Document:

STANDARD FORM
                       APPLEBEE'S NEIGHBORHOOD GRILL & BAR
                              DEVELOPMENT AGREEMENT

                       -----------------------------------
                               (Name of Developer)

                       -----------------------------------
                                     (Date)

                       -----------------------------------
                       (General Description of Territory)

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<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                           <C>
RECITALS    .................................................................................  E-3

      1.    GRANT OF DEVELOPMENT RIGHTS.....................................................   E-4
      2.    INITIAL DEVELOPMENT SCHEDULE...................................................    E-5
      3.    SUBSEQUENT DEVELOPMENT SCHEDULE;
            DEVELOPMENT OBLIGATIONS GENERALLY..............................................    E-6
      4.    FRANCHISE FEE AND ROYALTY RATE.................................................    E-7
      5.    SITE APPROVALS:  PLANS AND SPECIFICATIONS......................................    E-9
      6.    FEES AND FRANCHISE AGREEMENTS..................................................    E-10
      7.    DEVELOPER ORGANIZATION, AUTHORITY,
            FINANCIAL CONDITION AND SHAREHOLDERS............................................   E-10
      8.    TRANSFER........................................................................   E-12
      9.    TERMINATION.....................................................................   E-16
     10.    PREREQUISITES TO OBTAINING FRANCHISES
            FOR INDIVIDUAL RESTAURANT UNITS.................................................   E-18
     11.    RESTRICTIONS....................................................................   E-19
     12.    DEVELOPMENT PROCEDURES..........................................................   E-21
     13.    NO WAIVER OF DEFAULT............................................................   E-22
     14.    FORCE MAJEURE...................................................................   E-23
     15.    CONSTRUCTION, SEVERABILITY, GOVERNING
            LAW AND JURISDICTION..........................................................     E-23
     16.    MISCELLANEOUS.................................................................     E-24

APPENDIX A:             TERRITORY........................................................      E-27

APPENDIX B:             FORM OF FRANCHISE AGREEMENT......................................      E-28

APPENDIX C:             STATEMENT OF OWNERSHIP INTERESTS.................................      E-29

APPENDIX D:             REVIEW AND CONSENT WITH RESPECT
                        TO TRANSFERS.....................................................      E-30

APPENDIX E:             CONFIDENTIALITY AGREEMENT AND
                        COVENANT NOT TO COMPETE..........................................      E-31

APPENDIX F:             CONFIDENTIALITY AGREEMENT........................................      E-34

</TABLE>

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                       APPLEBEE'S NEIGHBORHOOD GRILL & BAR

                              DEVELOPMENT AGREEMENT

This Agreement is made this ________ day of _____________________,  20______, by
and   between   APPLEBEE'S   INTERNATIONAL,   INC.,   a   Delaware   corporation
("FRANCHISOR"),  _________________________________________,  a  (_______________
corporation, sole proprietorship,  _______________ partnership,  _______________
limited  partnership   [strike   inappropriate   language])   ("DEVELOPER")  and
______________________    ______________________________    (collectively,   the
"PRINCIPAL  SHAREHOLDERS"  and,  individually,   a  "PRINCIPAL  SHAREHOLDER"  of
Developer  if a  corporation  or  general  partner  of  Developer  is a  limited
partnership    having   as   its   general    partner   a    corporation)    and
_____________________________________________________________________________
("GENERAL PARTNER" of Developer if Developer is a limited partnership).*

       * (If  Developer is not a  corporation  or a sole  proprietorship,  or if
Developer is a limited liability  company,  the parties hereto hereby agree that
an Addendum  shall be attached to this  Agreement  so as properly to reflect the
responsibilities of the partners of any general partnership, the general partner
of any limited partnership and the shareholders of any corporate general partner
of any partnership, or the members of any limited liability company.)

WITNESSETH:

                                    RECITALS

       A.  Franchisor  owns the rights to develop and operate a unique system of
restaurants which specialize in the sale of high quality, moderately priced food
and  alcoholic  beverages  in  an  attractive,  casual  setting,  which  include
proprietary   rights  in  certain  valuable  trade  names,   service  marks  and
trademarks,  including the service mark Applebee's  Neighborhood Grill & Bar and
variations  of such  mark,  designs,  decor and  color  schemes  for  restaurant
premises,  signs,  equipment,  procedures  and formulae for  preparing  food and
beverage  products,  specifications  for  certain  food and  beverage  products,
inventory  methods,  operating  methods,  financial control  concepts,  training
facilities and teaching techniques (the "System").

       B. Franchisor has established, through its own development and operation,
and through the granting of franchises, a chain of Applebee's Neighborhood Grill
& Bar restaurants which are distinctive; which are similar in appearance, design
and decor; and which are uniform in operation and product consistency.

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<PAGE>

       C. The value of Franchisor's trade names, service marks and trademarks is
based upon: (1) the maintenance of uniform high quality  standards in connection
with the preparation and sale of Franchisor-approved food and beverage products,
(2) the uniform high standards of appearance of the individual  restaurant units
in the System, (3) the use of distinctive  trademarks,  service marks,  building
designs and advertising signs representing a

uniformly  high  quality of product  and  services,  and (4) the  assumption  by
Franchisor  and its  franchisees  of the  obligation to maintain and enhance the
goodwill and public  acceptance of the System (and of Franchisor's  trade names,
service marks and trademarks) by strict adherence to the high standards required
by Franchisor.

       D. Developer desires to obtain the exclusive right to develop  restaurant
units franchised by Franchisor  within the geographic area specified in Appendix
A hereto ("Territory"),  for the period specified in Subsection 1.1, pursuant to
the terms, conditions and provisions which are set forth in this Agreement.

NOW,  THEREFORE,  in  consideration  of  Franchisor  granting to  Developer  the
exclusive  right to develop  restaurant  units  franchised by  Franchisor  which
employ the System  ("Restaurants")  in the  Territory  for such  period,  and in
consideration  of the mutual  obligations  which are provided for herein,  it is
hereby agreed as follows:

1.     GRANT OF DEVELOPMENT RIGHTS

       1.1  Franchisor   grants   Developer  the  exclusive   right  to  develop
Restaurants only in the Territory for a period commencing on the date hereof and
expiring  on   ___________________,   ________,   unless  sooner  terminated  as
hereinafter  provided.  Developer has no rights under this  Agreement to develop
Restaurants  outside of the  Territory  or to develop  restaurants  which do not
employ the System,  including the  Applebee's  Neighborhood  Grill & Bar service
mark.

       1.2 During the term of this  Agreement,  Franchisor  shall not  operate a
restaurant  utilizing  the  System  or  license  any other  person to  operate a
restaurant  utilizing  the  System in the  Territory.  However,  nothing in this
Agreement  shall  prohibit  or  infringe  upon  Franchisor's  right to operate a
restaurant  or license any other person to operate a restaurant in the Territory
which does not utilize the System or use the Applebee's Neighborhood Grill & Bar
service mark. In addition, Franchisor specifically reserves the right to operate
or license any other person to operate  restaurants  in any  location  within an
airport  (serviced by one or more public or charter  carrier),  arena,  stadium,
state or national park, or military  fort,  post or base which may be within the
boundaries of the Territory otherwise granted to Developer.  Further,  Developer
acknowledges and agrees that Franchisor or any one (1) or more of its subsidiary
or affiliated  companies or divisions shall have the right to operate or license
any other  person to operate  such other  restaurants  which may or will compete
with the  Restaurants,  under a system and  service  mark other than  Applebee's
Neighborhood Grill & Bar.

       1.3 After this Agreement expires or is terminated,  Franchisor shall have
the  complete  and  unrestricted  right to operate or license  other  persons to
operate a restaurant utilizing the System in the Territory.

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<PAGE>

2.     INITIAL DEVELOPMENT SCHEDULE

       2.1 Developer  shall develop a total of  ___________  (____)  Restaurants
franchised by Franchisor  in the Territory  during the period  commencing on the
date hereof and expiring on  ______________,  ________,  in accordance  with the
following development schedule:

               (a)1  During  the first  Initial  Development  Period  under this
       Agreement,  Developer shall develop at least _________ (____) Restaurants
       within the Territory, each of which shall be open for operation and doing
       business on  __________________,  ________  (the end of the first Initial
       Development Period under this Agreement).

               (b) During  the  second  Initial  Development  Period  under this
       Agreement,  Developer shall develop the number of Restaurants  within the
       Territory necessary to result in the existence of ___________ (____) such
       Restaurants developed by Developer which are open for operation and doing
       business  on  _____________,  ________  (the  end of the  second  Initial
       Development Period under this Agreement).

               (c)  During  the third  Initial  Development  Period  under  this
       Agreement,  Developer shall develop the number of Restaurants  within the
       Territory necessary to result in the existence of ___________ (____) such
       Restaurants developed by Developer which are open for operation and doing
       business  on  ______________,  ________  (the  end of the  third  Initial
       Development Period under this Agreement).

Each of the periods  specified in  Subparagraphs  (a) through  (____)  hereof is
sometimes referred to hereinafter as an "Initial Development Period."

       2.2 During any Initial Development  Period,  subject to the provisions of
this Agreement,  Developer is free to develop more than the total minimum number
of  Restaurants  which  Developer  is  required to develop  during that  Initial
Development Period. Any such Restaurants developed, open for operation and doing
business  during an Initial  Development  Period in excess of the minimum number
required to be developed during that Initial Development Period shall be applied
to satisfy Developer's development obligation during the next succeeding Initial
Development Period or next succeeding Subsequent  Development Period (as defined
in Section 3 hereof),  if any,  as the case may be.  Notwithstanding  the above,
Developer shall not develop more than the total number  Restaurants  approved by
Franchisor for development under this Agreement.

1 The periods specified in Subsection 2.1(a)-(c) may be revised,deleted or added
to in order to reflect  the number of  Restaurants  Developer  is  obligated  to
develop  and the  time  in  which  the  Developer  is  obligated  to  open  such
Restaurants.

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       2.3  Strict  compliance  with  the  development   schedule  specified  in
Subsection 2.1 hereof is of the essence of this Agreement. If Developer fails to
fulfill its specified development  obligation with respect to any of the Initial
Development  Periods  specified in Subsection 2.1 hereof,  this Agreement  shall
terminate  sixty (60) days after the end of the  Initial  Development  Period in
question,  unless  by the  end of such  sixty  (60)  day  period  Developer  has
fulfilled  the  development  obligation  relating  to such  Initial  Development
Period.

3.     SUBSEQUENT DEVELOPMENT SCHEDULE; DEVELOPMENT
       OBLIGATIONS GENERALLY

       3.1 During the  period  commencing  on  _________________,  ________  and
expiring on  _________________,  ________,  Developer shall develop and open for
business in the Territory,  from time to time in accordance with the development
schedule established under Subsection 3.2, that number of additional Restaurants
as is  required  to  achieve  at the  end of  such  period  a  total  number  of
Restaurants  open for business within the Territory  which,  after including the
Restaurants developed during the Initial Development Periods,  would be equal to
(a) one (1) Restaurant for every twenty-five thousand (25,000) households within
the Territory  having an income of  twenty-five  thousand  dollars  ($25,000) or
more,  or (b)  one (1)  Restaurant  for  every  seventy-five  thousand  (75,000)
individuals  within the  Territory  who are  between the ages of twenty (20) and
fifty-four (54) years old, whichever  computation  results in a lesser number of
Restaurants.

       3.2 (a) Each  consecutive  twelve (12) month period,  commencing with the
period beginning on  _______________,  ________,  is hereafter  referred to as a
"Subsequent  Development  Period." Each period consisting of two (2) consecutive
Subsequent  Development  Periods,   commencing  with  the  period  beginning  on
________________,  ________,  is  hereinafter  referred  to  as  a  "Calculation
Period."

               (b) Franchisor and Developer  shall agree in writing on or before
the commencement of each Calculation  Period on the number of Restaurants  which
Developer  must  develop,  each of which shall be open for  operation  and doing
business,  during each of the two (2) Subsequent Development Periods included in
such  Calculation  Period;  provided  that  such  agreement  is  subject  to the
following minimum and maximum development requirements:  (i) Minimum development
requirements:   Developer  hereby  agrees  to  develop  during  each  Subsequent
Development  Period at least that number of Restaurants,  each of which shall be
open for operation and doing business, which will be equal to one-third (1/3) of
the total number of Restaurants (rounded to the nearest whole number) which were
required to be developed by Developer  during all prior Initial  Development and
Calculation Periods; and (ii) Maximum development requirements:  Notwithstanding
the minimum development requirements, Developer shall not be required to develop
during any  Subsequent  Development  Period more than that number of Restaurants
which,  when  added to the  number of  Restaurants  which  were  required  to be
developed by Developer  during all prior  Initial  Development  and  Calculation
Periods,  would exceed the number of  Restaurants  prescribed by the formula set
forth in Subsection 3.1, if such formula had been applied to determine the total
number of Restaurants required to service the Territory immediately prior to the
Calculation  Period in  question.  No later  than  sixty  (60) days prior to the
commencement of each Calculation Period, Franchisor shall provide Developer with
census data  necessary for  Developer to ascertain,  for purposes of the maximum
development  requirements,  the number of Restaurants which would be required in
the Territory by application of the formula. Franchisor shall use census figures
provided  by  National  Decision  Systems,  or such other  generally  recognized
demographic service as Developer and Franchisor shall reasonably designate.

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       3.3  Strict  compliance  with the  development  schedule  established  in
accordance with  Subsection 3.2 hereof is of the essence of this  Agreement.  If
Developer  shall fail to  fulfill  its  specified  development  obligation  with
respect to any Subsequent Development Period, this Agreement shall automatically
terminate sixty (60) days after the end of the Subsequent  Development Period in
question,  unless  by the  end of such  sixty  (60)  day  period  Developer  has
fulfilled the development  obligation  relating to such  Subsequent  Development
Period.

       3.4 If, during the term of this  Agreement,  (a)  Developer  transfers or
disposes of any Restaurant developed hereunder in accordance with the provisions
hereof,  or for any other  reason  ceases to operate  any  Restaurant  developed
hereunder,  and (b) after such  transfer or other  cessation  of  operation  the
premises no longer are utilized for the operation of a  Restaurant,  Developer's
development  obligation in the Initial or Subsequent Development Period in which
such transfer or other cessation of operations occurred shall increase,  subject
to the general limitations on Developer's  development  obligations set forth in
Section  2 and  Section  3, by the  number of  Restaurants  which  Developer  so
transferred, disposed of or which otherwise ceased to operate.

       3.5 Franchisor  represents  that it is the sole owner of the service mark
Applebee's  Neighborhood  Grill & Bar.  If  Franchisor  determines  that a third
person  has rights  under the law of any state  with  respect to such mark which
precludes  Developer from fulfilling any portion of its development  obligations
pursuant to this  Agreement,  Franchisor and Developer  shall  negotiate in good
faith for a revision of those  development  obligations,  a redefinition  of the
Territory, or such other modifications of this Agreement as may be reasonable in
the circumstances.

4.     FRANCHISE FEE AND ROYALTY RATE

       4.1 Developer shall pay Franchisor a franchise fee of $_____________ with
respect to each Restaurant which is developed  pursuant to this Agreement during
the Initial Development  Periods.  Thereafter,  Developer shall pay Franchisor a
franchise  fee in an amount  which is equal to the amount of the  franchise  fee
then in effect at the time of the issuance of the  franchise  agreement for each
additional restaurant to be opened during any Subsequent Development Period. The
amount  of the  franchise  fee  shall  be set  forth in the  franchise  offering
circular  received by the Developer from  Franchisor  immediately  preceding the
issuance of such franchise agreement.  Simultaneously with the execution of this
Agreement,  Developer shall pay to Franchisor, by certified check, the amount of
$______________  ("Franchise Fee Deposit").  Said Franchise Fee Deposit shall be
equal to the greater of (a) the franchise fee for one of the  Restaurants  to be
developed during the Initial  Development  Periods,  or (b) ten percent (10%) of
the entire franchise fees covering the _______________  (____) Restaurants to be
developed  during the first three2 (3) Initial  Development  Periods pursuant to
this  Agreement  (as reduced by a credit of $6,000  based on  Developer's  prior
payment, if so paid, of a non-refundable  $6,000 application fee). The remaining
balance of the franchise fees for each of the Restaurants to be developed during
the three (3) Initial  Development  Periods shall be paid by certified  check as
follows:  one-half  (1/2) of the balance  shall be paid upon signing a franchise
agreement for that  Restaurant and the remaining  balance shall be paid fourteen
(14) days prior to the scheduled  opening of the  Restaurant.  The Franchise Fee
Deposit shall be proportionately allocated to the franchise fee due with respect
to each  Restaurant to which it applies.  The franchise fee with respect to each
Restaurant  to be  developed  during a  Subsequent  Development  Period  or with
respect to any additional  Restaurants  developed during the Initial Development
Periods shall be paid by certified check in the same manner.

2In the event there are more or less than three (3) Initial Development Periods,
these  fees  are  payable  for  each  of  the  Restaurants  provided  for in the
applicable total number of Initial Development Periods.

