AGREEMENT REGARDING EMPLOYMENT

     This  Agreement  ("Agreement")  is made  and  entered  into by and  between
APPLEBEE'S  INTERNATIONAL,  INC.  ("Applebee's") and Julia Stewart  ("Stewart"),
collectively referred to in this Agreement as "the Parties."

     WHEREAS,  through  no  fault  of  Applebee's  or of  Stewart,  Stewart  has
voluntarily decided to resign her employment effective August 17, 2001

     WHEREAS,  Applebee's  and Stewart  wish to settle any  disputes  and claims
which exist  between  them,  or which could exist  between  them,  arising  from
Stewart's employment with Applebee's; and

     NOW,  THEREFORE,  in consideration  of the mutual promises,  agreements and
releases contained in this Agreement, the parties agree as follows:

     A.   Applebee's Agreements:
          ---------------------

     In  exchange  for  Stewart's  promises  and  covenants   contained  herein,
including  but not  limited  to  Stewart's  agreement  to  continue  her  active
employment through August 17, 2001, Applebee's agrees to the following:

          1. Salary  Continuation:  Continuation of current salary at the annual
     rate of $330,000,  less applicable  withholding,  including federal, state,
     and local taxes and F.I.C.A.  through  December  31, 2001.  Stewart will be
     granted a special  $100,000  cash bonus  (subject  to taxes) if she resigns
     effective  August 17, 2001.  This money will be paid at the next normal pay
     period after that date.

          2.  Benefit  Coverage:  Stewart's  standard  benefits,  including  her
     executive  physical,  will  continue  until  she is  eligible  for  similar
     benefits with another employer, but in no case past December 31, 2001.

          3. 2001  Bonus:  Stewart  will be  entitled to receive her 2001 85% of
     base salary bonus at the normal  distribution  date with the calculation as
     follows: a) 70% based on the company's actual performance against the 5 key
     metrics and b) the  remaining  30% assuming she would earn target (100%) on
     her individual objectives.

          4. Appointment as Director of Applebee's of Arizona: Simultaneous with
     the Agreement taking effect in accordance with Paragraph G herein,  Stewart
     shall be  appointed to the Board of  Directors  of  Applebee's  of Arizona,
     provided  that she may be  required  to resign  from such  position  at the
     direction of the CEO or Chief People  Officer of Applebee's  International,
     Inc.

                                       1

<PAGE>


          5. Stock  Options/Restricted  Shares: Vesting of October 5, 2001 stock
     options  of 5,315  Incentive  Stock  Options,  19,685  Non-Qualified  Stock
     Options,  and 1,666  restricted  shares.  The  vesting of all other  option
     grants  shall  be  governed  by the  terms  and  conditions  of  the  grant
     agreements previously issued.

     B.   Stewart's Agreements:
          --------------------

          1.   Full and General Release of Liability:
               -------------------------------------

          In exchange for the  consideration  and covenants of  Applebee's,  the
     sufficiency  of  which  Stewart   acknowledges,   Stewart  hereby  releases
     Applebee's and its past and present officers, directors, employees, agents,
     external consultants, insurers, successors, franchisees, and all affiliated
     companies  (collectively,  the  "Applebee's  Affiliates")  from any and all
     claims and  demands of any kind known or  unknown  which  Stewart  may have
     against  Applebee's or the  Applebee's  Affiliates up to and as of the date
     Stewart  signs this  Agreement,  or which  Stewart may have had at any time
     before the date of signing.  Stewart  understands that Stewart is releasing
     Applebee's and the Applebee's Affiliates, to the maximum extent permissible
     by law, from any liability which Stewart  believes  Applebee's may have had
     to  Stewart at any time up to and  including  the date  Stewart  signs this
     Agreement. This release includes a waiver (a giving up of) any legal rights
     or claims  Stewart may have or may have had,  including  but not limited to
     claims of race,  color,  national origin,  sex or gender,  age,  religious,
     disability  discrimination,  harassment or retaliation  arising under Title
     VII of the Civil Rights Act of 1964, as amended,  the Rehabilitation Act of
     1973,  the Civil Rights Act of 1866  (Section  1981),  the  Americans  with
     Disabilities  Act  of  1990,  the  Age  Discrimination  in  Employment  Act
     ("ADEA"),  any violation of the Employee  Retirement Income Security Act of
     1974,  the Fair  Labor  Standards  Act,  the Equal Pay Act,  the Family and
     Medical  Leave Act of 1993,  the  Occupational  Safety and Health Act,  the
     Kansas  Act  Against   Discrimination  and  Kansas  Age  Discrimination  in
     Employment Act, any applicable state or local  anti-discrimination  statute
     or law,  and all claims  arising  under any other  federal,  state or local
     statute,  regulation,  ordinance, or the common law of any state, including
     any and all claims in tort or contract.  Furthermore,  Stewart specifically
     represents and warrants that at the time of executing this "Agreement,  she
     is  unaware  of  any  work-related  injury  or  illness.   Stewart  further
     represents  and warrants that at the time of executing  this  Agreement she
     has not engaged in any "protected activity" for purposes of federal,  state
     or local law.

