Document:

FIFTH AMENDMENT TO PARTICIPATION AGREEMENT

     THIS FIFTH AMENDMENT TO PARTICIPATION AGREEMENT (hereinafter,  as it may be
modified,  amended or supplemented from time to time, called this  "Amendment"),
made and  entered  into as of August  24,  1999,  among (i) AVADO  BRANDS,  INC.
formerly known as Apple South, Inc., a corporation  organized and existing under
the laws of Georgia (herein,  together with its successors and assigns permitted
hereunder, called the "Lessee"), (ii) FIRST SECURITY BANK, NATIONAL ASSOCIATION,
a  national  banking  association  ("First  Security"),  not in  its  individual
capacity except as expressly  provided herein, but solely as Owner Trustee under
Apple  South  Trust  No.  97-1  (herein  in such  capacity,  together  with  its
successors and assigns permitted hereunder,  called the "Owner Trustee"),  (iii)
STI CREDIT  CORPORATION,  a Nevada  corporation,  as assignee of SunTrust  Bank,
Atlanta,  in its capacity as the holder of the beneficial  interest in the trust
estate  established under Apple South Trust No. 97-1 (in such capacity as of the
date  hereof,  the  "Holder",  and  together  with its  successors  and  assigns
permitted hereunder,  called the "Holders"), (iv) the financial institutions now
parties to the  Participation  Agreement  (as  defined  below) as Lenders  (each
herein in such  capacity,  together with its  successors  and assigns  permitted
hereunder, called a "Lender" and collectively,  the "Lenders"), and (v) SUNTRUST
BANK,  ATLANTA, a banking  corporation  organized and existing under the laws of
Georgia,  ("SunTrust"),  as collateral  agent and  administrative  agent for the
Lenders and the Holders (in such capacity, the "Administrative Agent").

                               W I T N E S S E T H

     WHEREAS,  the Lessee,  the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent are parties to that certain Participation Agreement,  dated
as of September 24, 1997, as amended by the First Amendment to the Participation
Agreement, dated as of March 27, 1998, as amended by the Second Amendment to the
Participation  Agreement,  dated as of August 14, 1998,  as amended by the Third
Amendment to the Participation Agreement,  dated as of November 13, 1998, and as
amended by the Fourth  Amendment  to the  Participation  Agreement,  dated as of
February 22, 1999 (as so amended, the "Participation Agreement");

     WHEREAS,  the Lessee,  the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent have agreed to amend the Participation Agreement in certain
respects, as described more particularly below;

     NOW,  THEREFORE,  in consideration of the sum of TEN DOLLARS ($10.00),  the
foregoing  premises,  to  induce  the  Holder  and  the  Lenders  to  amend  the
Participation Agreement and to continue to perform their obligations thereunder,
and for other good and valuable  consideration,  the  sufficiency and receipt of
all of which are acknowledged,  the Lessee,  the Owner Trustee,  the Holder, the
Lenders and the Administrative Agent agree as follows:

                                 A. DEFINITIONS

     Unless the context  otherwise  requires,  all capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in Appendix A
to the Participation  Agreement for all purposes of this Amendment.  The General
Provisions of Appendix A to the Participation  Agreement are hereby incorporated
by reference herein.

                                 B. AMENDMENTS:

     1.  Amendment  to Existing  Section 3.2:  Section 3.2 of the  Participation
Agreement is amended by deleting Section 3.2 in its entirety and substituting in
its place the following revised Section 3.2:

           SECTION 3.2. Representations and Warranties of the Lessee.

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     The Lessee  represents  and warrants to the other parties to this Agreement
that:

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

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

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

     (d)  The  audited  balance  sheet  of  the  Lessee  and  its   Consolidated
Subsidiaries  as of the Fiscal Year ended closest to December 31, 1998,  and the
related consolidated audited statements of income, shareholders' equity and cash
flows of the Lessee and its  Consolidated  Subsidiaries for the Fiscal Year then
ended,  and the  unaudited  balance  sheet of the  Lessee  and its  Consolidated
Subsidiaries  as of the Fiscal  Quarter ended closest to March 31, 1999, and the
related consolidated  unaudited  statements of income,  shareholders' equity and
cash  flows of the  Lessee  and its  Consolidated  Subsidiaries  for the  Fiscal
Quarter  then ended,  copies of which have been  delivered to each of the Holder
and the Lenders, fairly present, in conformity with GAAP, the financial position
of the Lessee and its Consolidated Subsidiaries as of such dates and the results
of its operations and cash flow for such periods stated;  provided,  that during
the  term  of  this   Agreement   after  the  Fifth   Amendment   Date,   future
representations  as to the matters set forth in this sentence shall be deemed to
refer to the most recent  financial  statements  delivered  pursuant to Sections
5.1(a) and  5.1(b).  Since  December  31,  1998,  there has been no event,  act,
condition  or  occurrence  having or which  could be expected to have a Material
Adverse  Effect;  provided that during the term of this Agreement  following the
Fifth Amendment  Date,  future  representations  as to matters set forth in this
sentence  shall be  deemed to refer to the last day of the most  recent  audited
financial statements delivered by the Lessee pursuant to Section 5.1(a).

     (e) There is no action,  suit or proceeding pending, or to the knowledge of
the  Lessee  threatened,   against  or  affecting  the  Lessee  or  any  of  its
Subsidiaries  before any court or arbitrator or any governmental body, agency or
official  which could have a Material  Adverse  Effect  except as  described  on

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Schedule 3.2(e),  or which in any manner draws into question the validity of, or
could  impair the ability of the Lessee or any  Subsidiary  Guarantor to perform
its obligations under, this Agreement, the Lease, the Subsidiary Guaranty or any
of the other Operative Agreements.

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

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

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

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

     (j) The Lessee and each of its Subsidiaries  owns Properties,  or interests
in  Properties,  sufficient  for the conduct of its  business;  and none of such
Properties is subject to any Lien except as permitted in Section 5.8.

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

     (l) All written information and, to the best of the Lessee's knowledge, all
other information,  heretofore furnished by the Lessee to the Owner Trustee, any
Holder, any Lender or the Administrative  Agent for purposes of or in connection
with this  Agreement  or any  transaction  contemplated  hereby is, and all such
information  hereafter furnished by the Lessee to the Owner Trustee, any Holder,
any Lender or the Administrative  Agent will be, true,  accurate and complete in
every material respect or based on reasonable  estimates on the date as of which
such  information  is stated or  certified.  The  Lessee  has  disclosed  in its
offering circular dated June 2, 1999, a copy of which has been delivered to each
of the Owner Trustee,  any Holder,  any Lender or the  Administrative  Agent, or
otherwise in a writing delivered to the Owner Trustee, any Holder, any Lender or
the  Administrative  Agent, any and all facts which could reasonably be expected
to have or cause a Material Adverse Effect.

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

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

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

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

     (q) The Lessee and its  Subsidiaries  possess  to the extent  material  all
franchises,  certificates,  licenses,  permits  and  other  authorizations  from
governmental  and  political  subdivisions  or regulatory  authorities,  and all
patents,  trademarks,  service  marks,  trade  names,  copyrights,   franchises,
licenses and other rights that are  necessary  for  ownership,  maintenance  and
operation of any of their respective material Properties and assets, and neither
the Lessee nor any of its  Subsidiaries  is in violation of any thereof,  which,
individually  or in the  aggregate,  would  or might  have or  cause a  Material
Adverse Effect.

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

     (s) By the Fifth  Amendment  Date,  the  Lessee  shall have  developed  and
delivered to the  Administrative  Agent a  comprehensive  plan (the "Y2K Plan"),
including  milestones ("Y2K Plan  Milestones"),  to identify whether its and its
Subsidiaries'  computer software and hardware systems which materially impact or
affect the business  operations of the Lessee and such Subsidiaries will be Year
2000 Compliant and Ready.

     (t) The  principal  place of  business  and chief  executive  office of the

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

     (u) The legal name of the Lessee is "Avado Brands, Inc."

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

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

     2.  Amendment  to  Existing  Section  5:  Section  5 of  the  Participation
Agreement is amended by deleting  Section 5 in its entirety and  substituting in
its place the following revised Section 5:

                         SECTION 5. COVENANTS OF LESSEE:

                            SECTION 5.1. Information.

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

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

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

     (c)  Simultaneously  with the delivery of each set of financial  statements
referred to in Sections 5.1(a) and 5.1(b),  a certificate,  substantially in the
form of  Attachment  B (a  "Compliance  Certificate"),  of the  chief  financial
officer of the Lessee (i) setting  forth in reasonable  detail the  calculations
required to establish whether the Lessee was in compliance with the requirements
of Sections 5.4, 5.5, 5.6, 5.7 and 5.19 on the date of such financial statements
and  (ii)  stating  whether  any  Lease  Default  exists  on the  date  of  such
certificate  and, if any Lease  Default then exists,  setting  forth the details
thereof  and the  action  which the  Lessee is taking or  proposes  to take with
respect thereto;

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

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

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

     (g) If and when any member of the Controlled Group (i) gives or is required
to give notice to the PBGC of any  reportable  event (as defined in Section 4043
of  ERISA)  with  respect  to any Plan  which  might  constitute  grounds  for a
termination  of such  Plan  under  Title IV of  ERISA,  or  knows  that the plan
administrator  of any Plan has given or is  required  to give notice of any such
reportable  event,  a copy of the  notice  of such  reportable  event  given  or
required to be given to the PBGC;  (ii)  receives  notice of complete or partial
withdrawal  liability  under Title IV of ERISA, a copy of such notice;  or (iii)
receives  notice from the PBGC under Title IV of ERISA of an intent to terminate
or appoint a trustee to administer any Plan, a copy of such notice;

     (h)  Simultaneously  with the delivery of each set of annual and  quarterly
financial statements referred to in Section 5.1(a) and Section 5.1(b) until such
time as  Lessee is Year 2000  Compliant  and  Ready,  a  statement  of the chief
executive officer,  chief financial officer,  or chief technology officer of the
Lessee to the effect  that  nothing  has come to his  attention  to cause him to
believe  that the Y2K Plan  Milestones  have not been  achieved  (or  cannot  be
achieved) in a manner such that the Lessee's and its Subsidiaries'  hardware and
software  systems will not be Year 2000  Compliant and Ready in accordance  with
the  Y2K  Plan.  In  addition,  if,  prior  to the  delivery  date  of any  such
statements,  the Lessee  becomes aware of any material  deviations  from the Y2K
Plan or any Y2K Plan  Milestones  which would be reasonably  likely to cause the
Lessee and its Subsidiaries not to be Year 2000 Compliant and Ready, a statement
of the chief executive  officer,  chief financial  officer,  or chief technology
officer of Lessee  setting  forth the details  thereof and the action  which the
Lessee is taking or proposes to take with respect  thereto shall be delivered to
each of the Holder and the Lenders promptly thereafter; and

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

5.2 Inspection of Property, Books and Records.

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

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assist in such visits and inspections in each case at such reasonable  times and
as often as may reasonably be desired.

5.3.  Y2K.

     The Lessee will  diligently  endeavor to meet the Y2K Plan  Milestones such
that all computer  hardware and software systems  identified as material will be
Year 2000 Compliant and Ready in accordance with the Y2K Plan.

5.4.  Adjusted Total Debt/Adjusted Total Capital Ratio.

     The Adjusted Total  Debt/Adjusted  Total Capital Ratio will not at any time
exceed .70:1.0.

5.5.  Fixed Charge Coverage Ratio.

     Lessee's Fixed Charge Coverage Ratio, measured on a rolling four (4) Fiscal
Quarters' basis as of the end of each Fiscal Quarter, commencing with the Fiscal
Quarter ended closest to June 30, 1999,  shall be (i) not less than 1.50:1,  for
the Fiscal  Quarters  ending  closest to June 30, 1999,  September  30, 1999 and
December 31, 1999,  (ii) not less than 1.75:1,  for the Fiscal  Quarters  ending
closest to March 31, 2000,  June 30, 2000,  September  30, 2000 and December 31,
2000; and (iii) not less than 2.00:1, for each Fiscal Quarter ending thereafter.