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<PAGE>

       4.2 Except as provided in this  Subsection 4.2 and in Subsection  19.1 of
the form of  franchise  agreement  which  is  attached  hereto  as  Appendix  B,
Developer  shall  have  no  right  to  recover  from  Franchisor,   directly  or
indirectly,  any of the franchise fees which are prepaid  pursuant to Subsection
4.1 hereof.  If  Developer's  failure to develop the total number of Restaurants
specified in Subsection  2.1 of this Agreement is the result of the assertion of
rights by a third party as described in  Subsection  3.5 hereof,  those  prepaid
franchise  fees which  relate to the  Restaurants  which  cannot be so developed
shall be refunded to Developer in cash.

       4.3 As partial consideration for the rights granted to Developer pursuant
to the franchise  agreements  covering the Restaurants which Developer  develops
hereunder,  Developer (as franchisee under each such franchise  agreement) shall
pay Franchisor a monthly royalty fee as determined by Franchisor,  not to exceed
five percent (5%) of each calendar  month's gross sales (as that term is defined
in the form of franchise agreement which is attached hereto as Appendix B).

       4.4  Pursuant  to its  obligations  hereunder  and under  the  applicable
franchise  agreements,  Franchisor will make various  expenditures in connection
with the  development of prospective  Restaurant  sites by Developer,  including
expenditures  for  travel,   lodging,  meals,  obtaining  of  information  about
prospective sites, demographic  information,  traffic counts, and inquiries into
local laws and  ordinances.  Developer  shall  promptly  notify  Franchisor of a
decision to cease  development  of a prospective  Restaurant  site. In the event
that  Developer  fails to open a  restaurant  at any such  site,  in lieu of the
payment of the  franchise fee therefor,  Franchisor in its sole  discretion  may
require  Developer to reimburse  Franchisor for Franchisor's  expenditures  with
respect to that site. In such event,  Franchisor shall provide Developer with an
itemized  list of  Franchisor's  expenditures  with  respect to that site within
thirty (30) business days after  Franchisor  receives  notice that  Developer no
longer  intends  to  develop a  Restaurant  at that site,  and  Developer  shall
reimburse Franchisor for such costs within thirty (30) days after receiving such
list.

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<PAGE>

5.     SITE APPROVALS:  PLANS AND SPECIFICATIONS

       5.1 Developer assumes all cost, liability, expense and responsibility for
locating,  obtaining,  financing and developing sites for  Restaurants,  and for
constructing and equipping Restaurants at such sites. To assist Developer in the
site  selection   process,   Franchisor  will  provide  Developer  with  certain
demographic  information  regarding the site, will conduct an on-site inspection
and will  review any lease or contract  under  negotiation  for the  prospective
site,  such  services to be provided to Developer  at no  additional  cost.  The
development  of a  Restaurant  at any site must be  approved  by  Franchisor  in
accordance with its then-existing site approval procedure.  In connection with a
request  for  approval  of a proposed  site for a  Restaurant,  Developer  shall
provide a related contract of sale or lease agreement and such other information
and material as the Franchisor may reasonably require.  Franchisor's approval of
a prospective  Restaurant  site shall not be unreasonably  withheld.  Franchisor
shall  notify  Developer  whether it  approves a proposed  site and the  related
contract  of sale  or  lease  agreement  within  thirty  (30)  business  days of
receiving  Developer's request for approval.  Failure of Franchisor to so notify
Developer  within such thirty (30)  business day period shall be deemed to be an
approval  of such  site and the  related  contract  of sale or lease  agreement.
Developer  acknowledges that  Franchisor's  approval of a prospective site for a
Restaurant  does not  constitute  a  representation,  promise  or  guarantee  by
Franchisor  that a  Restaurant  operated  at that  site  will be  profitable  or
otherwise  successful.  Developer  shall not make any  binding  commitment  to a
prospective  vendor  or  lessor  of real  estate  with  respect  to a site for a
Restaurant   unless  Franchisor  has  approved  that  site  in  accordance  with
Franchisor's   then-existing  site  approval  procedure.  After  Franchisor  has
approved a site for a Restaurant, Developer shall provide Franchisor with a copy
of the executed  contract of sale or lease, as applicable,  relating to the site
within a reasonable period of time.

       5.2  For  each  Restaurant  which  Developer  develops  pursuant  to this
Agreement,   Franchisor   will  make   available   to   Developer   Franchisor's
specifications for a typical Restaurant. Developer will obtain architectural and
engineering services independently and at its own expense. Franchisor shall have
the  right to review  all such  architectural  and/or  engineering  plans  which
Developer  obtains  and to  prohibit  the  implementation  of any plan,  or part
thereof, which Franchisor, in its sole and absolute discretion,  believes is not
consistent  with the best interests of the System.  In the event that Franchisor
desires  to  prohibit  the  implementation  of any such plan,  or part  thereof,
Franchisor  shall so  notify  Developer  within  thirty  (30)  business  days of
receiving such  architectural  and/or  engineering plans for review.  Failure of
Franchisor  to so notify  Developer  within such thirty (30) business day period
shall be deemed to be an approval of such plans.  In the event  Franchisor  does
object to any such plan,  Franchisor  shall provide  Developer with a reasonable
detailed list of changes  necessary to make such plans acceptable to Franchisor.
Franchisor  shall,  upon  resubmission  of such  plans,  with  such  changes  as
Developer has prepared,  notify  Developer  within fifteen (15) business days of
receiving such plans whether they are acceptable. Failure to so notify Developer
within such fifteen  (15)  business day period shall be deemed to be an approval
of such amended plans.

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<PAGE>

       5.3 If Developer  acquires a leasehold interest in a site, that leasehold
interest  shall be for a term  which is at least as long as the term of the form
of  franchise  agreement  which is attached  hereto as Appendix B, and the lease
shall provide that if the applicable  franchise agreement is terminated prior to
the expiration of that term for whatever reason,  Developer may assign the lease
to Franchisor  without the lessor having any right to impose  conditions on such
assignment or to obtain any payment in connection therewith.

6.     FEES AND FRANCHISE AGREEMENTS

       Not later than  ninety  (90) days prior to the  scheduled  opening of any
Restaurant which has been developed pursuant to this Agreement,  Developer shall
deliver to Franchisor an executed franchise agreement  substantially in the form
which is attached  hereto as Appendix B,  provided  however,  that the franchise
agreement which Developer  executes shall require the payment of a franchise fee
in the  amount  described  in  Subsection  4.1,  royalty  fees as  described  in
Subsection  4.3,  and  advertising  payments  at the rates then  established  by
Franchisor with respect to new  Restaurants,  except that in no event shall such
rates  exceed five  percent  (5%) of a  Restaurant's  gross sales (as defined in
Subsection 9.3 of the form of a franchise  agreement which is attached hereto as
Appendix B).

7.     DEVELOPER ORGANIZATION, AUTHORITY, FINANCIAL
       CONDITION AND SHAREHOLDERS

       7.1 Developer and each Principal  Shareholder represent and warrant that:
(a) Developer is a corporation duly  incorporated,  validly existing and in good
standing under the laws of the state of its incorporation; (b) Developer is duly
qualified  and is authorized to do business and is in good standing as a foreign
corporation in each jurisdiction in which its business  activities or the nature
of the properties owned by it requires such qualification; (c) the execution and
delivery of this Agreement and the transactions  contemplated  hereby are within
Developer's  corporate  power;  (d) the execution and delivery of this Agreement
have been duly  authorized by the Developer;  (e) the articles of  incorporation
and by-laws of Developer delivered to Franchisor are true, complete and correct,
and there have been no changes therein since the date thereof; (f) the certified
copies of the minutes  electing the officers of Developer  and  authorizing  the
execution  and delivery of this  Agreement are true,  correct and complete,  and
there have been no changes therein since the date(s)  thereof;  (g) the specimen
stock  certificate  delivered to Franchisor  is a true  specimen of  Developer's
stock  certificate;  (h) the  financial  statement  of Developer  and  financial
statements of its Principal  Shareholders,  heretofore  delivered to Franchisor,
are true,  complete and correct,  and fairly present the financial  positions of
Developer and each Principal Shareholder,  respectively, as of the date thereof;
(i) such financial  statements  have been prepared in accordance  with generally
accepted  accounting  principles;  and (j) there have been no materially adverse
changes in the  condition,  assets or  liabilities  of  Developer  or  Principal
Shareholders since the date or dates thereof.

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<PAGE>

       7.2 Developer  and each  Principal  Shareholder  covenant that during the
term of this  Agreement:  (a) Developer  shall do or cause to be done all things
necessary to preserve and keep in full force its  corporate  existence and shall
be in good standing as a foreign  corporation in each  jurisdiction in which its
business  activities or the nature of the  properties  owned by it requires such
qualification; (b) Developer shall have the corporate authority to carry out the
terms of this Agreement; and (c) Developer shall print, in a conspicuous fashion
on all  certificates  representing  shares of its stock  when  issued,  a legend
referring to this Agreement and the restrictions on and obligations of Developer
and Principal Shareholders hereunder,  including the restrictions on transfer of
Developer's shares.

       7.3  Prior  to  development  of the  first  Restaurant  pursuant  to this
Agreement,  Developer  shall maintain an average monthly balance of five hundred
thousand  dollars  ($500,000) in liquid assets.  For purposes of this Agreement,
"liquid assets" shall consist of cash,  cash available to Developer  pursuant to
an irrevocable line of credit issued by a commercial bank in favor of Developer,
marketable  securities,  or any other  similar  asset which  Franchisor's  Chief
Financial Officer  designates in writing as a liquid asset. After development of
the first Restaurant  pursuant to this Agreement,  and at any time thereafter in
which  Developer is operating  one (1)  Restaurant in the  Territory,  Developer
shall maintain an average monthly balance of three hundred twenty-five  thousand
dollars ($325,000) in liquid assets.  After development of the second Restaurant
pursuant to this Agreement, and thereafter, so long as Developer is operating at
least two (2) Restaurants in the Territory,  Developer shall maintain an average
monthly  balance of one hundred  fifty  thousand  dollars  ($150,000)  in liquid
assets. At all times Developer shall maintain the necessary  financial resources
to satisfy its development obligations hereunder.

       7.4 In addition to its  obligations  pursuant to Subsections  7.1 and 7.3
hereof,  Developer and Principal Shareholders shall provide Franchisor with such
financial  information as Franchisor  may reasonably  request from time to time,
including,  on an  annual  basis,  copies  of the  then-most  current  financial
statements of Developer and each Principal  Shareholder,  dated as of the end of
the last preceding fiscal year of the Developer or Principal  Shareholder,  said
statements  to be delivered to  Franchisor  no later than April 15 of each year,
which  financial  statements  shall  conform  to  the  standards  set  forth  in
Subsection 7.1 hereof.

       7.5  Developer  and each  Principal  Shareholder  represent,  warrant and
covenant that all  Interests (as defined in Subsection  8.4 hereto) in Developer
are owned as set forth on Appendix C hereto,  that no Interest  has been pledged
or  hypothecated  (except in accordance with Section 8 of this  Agreement),  and
that no change will be made in the ownership of any such Interest  other than as
permitted by this Agreement, or otherwise consented to in writing by Franchisor.
Developer  and  Principal  Shareholders  agree to furnish  Franchisor  with such
evidence  as  Franchisor  may  request,  from time to time,  for the  purpose of
assuring  Franchisor that the Interests of Developer and Principal  Shareholders
remain as represented herein.

                                      E-11
<PAGE>

       7.6 Each Principal Shareholder,  jointly and severally, hereby personally
and  unconditionally  guarantees  each of Developer's  financial  obligations to
Franchisor  (including,  but not  limited  to, all  obligations  relating to the
payment of fees by Developer to Franchisor).  Each Principal  Shareholder agrees
that  Franchisor may resort to such Principal  Shareholder  (or any of them) for
payment of any such financial  obligation,  whether or not Franchisor shall have
proceeded  against  Developer,  any  other  Principal  Shareholder  or any other
obligor  primarily or secondarily  obligated to Franchisor  with respect to such
financial  obligation.   Each  Principal  Shareholder  hereby  expressly  waives
presentment,  demand,  notice  of  dishonor,  protest,  and  all  other  notices
whatsoever  with  respect  to  Franchisor's  enforcement  of this  guaranty.  In
addition,   each  Principal  Shareholder  agrees  that  if  the  performance  or
observance by Developer of any term or provision hereof is waived or the time of
performance  thereof  extended by  Franchisor,  or payment of any such financial
obligation is accelerated in accordance  with any agreement  between  Franchisor
and any party liable in respect  thereto or extended or renewed,  in whole or in
part, all as Franchisor  may  determine,  whether or not notice to or consent by
any Principal Shareholder or any other party liable in respect to such financial
obligations  is given or obtained,  such  actions  shall not affect or alter the
guaranty of each Principal Shareholder described in this Subsection.

8.     TRANSFER

       8.1 There  shall be no Transfer of any  Interest  of  Developer,  or of a
Principal Shareholder in Developer,  in whole or in part (whether voluntarily or
by operation of law), directly, indirectly or contingently, except in accordance
with the provisions of this Section 8.  "Transfer" and "Interest" are defined in
Subsections 8.2, 8.3 and 8.4.

       8.2 Except as  provided  in  Subsection  8.3,  "Transfer"  shall mean any
assignment,  sale,  pledge,  hypothecation,  gift or any other such event  which
would change ownership of or create a new Interest,  including,  but not limited
to:

               (a) any change in the  ownership of or rights in or to any shares
       of stock or other equity  interest in  Developer  which would result from
       the act of any shareholder of Developer ("Shareholder"),  such as a sale,
       exchange, pledge or hypothecation of shares, or any interest in or rights
       to any of  Developer's  profits,  revenues or assets,  or any such change
       which would result by operation of law; and

               (b)  any  change  in  the   percentage   interest  owned  by  any
       Shareholder  in the shares of stock of  Developer,  or  interests  in its
       profits,  revenues or assets which would result from any act of Developer
       such as a sale,  pledge or hypothecation of any Restaurant  assets (other
       than a pledge of assets to secure bona fide loans made or credit extended
       in  connection  with  acquisition  of the assets  pledged,  provided that
       immediately  before and after such  transaction  Developer  satisfies the
       applicable liquid asset  requirement  described in Subsection 7.3 of this
       Agreement);  any sale or issuance of any shares of Developer's stock; the
       retirement or redemption of any shares of Developer's  stock; or any sale
       or grant to any person of any right to  participate  in or  otherwise  to
       share or become  entitled to any part of Developer's  profits,  revenues,
       assets or equity.

                                      E-12
<PAGE>

       8.3  "Transfer"  shall not  include (a) a change in the  ownership  of or
rights to any shares or other equity interest in Developer  pursuant to a public
offering of Developer's  securities registered under the Securities Act of 1933,
or (b) a change in the ownership of or rights to any  securities or other equity
interest in Developer  pursuant to a private offering of Developer's  securities
exempted from  registration  under such Act,  provided that  Developer  provides
Franchisor  with a copy of its prospectus  and/or  offering  memorandum ten (10)
days  prior to its  filing  with  the  Securities  and  Exchange  Commission  or
circulation  to third parties so that  Franchisor may comment and, if necessary,
correct any information  concerning  Franchisor  and/or the System,  and further
provided  that after giving effect to any such public or private  offering,  the
Principal  Shareholders,  or any of them, "control"  Developer.  For purposes of
this Section 8, "control"  means either (1) owning legal and equitable  title to
fifty-one  percent  (51%)  or  more  of the  outstanding  voting  securities  of
Developer,  which are not  subject to a proxy  granted to or  contract  with any
other person or party  granting that party the right to vote part or all of such
securities,  or (2) having and  continually  exercising  the  contractual  power
presently to designate a majority of the directors of Developer.

       8.4  "Interest"  shall mean:  when  referring  to  interests or rights in
Developer,  any shares of Developer's  stock,  and any other  equitable or legal
right in or to any of  Developer's  stock,  revenues,  profits or  assets;  when
referring  to  rights  or  assets of  Developer,  Developer's  rights  under and
interest in this Agreement, any Restaurant and its revenues, profits and assets.

       8.5 (a) The Interest of a Principal  Shareholder  may be  transferred  to
such  Principal  Shareholder's  spouse or children or to a person  designated in
such  Principal  Shareholder's  will or  trust  (individually  and  collectively
referred  to  as  "Successor"),  upon  such  Principal  Shareholder's  death  or
permanent  incapacity,   without  Franchisor's  approval,   provided  that  such
Successor shall agree to be bound by the restrictions  contained in this Section
8,  and  the  other  agreements  and  covenants  of the  Principal  Shareholders
contained in this Agreement.

               (b)  The  Interest  of  a  Principal   Shareholder   may  not  be
transferred to another  Principal  Shareholder  without  Franchisor's  approval,
which approval will not be unreasonably withheld.

               (c) The  Interest  of a  Successor  may  only be  transferred  in
accordance with Subsection 8.5(b) or 8.8, regardless of whether such Transfer is
for consideration or by gift or will or other device.