          2.   Resignation  of Employment:
               --------------------------
          Stewart  agrees  she will  voluntarily  submit  her  resignation  from
     employment  effective  August 17, 2001.  Stewart agrees that all statements
     regarding the reasons for her resignation will be in substantial accordance
     with Stewart and Applebee's agreed-upon joint statement attached as Exhibit
     A and  incorporated by reference.  Stewart agrees she will not announce any
     new position or employer prior to August 5, 2001.

                                       2
<PAGE>


          3.   Non-Solicitation Agreement:
               --------------------------

               (a)  Acknowledgments.  Stewart  acknowledges  that Applebee's and
     Applebee's  Affiliate's  relationships  with  its  employees,  contractors,
     consultants  and other  business  associations  are among  Applebee's  most
     important  assets,  and that  developing,  maintaining  and  continuing  to
     maintain  these  relationships  is one of  Applebee's  highest  priorities.
     Stewart  further  understands  that she will be relied upon to maintain the
     goodwill of these  relationships on behalf of Applebee's  during the period
     in which she receives  payments and benefits  pursuant to section A of this
     Agreement.

               (b) Non-Solicitation of Employees. Stewart agrees that during the
     period through  December 31, 2002, she will not recruit,  solicit,  induce,
     attempt to induce,  or encourage others to recruit,  solicit,  or induce on
     her behalf,  any  employees,  contractors,  consultants  and other business
     associates  of  Applebee's or any  Applebee's  Affiliate  including but not
     limited to any Applebee's  Franchisee,  to terminate their employment with,
     or otherwise cease the relationship  with,  Applebee's or such Affiliate or
     Franchisee.  Stewart  further  agrees that if any  employees,  contractors,
     consultants,  or other business  associates of Applebee's or any Applebee's
     affiliate  including,  but not  limited  to,  any  Applebee's  franchisees,
     approach her about or seek to discuss  employment  with her during the time
     period  through  December 31, 2002, she will refrain from entering into any
     such  discussion  and/or making offers of  employment,  either  formally or
     informally, without first giving notice to Applebee's CEO or CPO in writing
     of that employee's  expression of interest and allowing  Applebee's two (2)
     business days after such notification to talk to such person before Stewart
     proceeds to either discuss or make any offer of employment.

               (c) Legal and Equitable  Relief.  The  restrictions  contained in
     paragraph 3.(b) are necessary for the protection of the legitimate business
     interests and goodwill of  Applebee's,  and are considered by Stewart to be
     reasonable for such  purposes.  Stewart agrees that any breach of paragraph
     3.(b) could cause  Applebee's  substantial and irrevocable  damage.  In the
     event of any such breach,  in addition to such other  remedies  that may be
     available, including the recovery of damages from Stewart, Applebee's shall
     have the right to seek  injunctive  relief to restrain or enjoin any actual
     or threatened  breach of the provisions of paragraph  4.(b).  If Applebee's
     prevails in a legal  proceeding to remedy a breach or threatened  breach of
     this  Agreement,   Applebee's  shall  be  entitled  to  receive  reasonable
     attorneys' fees, expert witness fees, and  out-of-pocket  costs incurred in
     connection with such proceeding,  in addition to any other relief it may be
     granted.  If Stewart prevails in any such action  instituted by Applebee's,
     she shall be entitled to receive reasonable attorneys' fees, expert witness
     fees, and out-of-pocket  costs incurred in connection with such proceeding,
     in addition to any other relief she may be granted.

               Provided Stewart fulfills her obligations set forth in paragraphs
     3 (a) and 3 (b),  Applebee's  agrees to pay Stewart,  no later than January
     30, 2003, the total gross amount of One Hundred Thousand Dollars and No/100
     ($100,000)  less  applicable  withholding,  including  but not  necessarily
     limited to federal and state taxes.

