation may be withdrawn or terminated
by  Defendants  if potential  Class Members who purchased in excess of a certain
number  shares of DAKA  common  stock  traded  during the Class  Period  exclude
themselves from the Class. The Supplemental  Agreement shall be filed under seal
if permitted by the Court and the  Bankruptcy  Court,  and, if not so permitted,
shall  not be  filed,  but its  substantive  content  shall  be  brought  to the
attention of the Court,  in camera if so requested by the  attorneys  for any of
the undersigned parties and permitted by the Court. In the event of a withdrawal
from this Stipulation pursuant to the Supplemental  Agreement,  this Stipulation
shall become null and void and of no further force and effect and the provisions
of paragraph 25 shall apply.  Notwithstanding  the  foregoing,  the  Stipulation
shall not become null and void as a result of the election by the  Defendants to
exercise  their  option  to  withdraw  from  the  Stipulation  pursuant  to  the
Supplemental  Agreement  until  the  conditions  set  forth in the  Supplemental
Agreement  have  been  satisfied.   Effective  Date  of  Settlement,  Waiver  or
Termination

         23. The  Effective  Date of  Settlement  shall be the date when all the
following shall have occurred:

                  (a) entry of the Order for Notice and Hearing in all  material
respects in the form annexed hereto as Exhibit A;

                  (b) approval by the Court of the Settlement,  following notice
to the Class and a hearing,  as  prescribed  by Rule 23 of the Federal  Rules of
Civil Procedure; and

                  (c) entry by the Court of an Order and Final Judgment,  in all
material  respects  in the form set forth in Exhibit B annexed  hereto,  and the
expiration  of any time for appeal or review of such  Order and Final  Judgment,
or,  if any  appeal  is filed  and not  dismissed,  after  such  Order and Final
Judgment is upheld on appeal in all material  respects and is no longer  subject
to review upon appeal or review by writ of certiorari, or, in the event that the
Court enters an order and final  judgment in form other than that provided above
("Alternative  Judgment") and none of the parties hereto elect to terminate this
Settlement,  the date that such Alternative Judgment becomes final and no longer
subject to appeal or review.

         24. Defendants'  Counsel or Plaintiffs,  Co-Lead Counsel shall have the
right to terminate the  Settlement  and this  Stipulation  by providing  written
notice of their  election to do so  ("Termination  Notice") to all other parties
hereto  within  thirty days of (a) the Court's  declining to enter the Order for
Notice and Hearing in any material  respect;  (b) the Court's refusal to approve
this Stipulation or any material part of it; (c) the Court's  declining to enter
the Order and Final  Judgment in any material  respect;  (d) the date upon which
the Order and Final Judgment is modified or reversed in any material  respect by
the  Court of  Appeals  or the  Supreme  Court;  or (e) the date  upon  which an
Alternative  Judgment is modified  or  reversed in any  material  respect by the
Court of Appeals or the Supreme Court.

         25. Except as otherwise provided herein, in the event the Settlement is
terminated or modified in any material  respect or fails to become effective for
any  reason,  then the  parties  to this  Stipulation  shall be  deemed  to have
reverted  to  their  respective  status  in the  Action  as of the date and time
immediately  prior to the execution of this Stipulation and, except as otherwise
expressly  provided,  the  parties  shall  proceed  in all  respects  as if this
Stipulation and any related orders had not been entered,  and any portion of the
Cash Settlement Amount previously paid by Defendants, together with any interest
earned  thereon,  less any  taxes  due with  respect  to such  income,  and less
reasonable  costs of  administration  and notice  actually  incurred and paid or
payable  from  the  Settlement  Amount,  shall be  returned  to  Defendants.  