       8.6 Until such date as Developer  has  developed and opened for operation
forty percent  (40%) of the number of  Restaurants  required by  Subsection  2.1
hereof and the number of  Restaurants  required by Subsection 3.1 hereof as said
total aggregate number is set forth on Appendix A, Developer shall have no right
to Transfer this  Agreement or any rights or obligations  under this  Agreement,
and any franchise agreements to be issued pursuant hereto shall be issued solely
to the  Developer,  which  as of the date of  issuance  of each  such  franchise
agreement   shall  be  owned  by  the  Principal   Shareholders  to  the  extent
hereinbefore  provided.  Any transfer or attempted  transfer in contravention of
this provision shall be void and of no effect.  If, after the date Developer has
developed and opened for continuous operation the number of Restaurants required
by this Subsection 8.6, the Principal  Shareholders  desire to dispose of all or
substantially  all of the Interests of the Principal  Shareholders in Developer,
or the  Principal  Shareholders  (or  Developer)  desire  to  dispose  of all or
substantially  all of  Developer's  Interest in this  Agreement or in the assets
which  Developer  has  acquired  pursuant  to  this  Agreement,   the  Principal
Shareholders or Developer,  as the case may be, shall notify  Franchisor of that
desire,  in writing,  thirty (30) days before  announcing  that fact publicly or
engaging the services of a broker or sales agent.

                                      E-13
<PAGE>

       8.7 (a) If at any time any of the Principal Shareholders or Developer, as
the case may be,  obtains from a third party or third  parties a bona fide offer
(the  "Offer") in writing for the  purchase of all or  substantially  all of the
Interests of the Principal Shareholders in Developer or in the Restaurant assets
which  Developer  has  acquired  as a result of this  Agreement,  the  Principal
Shareholders or Developer shall give notice (the "Selling Notice") to Franchisor
stating that the Principal  Shareholders or Developer,  as the case may be, have
received the Offer,  identifying the prospective  purchaser by name and address,
specifying the proposed purchase price and attaching a true and complete copy of
the Offer.  Notwithstanding  the  foregoing,  however,  Developer  and Principal
Shareholders  understand  and agree that, as provided in Subsection  8.6 hereof,
until such time as Developer  has  developed and opened for operation the number
of Restaurants required by said Subsection 8.6. hereof, any portion of any Offer
regarding  the right to develop  Restaurants  or  Developer's  Interest  in this
Agreement  shall  be  invalid  and of no  force or  effect,  it being  expressly
understood and agreed that such rights may not be transferred, and any franchise
agreements to be granted  hereunder  shall be issued solely to Developer,  which
shall be owned by the Principal  Shareholders as hereinbefore set forth. At such
time as  Developer  has  developed  and  opened  for  operation  the  number  of
Restaurants  required by Subsection  8.6, any portion of such an Offer regarding
Developer's Interest in this Agreement shall be effective in accordance with its
terms.

               (b) Franchisor  shall have an option to purchase (the  "Option"),
exercisable within a period of forty-five (45) days after receipt of the Selling
Notice (the "Option Period"),  such Interests at the price and on the conditions
set forth in the Offer, except that Franchisor shall not be obligated to pay any
finder's or broker's fee, and if the Offer provides for payment of consideration
other  than  cash,  or  if  the  Offer  involves  certain  intangible  benefits,
Franchisor may elect to purchase such Interests by offering a reasonable  dollar
value substitute including,  at Franchisor's option, cash or the common stock or
other  securities  of  the  Franchisor  or  any  combination   thereof  for  the
non-cash/intangible benefits part of the Offer.

               (c) The Option shall be exercisable  by Franchisor  delivering to
the Principal  Shareholders or Developer,  as the case may be, within the Option
Period,  a notice  (i)  stating  that the  Option is being  exercised,  and (ii)
specifying  the time,  date and place at which such  purchase and sale will take
place, which date shall be within forty-five (45) days after Franchisor delivers
such notice.  Developer  shall provide  Franchisor  access to and copies of such
information and  documentation  Franchisor shall request regarding the purchase.
The  forty-five  (45)  day  limitation  described  at the  end of the  preceding
sentence  shall not apply if at the end of said  forty-five  (45) day period the
only issue which  prevents  completion  of the  purchase and sale is the need to
effect  transfers  of the  applicable  liquor  licenses.  In the event of such a
delay,  the purchase  and sale shall take place  within seven (7) business  days
after those liquor licenses have been transferred.

               (d) If the Option is not exercised, the Principal Shareholders or
Developer,  as the case may be, may sell the Interests in or of Developer to the
third  party  which made the  Offer,  on  conditions  no more  favorable  to the
third-party offerer than those set forth in the Offer,  provided that Franchisor
approves the proposed  transferee in  accordance  with the criteria set forth in
Appendix D and provided  further  that such sale takes place within  ninety (90)
days after the expiration of the Option  Period.  The ninety (90) day limitation
described in the preceding sentence shall not apply if at the end of said ninety
(90) day period the issue which prevents  completion of the purchase and sale is
either the need to effect transfers of the applicable liquor licenses or consent
or approval of the transaction by a state or federal  regulatory  agency. In the
event of such a delay,  the  purchase and sale shall take place within seven (7)
business days after those issues have been resolved or waived by Franchisor.  In
the event of such a  transfer,  Franchisor  may, in its  discretion,  require an
amendment to Subsection  2.1 of this  Agreement in order to increase or decrease
the  number  of  restaurants  required  thereby  and the  dates  of the  Initial
Development Periods referred to therein.

                                      E-14
<PAGE>

               (e) If the Option is not exercised, the Principal Shareholders or
Developer, as the case may be, shall immediately notify Franchisor in writing of
any change in the terms of an Offer.  Any change in the terms of an Offer  shall
cause it to be deemed a new  Offer,  conferring  upon  Franchisor  a new  Option
pursuant to this  Subsection  8.7;  the Option  Period  with  respect to the new
Option  shall be  deemed to  commence  on the day on which  Franchisor  receives
written notice of a change in the terms of the original Offer. Provided however,
in such an instance,  Franchisor  shall provide  Franchisee its response  within
fifteen  (15) days  after  Franchisor's  receipt of all of the  modified  terms,
unless such  changes are deemed  material  by  Franchisor  and in such an event,
Franchisor  shall have a forty-five  (45) day period within which to review said
changes.

       8.8 (a) Developer understands and acknowledges that the rights and duties
set forth in this  Agreement are personal to Developer and that  Franchisor  has
entered  into this  Agreement in reliance on the  business  skill and  financial
capacity of Developer, and the business skill, financial capability and personal
character of each Principal Shareholder. Any transfer of Principal Shareholders'
Interest  in  Developer  or  in  Developer's   Interest  in  this  Agreement  in
contravention  of this Section 8 shall cause the  immediate  termination  of all
development rights granted herein with respect to Restaurants not otherwise open
for  operation.  Except as otherwise  set forth in this Section 8, the Principal
Shareholders shall at all times retain control of Developer. Except as otherwise
provided in this Section 8, no Transfer of any part of  Developer's  Interest in
this  Agreement,  and no Transfer of any Interest of any  Principal  Shareholder
shall be completed  except in accordance  with this Subsection 8.8. In the event
of  such a  proposed  Transfer  of any  part  of  Developer's  Interest  in this
Agreement, or of any Interest of any Principal Shareholder, the party or parties
desiring to effect such Transfer shall give Franchisor  notice in writing of the
proposed  Transfer,  which  notice  shall set forth the name and  address of the
proposed transferee, its financial condition,  including a copy of its financial
statement dated not more than ninety (90) days prior to the date of said notice,
and all the terms and conditions of the proposed  Transfer.  Upon receiving such
notice, Franchisor may (i) approve the Transfer, or (ii) withhold its consent to
the Transfer.  Franchisor  shall,  within forty-five (45) days of receiving such
notice and all the  information  required  therein,  advise the party or parties
desiring to effect the Transfer  whether it (1) approves  the  Transfer,  or (2)
withholds its consent to the Transfer,  giving the reasons for such disapproval.
Failure of Franchisor to so advise said party or parties within that  forty-five
(45) day  period  shall be  deemed  to be  approval  of the  proposed  Transfer.
Appendix D sets  forth the  criteria  for  obtaining  Franchisor's  consent to a
proposed Transfer.

               (b) In the event that Franchisor  approves the Transfer,  and the
Transfer is not completed within ninety (90) days of the later of (i) expiration
of the  forty-five  (45) day  notice  period,  or (ii)  delivery  of  notice  of
Franchisor's  approval of the proposed  Transfer,  Franchisor's  approval of the
proposed Transfer shall automatically be revoked. The ninety (90) day limitation
described in the preceding sentence shall not apply if at the end of said ninety
(90) day period the only issue which prevents  completion of the Transfer is the
need to effect transfers of the applicable liquor licenses. In the event of such
a delay,  the Transfer  shall take place  within  seven (7) business  days after
those liquor licenses have been transferred. Any subsequent proposal to complete
the  proposed  Transfer  shall be subject to  Franchisor's  right of approval as
provided herein.  The party which desires to effect the proposed  Transfer shall
immediately  notify  Franchisor  in  writing  of any  change  in the  terms of a
Transfer.  Any change in terms of a Transfer  prior to closing shall cause it to
be deemed a new Transfer,  revoking any approval  previously given by Franchisor
and conferring upon Franchisor a new right to approve such Transfer, which shall
be deemed to commence on the day on which Franchisor  receives written notice of
such change in terms.

                                      E-15
<PAGE>

       8.9 In  connection  with  any  request  for  Franchisor's  approval  of a
proposed  Transfer to this Section 8, the parties to the proposed Transfer shall
pay Franchisor a nonaccountable  fee to defray the actual cost of review and the
administrative  and professional  expenses related to the proposed  Transfer and
the preparation  and execution of documents and  agreements,  up to a maximum of
two thousand five hundred dollars ($2,500).

9.     TERMINATION

       9.1 This  Agreement  shall  expire on  _______________,  _______,  unless
sooner terminated pursuant to the terms hereof.

       9.2  Franchisor   shall  have  the  right  to  terminate  this  Agreement
immediately  upon  written  notice to  Developer  stating  the  reason  for such
termination,  and  Developer  shall no longer have any of the rights  created by
this Agreement, in the event of:

               (a)  development  by  Developer  of a  Restaurant  without  first
       obtaining   approval  from  Franchisor  of  the  Restaurant  site  or  of
       Developer's  architectural  and/or  engineering  plans in accordance with
       Section 5 hereof;

               (b) any breach or default of any of the  provisions of Sections 8
       and 11 of this Agreement and Subsection  14.1 of any franchise  agreement
       entered into pursuant to this Agreement;

               (c) the filing by  Developer  of a  petition  in  bankruptcy,  an
       arrangement   for  the   benefit  of   creditors,   or  a  petition   for
       reorganization; the filing against Developer of a petition in bankruptcy,
       an   arrangement   for  the  benefit  of   creditors,   or  petition  for
       reorganization,  not  dismissed  within  ninety  (90) days of the  filing
       thereof;  the making of an  assignment  by  Developer  for the benefit of
       creditors;  or the  appointment  of a receiver or trustee for  Developer,
       which  receiver or trustee  shall not have been  dismissed  within ninety
       (90) days of such appointment;

               (d) the discovery by Franchisor  that Developer made any material
       misrepresentation  or omitted any material fact in the information  which
       was furnished to Franchisor in connection with this Agreement;

                                      E-16
<PAGE>

               (e)  failure by  Developer  to locate  and  employ a Director  of
       Operations  who is approved by Franchisor in accordance  with  Subsection
       12.2  within  ninety  (90) days of the date of this  Agreement  or,  with
       respect to a replacement Director of Operations,  failure by Developer to
       locate such a  replacement  who is approved by  Franchisor  in accordance
       with  Subsection 12.2 within one hundred eighty (180) days of the date on
       which the last  Director of  Operations  who was  approved by  Franchisor
       ceased to be employed by Developer in that capacity;

               (f) any part of this Agreement relating to the payment of fees to
       Franchisor,  or the  preservation  of any of  Franchisor's  trade  names,
       service marks,  trademarks,  trade secrets or secret formulae licensed or
       disclosed  hereunder or under any franchise  agreement between Franchisor
       and Developer, for any reason being declared invalid or unenforceable;

               (g) Developer or any Principal  Shareholder being convicted of or
       pleading  nolo  contendere  to a  felony  or any  crime  involving  moral
       turpitude; or

               (h)  the  franchisee  under  any  franchise   agreement  executed
       pursuant to this  Agreement  committing  a default  subject to  immediate
       termination under the franchise agreement.

         9.3 Except as provided above in Subsection  9.2, if Developer  defaults
in the  performance or observance of any of its other  obligations  hereunder or
under any franchise  agreement  between  Developer and Franchisor,  and any such
default  continues  for a period of thirty  (30) days  after  written  notice to
Developer specifying such default,  Franchisor shall have the right to terminate
this Agreement upon written  notice to Developer.  If Developer  defaults in the
performance or observance of the same  obligation two (2) or more times within a
twelve (12) month  period,  Franchisor  shall have the right to  terminate  this
Agreement immediately upon commission of the second act of default, upon written
notice to Developer stating the reason for such  termination,  without allowance
for any curative period.

       9.4 This Agreement shall automatically terminate under the conditions and
at the times specified in Subsection 2.3 and 3.3.

                                      E-17
<PAGE>

10.    PREREQUISITES TO OBTAINING FRANCHISES FOR INDIVIDUAL
       RESTAURANT UNITS

       10.1 Developer understands and agrees that this Agreement does not confer
upon Developer a right to obtain a franchise for any Restaurant, but is intended
by the parties to set forth the terms and conditions  which, if fully satisfied,
shall  entitle  Developer  to  obtain  such  a  franchise,  located  within  the
Territory. Developer further understands that until the date Developer opens for
operation all those Restaurants required under Subsection 8.6 of this Agreement,
such aforesaid  terms and conditions may only be satisfied by Developer (and not
an  assignee or  transferee  thereof),  who shall  remain at all times owned and
controlled by the Principal Shareholders as herein set forth.

       10.2  In the  event  that  Developer  shall  have  obtained  Franchisor's
approval of a particular proposed site for a Restaurant,  and if Franchisor,  in
the  exercise  of  its  sole  discretion,  has  granted  Developer  operational,
financial and legal  approval,  then Franchisor will grant Developer a franchise
for a Restaurant at the site in question.  As used herein,  Franchisor will give
Developer  "operational",  "financial" and "legal"  approval under the following
circumstances:

       "Operational"  approval will be granted if Franchisor has determined,  in
       the exercise of its sole  discretion,  that  Developer is conducting  the
       operation of each of its  Restaurants,  and is capable of conducting  the
       operation of the proposed Restaurant, including physical aspects thereof,
       (a) in accordance with the terms and conditions of this Agreement, (b) in
       accordance  with the provisions of the respective  franchise  agreements,
       and (c) in accordance with the standards,  specifications  and procedures
       set forth and  described in the  Franchise  Operations  Manual and in any
       other  materials  or manuals  provided or made  available to Developer by
       Franchisor  (collectively,  the  "Manuals"),  as such may be amended from
       time to time.  Developer  understands  that  changes  in said  standards,
       specifications  and  procedures  may become  necessary from time to time.
       Developer  agrees to accept said changes,  and Developer  further  agrees
       that it is within the sole discretion of Franchisor to make said changes.

       "Financial" approval will be granted if (a) Developer is not in breach of
       its  obligations  under  Subsection  7.3  hereof  and  has  been  and  is
       faithfully performing all terms and conditions under each of its existing
       franchise agreements with Franchisor,  (b) Developer or its affiliates is
       not in  default  of any money  obligations  owed to  Franchisor,  and (c)
       Developer  is not in default of any  financial  obligation  to any of its
       suppliers,  unless any such obligation is being disputed in good faith by
       the  Developer.  Developer  acknowledges  and agrees  that it is vital to
       Franchisor's  interest that each of its franchisees be financially  sound
       to avoid failure of a franchised  business (which would adversely  affect
       the  reputation  and good name of Franchisor  and the System).  Developer
       acknowledges and agrees that it is vital to Franchisor's  interest and to
       the  interests  of  the  System  that   Developer  (in  its  capacity  as
       franchisee) remain current in satisfying its financial  obligations to it
       suppliers.

       "Legal"  approval will be granted if Franchisor  has  determined,  in the
       exercise  of  its  sole  discretion,  that  Developer  has  submitted  to
       Franchisor,  in  a  timely  manner  as  requested,  all  information  and
       documents  requested  by  Franchisor  prior  to and as a  basis  for  the
       issuance of  individual  franchises  or pursuant to any right  granted to
       Franchisor  by  this  Agreement  or by any  franchise  agreement  between
       Developer  and  Franchisor,  and has taken  such  additional  actions  in
       connection therewith as may be requested from time to time.

                                      E-18
<PAGE>

       10.3 It is understood and agreed that the foregoing criteria apply to the
operational,  financial  and  legal  aspects  of any  Restaurant  franchised  by
Franchisor  in which  Developer or any  Principal  Shareholder  has any legal or
equitable  interest.  It is further  understood  and agreed that  Developer  and
Principal Shareholders have an ongoing responsibility to operate each Restaurant
in which  Developer  or any  Principal  Shareholder  has any legal or  equitable
interest in a manner which satisfies the foregoing requirements for operational,
financial and legal approval.