5.6.  Total Debt/EBITDA Ratio.

     The ratio  which  (i) the Total  Debt of the  Lessee  and its  Consolidated
Subsidiaries  at the end of any  Fiscal  Quarter,  commencing  with  the  Fiscal
Quarter ended  closest to June 30, 1999,  bears to (ii) the EBITDA of the Lessee
and its  Consolidated  Subsidiaries,  measured  on a  rolling  four  (4)  Fiscal
Quarters'  basis as of the end of such Fiscal  Quarter  (the "Total  Debt/EBITDA
Ratio"),  shall be (i) not more than  4.00:1,  for the  Fiscal  Quarters  ending
closest to June 30, 1999,  September  30, 1999 and  December 31, 1999,  (ii) not
more than 3.75:1 for the Fiscal  Quarters ending closest to March 31, 2000, June
30,  2000,  September  30,  2000 and  December  31, 2000 and (iii) not more than
3.50:1 for each Fiscal Quarter ending thereafter. In computing EBITDA in respect
of the foregoing  ratio and the ratio set forth in Section 5.7, (a) any asset or
stock  dispositions  by the Lessee  consisting  of the sale of a business  line,
segment or other group of related stores occurring within a Fiscal Quarter shall
be accounted for by reducing  EBITDA by the individual  EBITDA  attributable  to
each store within such group for such Fiscal Quarter and the three (3) preceding
Fiscal  Quarters  or, in the event that any such store had  negative  individual
EBITDA for such  periods,  by  increasing  EBITDA by the amount of such negative
EBITDA;  and (b) any asset or stock acquisitions by the Lessee consisting of the
purchase of a business, line, segment or other group of related stores occurring
within a Fiscal  Quarter  shall be  accounted  for by  increasing  EBITDA by the
individual  EBITDA  attributable to each store within such group for such Fiscal
Quarter and for the three (3)  preceding  Fiscal  Quarters or, in the event that
any such store had negative  individual  EBITDA for such periods,  by decreasing
EBITDA by the amount of such negative EBITDA; in each instance, on an historical
basis,  in a manner which Lessee  shall  determine,  but subject to prior review
with, and approval by, the Administrative Agent.

5.7  Total Senior Debt/EBITDA Ratio.

     The  ratio  which  (i)  the  Total  Senior  Debt  of  the  Lessee  and  its
Consolidated Subsidiaries at the end of any Fiscal Quarter,  commencing with the
Fiscal  Quarter  ended  closest to June 30,  1999,  bears to (ii)  EBITDA of the
Lessee and its Consolidated  Subsidiaries,  measured on a rolling Four Quarters'
basis as of the end of such Fiscal Quarter (adjusted,  however,  as reflected in
Section 5.6), shall be (i) not more than 3.00:1,  for the Fiscal Quarters ending
closest to June 30, 1999,  September  30, 1999 and  December 31, 1999,  (ii) not
more than 2.75:1 for the Fiscal  Quarters ending closest to March 31, 2000, June
30,  2000,  September  30,  2000 and  December  31, 2000 and (iii) not more than
2.50:1, for any Fiscal Quarter ending thereafter.

                                       7
<PAGE>
5.8.  Negative Pledge.

     The Lessee will not, nor will the Lessee permit any  Subsidiary to, create,
assume or suffer to exist any Lien on any asset now owned or hereafter  acquired
by it, except:  (i) those Liens, if any,  described on Schedule 5.8,  concerning
existing  Debt of the Lessee,  to be set forth and described  more  particularly
therein,  together  with any Lien  arising  out of the  refinancing,  extension,
renewal or refunding of any Debt  secured by any such Lien,  provided  that such
Debt is not  secured  by any  additional  assets,  and the  amount  of such Debt
secured by any such Lien is not increased;  (ii) Liens incidental to the conduct
of its business or the ownership of its Properties  which (A) do not secure Debt
and  (B) do not in the  aggregate  materially  detract  from  the  value  of its
Properties  or  materially  impair  the  use  thereof  or the  operation  of its
business,  including, without limitation,  easements, rights of way, restrictive
covenants,  zoning  and  other  similar  restrictions  on real  property;  (iii)
materialmen's,  mechanics',  warehousemen's,  carriers',  landlords'  and  other
similar statutory Liens which secure Debt or other obligations that are not past
due,  or, if past due are being  contested  in good  faith by the  Lessee or the
appropriate  Subsidiary  by  appropriate  proceedings;  (iv) Liens for taxes not
delinquent  or  taxes  being   contested  in  good  faith  and  by   appropriate
proceedings;  (v) pledges or deposits in connection with worker's  compensation,
unemployment  insurance and other social security legislation;  (vi) deposits to
secure performance of bids, trade contracts,  leases,  statutory obligations (to
the extent not excepted elsewhere  herein);  (vii) grants of security and rights
of setoff in deposit accounts,  securities and other properties held at banks or
financial  institutions to secure the payment or reimbursement  under overdraft,
letter of credit,  acceptance  and other  credit  facilities;  (viii)  rights of
setoff,  banker's  liens and other similar rights arising solely by operation of
law; (ix) Purchase Money Liens, provided that the total amount of all such Debt,
when  aggregated  with any Debt described in clause (x) below then  outstanding,
does not exceed,  at any time,  in aggregate  amount,  fifteen  percent (15%) of
Tangible  Net  Worth;  (x)  Liens on any  Properties  acquired  by Lessee or any
Subsidiary  subsequent  to June 2, 1999,  to the extent  that (A) such Liens are
existing at the time of acquisition, (B) the Debt secured thereby is not secured
by any other  Properties  of  Lessee  or such  Subsidiary  except  the  acquired
Properties,  (C) the amount of such Debt so secured  thereby is not increased at
or  subsequent  to the  acquisition  and (D) the  total  amount of all such Debt
secured by all such acquired Properties, when aggregated with all purchase money
Debt then outstanding, does not exceed at any time, in aggregate amount, fifteen
percent  (15%) of Tangible Net Worth;  together with any Lien arising out of the
refinancing,  extension,  renewal or  refunding  of any Debt secured by any such
Lien,  provided that such Debt is not secured by any additional  assets, and the
amount of such Debt  secured  by any such Lien is not  increased;  (xi)  capital
leases  made  in the  ordinary  course  of  business  (but  excluding,  however,
sale-leaseback  transactions  in any event) in which there is no  provision  for
title to the leased  Property  to pass to the Lessee or such  Subsidiary  at the
expiration of the lease term or as to which no bargain  purchase  option exists;
and (xii) rights of lessors in respect of Properties leased to the Lessee or its
Subsidiaries under operating leases.

5.9.  Maintenance of Existence.

     Except as permitted in Section 5.10 and 5.11,  the Lessee shall,  and shall
cause each  Subsidiary  to,  maintain its  corporate  existence and carry on its
business in substantially  the same manner and in substantially  the same fields
as such business is now carried on and maintained.

5.10.  Dissolution.

     Neither  the  Lessee  nor any of its  Subsidiaries  shall  suffer or permit
dissolution or liquidation  either in whole or in part, except through corporate
reorganization to the extent permitted by Section 5.11.

                                       8
<PAGE>
5.11.  Consolidations, Mergers and Sales of Assets.

     The Lessee will not, nor will it permit any Subsidiary  to,  consolidate or
merge with or into, or sell, lease or otherwise  transfer all or any substantial
part of its  assets  to, any other  Person,  or  discontinue  or  eliminate  any
business line or segment,  provided,  however, that, (i) subject at all times to
Section 5.19,  the Lessee or any Subsidiary may merge with another Person (which
is not the Lessee or such Subsidiary) if (A) such Person was organized under the
laws of the United  States of America  or one of its  states,  (B) the Lessee or
such  Subsidiary (as the case may be) is the  corporation  surviving such merger
and (C) immediately  after giving effect to such merger,  no Lease Default shall
have occurred and be  continuing,  (ii) any  Subsidiaries  of the Lessee may (A)
merge or  consolidate  with each other or with the Lessee (so long as the Lessee
is the corporation  surviving such merger),  or (B) sell assets to each other or
to the Lessee and (iii) in connection with  acquisitions  permitted  pursuant to
clause (l) of Section 5.19, the Lessee may cause one or more Subsidiaries formed
for such purpose to merge into  acquisition  targets in order to consummate such
acquisitions; and, provided, further, that the Lessee may consummate Asset Sales
so long as, unless otherwise  approved in writing by the Required Lenders,  each
of the  following  conditions  is met: (i) the Asset Sales are to Persons  other
than  Affiliates,  (ii) the Asset  Sales  are made for cash,  (iii) the Net Cash
Proceeds  from all such Asset  Sales  (other  than any in  respect  of  Non-Core
Assets) in any one Fiscal Year do not exceed Ten Million Dollars  ($10,000,000),
(iv) the proceeds of all such Asset Sales (other than any in respect of Non-Core
Assets)  are  applied in the  manner  provided  in  Section  2.9.2 of the Credit
Agreement, to the extent required thereby, and to the extent not so required, to
make  optional  prepayments  of the  Revolving  Loans (as  defined in the Credit
Agreement)  pursuant  to Section  2.8 of the Credit  Agreement  and for  working
capital in Lessee's business,  but for no other purpose and (v) no Lease Default
has occurred which is then  continuing or otherwise  would result from such sale
occurring.

5.12.  Compliance with Laws; Payment of Taxes.

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

5.13.  Insurance.

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

5.14.  Change in Fiscal Year.

     The  Lessee  will not change its Fiscal  Year  without  the  consent of the
Required Lenders.

5.15.  Maintenance of Property.

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

                                       9
<PAGE>
5.16.  Environmental Notices.

     The Lessee shall furnish to the  Administrative  Agent,  promptly after the
Lessee becomes aware thereof,  written notice of all Environmental  Liabilities,
pending,   threatened   Environmental   Proceedings,    Environmental   Notices,
Environmental Judgments and Orders and Environmental Releases, at, on, in, under
or in any way affecting the  Properties or any adjacent  property and all facts,
events,  or conditions  that could  reasonably be expected to lead to any of the
foregoing.

5.17.  Environmental Matters.

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

5.18.  Environmental Releases.

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

5.19.  Investments.

     The Lessee  will not make (nor will the Lessee  permit  any  Subsidiary  to
make) any  investment in any Person or Property  (which term  "investment,"  for
purposes hereof, shall mean and include, without limitation,  the acquisition of
any property,  the issuance,  acquisition or exchange of any capital stock, debt
or other obligations or security to, from or with any Person,  the making of any
loan, advance,  extension of credit, credit accommodation,  Guarantee or capital
contribution to or on behalf of any Person, and the leasing or subleasing of any
property to any Person,  but shall not include the issuance by the Lessee of its
Capital  Stock in exchange for cash  consideration),  provided,  however,  that,
notwithstanding the foregoing,  the Lessee (or any Subsidiary) may, from time to
time,  undertake the following,  without the necessity of obtaining the Required
Lenders' prior written consent thereto:

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

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

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

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

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

                                       10
<PAGE>
     (f)  Surplus  Cash.  Consistent  at all times  with the  Lessee's  internal
Statement of Investment  Policy,  invest surplus cash in (A)  obligations of, or
guaranteed  by,  the  United  States  of  America  or any  agency  thereof,  (B)
short-term certificates of deposit issued by, and time deposits with, any Lender
or any other  financial  institution  domiciled in the United  States of America
with assets of at least $500,000,000,  (C) short-term  commercial paper rated at
least "A1" by Standard & Poors or "P1" by Moody's,  and (D) fixed or  adjustable
rate corporate debt securities with a credit rating of at least double A (Aa/AA)
by either  Moody's  or  Standard  & Poors,  provided  that any  fixed  rate debt
securities have a maturity of one year or less;

     (g)  Subsidiaries.  Have  investments in  Consolidated  Subsidiaries of the
Lessee in the ordinary  course of, and pursuant to the  reasonable  requirements
of,  the  Lessee's  and such  Subsidiaries'  respective  businesses  (including,
without  limitation,  the  issuance of  Guarantees  of the  obligations  of such
Consolidated   Subsidiaries),   provided  that  the  aggregate  amount  of  such
investments  which may be outstanding at any one time hereafter,  as to all such
Subsidiaries,  other than any which are  Subsidiary  Guarantors  (as to which no
limitation shall apply),  shall not exceed (A) as to the Hops Subsidiaries,  the
sum of (1) the  aggregate  amount  thereof  which  already has been invested and
remains  outstanding  on the Fifth  Amendment  Date, or has been committed to be
invested as of the Fifth  Amendment Date, as set forth on Schedule 5.19 attached
hereto (without credit for any reductions  thereof which may occur subsequent to
the Fifth Amendment Date), plus (2) an additional amount,  which shall represent
the  maximum  amount,  in the  aggregate,  which  may be  invested  in the  Hops
Subsidiaries  subsequent to the Fifth  Amendment Date, not to exceed Two Million
Five Hundred  Thousand Dollars  ($2,500,000) per annum,  measured from the Fifth
Amendment Date, in annual increments  (without any rollover from  year-to-year);
and  (B) as to all  Subsidiaries,  other  than  the  Hops  Subsidiaries  and any
Subsidiaries which are Subsidiary Guarantors, an aggregate amount which does not
exceed,  when  aggregated  with all  investments  (whether or not made in, by or
through  Subsidiaries)  under clause (j) of this Section 5.19, ten percent (10%)
of the sum of (A) Lessee's  Stockholders  Equity at any time plus (B) the amount
of the TECONS at such time; it being  understood  and agreed that there shall be
deducted in any event from the amount of investments in such Subsidiaries  which
may be made pursuant to this  subclause (B) the aggregate  amount of Capitalized
Lease Obligations of all such Subsidiaries which are at any time outstanding, if
and to the extent not already  counted  against such amount as an  investment of
Lessee;  i.e., as a Capitalized  Lease  Obligation  owing to Lessee as lessor or
sublessor.