                                       3
<PAGE>

          4.  Non-Competition Agreement:
              -------------------------
          Stewart  agrees  that during the period  through  December  31,  2002,
     Stewart  will not  compete  either  directly  or  indirectly,  either as an
     employee, owner, officer, director,  consultant,  stockholder or partner in
     the following competitive enterprises: Brinker Int'l and TGI Fridays..

          5. Adequacy of Consideration:
             --------------------------
          Stewart  acknowledges  that the amounts  and/or  benefits  provided by
     Applebee's  under this Agreement are adequate  consideration  for Stewart's
     execution  of this  Agreement,  and further  acknowledges  that the amounts
     and/or benefits provided is in excess of anything of value to which Stewart
     may  otherwise  be  entitled  under  existing   policies  or  practices  of
     Applebee's.

     C.   Non-Disparagement:
          -----------------

     Stewart  agrees that she will refrain from making  disparaging  or critical
statements  of any nature  whatsoever  about  Applebee's  and/or any  Applebee's
Franchisees  or  Affiliates.   Similarly,  Applebee's  agrees  that  its  Senior
Executive  Team and Board of Directors  will refrain from making  disparaging or
critical  statements of any nature whatsoever about Stewart.  Any breach of this
agreement will entitle the aggrieved party to seek all remedies allowed by law ,
and the prevailing  party,  in addition to damages,  will be entitled to recover
all attorneys  fees,  expenses and costs.  The parties agree that all statements
regarding  Stewart's  employment with  Applebee's will be in substantial  accord
with the statements in Exhibit A attached hereto and  incorporated by reference.
The parties  agree and  acknowledge  that any violation of or failure to perform
the agreements set forth in this section shall  constitute a material  breach of
this Agreement.

     D.   Trade Secrets
          -------------

     Stewart  agrees  that she has  been  employed  in a  supervisory/managerial
capacity and in such  capacity has access to  information  and  materials  which
constitute  trade secrets and  confidential  and proprietary  information.  She,
therefore, agrees that except for knowledge or information that she gained prior
to her employment with  Applebee's,  she will not at any time (i) appropriate or
use the trade secrets for use in any business which is not a part of Applebee's;
(ii) acquire any right to use, or to license or  franchise  the use of any name,
mark or other  intellectual  property  right  which is or may be  granted by any
franchise agreement between Applebee's and any franchisee; or (iii) communicate,
divulge or use for the  benefit of any other  person or entity any  confidential
information,  knowledge or know-how  concerning  the methods of  development  or
operation of a Restaurant  which have been  communicated  to Stewart or of which
Stewart has been apprised by virtue of Applebee's employment by Stewart. Any and
all  information,   knowledge,  and  know-how,  including,  without  limitation,
drawings, materials, equipment, specifications, techniques and other data, which
Applebee's  has designated as  confidential,  shall be deemed  confidential  for
purposes of this  Agreement.  Stewart further  acknowledges  and agrees that the
Franchise Operations Manual and any other materials and manuals provided or made
available to franchisees of Applebee's  and Applebee's  employees  involved with
said franchisees  (collectively,  the "Manuals") may not be reproduced, in whole
or in part,  without  the  written  consent  of  Applebee's.  Stewart  agrees to
surrender  to  Applebee's  each and  every  copy of the  Manuals  and any  other
confidential  information  or material  in her  possession  or control  upon the
execution of this Agreement.

                                       4
<PAGE>

     E.   Confidentiality Agreement:
          -------------------------

     (a)Stewart agrees to keep confidential the existence, terms and contents of
this Agreement,  other than to her spouse,  attorney,  tax preparer (all of whom
shall also agree to  maintain  confidentiality),  and,  to the extent  required,
governmental  taxing  authorities,  or if  compelled  by a  court  of  competent
jurisdiction or otherwise required by law (collectively,  "Authorized Persons").
Stewart  further  agrees to keep  confidential  and not to  disclose  the facts,
events and/or circumstances giving rise to this Agreement, unless compelled by a
court of competent jurisdiction or otherwise required by law.

     Stewart   expressly   agrees  and  understands   that  any  breach  of  the
confidentiality provisions of this Agreement by her is a material breach of this
Agreement.  In the  event of  Stewart's  breach of  confidentiality  provisions,
Stewart acknowledges and agrees,  Applebee's will be entitled to seek to recover
from Stewart any payments made to Stewart, to the extent permitted by law.