11.    RESTRICTIONS

       11.1 Developer and its Principal  Shareholders  acknowledge that over the
term of  this  Agreement  they  are to  receive  proprietary  information  which
Franchisor has developed over time at great expense,  including, but not limited
to,  methods  of  site  selection,   marketing  methods,  product  analysis  and
selection,  and service  methods  and skills  relating  to the  development  and
operation of Restaurants. They further acknowledge that this information,  which
includes,  but is not necessarily  limited to, that contained in the Manuals, is
not generally  known in the industry and is beyond their own present  skills and
experience, and that to develop it themselves would be expensive, time-consuming
and difficult. Developer and Principal Shareholders further acknowledge that the
Franchisor's  information provides a competitive  advantage and will be valuable
to them in the development of their  business,  and that gaining access to it is
therefore  a  primary  reason  why  they  are  entering  into  this   Agreement.
Accordingly,  Developer and its Principal  Shareholders  agree that Franchisor's
information,  as described above,  which may or may not be "trade secrets" under
prevailing judicial  interpretations or statutes,  is private and valuable,  and
constitutes  trade secrets  belonging to  Franchisor;  and in  consideration  of
Franchisor's  confidential disclosure to them of these trade secrets,  Developer
and Principal Shareholders agree as follows:

               (a) During the term of this Agreement,  neither Developer nor any
       Principal Shareholder,  for so long as such Principal Shareholder owns an
       Interest  in  Developer,  may,  without  the  prior  written  consent  of
       Franchisor, directly or indirectly engage in, or acquire any financial or
       beneficial    interest   (including   any   interest   in   corporations,
       partnerships,  trusts, unincorporated associations or joint ventures) in,
       advise,  help,  guarantee loans or make loans to, any restaurant business
       whose  menu or  method  of  operation  is  similar  to that  employed  by
       restaurant  units  within the System  which is either (i)  located in the
       Territory, (ii) located in the Area of Dominant Influence (as defined and
       established  from  time to  time  by  Arbitron  Ratings  Company)  of any
       Restaurant  developed pursuant to this Agreement,  (iii) located within a
       five (5) mile radius of any  restaurant  unit within the System,  or (iv)
       determined by Franchisor,  exercising  reasonable good faith judgment, to
       be a direct competitor of the System.

               (b)  Neither   Developer,   for  two  (2)  years   following  the
       termination of this Agreement, nor any Principal Shareholder, for two (2)
       years  following  the  termination  of all of  his  or  her  Interest  in
       Developer or the termination of this Agreement,  whichever  occurs first,
       may  directly  or  indirectly  engage in, or  acquire  any  financial  or
       beneficial    interest   (including   any   interest   in   corporations,
       partnerships,  trusts, unincorporated associations or joint ventures) in,
       advise,  help,  guarantee loans or make loans to, any restaurant business
       whose  menu or  method  of  operation  is  similar  to that  employed  by
       restaurant  units  within the System  which is located  either (i) in the
       Territory,  (ii) in the  Area  of  Dominant  Influence  (as  defined  and
       established  from  time to  time  by  Arbitron  Ratings  Company)  of any
       Restaurant developed pursuant to this Agreement,  (iii) within a five (5)
       mile radius of any restaurant unit within the System,  or (iv) within any
       area for which an active,  currently  binding  development  agreement has
       been  granted  by  Franchisor  to  another  franchisee  as of the date of
       termination.

                                      E-19
<PAGE>

       11.2  Neither  Developer  nor  any  Shareholder  shall  at any  time  (a)
appropriate or use the trade secrets  incorporated in the System, or any portion
thereof,  in any other restaurant  business which is not within the System,  (b)
disclose  or reveal  any  portion  of the  System to any  person  other  than to
Developer's employees as an incident of their training, (c) acquire any right to
use any name,  mark or other  intellectual  property  right which may be granted
pursuant to any agreement between Franchisor and Developer, except in connection
with the operation of a Restaurant,  or (d) communicate,  divulge or use for the
benefit of any other person or entity any confidential information, knowledge or
know-how  concerning  the methods of  development  or  operation of a restaurant
utilizing the System, which may be communicated by Franchisor in connection with
the Restaurants to be developed hereunder.

       11.3  Developer and Principal  Shareholders  agree that the provisions of
this Section 11 are and have been a primary  inducement  to  Franchisor to enter
into this Agreement, and that in the event of breach thereof Franchisor would be
irreparably  injured and would be without an adequate remedy at law.  Therefore,
in the event of a breach,  or a threatened or attempted  breach,  of any of such
provisions Franchisor shall be entitled, in addition to any other remedies which
it may have  hereunder or in law or in equity  (including the right to terminate
this Agreement),  to a preliminary and/or permanent  injunction and a decree for
specific performance of the terms hereof without the necessity of showing actual
or  threatened  damage,  and without  being  required to furnish a bond or other
security.

       11.4 The restrictions  contained in Subsection 11.1 above shall not apply
to  ownership  of less than two  percent  (2%) of the shares of a company  whose
shares are listed and traded on a national  securities  exchange  if such shares
are owned  for  investment  only,  and are not  owned by an  officer,  director,
employee or consultant of such publicly traded company.

       11.5 If any court or other tribunal having  jurisdiction to determine the
validity  or  enforceability  of this  Section  11  determines  that it would be
invalid or unenforceable as written,  then the provisions hereof shall be deemed
to be modified or limited to such extent or in such manner as necessary for such
provisions to be valid and enforceable to the greatest extent possible.

                                      E-20

<PAGE>

12.    DEVELOPMENT PROCEDURES

       12.1 Franchisor will use its reasonable efforts to furnish Developer with
advice in developing Restaurants and in selecting sites therefor.

       12.2  Developer  shall  designate  an  individual  employee  who shall be
personally  responsible  for  Developer's  activities  during  the  term of this
Agreement, and who shall devote his or her full-time,  best efforts and constant
personal  attention,  on a day-to-day  basis,  to Developer's  activities in the
Territory  (the  "Director of  Operations").  Developer  shall  require that the
Director of Operations  maintain his or her principal  personal residence in the
Territory.  Franchisor reserves the right to require that, as a condition of his
or her employment  with Developer,  the Director of Operations,  as well as each
supervisory employee referred to in Subsection 12.3, must successfully  complete
Franchisor's  interview  process and a  psychological  profile  test in a manner
which satisfies a uniform standard established by Franchisor.  The test shall be
administered by Franchisor,  or by a testing agency designated by Franchisor, at
Developer's   expense.   Developer's   designation  of  the  first  Director  of
Operations,  and any subsequent Director of Operations,  shall be subject to the
written  approval  of  Franchisor,  which  approval  shall  not  be  arbitrarily
withheld,  and  shall  also be  subject  to the time  limitations  described  in
Subsection  9.2(e) hereof.  Franchisor  shall notify Developer in writing within
fourteen (14) business days of receipt of Developer's request whether Franchisor
disapproves  such person.  Failure by Franchisor to so notify  Developer  within
that period shall be deemed to constitute Franchisor's approval of such person.

       12.3 In the event that  Developer  desires to  designate  an employee (in
addition to the Director of Operations) who will have supervisory authority over
the  development  of  operation  of more  than  one (1)  Restaurant  within  the
Territory,  Developer's  designation  of such a  supervisory  employee  shall be
subject to the  written  approval of  Franchisor,  which  approval  shall not be
arbitrarily  withheld.  Franchisor  shall  notify  Developer  in writing  within
fourteen (14) business days of receipt of Developer's request whether Franchisor
disapproves  such person.  Failure by Franchisor to so notify  Developer  within
that period shall be deemed to constitute  Franchisor's approval of such person.
Developer shall require that any such supervisory  employee  maintain his or her
principal personal residence in the Territory.

       12.4  Developer  shall  require the Director of  Operations  to execute a
confidentiality  agreement  and  covenant  not to compete  in the form  attached
hereto as Appendix E. In addition,  at  Franchisor's  request,  Developer  shall
obtain  from the  Director  of  Operations  an  agreement  verifying  his or her
employment status. Developer shall require that each other employee of Developer
who will have  supervisory  authority over the  development or operation of more
than one (1) Restaurant execute a confidentiality agreement in the form attached
hereto as Appendix F.  Developer  shall be  responsible  for  compliance  of its
employees  with the  agreements  identified  in this  Subsection,  including the
payment of any costs needed to enforce the obligations.

       12.5 (a) Developer shall require its Director of Operations and any other
supervisory  employee  designated  pursuant to Subsection  12.3 to attend and to
successfully  complete to  Franchisor's  reasonable  satisfaction  an operations
training  course  provided by  Franchisor.  If the Director of Operations or any
such supervisory employee fails to successfully complete Franchisor's operations
training  course,  Franchisor  may  require  designation  of a new  Director  of
Operations  or  replacement  supervisory  employee,  as the  case  may  be,  and
Developer   shall   designate  a  new  Director  of  Operations  or  replacement
supervisory  employee  who  shall be  required  to  successfully  complete  such
training course.

                                      E-21
<PAGE>

               (b)  The  Director  of  Operations  and   supervisory   employees
designated  pursuant to Subsection  12.3 shall,  from time to time as reasonably
requested  by  Franchisor,  attend and  successfully  complete  to  Franchisor's
reasonable  satisfaction a  Franchisor-provided  refresher  course in restaurant
operations.

       12.6 With respect to each  Restaurant  within the Territory  developed by
Developer,   Developer's   employees  must  satisfy  the  training  requirements
described  in Section 6 of  Appendix B hereto.  After  Developer  opens it first
Restaurant pursuant to this Agreement, Franchisor may at its option, and subject
to  such  conditions  as  Franchisor  deems  necessary,   permit  Developer  (at
Developer's own expense) to conduct a portion of the required training at one of
Developer's existing Restaurants.  In that event,  Developer will be required to
provide qualified personnel to administer training tests and to maintain records
relating to the training and performance of employees.

13.    NO WAIVER OF DEFAULT

       13.1 The waiver by any party to this  Agreement of any breach or default,
or series of breaches or defaults, of any term, covenant or condition herein, or
of any same or  similar  term,  covenant  or  condition  contained  in any other
agreement between Franchisor and any other person,  shall not be deemed a waiver
of any subsequent or continuing breach or default of the same or any other term,
covenant or  condition  in this  Agreement,  or in any other  agreement  between
Franchisor and any other person.

       13.2 All rights and remedies of Franchisor  shall be  cumulative  and not
alternative,  in addition to and not  exclusive  of any other rights or remedies
which are  provided  for herein or which may be available at law or in equity in
case of any breach,  failure or default or threatened breach, failure or default
of any term,  provision or condition of this Agreement.  Franchisor's rights and
remedies  shall be continuing  and shall not be exhausted by any one (1) or more
uses thereof,  and may be exercised at any time or from time to time as often as
may be expedient; and any option or election to enforce any such right or remedy
may be exercised or taken at any time and from time to time.  The  expiration or
earlier  termination of this Agreement shall not discharge or release  Developer
or any Principal  Shareholder from any liability or obligation then accrued,  or
any liability or obligation continuing beyond, or arising out of, the expiration
or earlier termination of this Agreement.

                                      E-22
<PAGE>

14.    FORCE MAJEURE

       14.1 As used in this  Agreement,  the term "Force Majeure" shall mean any
act of God, strike, lock-out or other industrial  disturbance,  war (declared or
undeclared),  riot, epidemic,  fire or other catastrophe,  act of any government
and any other  similar  cause  not  within  the  control  of the party  affected
thereby.

       14.2  If the  performance  of any  obligation  by any  party  under  this
Agreement is prevented  or delayed by reason of Force  Majeure,  which cannot be
overcome by use of normal commercial measures,  the parties shall be relieved of
their  respective  obligations  to  the  extent  the  parties  are  respectively
necessarily  prevented or delayed in such performance  during the period of such
Force  Majeure.  The party  whose  performance  is affected by an event of Force
Majeure  shall give prompt notice of such Force Majeure event to the other party
by  facsimile,  telephone or telegram (in each case to be confirmed in writing),
setting forth the nature  thereof and an estimate as to its duration,  and shall
be liable for  failure to give such  timely  notice only to the extent of damage
actually caused.

15.    CONSTRUCTION, SEVERABILITY, GOVERNING LAW AND
       JURISDICTION

       15.1 If any part of this  Agreement  shall  for any  reason  be  declared
invalid,  unenforceable  or impaired in any way, the  validity of the  remaining
portions  shall  remain in full force and effect as if this  Agreement  had been
executed with such invalid  portion  eliminated,  and it is hereby  declared the
intention of the parties that they would have executed the remaining  portion of

this  Agreement  without  including  therein  any such  portions  which might be
declared invalid;  provided however,  that in the event any part hereof relating
to the payment of fees to Franchisor, or the preservation of any of Franchisor's
trade  names,  service  marks,  trademarks,  trade  secrets  or secret  formulae
licensed or disclosed  hereunder or pursuant to any franchise  agreement between
Franchisor and Developer is for any reason  declared  invalid or  unenforceable,
then Franchisor shall have the option of terminating this Agreement upon written
notice to Developer.  If any clause or provision  herein would be deemed invalid
or  unenforceable  as  written,  it shall be deemed to be modified or limited to
such  extent or in such  manner as may be  necessary  to  render  the  clause or
provision  valid and enforceable to the greatest extent possible in light of the
interest of the parties  expressed in that clause or  provision,  subject to the
provisions of the preceding sentence.

       15.2 DEVELOPER AND PRINCIPAL SHAREHOLDERS ACKNOWLEDGE THAT FRANCHISOR MAY
ENTER INTO OTHER  DEVELOPMENT  AGREEMENTS  THROUGHOUT THE UNITED STATES ON TERMS
AND CONDITIONS  SIMILAR TO THOSE SET FORTH IN THIS AGREEMENT,  AND THAT IT IS OF
MUTUAL BENEFIT TO DEVELOPER AND PRINCIPAL  SHAREHOLDERS  AND TO FRANCHISOR  THAT
THESE TERMS AND  CONDITIONS  BE UNIFORMLY  INTERPRETED.  THEREFORE,  THE PARTIES
AGREE THAT TO THE EXTENT THAT THE LAW OF THE STATE OF KANSAS  DOES NOT  CONFLICT
WITH LOCAL FRANCHISE STATUTES, RULES AND REGULATIONS,  KANSAS LAW SHALL APPLY TO
THE  CONSTRUCTION  OF THIS AGREEMENT AND SHALL GOVERN ALL QUESTIONS  WHICH ARISE
WITH REFERENCE HERETO; PROVIDED HOWEVER, THAT PROVISIONS OF KANSAS LAW REGARDING
CONFLICTS OF LAW SHALL NOT APPLY HERETO.

       15.3 THE PARTIES AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT
OF OR RELATING TO THIS  AGREEMENT  OR THE  PERFORMANCE  THEREOF  WHICH CANNOT BE
AMICABLY SETTLED, EXCEPT AS OTHERWISE PROVIDED HEREIN, MAY, AT THE OPTION OF THE
CLAIMANT, BE RESOLVED BY A PROCEEDING IN A COURT IN JOHNSON COUNTY,  KANSAS, AND
DEVELOPER  AND  THE  PRINCIPAL   SHAREHOLDERS   EACH   IRREVOCABLY   ACCEPT  THE
JURISDICTION OF THE COURTS OF THE STATE OF KANSAS AND THE FEDERAL COURTS SERVING
JOHNSON COUNTY, KANSAS FOR SUCH CLAIMS, CONTROVERSIES OR DISPUTES.

       The parties agree that service of process in any  proceeding  arising out
of or relating to this  Agreement or the  performance  thereof may be made as to
Developer and any Principal  Shareholder by serving a person of suitable age and
discretion  (such as the  person in  charge of the  office)  at the  address  of
Developer  specified  in this  Agreement  and as to  Franchisor  by serving  the
president or a  vice-president  of Franchisor at the address of Franchisor or by
serving Franchisor's registered agent.

                                      E-23

<PAGE>

16.    MISCELLANEOUS

       16.1 All notices and other  communications  required or  permitted  to be
given  hereunder  shall be deemed given when  delivered in person,  by overnight
courier  service,  facsimile  transmission  or mailed by registered or certified
mail  addressed to the  recipient  at the address set forth  below,  unless that
party shall have given written notice of change of address to the sending party,
in which event the new address so specified shall be used.

       FRANCHISOR:         Applebee's International, Inc.
                           4551 W. 107th Street, Suite 100
                           Overland Park, Kansas  66207
                           Attention:  President

       DEVELOPER:

       PRINCIPAL SHAREHOLDERS:

       16.2 All terms  used in this  Agreement,  regardless  of the  number  and
gender in which they are used,  shall be deemed  and  construed  to include  any
other number, singular or plural, and any other gender,  masculine,  feminine or
neuter,  as the context or sense of this  Agreement may require,  the same as if
such words had been written in this Agreement themselves.  The headings inserted
in this  Agreement  are for  reference  purposes  only and shall not  affect the
construction of this Agreement or limit the generality of any of its provisions.
The term  "business  day"  means any day other  than  Saturday,  Sunday,  or the
following   national   holidays:   New  Year's  Day,  Martin  Luther  King  Day,
Washington's Birthday,  Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving and Christmas.

       16.3 This Agreement, the Uniform Franchise Offering Circular currently in
effect and the  documents  referred to herein  constitute  the entire  agreement
between parties, superseding and canceling any and all prior and contemporaneous
agreements, understandings, representations, inducements and statements, oral or
written, of the parties in connection with the subject matter hereof.

       16.4 Except as expressly  authorized herein, no amendment or modification
of this Agreement shall be binding unless executed in writing both by Franchisor
and by Developer and Principal Shareholders.