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

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

     (j)  Restaurant  Concepts.  So long as no Lease Default has occurred and is
continuing or would be caused thereby,  make investments in restaurant  concepts
and joint ventures (including, without limitation, by the issuance of Guarantees
of the obligations of such restaurant concepts and joint ventures),  and whether
directly or through one or more  Subsidiaries,  for the operation of restaurants
so  long  as the  total  amount  of all  such  investments  at any  time  (after
subtracting   therefrom  the  amount  of  cash  returns  received  on  any  such
investments)   does  not  exceed,   when  aggregated  with  all  investments  in
Subsidiaries  described in and  permitted  under  subclause (B) to clause (g) of
this Section  5.19,  ten percent  (10%) of the sum of (A) Lessee's  Stockholders
Equity at any time plus (B) the amount of the TECONS at such time;

                                       11
<PAGE>
     (k)  Other  Advances.  Make  loans or  advances  to  Affiliates  (excluding
therefrom,  however,   Subsidiaries),   shareholders,   directors,  officers  or
employees in addition to those described in clauses (a) through (j) hereinabove,
in an aggregate amount as to all such loans and advances at any time outstanding
to all such Persons not to exceed Eight Million Dollars ($8,000,000) so long as,
and provided  that, (A) no Lease Default has occurred and is continuing or would
be caused  thereby,  (B) each such loan or advance is repaid in full,  not later
than two (2) years from the date of its disbursement and (C) the aforesaid Eight
Million Dollar  ($8,000,000)  limitation  shall be reduced by the amount of such
repayments   until  such   limitation   is  reduced  to  Five  Million   Dollars
($5,000,000);

     (l) Acquisitions. Acquire all of the stock or assets of any Person, so long
as (A) the aggregate amount of cash, or value of Property, paid as consideration
in connection with all such acquisitions,  and liabilities assumed by the Lessee
or any Subsidiary in connection with all such  acquisitions  consummated  during
any eighteen (18) month period, determined initially for the eighteen (18) month
period  commencing on the Fifth  Amendment Date and thereafter for each eighteen
(18) month period commencing on the first day of each month thereafter, does not
exceed the  lesser of (1) five  percent  (5%) of  consolidated  total  assets of
Lessee  and  its  Consolidated   Subsidiaries  and  (2)  Fifty  Million  Dollars
($50,000,000),  (ii)  after  giving  effect to all such  acquisitions,  no Lease
Default has occurred and is continuing and (iii) after giving effect to all such
acquisitions,   Lessee's  and  its  Consolidated   Subsidiaries'   total  Senior
Debt/EBITDA Ratio and Total Debt/EBITDA  Ratio,  determined on a pro forma basis
as of the most recently ended Fiscal  Quarter of the Lessee for which  financial
statements have been delivered to the Holder and the Lenders pursuant to Section
5.1(b),  as if such  acquisitions had been consummated prior to the date of such
financial statements, shall not exceed 2.50:1.0 and 3.50:1.0, respectively.

     In the event that, and to the extent that, as of the Fifth  Amendment Date,
any of the terms or  conditions  set forth in this  Section  5.19 (or in Section
5.20 or Section  5.21  below)  shall  operate  to  restrict  the  ability of any
Consolidated  Subsidiary  to (i) pay dividends or make  distributions  permitted
under applicable law on any capital stock of such Subsidiary owned by the Lessee
or any  other  Consolidated  Subsidiary,  (ii)  pay any  indebtedness  or  other
obligation owed to the Lessee or any other Consolidated  Subsidiary,  (iii) make
loans or advances to the Lessee or any other  Consolidated  Subsidiary,  or (iv)
transfer  any of its  property  or assets  to  Lessee or any other  Consolidated
Subsidiary (the "Subsidiary Activities"), and the imposition of such restriction
on any such Subsidiary Activities pursuant hereto is expressly prohibited under,
or  constitutes an event of default  under,  the terms of the Lessee's  existing
indenture for its 9-3/4% senior notes of due June 1, 2006, then, notwithstanding
the foregoing, such Subsidiary Activities shall be permitted.

5.20.  Debt.

     The Lessee will not incur, assume or suffer to exist any Debt or obligation
under any  Guarantee (or permit any  Subsidiary to do so),  except for: (i) Debt
for Borrowed  Money  existing on the date of this Agreement and disclosed in the
interim  financial  statements  described  in  Section  3.2(d);  (ii)  Debt  and
Guarantees   incurred   pursuant  to  this  Agreement  or  the  other  Operative
Agreements;  (iii) trade payables and  contractual  obligations to suppliers and
customers incurred in the ordinary course of business; (iv) accrued pension fund
and other employee benefit plan obligations and liabilities (provided,  however,
that such Debt does not result in the existence of any Lease Event of Default or
Lease Default under any other provision of this Agreement);  (v) deferred taxes;
(vi) Debt resulting from endorsements of negotiable  instruments received in the
ordinary  course of its  business;  (vii) any Debt  described  in, and permitted
within  Section  5.8;  (viii) Debt and  Guarantees  described  in and  permitted
pursuant to clauses (g) and (j) of Section  5.19;  (ix) Debt arising under or in
connection  with interest rate protection  contracts  entered into by the Lessee
with a Bank in the ordinary course of business, and not for speculation;  (x) in
the case of the Lessee and Subsidiary Guarantors, Capitalized Lease Obligations;
(xi) other  Debt for  Borrowed  Money in respect of letters of credit  issued in

                                       12
<PAGE>
conjunction with debts, liabilities and obligations arising from time to time in
the ordinary  course of, and pursuant to the customary  operation  of,  Lessee's
business; and (xii) the Subordinated Debt.

5.21. Dividends and Distributions.

     The Lessee will not, nor will the Lessee permit any  Subsidiary to, (i) pay
any cash dividend; (ii) make any capital distribution;  (iii) redeem, repurchase
or retire for cash any Capital  Stock  (except as permitted  pursuant to Section
5.24);  or (iv) take any other action which would have an effect  equivalent  to
any of the foregoing (the actions described in the preceding clauses (i) through
(iv)  herein  called,  generally,  "Distributions");  provided,  however,  that,
notwithstanding the foregoing,  (A) so long as no Lease Default has occurred and
is continuing or would be caused  thereby,  the Lessee may pay cash dividends on
its Capital Stock in each Fiscal Year in an aggregate amount not to exceed Three
Million Dollars  ($3,000,000)  per Fiscal Year during its Fiscal Years ending on
or about  December  31,  1999 and  December  31, 2000 and Four  Million  Dollars
($4,000,000)  during each Fiscal Year  thereafter,  (B) each Subsidiary may make
Distributions  on any Capital  Stock of such  Subsidiary  owned by the Lessee or
another  Consolidated  Subsidiary which is a Subsidiary Guarantor and (C) Lessee
may make Distributions on the TECONS.

5.22. Transactions With Affiliates.

     The Lessee will not, and will not permit any  Subsidiary  to enter into, or
be a party to, any transaction with any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of its business and upon fair and
reasonable  terms and are no less  favorable to Lessee or said  Subsidiary  than
would be obtained in a comparable arm's length  transaction with a Person not an
Affiliate.

5.23. Subsidiary Guaranties.

     The Lessee shall cause each Consolidated  Subsidiary of the Lessee acquired
or coming into existence  after the Fifth Amendment Date which is a wholly-owned
Subsidiary,  directly or indirectly,  of Lessee (excepting  therefrom any having
total  assets  of  less  than  Ten  Thousand  Dollars  ($10,000)),  as  soon  as
practicable  after,  but in  any  event  within  thirty  (30)  days  after,  its
acquisition  or creation,  to execute a Subsidiary  Guaranty,  together with all
other such documents which the  Administrative  Agent may reasonably  request in
connection  therewith,  including  a  secretary's  certificate,  confirming  the
existence of enabling  authorization in respect of such Subsidiary Guarantor and
signing  officer  incumbency,  and an opinion of counsel,  confirming  that such
Subsidiary  Guaranty  is a valid,  binding  and  enforceable  obligation  of the
Subsidiary  party  thereto,  subject to customary  assumptions,  exceptions  and
limitations acceptable to Administrative Agent. There shall be excluded from the
foregoing  requirements  any  Consolidated  Subsidiary of the Lessee which, as a
result of planned  transfers of Capital Stock to store  managers,  (A) will be a
wholly-owned  Subsidiary of the Lessee for a period of not more than ninety (90)
days after its acquisition or creation or (B) becomes a wholly-owned  Subsidiary
as a result of the return to the Lessee of, or the  cancellation of, any Capital
Stock by any store  manager for a period of not more than ninety (90) days after
such  return  or  cancellation  occurs;   provided,   however,  that,  (i)  such
requirements  shall  apply if such  planned  transfers  are not made during such
period such that such  Subsidiary  continues to be a wholly-owned  Subsidiary at
the  expiration  of such grace  period and (ii) all such  Subsidiaries  shall be
treated at all times, for purposes of Section 5.19(g),  as if such  Subsidiaries
were not  wholly-owned  Subsidiaries.  Should any Subsidiary  which is otherwise
exempt from this  Section  5.23 by reason of (i) such  Subsidiary  having  total
assets of less than Ten Thousand  Dollars  ($10,000) on the Fifth Amendment Date
or (ii) such Subsidiary which, as a result of planned transfers of Capital Stock
to store managers,  will be a wholly owned Subsidiary of the Lessee for a period
of less than ninety (90) days after the Fifth Amendment  Date,  cease to qualify
for such exemption,  the requirements of this Section 5.23 shall likewise apply.
In addition to the foregoing,  the Lessee may, at its option, at any time, cause

                                       13
<PAGE>
any other Subsidiary to execute a Subsidiary  Guaranty,  together with all other
such documents as the Administrative Agent may request in connection  therewith,
consistent with the foregoing provisions, after which such Subsidiary shall be a
Subsidiary Guarantor for all purposes hereof.

5.24. Stock Purchases, Etc.

     The Lessee will not, and will not permit any Consolidated Subsidiary of the
Lessee,  to  purchase  any  Capital  Stock of the  Lessee,  whether  in a "spot"
transaction,  pursuant to an Equity Forward Contract or otherwise, except (i) in
respect of shares of Capital Stock which are subject to Equity Forward Contracts
entered  into prior to October 1, 1998 which are  pending  settlement  as of the
Fifth  Amendment  Date, and (ii) so long as no Lease Default has occurred and is
continuing or would be caused thereby, other purchases of Lessee's Capital Stock
in an aggregate amount not in excess of Five Million Dollars ($5,000,000) during
the  term of  this  Agreement,  nor  will  Lessee  enter  into,  or  permit  any
Consolidated  Subsidiary to enter into, any Equity Forward  Contract or amend or
modify any Equity Forward  Contract in effect on the Fifth  Amendment Date so as
to  increase  the amount of, or price of, any shares of Capital  Stock which are
subject to Equity Forward Contracts pending settlement as of the Fifth Amendment
Date.

5.25. No Prepayment of Senior Notes.

     The Lessee will not prepay,  and will not permit any  Subsidiary to prepay,
the  principal  amount of any of the Lessee's  9-3/4%  Senior  Notes,  due 2006,
heretofore   issued  by  the  Lessee  in  the  aggregate   principal  amount  of
$125,000,000, nor will Lessee repurchase or permit any Subsidiary to repurchase,
such Notes.