     (b)  Applebee's  and its  Affiliates  agree  to keep the  contents  of this
Agreement  confidential  and not to  disclose  the terms or  conditions  of this
Agreement to any person other than to the extent required by law or as necessary
to fulfill the  promises  and  obligations  set forth in this  Agreement  or for
related business purposes. This provision specifically means that the disclosure
of the contents of the  Agreement  will be limited to that required by SEC Rules
and  Regulations  and will not be otherwise the subject of direct  communication
with  shareholders.  Applebee's  agrees to provide to Stewart any  statement  or
information required by SEC Rules and Regulations before publishing.  Applebee's
acknowledges  and agrees that if Applebee's  breaches  confidentiality,  Stewart
will be entitled to seek damages, attorney's fees, expenses, and costs.

     (c) In response to any inquiry regarding the facts or circumstances leading
to this Agreement  and/or the contents of this Agreement by any person or entity
not authorized to receive confidential information under this Agreement, Stewart
and  Applebee's  agree to limit their response to a statement that the matter is
confidential.

     F.   No Admission of Liability:
          -------------------------

     Stewart  acknowledges that this Agreement shall not in any way be construed
as an admission by Applebee's of any  liability on the part of  Applebee's,  and
that all such liability is expressly denied by Applebee's.

                                       5

<PAGE>


     G.   Voluntary Nature of Agreement and Advice of Counsel:
          ---------------------------------------------------

     Stewart  acknowledges  that Stewart has read this Agreement and understands
its terms,  and signs the  Agreement  voluntarily  of  Stewart's  own free will,
without coercion or duress,  and with full understanding of the significance and
binding  effect of the  Agreement.  Stewart is hereby advised to consult with an
attorney before signing this Agreement.

     H.   Consideration and Revocation Periods:
          ------------------------------------

     Stewart  received this  Agreement on July 20, 2001.  Stewart has twenty-one
(21) calendar days,  after the date she received the Agreement,  within which to
consider  the  Agreement,  although  Stewart  may  return it sooner if  desired.
Stewart may revoke the  Agreement,  by delivering a written notice of revocation
to Applebee's Chief People Officer, within seven (7) calendar days after Stewart
signs the Agreement.  The Agreement will become effective and enforceable on the
eighth (8th) calendar day following the date Stewart signs the Agreement.

     I.   Binding Effect:
          --------------

     This  Agreement   will  be  binding  upon  Stewart  and  Stewart's   heirs,
administrators,  representatives,  executors,  successors and assigns,  and will
inure to the benefit of Applebee's and its successors and assigns.  In the event
of Stewart's  incapacity or death,  all payments payable to Stewart will be paid
to her spouse or estate, as applicable.

     J.   No Liens:
          --------

     Stewart  represents  and warrants that there are no existing or outstanding
attorneys' liens or other liens,  which are not extinguished or satisfied by the
execution  of this  Agreement.  Stewart  agrees to indemnify  and hold  harmless
Applebee's for any liability in connection with such liens.

     K.   Recover of Amounts Paid:
          -----------------------

     If Stewart  breaches  a material  provision  of this  agreement,  or if any
provision  of  Paragraph  B, or any of its  subparts,  is  found  by a court  of
competent  jurisdiction  to be  unenforceable  as a result of any action Stewart
initiates,  then to the extent  permitted  by law,  Stewart  agrees to return to
Applebee's the value of the payments and/or  benefits  provided to Stewart under
this agreement.

     L.   Governing Law:
          -------------

     This Agreement will be interpreted and enforced in accordance with the laws
of the State of Kansas.

     M.   Severability:
          ------------

     Should any provision of this Agreement be declared or determined by a court
of  competent  jurisdiction  to  be  invalid  or  otherwise  unenforceable,  the
remaining  parts,  terms and provisions  shall  continue to be valid,  legal and
enforceable,  and will be performed and enforced to the fullest extent permitted
by law.

                                       6
<PAGE>

     N.   Complete Agreement:
          ------------------

     This Agreement and attached Exhibit A contains the entire agreement between
Stewart and Applebee's and  supersedes  all prior  agreements or  understandings
between them on the subject  matters of this  Agreement.  No change or waiver of
any part of the  AGREEMENT  will be valid  unless in writing  and signed by both
Stewart and Applebee's.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year designated below.


APPLEBEE'S INTERNATIONAL, INC.              JULIA STEWART


By:______________________________           __________________________________

Date: ____________________________          Date: _____________________________



                                       7