                                      E-24
<PAGE>

       16.5 In the event that any party to this  Agreement  initiates  any legal
proceeding to construe or enforce any of the terms, conditions and/or provisions
of this Agreement, including, but not limited to, its termination provisions, or
to obtain  damages or other  relief to which any party may be entitled by virtue
of this Agreement,  the prevailing party or parties shall be paid its reasonable
attorneys' fees and expenses by other party or parties.

IN WITNESS  WHEREOF,  the undersigned have entered into this Agreement as of the
date first above written.

                                      E-25
<PAGE>

                                           FRANCHISOR:

ATTEST:                                    APPLEBEE'S INTERNATIONAL, INC.
       -----------------------------

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

                                           DEVELOPER:

ATTEST:
       -----------------------------

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

                                           PRINCIPAL SHAREHOLDER(S):

Witness                                    Name:
                                               ---------------------------------

Witness                                    Name:
                                               ---------------------------------

Witness                                    Name:
                                               ---------------------------------

Witness                                    Name:
                                               ---------------------------------

                                      E-26
<PAGE>

                       APPENDIX A TO DEVELOPMENT AGREEMENT
                                    TERRITORY

Franchisor  specifically excludes from the Territory,  and reserves the right to
operate or license  any other  person to operate  restaurants  in, any  location
within an airport  (serviced by one or more public or charter  carrier),  arena,
stadium,  state or national  park, or military  fort,  post or base which may be
within the boundaries of the Territory otherwise granted to Developer.

One hundred percent (100%) of the number of Restaurants  required by Subsections
2.1 and 3.1 is ---------- (-----).

                                      E-27
<PAGE>

                       APPENDIX B TO DEVELOPMENT AGREEMENT
                            FORM FRANCHISE AGREEMENT
                    (See Exhibit F to this Offering Circular)

                                      E-28

<PAGE>

                       APPENDIX C TO DEVELOPMENT AGREEMENT
                        STATEMENT OF OWNERSHIP INTERESTS

                                         Percent of Issued
                                          and Outstanding
Shareholder                             Shares of Developer

                                      E-29
<PAGE>

                       APPENDIX D TO DEVELOPMENT AGREEMENT
                  REVIEW AND CONSENT WITH RESPECT TO TRANSFERS

         In  determining  whether to grant or to withhold  consent to a proposed
Transfer,  Franchisor shall consider all of the facts and circumstances which it
views as relevant in the particular instance, including, but not limited to, any
of the following:  (i) work experience and aptitude of Proposed New Owner and/or
proposed new  management  (a proposed  transferee  of a Principal  Shareholder's
Interest  and/or a proposed  transferee  of this  Agreement  is  referred  to as
"Proposed New Owner");  (ii) financial  background and condition of Proposed New
Owner,  and  actual  and pro  forma  financial  condition  of  Developer;  (iii)
character and reputation of Proposed New Owner;  (iv)  conflicting  interests of
Proposed New Owner; (v) the terms and conditions of Proposed New Owner's rights,
if the  proposed  Transfer is a pledge or  hypothecation;  (vi) the  adequacy of
Developer's  operation (as Franchisee) of any Restaurant and compliance with the
System and this  Agreement;  and (vii) such other  criteria  and  conditions  as
Franchisor shall then consider  relevant in the case of an application for a new
franchise to operate a restaurant unit within the System by an applicant that is
not then currently doing so.  Franchisor's  consent also may be conditioned upon
execution  by Proposed  New Owner of an  agreement  whereby  Proposed  New Owner
assumes  full,  unconditional,  joint and several  liability  for, and agrees to
perform  from  the  date  of  such  Transfer,  all  obligations,  covenants  and
agreements  contained  herein to the same  extent as if it had been an  original
party  to  this   Agreement  and  may  also  require   Developer  and  Principal
Shareholders, including the proposed Transferor(s), to execute a general release
which releases Franchisor from any claims they may have had or then have against
Franchisor. In the event Proposed New Owner is a partnership (including, but not
limited to, a limited partnership),  Proposed New Owner will also be required to
execute an addendum to the  Agreement  which amends the  references to Developer
and its Principal Shareholders to include the partnership approved by Franchisor
and Proposed New Owner's  general  partner(s) and the principal  shareholders of
the  general  partner(s),  if the  general  partner(s)  is a  corporation.  This
addendum will contain a provision  including in the definition of "Transfer" the
withdrawal, removal or voluntary/involuntary  dissolution (if applicable) of the
general  partner(s) or the  substitution  or addition of a new general  partner.
Developer  or  Principal  Shareholders,  as  the  case  may  be,  shall  provide
Franchisor with such  information as it may require in connection with a request
for approval of a proposed Transfer.

                                      E-30
<PAGE>

                       APPENDIX E TO DEVELOPMENT AGREEMENT
                          CONFIDENTIALITY AGREEMENT AND

                             COVENANT NOT TO COMPETE

         THIS AGREEMENT is made this ________ day of ________________, 20______,
by  and   between   _______________________________________,   a   _____________
corporation  ("Developer"),   and   __________________________,   an  individual
employed by Developer ("Employee").

WITNESSETH:

         WHEREAS, APPLEBEE'S INTERNATIONAL,  INC. ("Applebee's") is the owner of
all  rights in and to a unique  system  for the  development  and  operation  of
restaurants (the "System"),  which includes proprietary rights in valuable trade
names,  service  marks and  trademarks,  including  the service mark  Applebee's
Neighborhood  Grill & Bar and variations of such mark, designs and color schemes
for restaurant premises, signs, equipment, procedures and formulae for preparing
food and  beverage  products,  specifications  for  certain  food  and  beverage
products,  inventory methods,  operating methods,  financial control concepts, a
training facility and teaching techniques;

         WHEREAS,  Developer  is the  owner of the  exclusive  right to  develop
restaurants  franchised by Applebee's  which utilize the System  ("Restaurants")
for the period  and in the  territory  described  in the  Development  Agreement
between Applebee's and Developer (the "Development Agreement");

         WHEREAS, Developer and Employee acknowledge that Applebee's information
as described  above was developed over time at great  expense,  is not generally
known  in  the  industry  and is  beyond  Developer's  own  present  skills  and
experience, and that to develop it itself would be expensive, time-consuming and
difficult,  that it  provides a  competitive  advantage  and will be valuable to
Developer in the development of its business,  and that gaining access to it was
therefore a primary reason why Developer entered into the Development Agreement;
and

         WHEREAS,  in  consideration  of Applebee's  confidential  disclosure to
Developer of these trade  secrets,  Developer  has agreed to be obligated by the
terms of Development  Agreement to execute,  with its Director of Operations,  a
written   agreement   protecting   Applebee's  trade  secrets  and  confidential
information entrusted to Employee, and protecting against unfair competition;

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

                                      E-31
<PAGE>

         (1) The  parties  acknowledge  and agree  that  Employee  is or will be
employed in a supervisory or managerial  capacity and in such capacity will have
access  to  information  and  materials  which   constitute  trade  secrets  and
confidential and proprietary  information.  The parties further  acknowledge and
agree that any actual or potential  direct or indirect  competitor of Applebee's
or of any of its  franchisees  shall not have  access to such trade  secrets and
confidential information.

         (2) The parties  acknowledge  and agree that the System  includes trade
secrets and  confidential  information  which  Applebee's  has  revealed or will
reveal to Developer in confidence, and that protection of said trade secrets and
confidential information and protection of Applebee's against unfair competition
from  others  who  enjoy  or who have  had  access  to said  trade  secrets  and
confidential  information  are  essential  for the  maintenance  of goodwill and
special value of the System.

         (3)  Employee  agrees  that  he or  she  shall  not  at  any  time  (i)
appropriate or use the trade secrets  incorporated in the System, or any portion
thereof,  for use in any business which is not within the System;  (ii) disclose
or reveal any  portion of the  System to any  person  other than to  Developer's
employees as an incident of their  training;  (iii) acquire any right to use, or
to license or franchise the use of any name, mark or other intellectual property
right which is or may be granted by any franchise  agreement between  Applebee's
and Developer; or (iv) communicate,  divulge or use for the benefit of any other
person or entity any confidential information,  knowledge or know-how concerning
the  methods  of  development  or  operation  of  a  Restaurant   which  may  be
communicated  to  Employee  or of which  Employee  may be  apprised by virtue of
Employee's  employment by Developer.  Employee  shall divulge such  confidential
information  only to such of Developer's  other employees as must have access to
that  information  in order to operate a Restaurant  or to develop a prospective
site  for a  Restaurant.  Any  and  all  information,  knowledge  and  know-how,
including, without limitation,  drawings, materials, equipment,  specifications,
techniques and other data, which Applebee's designates as confidential, shall be
deemed confidential for purposes of this Agreement.

         (4) Employee  agrees that for the duration of his or her  employment by
Developer,  and for two (2) years following  termination  thereof,  Employee may
not,  without the prior written  consent of Applebee's,  directly or indirectly,
for  himself  or  through,  on  behalf  of or in  conjunction  with any  person,
partnership  or  corporation,  engage in or acquire any  financial or beneficial
interest  (including  any  interest  in  corporations,   partnerships,   trusts,
unincorporated associations or joint ventures) in, advise, help, guarantee loans
or make loans to, any  restaurant  business whose menu or method of operation is
the same as or similar to that  employed by  restaurant  units within the System
which is located  either  (a) in the  Territory,  as defined in the  Development
Agreement,  or (b) in the Area of Dominant Influence (as defined and established
from time to time by  Arbitron  Ratings  Company)  of any  Restaurant  developed
pursuant to the Development Agreement.

                                      E-32
<PAGE>

         (5)  Employee  further  acknowledges  and  agrees  that  the  Franchise
Operations Manual and any other materials and manuals provided or made available
to Developer by Applebee's (collectively, the "Manuals"), described in Section 5
of the form of  franchise  agreement  which is  attached  as  Appendix  B to the
Development Agreement are loaned by Applebee's to Developer for limited purposes
only, remain the property of Applebee's,  and may not be reproduced, in whole or
in part, without the written consent of Applebee's.

         (6) Employee agrees to surrender to Developer or to Applebee's each and
every copy of the  Manuals and any other  information  or material in his or her
possession or control upon request,  upon  termination  of  employment,  or upon
completion  of the use for which said Manuals or other  information  or material
may have been furnished to Employee.

         (7) The parties agree that in the event of a breach of this  Agreement,
Applebee's would be irreparably  injured and would be without an adequate remedy
at law. Therefore,  in the event of a breach or a threatened or attempted breach
of any of the  provisions  hereof,  Applebee's  shall be entitled to enforce the
provisions of this  agreement as a third-party  beneficiary  hereof and shall be
entitled,  in addition to any other  remedies which it may have hereunder at law
or in equity (including the right to terminate the Development Agreement),  to a
temporary and/or permanent  injunction and a decree for specific  performance of
the terms hereof without the necessity of showing  actual or threatened  damage,
and without being required to furnish a bond or other security.

         (8) The  restrictions  in  Subsection  (4)  hereof  shall  not apply to
ownership of less than two percent (2%) of the shares of a company  whose shares
are  traded on a  national  securities  exchange  if such  shares  are owned for
investment  only,  and  are not  owned  by an  officer,  director,  employee  or
consultant of such publicly traded company.

         (9) If any court or other tribunal having jurisdiction to determine the
validity or enforceability of this Agreement determines that it would be invalid
or  unenforceable  as  written,  the  provisions  hereof  shall be  deemed to be
modified  or  limited  to such  extent  or in such  manner  necessary  for  such
provisions to be valid and enforceable to the greatest extent possible.

         (10) In the  event  that any  party  to this  Agreement  or  Applebee's
initiates  any  legal  proceeding  to  construe  or  enforce  any of the  terms,
conditions  and/or  provisions of this Agreement,  or to obtain damages or other
relief  to which  any party may be  entitled  by virtue of this  Agreement,  the
prevailing party or parties shall be paid its/their  reasonable  attorneys' fees
and expenses by other party or parties.

         IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first above written.

DEVELOPER:                               EMPLOYEE:

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

                                      E-33
<PAGE>

                       APPENDIX F TO DEVELOPMENT AGREEMENT
                            CONFIDENTIALITY AGREEMENT

         THIS   AGREEMENT  is  made  this  ________  day  of   ________________,
20_______,   by   and   between   ________________________________________,    a
_____________  corporation  ("Developer"),  and  __________________________,  an
individual employed by Developer ("Employee").

WITNESSETH:

          WHEREAS, APPLEBEE'S INTERNATIONAL, INC. ("Applebee's") is the owner of
all  rights in and to a unique  system  for the  development  and  operation  of
restaurants (the "System"),  which includes proprietary rights in valuable trade
names,  service  marks and  trademarks,  including  the service mark  Applebee's
Neighborhood  Grill & Bar and variations of such mark, designs and color schemes
for restaurant premises, signs, equipment, procedures and formulae for preparing
food and  beverage  products,  specifications  for  certain  food  and  beverage
products,  inventory methods,  operating methods,  financial control concepts, a
training facility and teaching techniques;

          WHEREAS,  Developer  is the owner of the  exclusive  right to  develop
restaurants  franchised by Applebee's  which utilize the System  ("Restaurants")
for the period  and in the  territory  described  in the  Development  Agreement
between Applebee's and Developer (the "Development Agreement"); and

          WHEREAS,   Developer   acknowledges  that  Applebee's  information  as
described above was developed over time at great expense, is not generally known
in the industry and is beyond Developer's own present skills and experience, and
that to develop it itself would be expensive, time-consuming and difficult, that
it provides a  competitive  advantage  and will be valuable to  Developer in the
development  of its  business,  and that  gaining  access to it was  therefore a
primary reason why Developer entered into the Development Agreement; and

          WHEREAS,  in  consideration of Applebee's  confidential  disclosure to
Developer of these trade  secrets,  Developer  has agreed to be obligated by the
terms of Development  Agreement to execute,  with each employee of Developer who
will have  supervisory  authority over the development or operation of more than
one  Restaurant  in the  Territory  described in the  Development  Agreement,  a
written   agreement   protecting   Applebee's  trade  secrets  and  confidential
information entrusted to Employee;

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

                                      E-34

<PAGE>

          (1) The  parties  acknowledge  and agree that  Employee  is or will be
employed in a supervisory or managerial  capacity and in such capacity will have
access  to  information  and  materials  which   constitute  trade  secrets  and
confidential and proprietary  information.  The parties further  acknowledge and
agree that any actual or potential direct or indirect  competitor of Applebee's,
or of any of its  franchisees,  shall not have access to such trade  secrets and
confidential information.

          (2) The parties  acknowledge  and agree that the System includes trade
secrets and confidential  information which Applebee's has revealed to Developer
in  confidence,  and that  protection  of said trade  secrets  and  confidential
information and protection of Applebee's  against unfair competition from others
who  enjoy  or who  have had  access  to said  trade  secrets  and  confidential
information  are essential for the  maintenance of goodwill and special value of
the System.

          (3)  Employee  agrees  that  he or  she  shall  not at  any  time  (i)
appropriate or use the trade secrets  incorporated in the System, or any portion
thereof,  for use in any business which is not within the System;  (ii) disclose
or reveal any  portion of the  System to any  person  other than to  Developer's
employees as an incident of their  training;  (iii) acquire any right to use, or
to license or franchise the use of any name, mark or other intellectual property
right which is or may be granted by any franchise  agreement between  Applebee's
and Developer; or (iv) communicate,  divulge or use for the benefit of any other
person or entity any confidential information,  knowledge or know-how concerning
the  methods  of  development  or  operation  of  a  Restaurant   which  may  be
communicated  to  Employee  or of which  Employee  may be  apprised by virtue of
Employee's  employment by Developer.  Employee  shall divulge such  confidential
information  only to such of Developer's  other employees as must have access to
that  information  in order to operate a Restaurant  or to develop a prospective
site for a Restaurant. Any and information,  knowledge and know-how,  including,
without limitation, drawings, materials, equipment,  specifications,  techniques
and other data,  which Applebee's  designates as  confidential,  shall be deemed
confidential for purposes of this Agreement.

          (4)  Employee  further  acknowledges  and  agrees  that the  Franchise
Operations  Manual and any other materials or manuals provided or made available
to Developer by Applebee's (collectively, the "Manuals"), described in Section 5
of the applicable  franchise  agreement  between  Applebee's and Developer,  are
loaned by Applebee's to Developer for limited purposes only, remain the property
of  Applebee's,  and may not be  reproduced,  in whole or in part,  without  the
written consent of Applebee's.

          (5) Employee  agrees to surrender to Developer or to  Applebee's  each
and every copy of the  Manuals and any other  information  or material in his or
her possession or control upon request,  upon  termination of employment or upon
completion  of the use for which said Manuals or other  information  or material
may have been furnished to Employee.

                                      E-35
<PAGE>

          (6) The parties agree that in the event of a breach of this Agreement,
Applebee's would be irreparably  injured and would be without an adequate remedy
at law. Therefore,  in the event of a breach or a threatened or attempted breach
of any of the  provisions  hereof,  Applebee's  shall be entitled to enforce the
provisions of this  Agreement as a third-party  beneficiary  hereof and shall be
entitled,  in addition to any other  remedies which it may have hereunder at law
or in equity (including the right to terminate the Development Agreement),  to a
temporary and/or permanent  injunction and a decree for specific  performance of
the terms hereof without the necessity of showing  actual or threatened  damage,
and without being required to furnish a bond or other security.