5.26. Subordinated Debt.

     The Lessee will not,  and will not permit any  Subsidiary  to: (i) make any
payment  (whether  of  principal,   interest,   premium  or  otherwise)  on  any
Subordinated Debt unless and except to the extent, if any,  expressly  permitted
by the express, written terms of subordination governing such Subordination Debt
as then approved in writing by the Required Lenders; or (ii), in any event, make
any  prepayment  of any  part  or all of any  Subordinated  Debt,  or  otherwise
repurchase,  redeem or retire any instrument  evidencing any  Subordinated  Debt
prior  to  maturity;  or  enter  into any  agreement  which  could in any way be
construed to amend,  modify,  alter or terminate any one or more  instruments or
agreements evidencing or relating to any Subordinated Debt.

5.27  Change of Chief Executive Office.

     No less than 30 days prior to the date upon which the Lessee  shall  change
its chief executive  office (as such term is defined in Article 9 of the Uniform
Commercial  Code as in  effect  in the  State of  Georgia),  principal  place of
business or the place where the Lessee shall retain its records  concerning  the
Equipment and all its  interests in, to and under all documents  relating to the
Trust Estate from Hancock at Washington,  Madison,  Georgia  30650,  then in any
such case the Lessee  shall  notify the  Administrative  Agent (on behalf of the
Owner Trustee,  the Holders and the Lenders) of the same and of the need to make
additional Uniform Commercial Code filing with respect thereto.

5.28  Lien Searches.

     Within 30 days after the Fifth  Amendment Date and within 30 days after the
last  Commencement  Date,  the  Administrative  Agent  (on  behalf  of the Owner
Trustee,  the  Holders  and the  Lenders)  shall  have  received  Lien  searches
regarding the Lessee and the Equipment (including,  without limitation,  Uniform
Commercial Code searches and similar searches in foreign jurisdictions, Tax Lien
searches and judgment Lien searches) in such jurisdictions as such parties shall
determine in their reasonable discretion,  and Lessee shall cause all such Liens
which  would  materially  impair  the  rights  of such  parties  (as  reasonably

                                       14
<PAGE>
determined by such parties) to be removed at such time or otherwise handled in a
manner satisfactory to all such parties.

5.29  Classification of Equipment.

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

5.30  Lien Perfection Filings.

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

5.31  Allocation of Equipment Cost among the States and Counties.

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

5.32  UCC Filing Amendments.

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

                           3. Amendment to Appendix A:

     Appendix  A of  the  Participation  Agreement  is  amended  by  adding  the
following definition to Appendix A in the proper alphabetical order:

     "Adjusted Total Debt" shall mean and include the sum (without  duplication)
of the following, at any Fiscal Quarter end, for the Lessee and its Consolidated
Subsidiaries, on a consolidated basis: (i) Total Debt; plus (ii) an amount equal
to seven (7) times the amount of the operating lease payments which were owed by
the Lessee and such  Subsidiaries  during the period of four (4) Fiscal Quarters
ending on such date.

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

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

                                       15
<PAGE>
     "Asset  Sale" shall mean the sale by the Lessee or any of its  Subsidiaries
of any of their Properties,  excluding  inventory sold in the ordinary course of
business.

     "Debt" of any Person shall mean at any date, without duplication, all items
which in accordance with GAAP would be included in determining total liabilities
of such Person as shown on the liability  side of a balance sheet of such Person
as of the date on which such determination is to be made.

     "Debt for Borrowed  Money" shall mean Debt of any Person for money borrowed
from any  Person,  including,  without  limitation,  Debt  represented  by notes
payable or bonds,  Debt under any Guarantee and Debt in respect of any letter of
credit; but, excluding, however, the TECONS.

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

     "EBITDAR"  shall  mean,  for  any  fiscal  period  of the  Lessee  and  its
Consolidated  Subsidiaries,  that  amount  equal to the sum of  EBITDA  for such
period plus operating lease expense of Lessee and its Consolidated  Subsidiaries
for such period.

     "Fifth Amendment Date" shall mean June 22, 1999.

     "Hops  Subsidiaries"  shall mean those Subsidiaries  listed on Schedule 1.2
attached  hereto  plus any  Subsidiaries  (other  than any which are  Subsidiary
Guarantors) hereafter created or acquired for the purpose of owning or operating
any "Hops" restaurant or related business.

     "Net Cash  Proceeds"  shall mean the total cash  proceeds  received  by the
Lessee or any Subsidiary  from any Asset Sale, less (i) provisions for all taxes
actually paid or payable as a result thereof,  (ii) any direct costs incurred by
Lessee or any Subsidiary  associated  therewith,  and (iii) any payments made to
repay any indebtedness or other  obligation  outstanding at the time of an Asset
Sale that is secured by a Purchase Money Lien on the property or assets sold.

     "Non-Core Assets" shall mean those assets so identified on Schedule 1.1.

     "Subordinated  Debt" shall mean Debt of Lessee  incurred on or prior to the
Fifth Amendment Date pursuant to an indenture and other  documents  satisfactory
in all respects to the Holder and the Lenders,  including,  without  limitation,
with respect to the subordination  provisions  thereof,  the covenants  included
therein, the repayment terms thereof and the interest rate payable thereon.

     "TECONS" shall mean the Lessee-obligated  mandatorily  redeemable preferred
securities of Avado Financing I, as in existence on the Fifth Amendment Date.

     "Total  Debt"  shall  mean that  portion  of the Debt of the Lessee and its
Consolidated Subsidiaries at any date equal to the sum (without duplication) of:
(i) all Debt for Borrowed Money at such date (including,  for this purpose, Debt
in respect of any outstanding bankers'  acceptances);  plus (ii) all Capitalized
Lease  Obligations  outstanding at such date; plus (iii) all Debts,  liabilities
and  obligations  which  are  Guaranteed  by  the  Lessee  or  any  Consolidated
Subsidiary as of such date;  plus (iv) all Debts,  liabilities or obligations at
such date to any  seller  incurred  to pay the  deferred  price of  property  or
services having a deferred purchase price of One Million Dollars ($1,000,000) or
more,  excepting,  in any event,  trade accounts payable arising in the ordinary
course of business and purchase  options prior to their  exercise;  plus (v) all
Debts,  liabilities and  obligations  outstanding at such date in respect of any
Synthetic  Leases;  plus (vi) all Debts,  liabilities and obligations  under any
Equity Forward Contracts, pending settlement.

     "Total  Debt/EBITDA  Ratio"  shall have the  meaning  given to such term in
Section 5.6.

                                       16
<PAGE>
     "Total Senior Debt" shall mean,  at any date,  Total Debt of Lessee and its
Consolidated  Subsidiaries  minus the then outstanding  principal balance of the
Subordinated Debt.

     "Y2K Plan" shall have the meaning set forth in Section 3.2(s).

     "Y2K Plan Milestones" shall have the meaning set forth in Section 3.2(s).

     "Year 2000  Compliant  and Ready"  shall mean that (a) the Lessee's and its
operating divisions' and Subsidiaries' computer hardware or software in question
will:  (i) handle date  information  involving any and all dates before,  during
and/or after January 1, 2000,  including  accepting input,  providing output and
performing  date  calculations  in whole or in part;  (ii)  operate,  accurately
without  interruption  on and in  respect  of any and all dates  before,  during
and/or after  January 1, 2000 and without any change in  performance;  and (iii)
store and provide date input  information  without  creating any ambiguity as to
the century;  provided all other information  technology properly exchanges date
data information with it; and (b) the Lessee has developed  alternative plans to
ensure  business  continuity  in the event of the failure of any or all of items
(i) through (iii) above.

                           4. Amendment to Appendix A:

     Appendix  A of the  Participation  Agreement  is amended  by  deleting  the
definitions  of "Compliance  Certificate",  "Consolidated  Net Income",  "Credit
Agreement",  "EBITDA", "Equity Forward Contract", "Fixed Charge Coverage Ratio",
"GAAP", "Material Adverse Effect", "Purchase Money Liens", "Redeemable Preferred
Stock",  "Stockholders' Equity" "Subsidiary  Guarantor",  "Subsidiary Guaranty",
"Synthetic  Lease" and "Tangible Net Worth" in their entirety and replacing such
definitions in Appendix A in the proper alphabetical order:

     "Compliance  Certificate"  shall  have the  meaning  set  forth in  Section
5.1(c).

     "Consolidated Net Income", for any period, shall mean the net income of the
Lessee  and its  Consolidated  Subsidiaries  for such  period,  determined  on a
consolidated  basis  in  accordance  with  GAAP,  excluding,   however  (without
duplication),  (i) any  extraordinary  items and (ii) any equity interest of the
Lessee or any Consolidated  Subsidiary in the unremitted  earnings of any Person
which is not a Subsidiary; in each case as likewise determined on a consolidated
basis in accordance with GAAP.

     "Credit  Agreement"  shall mean that certain Credit  Agreement  dated as of
June  22,  1999,  among  Lessee,   Wachovia  Bank,  National   Association,   as
Administrative   Agent,   BancBoston,   N.A.,  as  Syndication  Agent,  Wachovia
Securities,   Inc.,  as  Arranger,   BancBoston  Robertson  Stephens,  Inc.,  as
Co-Arranger  and the other  banks and  financial  institutions  that are parties
thereto,  as the same may be amended,  restated,  and supplemented  from time to
time,  and any  loan  or  credit  agreement  executed  in  connection  with  the
refinancing of all or any substantial  portion of the  indebtedness  outstanding
under such Credit  Agreement,  as such loan or credit  agreement may be amended,
restated, and supplemented from time to time.

     "EBITDA"  shall  mean,  for  any  fiscal  period  of  the  Lessee  and  its
Consolidated  Subsidiaries,   that  amount  equal  to  the  sum,  determined  in
accordance  with  GAAP,  of the  Consolidated  Net  Income of the Lessee and its
Consolidated  Subsidiaries for such period (considered without regard to (i) any
extraordinary gains or losses, (ii) any gains or losses arising from the sale of
assets,  and (iii) any gains or losses arising from any  activities  outside the
normal  course  of  Lessee's  business  operations  as  conducted  on the  Fifth
Amendment  Date);  plus,  without  duplication,  and to the extent deducted from
revenue in determining  Consolidated  Net Income,  depreciation and amortization
expense and any other  non-cash  charges for such period,  interest  expense for
such period,  and taxes for such period;  provided,  however,  that in computing
EBITDA for the four (4) Fiscal  Quarters  of Lessee  ending  closest to June 30,

                                       17
<PAGE>
1999,  September 30, 1999,  December 31, 1999 and March 31, 2000, there shall be
added the following sums,  respectively,  $6,140,000,  $2,883,000,  $621,000 and
$117,000,  respecting certain agreed upon adjustments reflecting improvements in
Lessee's general and administrative expenses.

     "Equity Forward Contract" shall mean any contract, whether now or hereafter
existing,  whereby the Lessee or any of its  Consolidated  Subsidiaries  agrees,
directly or  indirectly,  to purchase  Capital Stock of the Lessee on any future
date at a fixed price  (including any contract,  howsoever  denominated,  having
substantially the same or similar effect or result).

     "Fixed Charge Coverage Ratio" shall mean, for any fiscal period,  the ratio
which (A) the sum of (i) EBITDAR  for such  period;  plus (ii) the sum  (without
duplication) of (a) any dividends paid in respect of Redeemable  Preferred Stock
during  such  period,  plus (b) any  payments  made  (howsoever  denominated  or
construed)  in respect of any TECONS in such period,  regardless  of maturity or
the timing of any redemption or repurchase rights granted in regard thereto (the
sum of (a) and (b) above being called, collectively, "Investment Costs" herein);
bears to (B) the sum (without  duplication) of: (i) all Investment  Costs;  plus
(ii) operating lease expense;  plus (iii) interest  expense  provided,  however,
that for the  Fiscal  Quarters  of  Lessee  ending  closest  to June  30,  1999,
September 30, 1999, December 31, 1999 and March 31, 2000, interest expense shall
be  "annualized,"  rather  than  presented  historically;  that is,  computed as
follows:  (i) for the Fiscal Quarter  ending closest to June 30, 1999,  multiply
interest  expense  for such  Fiscal  Quarter  by four (4);  (ii) for the  Fiscal
Quarter ending closest to September 30, 1999, add together  interest expense for
such Fiscal Quarter and the preceding Fiscal Quarter, divide the sum obtained by
two (2), and multiply the quotient  resulting by four (4);  (iii) for the Fiscal
Quarter ending closest to December 31, 1999, add together  interest  expense for
such Fiscal Quarter and the two (2) preceding  Fiscal  Quarters,  divide the sum
obtained by three (3), and multiply the quotient resulting by four (4); and (iv)
for the Fiscal Quarter  ending closest to March 31, 2000, add together  interest
expense for such Fiscal  Quarter and the three (3)  preceding  Fiscal  Quarters,
divide the sum obtained by four (4) and multiply the quotient  resulting by four
(4).