No Admission of Wrongdoing

         26. This Stipulation,  whether or not consummated,  and any proceedings
taken pursuant to it:

                  (a) shall not be offered or received against the Defendants as
evidence  of or  construed  as or  deemed  to be  evidence  of any  presumption,
concession,  or  admission  by any of the  Defendants  of the  truth of any fact
alleged by  Plaintiffs  or the validity of any claim that had been or could have
been  asserted  in the Action or in any  litigation,  or the  deficiency  of any
defense  that has been or could  have  been  asserted  in the  Action  or in any
litigation, or of any liability, negligence, fault, or wrongdoing of Defendants;

                  (b) shall not be offered or received against the Defendants as
evidence  of  a  presumption,  concession  or  admission  of  any  fact,  fault,
misrepresentation  or omission with respect to any statement or written document
approved or made by any  Defendant,  or against the  Plaintiffs and the Class as
evidence of any infirmity in the claims of Plaintiffs and the Class;

                  (c) shall not be offered or received against the Defendants as
evidence of a presumption, concession or admission of any liability, negligence,
fault or  wrongdoing,  or in any way referred to for any other reason as against
any of the  parties  to  this  Stipulation,  in any  other  civil,  criminal  or
administrative action or proceeding, or any arbitration or mediation, other than
such  proceedings  as may be  necessary to  effectuate  the  provisions  of this
Stipulation;  provided,  however,  that if this  Stipulation  is approved by the
Court,  Defendants  may refer to it to  effectuate  the releases  and  liability
protection granted them hereunder; and

                  (d) shall  not be  construed  against  the  Defendants  or the
Plaintiffs and the Class as an admission or concession that the consideration to
be given  hereunder  represents  the  amount  which  could be or would have been
recovered after trial. Miscellaneous Provisions

         27. All of the  exhibits  attached  hereto are hereby  incorporated  by
reference as though fully set forth herein.

         28. Each Defendant  warrants as to himself,  herself or itself that, as
to the  payments  made by or on  behalf  of him,  her or it, at the time of such
payment  that the  Defendant  made or caused to be made  pursuant to paragraph 4
above,  he, she or it was not insolvent nor did nor will the payment required to
be made by or on behalf of him, her or it render such Defendant insolvent within
the meaning of and/or for the  purposes of the United  States  Bankruptcy  Code,
including  ss.ss.  101 and  547  thereof.  This  warranty  is made by each  such
Defendant and not by such Defendant's counsel.

         29. If a case is commenced in respect of any  Defendant  under Title 11
of the United States Code (Bankruptcy), or a trustee, receiver or conservator is
appointed  under any similar law, and in the event of the entry of a final order
of a court of competent  jurisdiction  determining  the transfer of money to the
Escrow Account or any portion  thereof by or on behalf of such Defendant to be a
preference,  voidable transfer,  fraudulent  transfer or similar transaction and
any portion thereof is required to be returned,  and such amount is not promptly
deposited to the Gross  Settlement Fund by other Settling  Defendants,  then, at
the election of Plaintiffs,  Co-Lead Counsel, the parties shall jointly move the
Court to vacate and set aside the releases  given and Judgment  entered in favor
of the Settling Defendants pursuant to this Settlement Agreement, which releases
and Judgment  shall be null and void, and the Parties shall be restored to their
respective positions in the litigation as of the date a day prior to the date of
this  Settlement  Agreement and any cash amounts in the Escrow shall be returned
as provided in paragraphs 8 and 25 above.

         30. The Parties to this Stipulation and Agreement Of Settlement  intend
the Settlement to be a final and complete resolution of all disputes asserted or
which could be asserted by the Class Members  against the Released  Parties with
respect to the Settled Claims. Accordingly, the Settling Defendants agree not to
assert any claim under Rule 11 of the Federal  Rules of Civil  Procedure  or any
similar  law,  rule or  regulation,  that the Action was brought in bad faith or
without a reasonable basis. The Parties agree that the amount paid and the other
terms of the  Settlement  were  negotiated  at arm's length in good faith by the
Parties,   and  reflect  a  settlement  that  was  reached   voluntarily   after
consultation with experienced legal counsel.

         31. This Stipulation may not be modified or amended, nor may any of its
provisions be waived except by a writing  signed by all parties  hereto or their
successors-in-interest.

         32. The headings  herein are used for the purpose of  convenience  only
and are not meant to have legal effect.

         33. The  administration  and consummation of the Settlement as embodied
in this  Stipulation  shall be under  the  authority  of the Court and the Court
shall  retain  jurisdiction  for the purpose of entering  orders  providing  for
awards of attorneys fees and expenses to  Plaintiffs,  Counsel and enforcing the
terms of this Stipulation.

         34. The Waiver by one party of any  breach of this  Stipulation  by any
other party shall not be deemed a waiver of any other prior or subsequent breach
of this Stipulation.