          (7) If any court or other tribunal  having  jurisdiction  to determine
the validity or  enforceability  of this Agreement  determines  that it would be
invalid or unenforceable as written, the provisions hereof shall be deemed to be
modified  or  limited  to such  extent  or in such  manner  necessary  for  such
provisions to be valid and enforceable to the greatest extent possible.

          IN WITNESS  WHEREOF,  the undersigned have entered into this Agreement
as of the date first above written.

DEVELOPER                                      EMPLOYEE

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

                                      E-36STANDARD FORM
                       APPLEBEE'S NEIGHBORHOOD GRILL & BAR
                               FRANCHISE AGREEMENT

                       -----------------------------------
                               (Location Address)

                       -----------------------------------
                                (Franchisee Name)

                       -----------------------------------
                                     (Date)

                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                                      <C>
RECITALS     ........................................................................................       F-3

       1.    FRANCHISE GRANT AND TERM................................................................       F-4
       2.    UNIFORM STANDARDS.......................................................................       F-5
       3.    COMPLIANCE WITH THE SYSTEM..............................................................       F-6
       4.    GENERAL SERVICES OF FRANCHISOR..........................................................       F-6
       5.    RESTAURANT SYSTEM AND PROCEDURES........................................................       F-7
       6.    TRAINING................................................................................      F-10
       7.    RESTAURANT MAINTENANCE..................................................................      F-11
       8.    ADVERTISING.............................................................................      F-12
       9.    FEES....................................................................................      F-14
      10.    RECORD KEEPING..........................................................................      F-15
      11.    FRANCHISEE ORGANIZATION, AUTHORITY,
             FINANCIAL CONDITION AND SHAREHOLDERS....................................................      F-16
      12.    TRANSFER................................................................................      F-18
      13.    CONFIDENTIALITY; RESTRICTIONS...........................................................      F-22
      14.    INSPECTIONS.............................................................................      F-24
      15.    RELATIONSHIP OF PARTIES AND INDEMNIFICATION.............................................      F-25
      16.    INSURANCE...............................................................................      F-27
      17.    DEBTS AND TAXES.........................................................................      F-28
      18.    TRADE NAMES, SERVICE MARKS AND TRADEMARKS...............................................      F-29
      19.    EXPIRATION AND TERMINATION; OPTION TO
             PURCHASE RESTAURANT; ATTORNEYS' FEES....................................................      F-31
      20.    NO WAIVER OF DEFAULT....................................................................      F-36
      21.    CONSTRUCTION, SEVERABILITY,
             GOVERNING LAW AND JURISDICTION..........................................................      F-36
      22.    INTERFERENCE WITH EMPLOYMENT RELATIONS..................................................      F-37
      23.    LIQUOR LICENSE..........................................................................      F-38
      24.    FORCE MAJEURE...........................................................................      F-38
      25.    MISCELLANEOUS...........................................................................      F-39
      26.    ACKNOWLEDGMENTS.........................................................................      F-40

EXHIBIT 1:              ROYALTY FEE..................................................................      F-43

APPENDIX A:             STATEMENT OF OWNERSHIP INTERESTS.............................................      F-44

APPENDIX B:             REVIEW AND CONSENT WITH
                        RESPECT TO TRANSFERS.........................................................      F-45

APPENDIX C:             CONFIDENTIALITY AGREEMENT....................................................      F-46

</TABLE>

                                      F-2
<PAGE>

                       APPLEBEE'S NEIGHBORHOOD GRILL & BAR

                               FRANCHISE AGREEMENT

This Agreement is made this ________ day of _____________________,  20______, by
and   between   APPLEBEE'S   INTERNATIONAL,   INC.,   a   Delaware   corporation
("FRANCHISOR"),         _____________________________________________,         a
(_______________ corporation, sole proprietorship,  _______________ partnership,
_______________    limited   partnership   [strike   inappropriate    language])
("FRANCHISEE") and ______________________________  (collectively, the "PRINCIPAL
SHAREHOLDERS" and,  individually,  a "PRINCIPAL  SHAREHOLDER" of Franchisee if a
corporation or general partner if Franchisee is a limited  partnership having as
its         general          partner         a         corporation)          and
______________________________________________________________________________
("GENERAL PARTNER" of Franchisee if Franchisee is a limited partnership).*

       * (If  Franchisee is not a corporation  or a sole  proprietorship,  or if
Franchisee is a limited liability company,  the parties hereto hereby agree that
an Addendum  shall be attached to this  Agreement  so as properly to reflect the
responsibilities of the partners of any general partnership, the general partner
of any limited partnership and the shareholders of any corporate general partner
of any partnership, or the members of any limited liability company.)

WITNESSETH:

                                    RECITALS

       A.  Franchisor  owns the rights to develop and operate a unique system of
restaurants which specialize in the sale of high quality, moderately priced food
and  alcoholic  beverages  in an  attractive,  casual  setting,  which  includes
proprietary   rights  in  certain  valuable  trade  names,   service  marks  and
trademarks,  including the service mark Applebee's  Neighborhood Grill & Bar and
variations  of such  mark,  designs,  decor and  color  schemes  for  restaurant
premises,  signs,  equipment,  procedures  and formulae for  preparing  food and
beverage  products,  specifications  for  certain  food and  beverage  products,
inventory  methods,  operating  methods,  financial control  concepts,  training
facilities and teaching techniques ("the System").

       B. Franchisor established, through its own development and operation, and
through the granting of franchises,  a chain of Applebee's  Neighborhood Grill &
Bar restaurants which are distinctive;  which are similar in appearance,  design
and decor; and which are uniform in operation and product consistency.

       C. The value of Franchisor's trade names, service marks and trademarks is
based upon: (1) the maintenance of uniform high quality  standards in connection
with the preparation and sale of Franchisor-approved food and beverage products,
(2) the uniform high standards of appearance of the individual  restaurant units
in the System, (3) the use of distinctive  trademarks,  service marks,  building
designs and advertising  signs  representing a uniformly high quality of product
and services,  and (4) the assumption by Franchisor  and its  franchisees of the
obligation  to maintain and enhance the goodwill  and public  acceptance  of the
System (and of Franchisor's trade names, service marks and trademarks) by strict
adherence to the high standards required by Franchisor.

                                      F-3
<PAGE>

       D.  Franchisor,  Franchisee and the Principal  Shareholders  have entered
into a Development Agreement dated  __________________,  20______  ("Development
Agreement"),   relating  to  the   development   by   Franchisee  of  Applebee's
Neighborhood Grill & Bar restaurants.

       E. Franchisee  desires to use the System in connection with the operation
of an Applebee's  Neighborhood  Grill & Bar  restaurant at the location which is
specified in Subsection 1.1 of this Agreement, pursuant to the terms, conditions
and provisions hereinafter set forth.

NOW, THEREFORE,  in consideration of the mutual obligations contained herein, it
is hereby agreed as follows:

1.     FRANCHISE GRANT AND TERM

       1.1 Franchisor grants  Franchisee,  for the term stated below, the right,
license and privilege:

               (a) to use the System  incident to the operation of an Applebee's
       Neighborhood        Grill        &        Bar        restaurant        at
       __________________________________________________ (the "Restaurant");

               (b) to use the trade names,  service marks and  trademarks  which
       Franchisor  shall from time to time designate as part of the System,  but
       only in  connection  with the sale at the  Restaurant  of those  products
       which Franchisor has designated and approved; and

               (c)  to  hold  itself  out  to  the  public  as a  Franchisee  of
       Franchisor.

       1.2 The term of the franchise shall commence as of the Commencement Date,
as hereinafter defined, and shall end twenty (20) years thereafter,  unless this
Agreement is terminated  prior to that date in accordance  with its  provisions.
"Commencement  Date,"  as used  herein,  shall  mean the  date  upon  which  the
Restaurant  opens for business.  The parties agree to affix to this Agreement an
addendum  expressly setting forth the Commencement Date, which, when so affixed,
shall become a part of this Agreement.

       1.3 At the expiration of the term hereof, Franchisee shall have an option
to  operate  the  Restaurant  for four (4)  successive  terms of five (5)  years
(unless the franchise  agreement with respect to that  additional term is sooner
terminated in accordance with its provisions),  provided that immediately  prior
to each such five (5) year term (a) Franchisee  satisfies the requirements which
Franchisor  then-imposes on its new franchisees,  (b) all other restaurant units
within the System which Franchisee  then-operates  substantially  comply, in the
opinion of Franchisor, with Franchisor's then-current standards, specifications,
requirements and instructions, and (c) Franchisee executes the form of franchise
agreement which Franchisor is then using with respect to new restaurants  within
the System, with the amount of royalty and advertising fees payable at the rates
then-prevailing  under the franchise  agreements  which Franchisor is then using
for new  restaurants  within the System,  and Franchisee  pays to Franchisor for
each of said five (5) year periods a franchise fee equal to ten percent (10%) of
the prevailing franchise fee paid by new franchisees at that time. Any franchise
agreement which  Franchisee  executes for such additional term will also contain
options to obtain an assignment of Franchisee's  lease with a third party and/or

                                      F-4
<PAGE>

to purchase  certain  property or to purchase or lease the  Restaurant  premises
exercisable by Franchisor upon termination  thereof and an option to purchase or
lease the Restaurant  premises  exercisable by Franchisor upon expiration of the
renewal term (subject to any then-existing  renewal rights of Franchisee).  Such
options will  contain  provisions  substantially  similar to the  provisions  of
Franchisor's options described in Subsection 19.4 hereof.  Franchisee shall give
Franchisor  written  notice of its desire to exercise  its option to operate the
Restaurant  for an  additional  term no earlier than twelve (12) months,  and no
later than  seven (7)  months,  prior to  expiration  of the  initial  term.  If
Franchisee gives that notice,  Franchisor,  in its sole  discretion,  reasonably
exercised,  shall  determine  whether  Franchisee  has  satisfied  the foregoing
requirements.  Within  forty-five  (45) days of receiving  the notice  described
above,  Franchisor shall notify  Franchisee in writing whether or not Franchisee
is eligible to exercise the option described in this Subsection.

       1.4 During the period from the date of this  Agreement to the  expiration
or earlier  termination  of this  Agreement,  Franchisor  shall not  establish a
restaurant unit utilizing the System, or license another franchisee to establish
a restaurant  unit utilizing the System,  at any location within the lesser of a
three (3) mile radius of the  Restaurant or a radius from the  Restaurant  which
includes either a daytime or residential  population of forty thousand  (40,000)
or more  people.  Notwithstanding  the  foregoing,  Franchisor  may  establish a
restaurant  unit or may license a  restaurant  unit to a third party  within the
geographic  area set forth in the  preceding  sentence,  provided  that (i) such
restaurant  is located  within an  airport  (serviced  by one or more  public or
charter carrier), arena, stadium, state or national park, or military fort, post
or base,  or (ii)  does  not  utilize  the  System  or  utilize  the  Applebee's
Neighborhood Grill & Bar service mark.

       1.5 Franchisee,  in consideration of the benefits and privileges provided
to it by this  Agreement,  agrees to  operate  the  Restaurant  and  perform  as
required hereunder for the full term of this Agreement.

       1.6 This  Agreement is entered into  pursuant to and subject to the terms
and conditions which are set forth in the Development Agreement.

2.     UNIFORM STANDARDS

       2.1 The System is a comprehensive  restaurant system for the retailing of
certain  uniform and quality food and  beverage  products  (including  alcoholic
beverages),  emphasizing a varied menu of high quality,  moderately  priced food
products  (including  appetizers,   creative  sandwiches,   dinner  entrees  and
desserts),  a  selection  of  alcoholic  and other  beverages,  and  prompt  and
courteous service in a clean,  wholesome,  casual atmosphere.  The foundation of
the System is the establishment and maintenance of a reputation among the public
for the operation of high quality restaurant units. A fundamental requirement of
the System,  this Franchise Agreement and franchises which Franchisor will grant
to others is adherence by all franchisees to Franchisor's standards and policies
providing for the uniform  operation of all restaurant  units within the System,
including,  but not limited to, (a) selling only those products which Franchisor
has designated and approved,  (b) using only  Franchisor's  prescribed  building
layout and  designs,  equipment,  signs,  interior  and  exterior  decor  items,
fixtures and furnishings,  (c) adhering  strictly to Franchisor's  standards and
specifications  relating  to  the  selection,  purchase,  storage,  preparation,
packaging,  service and sale of all food and beverage products being sold at the
Restaurant,  and (d)  satisfying  all of  Franchisor's  prescribed  standards of
quality,  service  and  cleanliness.  Compliance  by all  franchisees  with  the
foregoing  standards and policies in  conjunction  with the use of  Franchisor's
trade names, service marks and trademarks provides the basis for the wide public
acceptance  of  the  System  and  its  valuable  goodwill.  Accordingly,  strict
adherence  by all  franchisees  to all  aspects of the System is required at all
times.

                                      F-5
<PAGE>

       2.2 The  provisions of the Agreement  shall be interpreted to give effect
to the intent of the parties stated in this Section 2 to assure that  Franchisee
shall  operate the  Restaurant  in conformity  with the System,  through  strict
adherence to  Franchisor's  standards and policies as they now exist and as they
may be modified from time to time.

3.     COMPLIANCE WITH THE SYSTEM

       Franchisee  acknowledges  that every component of the System is important
to  Franchisor,  to all  franchisees  and to the  operation  of the  Restaurant,
including the requirements (a) that only those products  designated and approved
by the Franchisor are sold at the  Restaurant,  and (b) that there is uniformity
of food and beverage specifications,  preparation methods, quality,  appearance,
building and  interior  design,  color and decor,  landscaping,  facilities  and
service among all restaurant units in the System. Accordingly, Franchisee agrees
to and shall  comply  with all aspects of the System (as it now exists and as it
may be  modified  from time to time).  Franchisee  recognizes  and  agrees  that
Franchisor   may   prohibit   the  use  of  the  System  and  its  trade  names,
notwithstanding  the granting of this Agreement,  if Franchisee fails to design,
construct, equip or furnish its Restaurant in compliance with the specifications
designated by Franchisor,  unless prior written  approval has been received from
Franchisor.

4.     GENERAL SERVICES OF FRANCHISOR

       4.1 Franchisor  shall advise and consult with Franchisee  periodically in
connection with the operation of the Restaurant,  and at other  reasonable times
upon  Franchisee's  request.  Franchisor  will provide to Franchisee such of its
know-how,  new developments,  techniques and improvements in areas of restaurant
design, management,  food and beverage preparation,  sales promotion and service
concepts as may be pertinent to the construction and operation of the Restaurant
under the  System.  Franchisor  may  provide the  foregoing  information  (a) by
sending  representatives  to visit the Restaurant,  (b) by providing  written or
other  material,  (c) at meetings or seminars,  and (d) at training  sessions at
Franchisor's training facility and/or such other locations as may be selected by
Franchisor from time to time. Franchisor also shall make available to Franchisee
all additional  services,  facilities,  rights and privileges  which  Franchisor
makes available from time to time to its franchisees of the System generally.

       4.2  For  approximately  eight  (8)  days  prior  to the  opening  of the
Restaurant  and the first six (6) days that the Restaurant is open for business,
Franchisor shall provide Franchisee,  at Franchisor's expense, with the services
of up to a maximum of six (6) of Franchisor's  training  personnel to facilitate
proper  operation of the  kitchen,  bar and dining room areas during that period
and to assist in correcting any operational problems which may arise.

                                      F-6
<PAGE>

       4.3 From time to time during the term of this Agreement,  Franchisor will
develop and test new menu items. The menu consists of approved national food and
beverage  selections.  Franchisee  shall  comply  with  all menu  changes  which
generally  occur every six (6) months.  The menu may be modified to reflect food
and beverage items peculiar to Franchisee's  local area, subject to Franchisor's
testing and approval.

5.     RESTAURANT SYSTEM AND PROCEDURES

       5.1  Franchisor  shall furnish  Franchisee  with advice and assistance in
managing and operating the Restaurant,  and  Franchisor's  representatives  will
visit  the  Restaurant  periodically.   Franchisor  will  assist  Franchisee  in
coordinating  the  Restaurant's  pre-opening  activities,   and  as  noted  more
particularly  in  Subsection  4.2  hereof,  shall  provide  Franchisee  with the
services of certain of Franchisor's  personnel to facilitate proper operation of
the Restaurant when it opens for business.

       5.2  Franchisee  shall  designate  an  employee  who will  supervise  the
Restaurant,  and devote his or her full time, best efforts and constant personal
attention to the day-to-day operation of the Restaurant (the "General Manager").
Franchisee  also shall  designate an employee who will  supervise the Restaurant
kitchen,  and devote his or her full time,  best efforts and  constant  personal
attention to the day-to-day  operation of the  Restaurant  kitchen (the "Kitchen
Manager").

       5.3  Franchisee  shall  require  that the  General  Manager,  the Kitchen
Manager and each of Franchisee's  employees who serve as Restaurant  managers to
maintain his or her principal  personal residence within a usual driving time of
not more  than  approximately  one (1)  hour  from  the  Restaurant.  Franchisor
reserves the right to require that, as a condition of his or her employment, the
General Manager must successfully complete Franchisor's  interview process and a
psychological  profile  test in a manner  which  satisfies  a  uniform  standard
established by Franchisor. The test shall be administered by Franchisor, or by a
testing agency designated by Franchisor, at Franchisee's expense.