     "GAAP" shall mean generally  accepted  accounting  principles  which,  with
respect to Lessee,  shall be applied on a basis  consistent  (except for changes
concurred with by Lessee's  independent public accountants or otherwise required
by a change in GAAP) with the then most recent  audited  consolidated  financial
statements  of  Lessee  and  its  Consolidated  Subsidiaries  delivered  to  the
Administrative Agent;  provided,  however, that upon any change in GAAP material
to Lessee occurring hereafter,  the Holders and the Lenders shall have the right
to require either that conforming adjustments be made to any financial covenants
set forth in the Participation Agreement, or the components thereof, affected by
such change or that Lessee  report its financial  condition  based on GAAP as in
effect immediately prior to such change occurring.  In determining compliance of
the Lessee  with the  financial  covenants  set forth in Section 5.4 through 5.7
hereof, and in making such calculations for any purposes hereunder,  there shall
be excluded from the calculations of Consolidated  Net Income,  depreciation and
amortization   expense  and  operating   lease  and  rent  expense  any  amounts
attributable to Applebee's  Neighborhood Grill & Bar restaurants which were sold
prior to the Fifth Amendment Date.

     "Material  Adverse  Effect"  shall mean,  with  respect to any event,  act,
condition or occurrence of whatever nature (including any adverse  determination
in any litigation,  arbitration,  or governmental  investigation or proceeding),
whether  singly or in conjunction  with any other event or events,  act or acts,
condition or conditions, occurrence or occurrences, whether or not related, that
such event or events, act or acts, condition or conditions, and/or occurrence or
occurrences  results in a material  adverse change in, or has a material adverse
effect  upon,  any of (a) the  financial  condition,  operations,  business,  or
properties of Lessee and its Consolidated Subsidiaries taken as a whole, (b) the
rights and  remedies  of the Owner  Trustee,  the  Holders,  the  Lenders or the
Administrative  Agent  under the  Operative  Agreements,  or the  ability of the

                                       18
<PAGE>
Lessee to perform its obligations under the Operative  Agreements to which it is
a party, as applicable,  (c) the legality,  validity or  enforceability  of this
Agreement, the Lease or any Operative Agreement,  (d) the validity,  priority or
enforceability  of any Lien on or other  rights of Lessor or the  Administrative
Agent  in the  Equipment,  taken  as a whole,  created  by any of the  Operative
Agreements  or (vi) the value,  utility or useful life of the  Equipment  or the
use,  or  ability of Lessee to use,  the  Equipment,  taken as a whole,  for the
purpose for which it was intended.

     "Purchase  Money Liens" shall mean Liens securing the repayment of any Debt
permitted  pursuant to Section  5.20  incurred  to finance  the  purchase of any
Property  hereafter  acquired by the Lessee or any Consolidated  Subsidiary,  so
long as such Liens are limited  solely to the Property so acquired,  secure only
the purchase money debt so incurred and are  terminated  upon payment in full of
such purchase money debt.

     "Redeemable  Preferred  Stock" of any Person shall mean any preferred stock
issued by such Person  which is at any time prior to June 22,  2002,  either (i)
mandatorily  redeemable  (by sinking fund or similar  payments or  otherwise) or
(ii) redeemable at the option of the holder thereof; but excluding the TECONS.

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

     "Subsidiary  Guarantor"  shall  mean any  Subsidiary  of  Lessee  which has
executed a Subsidiary Guaranty pursuant to Section 5.23.

     "Subsidiary  Guaranty" shall mean a guaranty,  in substantially the form of
Exhibit A  attached  hereto,  pursuant  to which a  Subsidiary  of Lessee  shall
guarantee all debts, liabilities and obligations of the Lessee hereunder, all in
accordance with Section 5.23.

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

     "Tangible Net Worth" shall mean the  difference at any time between (i) the
sum of (A) Stockholders' Equity of the Lessee and its Consolidated  Subsidiaries
at such time  plus (B) the  TECONS  and (ii) the sum of all those  assets of the
Lessee and its Consolidated Subsidiaries at such time constituting (A) goodwill,
patents,  copyrights,  trademarks,  trade names and other intangible  assets, as
determined under GAAP, plus (B) write-ups of any assets occurring  subsequent to
December 31, 1998, plus (C) unamortized debt discount and expense, as determined
under GAAP, plus (D) deferred  charges,  as determined  under GAAP, plus (E) any
indebtedness owing to such Person by any Affiliate of such Person.

     5.  Amendment  to  Attachment  "B".  Attachment  "B" to  the  Participation
Agreement is hereby deleted and  Attachment  "B" attached  hereto is substituted
therefor.

     6.  Amendment  to Schedule  3.2(h).  Schedule  3.2(h) to the  Participation
Agreement is hereby  deleted and Schedule  3.2(h)attached  hereto is substituted
therefor.

                                       19
<PAGE>
     7. Amendment to Schedule 5.7. Schedule 5.7 to the  Participation  Agreement
is hereby deleted and Schedule 5.8 attached hereto is substituted therefor.

     8. Addition of Schedules.  The Participation Agreement is hereby amended by
adding  Schedules  1.1, 1.2,  3.2(e) and 5.19 attached  hereto as Schedules 1.1,
1.2, 3.2(e) and 5.19 to the Participation Agreement.

                                C. MISCELLANEOUS

     1. Upon the Administrative Agent's receipt of executed signature pages from
all parties to this  Amendment,  all amendments to the  Participation  Agreement
made herein shall become effective as of June 22, 1999,  unless expressly stated
to become  effective  as of any other date.  Pursuant to Section 10.1 (a) of the
Trust  Agreement,  the Holder  authorizes  and  request  that the Owner  Trustee
execute this Amendment.

     2. Except as expressly set forth herein, this Amendment shall be deemed not
to waive or modify any  provision  of the  Participation  Agreement or the other
Operative Agreements,  and all terms of the Participation  Agreement, as amended
hereby, and all other Operative Agreements shall be and remain in full force and
effect and shall constitute a legal, valid, binding and enforceable  obligations
of the Lessee.  All references to the Participation  Agreement shall hereinafter
be references to the  Participation  Agreement as amended by this Amendment.  To
the extent any terms and  conditions  in any of the Operative  Agreements  shall
contradict or be in conflict  with any terms or conditions of the  Participation
Agreement,  after giving effect to this Amendment, such terms and conditions are
hereby  deemed  modified  and  amended  accordingly  to  reflect  the  terms and
conditions of the Participation  Agreement as modified and amended hereby. It is
not intended by the parties that this Amendment  constitute,  and this Amendment
shall not constitute, a novation or accord and satisfaction.

     3.  To  induce  the  Owner  Trustee,   the  Holder,  the  Lenders  and  the
Administrative  Agent to enter into this Amendment (A) Lessee hereby  represents
and warrants that the representations and warranties set forth in Section 3.2 of
the Participation  Agreement as amended hereby are true and correct,  (B) Lessee
hereby  restates,  ratifies and reaffirms  each and every term and condition set
forth in the Participation  Agreement,  as amended hereby,  and in the Operative
Agreements as amended hereby, and in the Operative  Agreements,  effective as of
the date hereof;  and (C) Lessee hereby certifies that no Lease Event of Default
has occurred and is continuing.

     4. THIS AMENDMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE LAWS OF THE STATE OF GEORGIA AND ALL APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

     5. This  Amendment  may be  executed in one or more  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same document.

     6. This  Amendment  shall be binding on, and shall inure to the benefit of,
the successors and assigns of the parties hereto.

     7. In the  event  that  any  part of this  Agreement  shall  be found to be
illegal or in violation of public  policy,  or for any reason  unenforceable  at
law, such finding shall not invalidate any other part thereof.

     8. TIME IS OF THE ESSENCE UNDER THIS AGREEMENT.

     9. The parties agree that their  signatures by telecopy or facsimile  shall
be effective  and binding upon them as though  executed in ink on paper but that
the parties shall exchange original ink signatures  promptly  following any such
delivery by telecopy or facsimile.

     10.  Lessee  agrees to pay all costs and expenses of  Administrative  Agent
incurred in connection with the preparation, execution, delivery and enforcement

                                       20
<PAGE>
of this  Amendment  and all other  Operative  Agreements  executed in connection
herewith,   including  the  reasonable  fees  and   out-of-pocket   expenses  of
Administrative Agent's counsel.

     11. This Amendment shall constitute an Operative Agreement for all purposes
of the Participation Agreement and shall be governed accordingly.

                               [Signatures appear on next page]

                                       21
<PAGE>
         IN WITNESS WHEREOF,  the Lessee,  the Owner Trustee,  the Holder,  each
Lender and the Administrative  Agent have set their hands as of the day and year
first above written.

                                            "LESSEE"

                                            AVADO BRANDS, INC. formerly known as
                                            Apple South, Inc.

                                            By:_________________________________
                                                Name:
                                                Title:

                                            Attest:_____________________________
                                                Name:
                                                Title:

                                       22
<PAGE>

                      [SIGNATURE PAGE TO FIFTH AMENDMENT TO
                                                       PARTICIPATION AGREEMENT]
                                            "OWNER TRUSTEE"

                                            FIRST SECURITY BANK, N.A.

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       23
<PAGE>

                                            "HOLDER"

                                            STI CREDIT CORPORATION

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       24
<PAGE>

                                            "LENDERS"

                                            SUNTRUST BANK, ATLANTA, as the
                                            Administrative Agent and as a Lender

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       25
<PAGE>

                                            BANCBOSTON LEASING, INC.

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       26
<PAGE>

                                            SOUTHTRUST BANK, N.A.

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       27
<PAGE>
     Exhibits and  schedules to this  agreement  are not filed  pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 10-K, the Registrant
hereby  agrees to  furnish  supplementally  a copy of any  ommitted  exhibit  or
schedule to the Commission upon request.

                                       28SIXTH AMENDMENT TO PARTICIPATION AGREEMENT

     THIS SIXTH AMENDMENT TO PARTICIPATION AGREEMENT (hereinafter,  as it may be
modified,  amended or supplemented from time to time, called this  "Amendment"),
made and entered  into as of December  22, 2000,  among (i) AVADO  BRANDS,  INC.
formerly known as Apple South, Inc., a corporation  organized and existing under
the laws of Georgia (herein,  together with its successors and assigns permitted
hereunder, called the "Lessee"), (ii) FIRST SECURITY BANK, NATIONAL ASSOCIATION,
a  national  banking  association  ("First  Security"),  not in  its  individual
capacity except as expressly  provided herein, but solely as Owner Trustee under
Apple  South  Trust  No.  97-1  (herein  in such  capacity,  together  with  its
successors and assigns permitted hereunder,  called the "Owner Trustee"),  (iii)
STI CREDIT  CORPORATION,  a Nevada  corporation,  as assignee of SunTrust  Bank,
formerly known as SunTrust Bank,  Atlanta,  in its capacity as the holder of the
beneficial  interest in the trust estate established under Apple South Trust No.
97-1 (in such capacity as of the date hereof,  the  "Holder",  and together with
its successors and assigns permitted hereunder,  called the "Holders"), (iv) the
financial  institutions now parties to the  Participation  Agreement (as defined
below) as Lenders (each herein in such  capacity,  together with its  successors
and  assigns  permitted  hereunder,  called a  "Lender"  and  collectively,  the
"Lenders"),  and (v) SUNTRUST BANK,  formerly known as SunTrust Bank, Atlanta, a
banking   corporation   organized  and  existing  under  the  laws  of  Georgia,
("SunTrust"),  as collateral agent and administrative  agent for the Lenders and
the Holders (in such capacity, the "Administrative Agent").

                               W I T N E S S E T H

     WHEREAS,  the Lessee,  the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent are parties to that certain Participation Agreement,  dated
as of September 24, 1997, as amended by the First Amendment to the Participation
Agreement, dated as of March 27, 1998, as amended by the Second Amendment to the
Participation  Agreement,  dated as of August 14, 1998,  as amended by the Third
Amendment to the  Participation  Agreement,  dated as of November  13, 1998,  as
amended by the Fourth  Amendment  to the  Participation  Agreement,  dated as of
February  22,  1999,  and as amended  by the Fifth  Amendment  to  Participation
Agreement,  dated as of  August  24,  1999 (as so  amended,  the  "Participation
Agreement");

     WHEREAS,  the Owner  Trustee  and the  Lessee are  parties to that  certain
Master Equipment Lease Agreement,  dated as of September 24, 1997, as amended by
the First  Amendment  to Lease  Agreement,  dated as of March 27,  1998,  and as
amended by the Second Amendment to Lease Agreement, dated as of May, 1999 (as so
amended, the "Lease Agreement");

     WHEREAS,  the Lessee,  the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent have agreed to amend the Participation Agreement in certain
respects and to waive certain covenant defaults,  as described more particularly
below.