         35. This  Stipulation and its exhibits and the  Supplemental  Agreement
constitute  the  entire  agreement  among  the  parties  hereto  concerning  the
Settlement of the Action,  and no  representations,  warranties,  or inducements
have been made by any party hereto  concerning this Stipulation and its exhibits
and the  Supplemental  Agreement other than those contained and  memorialized in
such documents.

         36. This Stipulation may be executed in one or more  counterparts.  All
executed  counterparts  and each of them  shall be deemed to be one and the same
instrument  provided  that  counsel  for the parties to this  Stipulation  shall
exchange among themselves original signed counterparts.

         37. This  Stipulation  shall be binding upon,  and inure to the benefit
of, the successors and assigns of the parties hereto.

         38. The construction, interpretation, operation, effect and validity of
this  Stipulation,  and all  documents  necessary  to  effectuate  it,  shall be
governed by the internal laws of the State of  Massachusetts  without  regard to
conflicts of laws,  except to the extent that federal law requires  that federal
law governs.

         39. This  Stipulation  shall not be construed more strictly against one
party than another  merely by virtue of the fact that it, or any part of it, may
have been prepared by counsel for one of the parties,  it being  recognized that
it is the  result of  arm's-length  negotiations  between  the  parties  and all
parties have contributed substantially and materially to the preparation of this
Stipulation.

         40. All counsel and any other person executing this Stipulation and any
of the  exhibits  hereto,  or any  related  settlement  documents,  warrant  and
represent  that  they  have the full  authority  to do so and that they have the
authority to take appropriate  action required or permitted to be taken pursuant
to the Stipulation to effectuate its terms.

         41.  Plaintiffs'  Co-Lead  Counsel  and  Defendants'  Counsel  agree to
cooperate  fully with one  another in seeking  Court  approval  of the Order for
Notice and Hearing,  the Stipulation  and the Settlement,  and to promptly agree
upon and execute all such other  documentation as may be reasonably  required to
obtain final  approval by the District  Court and as necessary,  the  Bankruptcy
Court, of the Settlement.

<PAGE>



Dated:  December 19, 1997

                                            SHAPIRO HABER & URMY  LLP

                              By:
                                                 Edward F. Haber
                                                 75 State Street
                                                 Suite 1520
                                                 Boston, MA 02109
                                                 (617)  439-3939

                                            MILBERG WEISS BERSHAD
                                                 HYNES  &  LERACH  LLP

                              By:
                                                 David J.  Bershad
                                                 Jerome M. Congress
                                                 Salvador J. Graziano
                                                 One Pennsylvania Plaza
                                                 New York, NY 10119
                                                 (212) 594 -5300

                                            SCHIFFRIN & CRAIG,  LTD.

                              By:
                                                 Richard S. Schiffrin
                                                 Andrew  L.  Barroway
                                                 Three Bala Plaza East
                                                 Suite 400
                                                 Bala Cynwyd, PA 19004
                                                 (610)  667-7706



<PAGE>


                                            LAW OFFICES OF ALFRED G.
                                                 YATES JR

                              By:
                                                 Alfred G. Yate's
                                                 Gerald L. Rutledge
                                                 519 Allegheny Building
                                                 429 Forbes Avenue
                                                 Pittsburgh, PA 15219
                                                 (412) 391-5164

                                            Counsel for Plaintiffs



<PAGE>


                                            GOODWIN, PROCTER & HOAR  LLP

                              By:
                                                 Stephen D. Poss, P.C.
                                                 Exchange Place
                                                 Boston, MA  02109
                                                 (617) 570-1000

                                            Counsel for Defendants
                                            William H. Baumhauer and
                                            DAKA International, Inc.

                                            DAKA International, Inc.
                                            2400 Yorkmont Road
                                            Charlotte, N.C. 28217.

                              By:
                              Name:
                              Title:



<PAGE>


                                            GOODWIN, PROCTER & HOAR  LLP

                              By:
                                                 Stephen D. Poss, P.C.
                                                 Exchange Place
                                                 Boston, MA 02109
                                                 (617) 570-1000

                                            Counsel for Defendants
                                            William H. Baumhauer and DAKA
                                            International, Inc.

                                            DAKA International, Inc.
                                            2400 Yorkmont Road
                                            Charlotte, N.C. 28217

                              By:
                                                 Michael J. Bailey
                                                 Chief Executive Officer