       5.4  Unless  Franchisor  shall  have  given its prior  written  approval,
Franchisee  shall keep the  Restaurant  open for business  only during the hours
which are specified by Franchisor in the Franchise  Operations Manual or in such
other  materials  or  manuals  provided  or  made  available  by  Franchisor  to
Franchisee  (collectively  the  "Manuals"),  provided  that  such  hours  do not
conflict with state laws or local  ordinances  relating to the sale of alcoholic
beverages or governing the hours during which restaurant  establishments  may be
open for business. In addition, Franchisee expressly agrees to:

               (a) operate the Restaurant in a clean,  safe and orderly  manner,
       providing courteous, first-class service to the public;

               (b)  diligently  promote  and make  every  reasonable  effort  to
       increase the business of the Restaurant;

                                      F-7
<PAGE>

               (c)  advertise  the business of the  Restaurant by the use of the
       Franchisor's  trade names,  service marks and  trademarks  and such other
       insignia,  slogans,  emblems,  symbols,  designs  and  other  identifying
       characteristics  as may be developed or established  from time to time by
       Franchisor  and included in the Manuals,  subject to the  limitations  of
       Subsections 8.4 and 8.5 hereof;

               (d) prohibit and, to the best of  Franchisee's  ability,  prevent
       the use of the Restaurant for any immoral or illegal purpose,  or for any
       other purpose,  business activity, use of function which is not expressly
       authorized hereunder or in the Manuals; and

               (e)  comply  fully  with all  applicable  laws  and  regulations,
       including,  but not limited to, those relating to building  construction,
       maintenance  and safety,  environmental,  fire  prevention,  food safety,
       public access and the sale of alcoholic beverages.

       5.5  Franchisee  hereby  acknowledges  receipt  and loan of a copy of the
Manuals  heretofore  or  hereinafter  furnished  to  Franchisee,  and  agrees to
faithfully, completely and continuously perform, fulfill, observe and follow all
instructions,  requirements,  standards, specifications,  systems and procedures
contained  therein,  including (a) those relating to the  construction,  design,
decor,  building and  equipping  of the  Restaurant,  (b) those  relating to the
selection,  purchase, storage,  preparation,  packaging, service and sale of all
products being sold at the Restaurant, (c) those relating to the maintenance and
repair of Restaurant building,  grounds, equipment, signs, interior and exterior
decor  items,  fixtures  and  furnishings,  and (d) those  relating  to employee
uniforms  and  dress,  accounting,  bookkeeping,  record  retention,  and  other
business systems, procedures and operations. The Manuals are incorporated herein
by reference and hereby made part of this Agreement. Franchisee acknowledges and
agrees that the materials  contained in the Manuals are integral,  necessary and
material elements of the System.

       5.6  Franchisee   understands,   acknowledges   and  agrees  that  strict
conformity with the System,  including the standards,  specifications,  systems,
procedures, requirements and instructions contained in this Agreement and in the
Manuals, is vitally important, not only to the success of Franchisor, but to the
collective success of all of Franchisor's  other  franchisees,  by reason of the
benefits which Franchisor and all of its franchisees will derive from uniformity
in products sold, identity,  quality,  appearance,  facilities and service among
all  restaurant  units  which  are  part of the  System.  Without  limiting  the
generality of the foregoing provisions,  Franchisee agrees to adhere strictly to
the requirements in the Manuals relating (a) to the construction, design, decor,
building and equipping of the Restaurant,  (b) to the maximum  permissible ratio
of sales of alcoholic  beverages to sales of food at the Restaurant,  and (c) to
the  limitations  on the number of video games or similar  devices  which may be
placed on the  Restaurant  premises.  Any  failure  to adhere to the  standards,
specifications,   systems,   requirements  or  instructions  contained  in  this
Agreement  or in  the  Manuals  shall  constitute  a  material  breach  of  this
Agreement.

       5.7 Franchisor  shall have the right,  at any time and from time to time,
in the good faith exercise of its reasonable business judgment,  consistent with
the overall best  interests of the System  generally,  having due regard for the
financial  burden which may be placed upon its  franchisees,  to revise,  amend,
delete from and add to the System and the  material  contained  in the  Manuals.
Franchisee  expressly  agrees to  comply  with all such  revisions,  amendments,
deletions and additions.

                                      F-8

<PAGE>

       5.8  Franchisee  shall offer for sale from the  Restaurant,  at all times
when the Restaurant is open for business,  only the products which are expressly
designated in the Manuals, except, as noted more particularly in Subsection 4.3,
to the extent that Franchisee has obtained Franchisor's prior written consent to
a modification  of that  requirement.  No product shall be offered or sold at or
from the Restaurant  under, or in connection with, any trademark or service mark
other  than  Franchisor's   designated  trademarks  and  service  marks  without
Franchisor's prior written consent.

       5.9 Franchisee shall obtain all food and beverage  products,  equipments,
signs, interior and exterior decor items, fixtures,  furnishings,  supplies, and
other  products  and  materials  required  for the  operation  of or sold at the
Restaurant  solely from suppliers  (including  manufacturers,  distributors  and
other  sources)  who   demonstrate,   to  Franchisor's   continuing   reasonable
satisfaction,  the  ability  to meet  Franchisor's  then-current  standards  and
specifications  for such  items;  who  possess  adequate  quality  controls  and
capacity to supply  Franchisee's needs promptly and reliably;  and who have been
approved in writing by Franchisor  and not thereafter  disapproved.  The Manuals
contain a list of approved  suppliers.  If  Franchisee  desires to purchase  any
items from an  unapproved  supplier,  Franchisee  shall  submit to  Franchisor a
written  request for such approval,  which  approval  shall not be  unreasonably
withheld,  or shall request the supplier itself to do so.  Franchisor shall have
the right to inspect the supplier's facilities, and to require that samples from
the supplier be delivered, at Franchisor's option, either to Franchisor or to an
independent,   certified  laboratory   designated  by  Franchisor  for  testing.
Franchisee  or the  supplier  shall pay the costs of any such  test.  Franchisor
shall notify  Franchisee in writing within forty-five (45) days of receiving any
such request  whether it disapproves  the supplier.  Failure by Franchisor to so
notify Franchisee within that period shall be deemed to constitute  Franchisor's
approval of such  supplier.  Franchisor  reserves the right,  at its option,  to
reinspect the  facilities and retest  products of any such approved  supplier at
any time and to revoke its approval upon the  supplier's  failure to continue to
meet any of Franchisor's criteria.  Notwithstanding the foregoing,  any supplier
of goods having any trademark, trade name, service mark, logo or symbol owned by
Franchisor  shall not be  approved  to supply  Franchisee  such goods until such
supplier  has  entered  a  written  agreement  with  Franchisor   regarding  the
production, use and sale of such goods.

       5.10 No food or beverage product,  interior or exterior decor item, sign,
item of  equipment,  fixtures,  furnishings  or  supplies,  or other  product or
material  required  for the  operation  of the  Restaurant,  which  bears any of
Franchisor's trade names, service marks or trademarks,  shall be used or sold in
or upon the Restaurant  premises unless the same shall have been first submitted
to and approved in writing by Franchisor.

       5.11  The  Manuals  and all  related  material  furnished  to  Franchisee
hereunder are and shall remain the property of Franchisor,  and must be returned
to Franchisor,  along with any copies made thereof,  immediately upon request or
upon the expiration or earlier termination of this Agreement.

                                      F-9
<PAGE>

6.     TRAINING

       6.1 Franchisor shall make its operations training course available to the
General Manager,  the Kitchen Manager,  and Franchisee's  Assistant Managers and
other Restaurant managers.

       6.2  Before  the  Restaurant  opens  for  business,   and  thereafter  as
replacement  personnel  are employed by  Franchisee,  the General  Manager,  the
Kitchen Manager and each Assistant Manager shall attend Franchisor's  operations
training  facility for such period of time as Franchisor  shall deem  reasonably
necessary,   and  shall  successfully   complete  that  course  to  Franchisor's
reasonable satisfaction. If the General Manager, Kitchen Manager or an Assistant
Manager fails to successfully complete Franchisor's  operations training course,
Franchisor may require designation of a new General Manager,  Kitchen Manager or
Assistant  Manager,  as the case may be, and  Franchisee  shall  designate a new
General Manager,  Kitchen Manager or Assistant Manager, who shall be required to
successfully complete such training course.

       6.3 The General Manager,  the Kitchen Manager and each Assistant  Manager
shall,  from time to time as  reasonably  required  by  Franchisor,  attend  and
successfully    complete   to    Franchisor's    reasonable    satisfaction    a
Franchisor-provided refresher course in restaurant operations.

       6.4 Franchisee shall be responsible for the Restaurant's  compliance with
the operating standards, methods, techniques and material taught at Franchisor's
operations  training course,  and shall cause the employees of the Restaurant to
be trained in such  standards,  methods and  techniques  as are  relevant to the
performance of their respective duties.

       6.5  Attendance  of the General  Manager,  the  Kitchen  Manager and each
Assistant Manager at any of Franchisor's training courses shall be tuition-free.
Franchisee shall pay all other costs and expenses  relating to the attendance of
Franchisee's  personnel  at any of  Franchisor's  training  courses,  including,
without limitation,  the cost of travel,  lodging,  meals, and other related and
incidental expenses.

                                      F-10
<PAGE>

7.     RESTAURANT MAINTENANCE

       7.1 Franchisee shall, at Franchisee's sole cost and expense, maintain the
Restaurant in conformity with the standards,  specifications and requirements of
the  System,  as the same may be  designated  by  Franchisor  from time to time.
Franchisee  specifically  agrees to repair or replace,  at Franchisee's cost and
expense,   equipment,  signs,  interior  and  exterior  decor  items,  fixtures,
furnishings,  supplies,  and  other  products  and  materials  required  for the
operation  of the  Restaurant  as  necessary  or  desirable,  and to obtain,  at
Franchisee's cost and expense, any new or additional equipment,  signs, interior
and exterior decor items,  fixtures,  furnishings,  supplies, and other products
and materials which may be reasonably required by Franchisor for new products or
procedures.  Except as may be expressly provided in the Manuals,  no alterations
or improvements, or changes of any kind in design, equipment, signs, interior or
exterior  decor  items,  fixtures or  furnishings  shall be made in or about the
Restaurant  or  Restaurant  premises  without  the  prior  written  approval  of
Franchisor in each instance.

       7.2  In  order  to  assure  the  continued  success  of  the  Restaurant,
Franchisee  shall,  at any  time  from  time  to  time  after  ________________,
_________,  (i.e., six [6] years after the date of this Agreement) as reasonably
required by Franchisor  (taking into  consideration the cost and  then-remaining
term of this Agreement),  modernize the Restaurant premises,  equipment,  signs,
interior and exterior decor items,  fixtures,  furnishings,  supplies, and other
products  and  materials  required  for  the  operation  of the  Restaurant,  to
Franchisor's  then-current  standards and  specifications,  provided that at the
time Franchisor  requires  Franchisee to so modernize the Restaurant premises at
least twenty-five  percent (25%) of  Franchisor-owned  and operated  Restaurants
meet such  standards and  specifications.  Franchisee's  obligations  under this
Subsection are in addition to, and shall not relieve Franchisee from, any of its
other  obligations  under  this  Agreement,  including  those  contained  in the
Manuals.

                                      F-11
<PAGE>

       7.3 If  Franchisee  is or  becomes a lessee of the  Restaurant  premises,
Franchisee shall have included in the lease provisions expressly permitting both
Franchisee and Franchisor to take all actions and make all alterations  referred
to under Subsections 7.1 and 7.2 hereof, requiring the lessor thereunder to give
Franchisor reasonable notice of any contemplated termination, and providing that
Franchisee has the unrestricted  right to assign the lease to Franchisor without
the lessor having any right to impose conditions on such assignment or to obtain
any payment in connection  therewith.  Franchisee  shall not,  without the prior
written  consent  of  Franchisor,  execute  any lease or other  agreement  which
imposes,  or purports to impose,  any  limitations  on the ability of Franchisee
and/or  of  Franchisor  to  operate  additional  restaurants  at any  particular
location  beyond the geographic  limitation set forth in Section 1.4 hereof,  or
any lease the term of which is shorter than the term of this Agreement.

8.     ADVERTISING

       8.1 Franchisor shall develop and administer advertising, public relations
and sales  promotion  programs  designed to promote  and enhance the  collective
success of all  restaurant  units in the  System.  It is  expressly  understood,
acknowledged  and agreed that in all phases of such  advertising  and promotion,
including,  without limitation,  type, quantity, timing, placement and choice of
media and medium, market areas, advertising agencies and public relations firms,
Franchisor's  decisions  shall be final and binding.  Franchisee  shall have the
right to  participate  actively in all such  advertising,  public  relations and
sales  promotion  programs,  but only in full and complete  accordance with such
terms and conditions as may be established by Franchisor for each such program.

       8.2 Franchisee shall pay Franchisor, in the manner described in Section 9
hereof,  a minimum  dollar amount equal to two and one-tenth  percent  (2.1%) of
Franchisee's gross sales, as defined in Subsection 9.3 hereof.  Such funds shall
become the sole and  absolute  property  of  Franchisor,  to be  allocated  to a
separate "advertising  account" established by Franchisor.  Franchisor shall use
such funds for market studies,  advertising  and marketing  studies or services,
production of commercials,  advertising copy and layouts,  traffic costs, agency
fees, marketing  personnel,  or any other costs associated with the development,
marketing and testing of advertising,  and for the purchase of advertising time,
space or materials in national, regional or other advertising media, in a manner
determined by Franchisor in its sole discretion. Within six (6) months following
the end of Franchisor's  fiscal year,  Franchisor  shall provide all franchisees
with an accounting of all amounts  received from them and expended by Franchisor
for the matters set forth above. In addition,  Franchisee shall expend a minimum
dollar amount equal to one and one-half  percent  (1.5%) of  Franchisee's  gross
sales,  for  local  promotional   activities,   subject  to  the  provisions  of
Subsections 8.4 and 8.5 hereof.  Franchisor shall have the right at all times to
review  Franchisee's  books and records,  and to require  Franchisee  to produce
evidence  of its  gross  sales  and  local  promotional  activities,  to  ensure
Franchisee's  compliance with this Section.  Any amount determined by said audit
to be due Franchisor as part of the  advertising  fee will be paid to Franchisor
by Franchisee  within ten (10) days  thereafter.  At any time after execution of
this Agreement,  Franchisor may in its sole discretion increase, to a maximum of
four percent (4%) of gross sales, the percentage of gross sales which Franchisee
shall be required to pay to Franchisor for allocation to a separate  advertising
account  pursuant to this  Subsection 8.2.  Franchisor  shall use the funds paid
pursuant to that  increased  percentage  requirement  solely for the purchase of
advertising time, space or materials in national,  regional or other advertising
media,  in a manner  determined by Franchisor in its sole  discretion,  provided
that in each  calendar  year (or other twelve [12] month period  established  by
Franchisor) in which Franchisor makes  expenditures for advertising from such an
advertising account, so long as Franchisee is in compliance with its obligations
hereunder,   Franchisor's   expenditures   for   advertising  in  the  Territory
encompassed by the Development Agreement (including expenditures for national or
regional  advertising in media which reach that  Territory)  shall be on a basis
which is roughly  proportional to Franchisee's  contribution to that advertising
account during that calendar year or other twelve (12) month period.  Franchisor
also may  increase  the  percentage  of gross  sales which  Franchisee  shall be
required to spend for local promotional activities, provided however, that in no
event shall Franchisee be required to make payments  pursuant to this Subsection
8.2 in a dollar amount in excess of five percent (5%) of gross sales.

                                      F-12
<PAGE>

       8.3 Franchisee shall submit to Franchisor,  for Franchisor's approval, an
advertising  campaign  plan  relating  to the  promotion  of the  opening of the
Restaurant  which is  sufficient  to meet the needs of the  market.  The Manuals
contain a Press  Release kit to assist  Franchisee  in this  regard.  Franchisee
shall conduct the approved  advertising  campaign and make all  expenditures for
advertising  to promote the opening of the  Restaurant  no later than sixty (60)
days after the Restaurant  opens for business.  Franchisor  will reimburse fifty
percent (50%) of Franchisee's  out-of-pocket opening advertising expenditures up
to a maximum of two thousand five hundred dollars ($2,500),  if Franchisee meets
the following criteria:

               (a) Franchisee's opening advertising expenditures are made within
       sixty (60) days after the opening of the Restaurant;

               (b)  Franchisee  submits to Franchisor  within one hundred twenty
       (120) days  after the  opening of the  Restaurant  documentation  for the
       opening advertising expenditures, such as paid invoices from suppliers of
       goods or  services  evidencing  expenditure  on the  opening  advertising
       promotion; and

               (c)  Franchisee's  opening  advertising   expenditures  are  made
       pursuant to the approved advertising campaign plan and in accordance with
       the Grand Opening  Reimbursement  Program Policy  Guidelines set forth in
       the Manuals.

       8.4  Nothing in the  foregoing  Subsections  shall be deemed to  prohibit
Franchisee from making additional expenditures for local promotional activities.
All of the  Franchisee's  local  promotional  activities  shall utilize approved
advertising media. "Approved advertising media" are limited to the following:

               (a)  Newspapers, magazines and other such periodicals;

               (b)  Radio and television;

               (c) Outdoor  advertising  by signs  displayed  on  billboards  or
       buildings; and

               (d)  Handbills, flyers, door-hangers and direct mail.