     NOW,  THEREFORE,  in consideration of the sum of TEN DOLLARS ($10.00),  the
foregoing  premises,  to  induce  the  Holder  and  the  Lenders  to  amend  the
Participation Agreement and to continue to perform their obligations thereunder,
and for other good and valuable  consideration,  the  sufficiency and receipt of
all of which are acknowledged,  the Lessee,  the Owner Trustee,  the Holder, the
Lenders and the Administrative Agent agree as follows:

                                 A. DEFINITIONS

     Unless the context  otherwise  requires,  all capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in Appendix A
to the Participation  Agreement for all purposes of this Amendment.  The General
Provisions of Appendix A to the Participation  Agreement are hereby incorporated
by reference herein.

                                       1
<PAGE>
                                  B. AMENDMENTS

     1.  Amendment  to Existing  Section 5.5:  Section 5.5 of the  Participation
Agreement  (Fixed Charge Coverage  Ratio) is hereby amended by deleting  Section
5.5 in its entirety and substituting in its place the following  revised Section
5.5:

5.5      Fixed Charge Coverage Ratio.

     Lessee's Fixed Charge Coverage Ratio, measured on a rolling four (4) Fiscal
Quarters'  basis,  as of the end of each  Fiscal  Quarter,  commencing  with the
Fiscal  Quarter  ending  closest to October 1, 2000,  shall be not less than the
ratio  prescribed below for each Fiscal Quarter  prescribed below  corresponding
thereto:
---------------------------------------- ------------------------------
Fiscal Quarter Ending:                                  Ratio
---------------------------------------- ------------------------------
October 1, 2000                                         1.10:1
---------------------------------------- ------------------------------
December 31, 2000                                       1.25:1
---------------------------------------- ------------------------------
April 4, 2001                                           1.30:1
---------------------------------------- ------------------------------
July 1, 2001                                            1.30:1
---------------------------------------- ------------------------------
September 30, 2001                                      1.40:1
--------------------------------------- ------------------------------
December 30, 2001                                       1.45:1
---------------------------------------- ------------------------------
March 31, 2002 and thereafter                           1.50:1
---------------------------------------- ------------------------------

     2.  Amendment  to Existing  Section 5.6:  Section 5.6 of the  Participation
Agreement (Total Debt/EBITDA Ratio) is hereby amended by deleting Section 5.6 in
its entirety and substituting in its place the following revised Section 5.6:

5.6      Total Debt/EBITDA Ratio.

     The ratio  which  (i) the Total  Debt of the  Lessee  and its  Consolidated
Subsidiaries  at the end of any  Fiscal  Quarter,  commencing  with  the  Fiscal
Quarter ended closest to October 1, 2000, bears to (ii) the EBITDA of the Lessee
and its  Consolidated  Subsidiaries,  measured  on a  rolling  four  (4)  Fiscal
Quarters'  basis as of the end of such Fiscal  Quarter  (the "Total  Debt/EBITDA
Ratio"), shall be not more than the ratio prescribed below as of the end of each
Fiscal Quarter corresponding thereto:

---------------------------------------- ------------------------------
Fiscal Quarter Ending:                                  Ratio
---------------------------------------- ------------------------------
October 1, 2000                                         6.00:1
---------------------------------------- ------------------------------
December 31, 2000                                       4.70:1
---------------------------------------- ------------------------------
April 4, 2001                                           4.45:1
---------------------------------------- ------------------------------
July 1, 2001                                            4.40:1
---------------------------------------- ------------------------------
September 30, 2001                                      4.10:1
---------------------------------------- ------------------------------
December 30, 2001                                       3.90:1
---------------------------------------- ------------------------------
March 31, 2002 and thereafter                           3.75:1
---------------------------------------- ------------------------------

                                       2
<PAGE>
     In  computing  EBITDA in respect of the  foregoing  ratio and the ratio set
forth in Section 5.7 below and the minimum amount of EBITDA set forth in Section
5.7A below, (a) any asset or stock  dispositions by the Lessee consisting of the
sale of a business line, segment or other group of related restaurants occurring
within a Fiscal  Quarter  shall  be  accounted  for by  reducing  EBITDA  by the
individual  EBITDA  attributable to each store within such group for such Fiscal
Quarter and the three (3)  preceding  Fiscal  Quarters or, in the event that any
such restaurant had negative  individual EBITDA for such periods,  by increasing
EBITDA  by the  amount  of such  negative  EBITDA;  and (b) any  asset  or stock
acquisitions  by the Lessee,  to the extent  otherwise  then  permitted to occur
hereunder (and without implying such permission),  consisting of the purchase of
a business, line, segment or other group of related restaurants occurring within
a Fiscal  Quarter shall be accounted for by increasing  EBITDA by the individual
EBITDA  attributable to each store within such group for such Fiscal Quarter and
for the three (3) preceding Fiscal Quarters or, in the event that any such store
had negative  individual  EBITDA for such periods,  by decreasing  EBITDA by the
amount of such negative EBITDA;  in each instance,  on an historical basis, in a
manner which the Lessee shall  determine,  but subject to prior review with, and
approval by, the Administrative Agent.

     3.  Amendment  to Existing  Section 5.7:  Section 5.7 of the  Participation
Agreement (Total Senior Debt/EBITDA Ratio) is hereby amended by deleting Section
5.7 in its entirety and substituting in its place the following  revised Section
5.7:

5.7      Total Senior Debt/EBITDA Ratio.

     The  ratio  which  (i)  the  Total  Senior  Debt  of  the  Lessee  and  its
Consolidated Subsidiaries at the end of any Fiscal Quarter,  commencing with the
Fiscal  Quarter  ended  closest to October 1, 2000,  bears to (ii) EBITDA of the
Lessee and its Consolidated Subsidiaries,  measured on a rolling four (4) Fiscal
Quarters'  basis as of the end of such Fiscal  Quarter  (adjusted,  however,  as
reflected in Section 5.6),  shall be not more than the amounts  prescribed below
for each Fiscal Quarter prescribed below corresponding thereto:

---------------------------------------- ------------------------------
Fiscal Quarter Ending:                                  Ratio
---------------------------------------- ------------------------------
October 1, 2000                                         4.30:1
---------------------------------------- ------------------------------
December 31, 2000                                       3.25:1
---------------------------------------- ------------------------------
April 4, 2001                                           3.05:1
---------------------------------------- ------------------------------
July 1, 2001                                            3.00:1
---------------------------------------- ------------------------------
September 30, 2001                                      2.75:1
---------------------------------------- ------------------------------
December 30, 2001                                       2.55:1
---------------------------------------- ------------------------------
March 31, 2002 and thereafter                           2.50:1
---------------------------------------- ------------------------------

     and  there  shall  be  added to the  Participation  Agreement,  immediately
following  amended Section 5.7 thereof (see above),  a new Section 5.7A, to read
as follows:

                                       3
<PAGE>
     SECTION 5.7A.  Minimum  EBITDA.  EBITDA of the Lessee and its  Consolidated
Subsidiaries  for each of the following  Fiscal  Quarters shall be at least that
amount prescribed opposite such Fiscal Quarter:

---------------------------------------- ------------------------------
Fiscal Quarter Ending:                                EBITDA
---------------------------------------- ------------------------------
December 31, 2000                                   $17,900,000
---------------------------------------- ------------------------------
April 4, 2001                                       $17,700,000
---------------------------------------- ------------------------------
July 1, 2001                                        $20,000,000
---------------------------------------- ------------------------------
September 30, 2001                                  $15,000,000
---------------------------------------- ------------------------------
December 30, 2001                                   $19,000,000
---------------------------------------- ------------------------------
March 31, 2002 and thereafter                       $17,000,000
---------------------------------------- ------------------------------

     4. Amendment to Existing  Section  5.11:Section  5.11 of the  Participation
Agreement  (Consolidations,  Mergers  and Sales of Assets) is hereby  amended by
deleting the entire existing second proviso, beginning with the words "provided,
further,  that the Lessee may consummate  Asset Sales ..." and ending at the end
of existing  Section 5.11 and  substituting  in is place the  following  revised
version of said second proviso:

     provided,  further,  that the Lessee may consummate Asset Sales so long as,
unless  otherwise  approved in writing by the Required  Lenders and the Required
Holders,  each of the  following  conditions  is met: (i) the Asset Sales are to
Persons other than Affiliates, (ii) the Asset Sales are made for cash, (iii) the
Net Cash Proceeds  from all such Asset Sales are applied in the manner  provided
in Section  2.9.2 of the Credit  Agreement,  and for no other  purpose,  (iv) no
Default has occurred  which is then  continuing  or otherwise  would result from
such  sale  occurring,  and  (v) if the  Asset  Sale  concerns  the  sale of any
collateral  then held as security for the revolving  loans and swing loans under
the Credit Agreement,  the prior written consent of the required banks under the
Credit  Agreement,  shall be required as a condition  to such sale to the extent
such consent is required under the Credit Agreement.  The term "Asset Sales," as
used herein,  shall extend to and include,  without  limitation,  sale-leaseback
transactions, provided that the Administrative Agent first shall have separately
approved the terms of the "leaseback"  portion of such  transaction as a further
condition to the Lessee or any Subsidiary entering into such transaction.

     5. Amendment to Existing Section  5.19:Section 5.19(b) of the Participation
Agreement  (Capital  Expenditures) is hereby amended by deleting Section 5.19(b)
in its entirety and  substituting  in its place the  following  revised  Section
5.19(b):

     (ii) Capital Expenditures. Make capital expenditures in the ordinary course
of business;  provided,  however, commencing with the Fiscal Year ending closest
to  December  31,  2000,  capital  expenditures  shall be  limited  in amount as
follows:  (i)  for  the  Fiscal  Year  ending  closest  to  December  31,  2000,
$50,000,000;  (ii) for the Fiscal Year  ending  closest to  December  31,  2001,
$25,000,000;  provided,  however,  that within the Fiscal Year ending closest to
December 31, 2001, in addition to the aforesaid  overall  limitation (A) capital
expenditures  shall  not  exceed,  in any event (1)  $6,600,000  for the  Fiscal
Quarter ending April 4, 2001, (2)  $13,200,000,  on a cumulative  basis, for the
two (2) Fiscal Quarters'  period ending July 1, 2001, and (3) $20,400,000,  on a
cumulative basis, for the three (3) Fiscal Quarters' period ending September 30,
2001, and (B) no such capital  expenditures  in excess of $3,000,000 may be made
in any one Fiscal  Quarter in such  Fiscal  Year  unless and until the Agent has
received  financial  statements  from the  Borrower  confirming  its  continuing
compliance  with all  financial  covenants set forth in Sections 5.4 through 5.7
hereof and this clause (ii) of Section 5.20 as of and for the  preceding  Fiscal

                                       4
<PAGE>
Quarter;  and (iii) for each  Fiscal Year  subsequent  to the fiscal year ending
closest to December 31, 2001, $12,500,000. In addition to the foregoing, in each
Fiscal Year  subsequent to the Fiscal Year ending  closest to December 31, 2000,
capital expenditures shall not include any expenditures for the purchase of land
or  buildings  or real  estate  interests  other  than  fixtures  and  leasehold
improvements.

     6.  Amendment  to  Existing  Section   5.19(j):   Section  5.19(j)  of  the
Participation  Agreement  (Restaurant  Concepts)  is hereby  amended by deleting
Section  5.19(j) in its entirety  and  substituting  in its place the  following
revised Section 5.19(j):

     (j)  Restaurant  Concepts.  So  long  as no  Default  has  occurred  and is
continuing or would be caused  thereby,  the Lessee may invest up to $1,000,000,
in  the  aggregate,  in  the  "San  Marzano"  restaurant  concept/joint  venture
subsequent to the Amendment  Date (the amount of investment by Lessee therein as
of the Amendment Date being zero);  provided,  however,  that, subsequent to the
Amendment  Date no further  investments  may be made  pursuant  to said  Section
5.20(x), of whatever sort, in any restaurant concept or joint venture except for
the aforementioned "San Marzano" investment.

     7.  Amendment  to  Existing  Section   5.19(k):   Section  5.19(k)  of  the
Participation  Agreement  (Other Advances) is hereby amended by deleting Section
5.19(k) in its  entirety and  substituting  in its place the  following  revised
Section 5.19(k):

     (k) Other Advances.  Make a loan to Tom E. Dupree, Jr., in an amount not to
exceed Three Million Dollars ($3,000,000),  on or about October 4, 1999, so long
as, and provided  that,  (A) no Default then has occurred and is  continuing  or
would be caused thereby,  (B) such loan is repaid in full by not later than June
22, 2002,  (C) such loan bears a market rate of interest until paid in full, and
(D) the  proceeds of such loan are used by Tom E. Dupree,  Jr. to repay  certain
personal  indebtedness  then due secured by his equity  interests in the Lessee;
provided,  further,  that,  as to all other  loans and  advances  to  Affiliates
(excluding therefrom, however, Subsidiaries),  shareholders, directors, officers
or employees shall be paid in full by June 22, 2002;

     8.  Amendment  to  Existing  Section   5.19(l):   Section  5.19(l)  of  the
Participation  Agreement  (Acquisitions)  is hereby amended by deleting  Section
5.19(l) in its  entirety and  substituting  in its place the  following  revised
Section 5.19(l):

         (l) INTENTIONALLY OMITTED

     9.  Amendment to Existing  Section  5.20.Clauses  (vii),  (viii)  (limited,
however,  to  clauses  (ix)  and (x)  Section  5.8) and  (ix) of  Section  5.20,
permitting the incurrence of Debt under certain  conditions  described  therein,
are hereby  eliminated  prospectively  as of the Sixth Amendment  Effective Date
such that,  subsequent to the Sixth Amendment Effective Date, no additional Debt
may  be  incurred  in  reliance  upon  said  clauses  (vii),   (viii)  or  (ix).
Furthermore,  henceforth,  other than Debt under the Credit  Agreement,  no Debt
shall be repaid by Lessee or any Subsidiary prior to its scheduled  maturity nor
may any such Person take (or acquiesce in) any action having  substantially  the
same  effect,  such as,  but not  limited  to,  by  terminating  early  any Debt
arrangement  or making  any  settlement  or accord  and  satisfaction  in regard
thereto,  except,  in each case,  with the prior written consent of the Required
Lenders thereto.

     Furthermore,  henceforth,  the Lessee will not, nor will the Lessee  permit
any  Consolidated  Subsidiary  to, acquire any real property (or any interest in
real  property),  or enter into any  commitment  (or  contract)  to acquire  any
thereof,  whether  directly or indirectly,  except with prior written consent of
the  Lenders,  notwithstanding  any term of  Section  5.20 of the  Participation
Agreement which may presently be to the contrary.

                                       5
<PAGE>
     10. Amendment to Existing Section 5.21.  Section 5.21 of the  Participation
Agreement  is deleted and the  following  revised  version of said  Section 5.21
shall be substituted in its place:

     SECTION 5.21 Dividends and Distributions. The Lessee will not, nor will the
Borrower  permit any  Subsidiary  to, (i) pay any cash  dividend;  (ii) make any
capital  distribution,  (iii) redeem,  repurchase or retire for cash any Capital
Stock;  provided,   however,  that,  notwithstanding  the  foregoing,  (A)  each
Subsidiary may make  Distributions on any Capital Stock of such Subsidiary owned
by the Lessee or another Consolidated Subsidiary which is a Subsidiary Guarantor
(as defined in the Credit Agreement),  and (B) the Lessee may make distributions
from  time to time in  respect  of the  TECONS  as and when due and  payable  in
accordance with the terms thereof.

     11. Amendment to Existing Section 5.24:  Section 5.24 of the  Participation
Agreement (Stock Purchases,  Etc.) is hereby amended by deleting Section 5.24 in
its entirety and substituting in its place the following revised Section 5.24:

     5.24 Stock Purchases, Etc.

     The Lessee will not, and will not permit any Consolidated Subsidiary of the
Lessee,  to  purchase  any  Capital  Stock of the  Lessee,  whether  in a "spot"
transaction,  pursuant  to an Equity  Forward  Contract or  otherwise,  nor will
Lessee enter into,  or permit any  Consolidated  Subsidiary  to enter into,  any
Equity Forward Contract or amend or modify any Equity Forward Contract in effect
on the Sixth Amendment  Effective Date so as to increase the amount of, or price
of, any shares of Capital  Stock which are subject to Equity  Forward  Contracts
pending settlement as of the Sixth Amendment Effective Date.

     12. Amendment to Appendix A: Appendix A of the  Participation  Agreement is
amended  by  adding  the  following  definitions  to  Appendix  A in the  proper
alphabetical order:

     "Morgan" shall mean the Morgan Guaranty Trust Company of New York.

     "Morgan Agreement" shall mean that Master Agreement with attached Schedule,
dated as of June 3, 1996, as amended by that certain Waiver and Amendment Letter
dated  April 3,  2000,  between  Morgan  and the  Lessee  and any  confirmations
thereto.

     "Sixth Amendment Effective Date" shall mean, December __, 2000.

     13. Amendment to Appendix A: Appendix A of the  Participation  Agreement is
amended by deleting  the  definition  of "Fixed  Charge  Coverage  Ratio" in its
entirety and replacing such definition in Appendix A in the proper  alphabetical
order:

     "Fixed Charge Coverage Ratio" shall mean, for any fiscal period,  the ratio
which (A) the sum of (i) EBITDAR  for such  period;  plus (ii) the sum  (without
duplication) of (a) any dividends paid in respect of Redeemable  Preferred Stock
during such  period,  plus (b) any payments  made or accrued  during such period
(howsoever  denominated  or  construed) in respect of any TECONS in such period,
regardless  of maturity or the timing of any  redemption  or  repurchase  rights
granted in regard thereto (the foregoing herein called "TECONS Payments"), bears
to (B) the sum  (without  duplication)  for the same such  period,  of:  (i) any
dividends paid in respect to Redeemable  Preferred Stock, plus (ii) that portion
of any TECONS  Payments  actually  paid in cash,  plus,  (iii)  operating  lease
expense;  plus (iv)  interest  expense,  plus (v) all payments  made  (including
payments made in  settlement of existing  obligations  or claims)  under,  or in
respect of,  interest rate "hedge,"  "swap,"  "collar" or similar  arrangements,
whether  now or  hereafter  existing,  including,  but  not  limited  to,  those
expressly  permitted  to exist under  clause (ix) of Section 5.20 for the Lessee
and its  Consolidated  Subsidiaries  in each  case,  for  the  Borrower  and its
Consolidated  Subsidiaries  for the same such period,  all as  determined  under
GAAP.

                                       6
<PAGE>
     Appendix A of the  Participation  Agreement  further  amended by adding the
following language to the existing definition of the term "Total Funded Debt":

     provided,  however,  that  notwithstanding  the  foregoing,  in making  the
foregoing   calculation  there  shall  be  excluded  from  clause  (iii)  above,
concerning,  debts,  liabilities  and  obligations  which  are  Guaranteed,  any
Guarantee by the Lessee or any Subsidiary  given in respect of any of the former
Applebee's locations owned or operated by the Lessee or any such Subsidiary.

                             C. WAIVERS AND CONSENTS

     1. Lessee has notified the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent that, (i) effective as of October 3, 1999, a Lease Event of
Default  occurred,  namely,  in respect of Section 14(d) of the Lease Agreement,
concerning Lessee's failure to observe the financial covenant set for in Section
5.6 of the Participation  Agreement (the Total Debt/EBITDA  ratio) as of and for
the Fiscal Quarter ended October 3, 1999, i.e. the required ratio thereunder for
such period being not more than 4.00:1.0 and the actual ratio, based on Lessee's
financial statements for such Fiscal Quarter,  being 4.2:1.0, and (ii) effective
as of January 2, 2000, a Lease Event of Default occurred,  namely, in respect of
Section 14(d) of the Lease Agreement, concerning Lessee's failure to observe the
financial  covenant set for in Section 5.6 of the  Participation  Agreement (the
Total  Debt/EBITDA  ratio) as of and for the Fiscal  Quarter ended  December 31,
1999,  i.e. the required  ratio  thereunder  for such period being not more than
4.00:1.0 and the actual ratio, based on Lessee's  financial  statements for such
Fiscal Quarter, being 5.2:1.0 (collectively,  the "Financial Covenant Default").
The Lessee has further requested that the Owner Trustee, the Holder, the Lenders
and the  Administrative  Agent waive the  Financial  Covenant  Default under the
Lease Agreement and the Participation  Agreement,  as the case may be. The Owner
Trustee,  the Holder, the Lenders and the  Administrative  Agent have considered
the Lessee's  request,  and hereby waive the Financial  Covenant  Default in the
Lease Agreement and the Participation Agreement, as the case may be.

     2. Lessee has notified the Owner Trustee,  the Holder,  the Lenders and the
Administrative  Agent that,  effective as of November 17, 1999, a Lease Event of
Default  occurred,  namely,  in respect of Section 14(d) of the Lease Agreement,
concerning  Lessee's  pledging and granting a first  priority Lien in certain of
its assets,  namely all of the capital  stock and other equity  interests in all
direct  and  indirect  subsidiaries  of the  Lessee  comprising  the  restaurant
concepts of (i) "Don Pablo's", (ii) "Hops", (iii) "McCormick & Schmick" and (iv)
"Canyon Cafe", to the administrative agent and the lenders parties to the Credit
Agreement,  in  violation  of  the  covenant  set  for  in  Section  5.8  of the
Participation  Agreement,  the negative  pledge  covenant,  (the "First Negative
Pledge  Covenant  Default").  The Lessee has  further  requested  that the Owner
Trustee,  the Holder, the Lenders and the  Administrative  Agent waive the First
Negative Pledge Covenant Default under the Lease Agreement and the Participation
Agreement,  as the case may be. The Owner Trustee,  the Holder,  the Lenders and
the Administrative  Agent have considered the Lessee's request, and hereby waive
the First  Negative  Pledge  Covenant  Default  in the Lease  Agreement  and the
Participation Agreement, as the case may be.

     3. Lessee has notified the Owner Trustee,  the Holder,  the Lenders and the
Administrative  Agent that,  effective as of December 31, 1999, a Lease Event of
Default  occurred,  namely,  in respect of Section 14(d) of the Lease Agreement,
concerning  Lessee's  granting  a  first  priority  Lien  in all of its  and its
Subsidiaries'  personal property (excluding any equipment or fixtures located at
the corporate  headquarters of Don Pablo's and Canyon Cafe),  and all of its and
its Consolidated Subsidiaries' real property to the administrative agent and the
lenders parties to the Credit Agreement, in violation of the covenant set for in
Section 5.8 of the  Participation  Agreement,  the negative pledge covenant (the
"Second  Negative Pledge Covenant  Default").  The Lessee has further  requested
that the Owner Trustee,  the Holder,  the Lenders and the  Administrative  Agent
waive the Second Negative Pledge Covenant  Default under the Lease Agreement and
the Participation  Agreement, as the case may be. The Owner Trustee, the Holder,

                                       7
<PAGE>
the Lenders and the  Administrative  Agent have considered the Lessee's request,
and  hereby  waive the  Second  Negative  Pledge  Covenant  Default in the Lease
Agreement and the Participation Agreement, as the case may be.

     4. Lessee has notified the Owner Trustee,  the Holder,  the Lenders and the
Administrative  Agent that,  effective as of February 29, 1999, a Lease Event of
Default  occurred,  namely,  in respect of Section 14(d) of the Lease Agreement,
concerning  Lessee's  pledging and granting a first  priority Lien in all of its
equity interests in Belgo Group Plc. to the administrative agent and the lenders
parties to the Credit Agreement, in violation of the covenant set for in Section
5.8 of the  Participation  Agreement,  the negative  pledge (the "Third Negative
Pledge  Covenant  Default").  The Lessee has  further  requested  that the Owner
Trustee,  the Holder, the Lenders and the  Administrative  Agent waive the Third
Negative Pledge Covenant Default under the Lease Agreement and the Participation
Agreement,  as the case may be. The Owner Trustee,  the Holder,  the Lenders and
the Administrative  Agent have considered the Lessee's request, and hereby waive
the Third  Negative  Pledge  Covenant  Default  in the Lease  Agreement  and the
Participation Agreement, as the case may be.

     5. Lessee has notified the Owner Trustee,  the Holder,  the Lenders and the
Administrative  Agent  that,  effective  as of May 22,  2000,  a Lease  Event of
Default  occurred,  namely,  in respect to Section 14(d) of the Lease Agreement,
concerning  Lessee's pledging and granting of first priority Liens in certain of
its assets,  namely any real properties  wherein both (a) the interest of Lessee
or its Subsidiaries is not fee simple; e.g. where Lessee or such Subsidiary is a
tenant under a ground lease or building  lease and (b) any consent of, or notice
to, the lessors of such real properties is required as a condition  precedent to
the grant to such Liens;

     6. Lessee has notified the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent that, by letter dated March 27, 2000, Morgan had declared a
default to exist (the "Morgan Default") under the Morgan Agreement, based on the
Lessee's failure to comply with certain covenants set forth therein incorporated
by  reference   therein  pursuant  to  Section  5(a)(ix)  thereof  (the  "Morgan
Covenants").  The existence and continuation of the Morgan Default constitutes a
Lease Event of Default  under the Lease  Agreement  pursuant  to Section  14.(l)
thereof  (the  "Cross-Default").  The Holder and the  Lenders  have agreed as an
accommodation  to  Lessee to waive the  Cross-Default,  and do hereby  waive the
Cross-Default, subject, however, to the following terms and conditions:

     (a) so long as a Morgan Default is continuing,  then,  notwithstanding  any
term hereof or of the Credit  Agreement  to the  contrary,  the total  amount of
revolving loans and swing loans  outstanding  under the Credit  Agreement at any
one time cannot exceed One Hundred Twenty-five Million Dollars ($125,000,000) or
such lesser amount as shall equal the  outstanding  commitments  thereunder from
time to time; and

     (b) if, at any time  hereafter,  whether  as a result of the  existence  or
continuation  of a Morgan  Default or otherwise,  any of the  following  (herein
called a "Reinstitution Event") shall occur: (i) Morgan designates any day as an
"Early  Termination  Date" (as that term is defined in the Morgan  Agreement) in
respect of all outstanding "Transactions" (as that term is defined in the Morgan
Agreement);  or (ii) any "Automatic Early  Termination" (as that term is defined
in the Morgan  Agreement)  occurs;  or (iii) any acceleration of, or demand for,
payment occurs with respect to any Debts arising under the Morgan Agreement,  or
(iv)  Lessee  enters  into any  settlement,  accord  and  satisfaction  or other
arrangement with Morgan,  or Morgan otherwise  exercises any rights or remedies,
in each instance, having substantially the same effect as if either clauses (i),
(ii) or (iii)  above had  occurred;  then,  automatically,  upon any one of such
conditions  being met,  and without the  necessity of any further act or deed on
the part of the Holder or any Lender,  the Morgan  Default  shall  constitute an
Event of Default  under the Lease  Agreement  and the  Participation  Agreement;
i.e., the Cross Default shall be re-instituted effectively immediately; and

     (c) the  waiver of the  Cross-Default  contained  herein  shall be  limited

                                       8
<PAGE>
solely to  Section  14(l) of the Lease  Agreement  as it  relates  to the Morgan
Default and,  then,  only with respect to the Morgan  Covenants,  and not to any
other Lease Event of Default, and nothing contained herein is intended, or shall
be construed,  to suggest that the Holder and the Lenders have waived,  or would
be  willing to waive,  any other  Lease  Event of  Default,  whether  related or
unrelated, or whether now or hereafter existing.

     In  addition  to the  foregoing,  Lessee  acknowledges  and agrees that any
waiver of the  Morgan  Default  or other  arrangement  substantially  similar in
effect thereto (herein, a "Morgan Waiver"), shall require the separate,  written
consent of the  Required  Lenders,  if and to the extent any term,  covenant  or
condition of the Morgan Waiver  conflicts  with,  contravenes or contradicts any
term,  covenant or condition  of the  Participation  Agreement or any  Operative
Document. To facilitate the foregoing,  Lessee agrees to keep the Administrative
Agent  informed  as to  the  status  of  its  ongoing  discussions  with  Morgan
concerning the Morgan Default;  to notify the  Administrative  Agent promptly in
writing if any Reinstitution Event occurs; and to provide  Administrative  Agent
with a copy, prior to its becoming effective,  of any Morgan Waiver proposed for
execution or  acceptance  by the Lessee and Morgan.  Further to  facilitate  the
foregoing,  Lessee hereby certifies to the Holders and the Lenders that attached
hereto  as  Schedule  A is a true,  correct  and  complete  copy  of the  Morgan
Agreement as in effect on the Sixth Amendment  Effective Date, and Lessee agrees
not to enter into any amendment or other  modification  to the Morgan  Agreement
hereafter  which has, or could  reasonably  be  expected to have,  the effect of
increasing  the amount or  frequency of payment of any Debts  thereunder  except
with the prior written consent of the Required Lenders.

     7. In consideration of the Owner Trustee,  the Holder,  the Lenders and the
Administrative Agent waivers and consents, the Lessee agrees to provide to Owner
Trustee,  the  Holder,  the  Lenders  and the  Administrative  Agent  additional
financial information, including but not limited to:

     (a) the "53 Week Report" of all four  concepts on a weekly  basis,  monthly
financial  performance  results by concept and on a consolidated  basis, and any
amended  financial  projections  from those  previously  to the  Lenders and the
Administrative Agent;

     (b)  on the  Sixth  Amendment  Effective  Date,  a  listing  of  all  other
Properties  which the Lessee  intends to sell during the  remaining  term of the
Participation Agreement as described on Schedule 1 hereto, the projected date of
sale thereof, the projected amounts thereof, and the projected Net Cash Proceeds
to be derived therefrom;

     (c)  on the  Sixth  Amendment  Effective  Date,  a  listing  of  all  Asset
Recoveries which the Lessee  anticipates  receiving during the remaining term of
the Participation Agreement, and the projected date of their recovery;

     (d) monthly, subsequent to the Sixth Amendment Effective Date, an update in
respect of all actual and projected Asset Sales  (including the  Sale-Leaseback)
and Asset Recoveries, including reconciliations to date.

     In addition to the foregoing,  beginning with the Sixth Amendment Effective
Date, the interim financial statements and corresponding compliance certificates
presently  required to be delivered  quarterly  under Sections 5.1(b) and 5.(c),
respectively, henceforth shall be delivered monthly by Lessee within twenty-five
(25) days after the end of each Fiscal Month (except that, until further notice,
compliance  with  financial  covenants  shall  continue  to  be  certified  on a
quarterly basis only).

                            D. POST CLOSING COVENANT

     1. The Lessee agrees to deliver to the  Administrative  Agent no later than
January __, 2001, a duly  executed  Mortgagee  Consent and Waiver in the form of
Exhibit A attached  hereto,  for each  parcel of real  property  which is now or
which hereafter becomes subject to a lien in favor of the  administrative  agent

                                       9
<PAGE>
for the benefit of the  lenders  under the Credit  Agreement  or any other third
party.  The Lessee  acknowledges  and agrees  that the  failure of the Lessee to
deliver  such  documents  to the  Administrative  Agent by January 26 2001 shall
constitute  an Event of Default under the  Participation  Agreement or the Lease
Agreement, as the case may be.

     2.  The  Lessee  agrees  to  cause  Pubs  Property  LLC to  deliver  to the
Administrative  Agent no later than January 26, 2001, re-sale  certificates with
proper sales tax  registration  numbers  from the states of  Colorado,  Florida,
Georgia,  Minnesota,  South Carolina and North Carolina that are satisfactory to
the Administrative Agent in its sole discretion.

                                     E. FEES

     1. In consideration of the Owner Trustee,  the Holder,  the Lenders and the
Administrative  Agent's amendments,  waivers and consents hereunder,  the Lessee
agrees to pay to the Administrative Agent, for the benefit of the Holder and the
Lenders, on the Sixth Amendment  Effective Date, an amendment/waiver  fee, which
shall  be  fully  earned  and not  subject  to  rebate,  in an  amount  equal to
$110,000.00.

                                F. MISCELLANEOUS

     1. Upon the Administrative  Agent's receipt of (i) executed signature pages
from all parties to this  Amendment,  and (ii) the fee  referenced  in Section D
above, all amendments and waivers to the  Participation  Agreement and the Lease
Agreement  made herein  shall  become  effective  as of March 31,  1999,  unless
expressly stated to become  effective as of any other date.  Pursuant to Section
10.1 (a) of the Trust  Agreement,  the Holder  authorizes  and request  that the
Owner Trustee execute this Amendment.

     2. Except as expressly set forth herein, this Amendment shall be deemed not
to waive or modify any  provision  of the  Participation  Agreement or the other
Operative Agreements,  and all terms of the Participation  Agreement, as amended
hereby, and all other Operative Agreements shall be and remain in full force and
effect and shall constitute a legal, valid, binding and enforceable  obligations
of the Lessee.  All references to the Participation  Agreement shall hereinafter
be references to the  Participation  Agreement as amended by this Amendment.  To
the extent any terms and  conditions  in any of the Operative  Agreements  shall
contradict or be in conflict  with any terms or conditions of the  Participation
Agreement,  after giving effect to this Amendment, such terms and conditions are
hereby  deemed  modified  and  amended  accordingly  to  reflect  the  terms and
conditions of the Participation  Agreement as modified and amended hereby. It is
not intended by the parties that this Amendment  constitute,  and this Amendment
shall not constitute, a novation or accord and satisfaction.

     3.  To  induce  the  Owner  Trustee,   the  Holder,  the  Lenders  and  the
Administrative  Agent to enter into this Amendment (A) Lessee hereby  represents
and warrants that the representations and warranties set forth in Section 3.2 of
the Participation  Agreement as amended hereby are true and correct,  (B) Lessee
hereby  restates,  ratifies and reaffirms  each and every term and condition set
forth in the Participation  Agreement,  as amended hereby,  and in the Operative
Agreements as amended hereby, and in the Operative  Agreements,  effective as of
the date hereof;  and (C) Lessee hereby certifies that no Lease Event of Default
has occurred and is continuing.

     4. THIS AMENDMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE LAWS OF THE STATE OF GEORGIA AND ALL APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

     5. This  Amendment  may be  executed in one or more  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same document.

                                       10
<PAGE>
     6. This  Amendment  shall be binding on, and shall inure to the benefit of,
the successors and assigns of the parties hereto.

     7. In the  event  that  any  part of this  Agreement  shall  be found to be
illegal or in violation of public  policy,  or for any reason  unenforceable  at
law, such finding shall not invalidate any other part thereof.

     8. TIME IS OF THE ESSENCE UNDER THIS AGREEMENT.

     9. The parties agree that their  signatures by telecopy or facsimile  shall
be effective  and binding upon them as though  executed in ink on paper but that
the parties shall exchange original ink signatures  promptly  following any such
delivery by telecopy or facsimile.

     10.  Lessee  agrees to pay all costs and expenses of  Administrative  Agent
incurred in connection with the preparation, execution, delivery and enforcement
of this  Amendment  and all other  Operative  Agreements  executed in connection
herewith,   including  the  reasonable  fees  and   out-of-pocket   expenses  of
Administrative Agent's counsel.

     11. This Amendment shall constitute an Operative Agreement for all purposes
of the Participation Agreement and shall be governed accordingly.

                                         [Signatures appear on next page]

                                       11
<PAGE>
     IN WITNESS WHEREOF,  the Lessee, the Owner Trustee, the Holder, each Lender
and the  Administrative  Agent have set their hands as of the day and year first
above written.

                                            "LESSEE"

                                            AVADO BRANDS, INC. formerly known as
                                            Apple South, Inc.

                                            By:_________________________________
                                                Name:
                                                Title:

                                            Attest:_____________________________
                                                Name:
                                                Title:

                                       12
<PAGE>
                                             PARTICIPATION AGREEMENT]
                                            "OWNER TRUSTEE"

                                            FIRST SECURITY BANK, N.A.

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       13
<PAGE>
                                           "HOLDER"

                                            STI CREDIT CORPORATION

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       14
<PAGE>

                                            "LENDERS"

                                            SUNTRUST  BANK,  formerly  known  as
                                            SunTrust  Bank,  Atlanta,  as the
                                            Administrative Agent and as a Lender

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       15
<PAGE>
                                            BANCBOSTON LEASING, INC.

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       16
<PAGE>

                                            SOUTHTRUST BANK, N.A.

                                            By:_________________________________
                                            Name:____________________________
                                            Title:_____________________________

                                       17
<PAGE>
     Exhibits and  schedules to this  agreement  are not filed  pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 10-K, the Registrant
hereby  agrees to  furnish  supplementally  a copy of any  ommitted  exhibit  or
schedule to the Commission upon request.

                                       18

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