                                      F-13
<PAGE>

In the event Franchisee wants to use a form of advertising  medium not set forth
above,  Franchisee  shall submit a description of such medium and advertising to
Franchisor.  Franchisor shall notify  Franchisee  whether it approves the use of
such  medium  within  thirty  (30)  days of  Franchisee's  request.  Failure  by
Franchisor  to so  notify  Franchisee  within  that  period  shall be  deemed to
constitute   Franchisor's  approval  of  such  request.   Guidelines  for  local
promotional  activities  are  contained in the Manuals,  including  Franchisee's
required participation in any co-operative marketing program.

       8.5 All advertising  copy and other  materials  employed by Franchisee in
local  promotional  activities shall be in strict accordance and conformity with
the standards,  formats and specimens contained in the Manuals and shall receive
the prior approval of Franchisor. In the event Franchisee wishes to deviate from
the  materials  contained  in the  Manuals,  Franchisee  shall  submit,  in each
instance, the proposed advertising copy and materials to Franchisor for approval
in advance of publication. Franchisor shall notify Franchisee in writing, within
fifteen  (15)  days of such  submission,  whether  Franchisor  disapproves  such
advertising  copy and materials.  Failure by Franchisor to so notify  Franchisee
within that period shall be deemed to constitute  Franchisor's  approval of such
advertising  copy and  materials.  In no event  shall  Franchisee's  advertising
contain any statement or material  which may be  considered  (a) in bad taste or
offensive to the public or to any group of persons, (b) defamatory of any person
or an  attack  on  any  competitor,  (c)  to  infringe  upon  the  use,  without
permission,  of any  other  persons'  trade  name,  trademark,  service  mark or
identification,  or (d)  inconsistent  with the public image of Franchisor or of
the System.

9.     FEES

       9.1 As partial consideration for the rights granted hereunder, Franchisee
shall pay Franchisor:

               (a) an initial  franchise  fee of  _____________________  dollars
       ($__________),  to be paid in the manner  prescribed in Subsection 4.l of
       the Development Agreement as payment for the grant of the franchise;

               (b) a monthly  royalty fee as  determined by  Franchisor,  not to
       exceed  five  percent  (5%) of each  calendar  month's  gross  sales,  as
       provided in Subsection 4.3 of the Development  Agreement,  as payment for
       Franchisee's  continuing  right to operate the  Restaurant as part of the
       System (see Exhibit 1); and

               (c) a monthly  advertising  fee equal to such  percentage of each
       calendar  month's  gross  sales as  Franchisor  may  require  pursuant to
       Subsection 8.2 hereof.

       9.2 The fees referred to in Subsections 9.l(b) and (c) (the "Fees") shall
be paid by check mailed and  postmarked on or before the twelfth day of the next
full month immediately  following the month to which the Fees relate.  Any Fees,
including  the  initial  franchise  fee,  which are not paid when due shall bear
interest  from and after the due dates  thereof at the rate of eighteen  percent
(18%) per annum or the highest rate  permitted by applicable  law,  whichever is
less.

                                      F-14

<PAGE>

       9.3 (a) Except as provided in Subsection  9.3(b) hereof,  the term "gross
sales,"  as used  in  this  Agreement,  shall  mean  all  receipts  (cash,  cash
equivalents  or credit) or revenues from sales from all business  conducted upon
or from the  Restaurant  premises,  whether  evidenced by check,  cash,  credit,
charge account,  exchange or otherwise,  including,  but not limited to, amounts
received from the sale of goods, wares and merchandise (including sales of food,
beverages  and  tangible  property  of every  kind and  nature,  promotional  or
otherwise),  from all services performed from or at the Restaurant premises, and
from all orders  taken or received at the  Restaurant  premises,  regardless  of
where such orders are filled. Gross sales shall not be reduced by any deductions
for cash shortages  incurred in connection with the transaction of business with
customers, credit card company charges or theft which is reimbursed by insurance
or is not reported to the appropriate  police  authorities.  Each charge or sale
upon  installment or credit shall be treated as a sale for the full price in the
month during which such charge or sale shall be first made,  irrespective of the
time when Franchisee shall receive payment (whether full or partial) therefor.

               (b) Gross sales shall not  include:  (i) the sale of  merchandise
for which cash has been refunded or,  except as provided in the second  sentence
of Subsection 9.3(a), not received,  or allowances made for merchandise,  if the
sales of any such returned or exchanged  merchandise  shall have been previously
included  in gross  sales,  (ii) the  amount  of any sales  tax  imposed  by any
federal,  state, municipal or other governmental authority directly on sales and
intended to be collected  from  customers,  provided that the amount  thereof is
added  to the  selling  price  and  actually  paid  by the  Franchisee  to  such
governmental  authority,  (iii)  the  sale  of  merchandise  for  which  a  gift
certificate is redeemed, provided that the initial sale of said gift certificate
shall  have been  previously  included  in gross  sales,  (iv) the sale of waste
products of the Restaurant,  (v) telephone,  game and vending machine  revenues,
(vi) the sale of non-food items or beverages at a discount in connection  with a
promotional campaign,  (vii) one-time sale of furniture,  fixtures or equipment,
and (viii)  theft  which is not  covered by  insurance  and is  reported  to the
appropriate police authorities. In addition,  Franchisor may, from time to time,
in writing, permit or allow certain other items to be excluded from gross sales.
Any such  permission  or allowance  may be revoked or withdrawn at  Franchisor's
discretion.

10.    RECORD KEEPING

       10.1  Franchisee  shall  employ  a  point  of  sale  system  approved  by
Franchisor,  without  modification,  in  connection  with  the  business  of the
Restaurant.  Franchisee  shall use such  bookkeeping and record keeping forms as
shall be prescribed in the Manuals.

       10.2  Franchisee  shall complete and submit to Franchisor,  on a regular,
continuous  basis, each of the following  reports,  in the form specified in the
Manuals:

               (a) monthly Restaurant  reports,  on or before the twelfth day of
       each calendar month following the month to which the report relates;

                                      F-15
<PAGE>

               (b) annual Restaurant  reports, on or before the fifteenth day of
       April of each year; and

               (c)  weekly  gross  sales  reports,  on  or  before  the  Tuesday
       following the calendar week to which the report relates.

       10.3 The annual  Restaurant  reports  referred to above  shall  include a
balance sheet dated as of the end of  Franchisee's  fiscal year or calendar year
and a profit and loss  statement for such year,  together  with such  additional
financial  information as Franchisor may reasonably request.  Such balance sheet
and profit and loss  statement  shall be prepared in accordance  with  generally
accepted   accounting   principles,   certified   as  correct  and  complete  by
Franchisee's  chief executive  officer,  president,  chief financial  officer or
controller  and  reported  on  and  reviewed  by an  independent  state-licensed
certified public accountant. If Franchisee fails to provide Franchisor with such
balance sheet and profit and loss statement,  Franchisor shall have the right to
have an independent audit made of Franchisee's books and records, and Franchisee
shall promptly reimburse Franchisor for the cost thereof.

       10.4  Each  of the  reports  referred  to in this  Section  10  shall  be
completed by Franchisee or its accountant in the respective  specimen forms, and
in accordance with the instructions,  contained in the Manuals.  Subsection 10.3
notwithstanding,  time is of the  essence  with  respect to the  completion  and
submission of each such report.

11.    FRANCHISEE ORGANIZATION, AUTHORITY,
       FINANCIAL CONDITION AND SHAREHOLDERS

       11.1  Franchisee  and each  Principal  Shareholder  represent and warrant
that: (a) Franchisee is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of its  incorporation;  (b) Franchisee
is duly  qualified and is authorized to do business and is in good standing as a
foreign corporation in each jurisdiction in which its business activities or the
nature  of the  properties  owned by it  requires  such  qualification;  (c) the
execution and delivery of this Agreement and the transaction contemplated hereby
are within Franchisee's  corporate power; (d) the execution and delivery of this
Agreement  has been duly  authorized  by the  Franchisee;  (e) the  articles  of
incorporation  and  by-laws of  Franchisee  delivered  to  Franchisor  are true,
complete  and  correct,  and there have been no changes  therein  since the date
thereof;  (f) the  certified  copies of the  minutes  electing  the  officers of
Franchisee  and  authorizing  the execution  and delivery of this  Agreement are
true,  correct and  complete,  and there have been no changes  therein since the
date(s) thereof; (g) the specimen stock certificate delivered to Franchisor is a
true  specimen of  Franchisee's  stock  certificate;  (h) the  balance  sheet of
Franchisee  as of  ____________________,  ________  ("Balance  Sheet")  and  the
balance  sheets  of  its  Principal  Shareholders  as  of  ____________________,
________,  heretofore  delivered to Franchisor,  are true, complete and correct,
and fairly  present the  financial  positions of Franchisee  and each  Principal
Shareholder,  respectively,  as of the dates thereof;  (i) the Balance Sheet and
each such balance sheet have been prepared in accordance with generally accepted
accounting principles;  and (j) there have been no materially adverse changes in
the condition,  assets or  liabilities  of Franchisee or Principal  Shareholders
since the date or dates thereof.

                                      F-16

<PAGE>

       11.2 Franchisee and each Principal  Shareholder  covenant that during the
term of this Agreement:  (a) Franchisee  shall do or cause to be done all things
necessary to preserve and keep in full force its  corporate  existence and shall
be in good standing as a foreign  corporation in each  jurisdiction in which its
business  activities or the nature of the  properties  owned by it requires such
qualification;  (b) Franchisee  shall have the corporate  authority to carry out
the terms of this  Agreement;  and (c) Franchisee  shall print, in a conspicuous
fashion on all  certificates  representing  shares of its stock when  issued,  a
legend  referring to this Agreement and the  restrictions  on and obligations of
Franchisee and Principal Shareholders  hereunder,  including the restrictions on
transfer of Franchisee's shares.

       11.3  In  addition  to the  financial  information  which  Franchisee  is
required  to provide  to  Franchisor  under  Subsections  10.2 and 11.1  hereof,
Franchisee and Principal  Shareholders  shall provide Franchisor with such other
financial  information as Franchisor  may reasonably  request from time to time,
including,  on an  annual  basis,  copies  of the  then-most  current  financial
statements of Franchisee and each Principal Shareholder,  dated as of the end of
the last preceding fiscal year of the Franchisee or Principal Shareholder,  said
statements  to be delivered to  Franchisor  no later than April 15 of each year,
which  financial  statements  shall  conform  to  the  standards  set  forth  in
Subsection 11.1 hereof.

       11.4  Franchisee and each Principal  Shareholder  represent,  warrant and
covenant that all Interests (as defined in Subsection 12.4 hereto) in Franchisee
are owned as set forth on Appendix A hereto,  that no Interest  has been pledged
or hypothecated  (except in accordance with Section 12 of this  Agreement),  and
that no change will be made in the ownership of any such Interest  other than as
permitted by this Agreement, or otherwise consented to in writing by Franchisor.
Franchisee  and Principal  Shareholders  agree to furnish  Franchisor  with such
evidence  as  Franchisor  may  request,  from time to time,  for the  purpose of
assuring Franchisor that the Interests of Franchisee and Principal  Shareholders
remain as represented herein.

       11.5 Each Principal Shareholder, jointly and severally, hereby personally
and  unconditionally  guarantees each of Franchisee's  financial  obligations to
Franchisor  (including,  but not  limited  to, all  obligations  relating to the
payment of fees by Franchisee to Franchisor).  Each Principal Shareholder agrees
that  Franchisor may resort to such Principal  Shareholder  (or any of them) for
payment of any such financial  obligation,  whether or not Franchisor shall have
proceeded  against  Franchisee,  any other  Principal  Shareholder  or any other
obligor  primarily or secondarily  obligated to Franchisor  with respect to such
financial  obligation.   Each  Principal  Shareholder  hereby  expressly  waives
presentment,  demand,  notice  of  dishonor,  protest,  and  all  other  notices
whatsoever  with  respect  to  Franchisor's  enforcement  of this  guaranty.  In
addition,   each  Principal  Shareholder  agrees  that  if  the  performance  or
observance by  Franchisee of any term or provision  hereof is waived or the time
of performance thereof extended by Franchisor,  or payment of any such financial
obligation is accelerated in accordance  with any agreement  between  Franchisor
and any party liable in respect  thereto or extended or renewed,  in whole or in
part, all as Franchisor  may  determine,  whether or not notice to or consent by
any Principal Shareholder or any other party liable in respect to such financial
obligations  is given or obtained,  such  actions  shall not affect or alter the
guaranty of each Principal Shareholder described in this Subsection.

                                      F-17
<PAGE>

12.    TRANSFER

       12.1 There shall be no Transfer of any  Interest of  Franchisee,  or of a
Principal Shareholder in Franchisee, in whole or in part (whether voluntarily or
by operation of law), directly, indirectly or contingently, except in accordance
with the provisions of this Section 12. "Transfer" and "Interest" are defined in
Subsections  12.2, 12.3 and 12.4. Any proposed Transfer also shall be subject to
the provisions of the Development  Agreement,  which are incorporated  herein by
reference.

       12.2 Except as provided in  Subsection  12.3,  "Transfer"  shall mean any
assignment,  sale,  pledge,  hypothecation,  gift or any other event which would
change  ownership  of or  change or create a new  Interest,  including,  but not
limited to:

               (a) any change in the  ownership of or rights in or to any shares
       of stock or other equity  interest in Franchisee  which would result from
       the act of any shareholder of Franchisee ("Shareholder"), such as a sale,
       exchange, pledge or hypothecation of shares, or any interest in or rights
       to any of Franchisee's  profits,  revenues or assets,  or any such change
       which would result by operation of law; and

               (b)  any  change  in  the   percentage   interest  owned  by  any
       Shareholder  in the shares of stock of  Franchisee,  or  interests in its
       profits, revenues or assets which would result from any act of Franchisee
       such as a sale,  pledge or hypothecation of any Restaurant  assets (other
       than a pledge of assets to secure bona fide loans made or credit extended
       in  connection  with  acquisition  of the assets  pledged,  provided that
       immediately before and after such transaction the net worth of Franchisee
       shall not be less than the amount which is reflected on the Balance Sheet
       referred to in Subsection 11.1 of this  Agreement);  any sale or issuance
       of any shares of Franchisee's  stock; the retirement or redemption of any
       shares of  Franchisee's  stock; or any sale or grant to any person of any
       right to participate  in or otherwise to share or become  entitled to any
       part of Franchisee's profits, revenues, assets or equity.

       12.3  "Transfer"  shall not include (a) a change in the  ownership  of or
rights to any shares or other equity interest in Franchisee pursuant to a public
offering of Franchisee's securities registered under the Securities Act of 1933,
or (b) a change in the ownership of or rights to any  securities or other equity
interest in Franchisee pursuant to a private offering of Franchisee's securities
exempted from  registration  under such Act,  provided that Franchisee  provides
Franchisor  with a copy of its prospectus  and/or  offering  memorandum ten (10)
days  prior to its  filing  with  the  Securities  and  Exchange  Commission  or
circulation  to third parties so that  Franchisor may comment and, if necessary,
correct any information  concerning  Franchisor  and/or the System,  and further
provided  that  after  giving  effect to such  public or private  offering,  the
Principal  Shareholders,  or any of them, "control" Franchisee.  For purposes of
this Section 12,  "control" means either (1) owning legal and equitable title to
fifty-one  percent  (51%)  or  more  of the  outstanding  voting  securities  of
Franchisee,  which are not subject to a proxy  granted to or  contract  with any
other person or party  granting that party the right to vote part or all of such
securities,  or (2) having and  continually  exercising  the  contractual  power
presently to designate a majority of the directors of Franchisee.

                                      F-18
<PAGE>

       12.4  "Interest"  shall mean:  when  referring  to interests or rights in
Franchisee,  any shares of  Franchisee's  stock and any other equitable or legal
right in or to any of  Franchisee's  stock,  revenues,  profits or assets;  when
referring  to  rights or assets of  Franchisee,  Franchisee's  rights  under and
interest in this Agreement, the Restaurant and its revenues, profits and assets.

       12.5 (a) The Interest of a Principal  Shareholder  may be  transferred to
such  Principal  Shareholder's  spouse or children or to a person  designated in
such  Principal  Shareholder's  will or  trust  (individually  and  collectively
referred  to as a  "Successor"),  upon  such  Principal  Shareholder's  death or
permanent  incapacity,   without  Franchisor's  approval,   provided  that  such
Successor shall agree to be bound by the restrictions  contained in this Section
12,  and the  other  agreements  and  covenants  of the  Principal  Shareholders
contained in this Agreement.

               (b)  The  Interest  of  a  Principal   Shareholder   may  not  be
transferred to another  Principal  Shareholder  without  Franchisor's  approval,
which approval shall not be unreasonably withheld.

               (c) The  Interest  of a  Successor  may  only be  transferred  in
accordance with Subsection  12.5(b),  12.6, 12.7 or 12.8,  regardless of whether
such Transfer is for consideration or by gift or will or other device.

       12.6 If at any time the Principal  Shareholders  desire to dispose of all
or  substantially  all  of  the  Interests  of  the  Principal  Shareholders  in
Franchisee,  or the Principal  Shareholders (or Franchisee) desire to dispose of
all or  substantially  all of Franchisee's  Interest in this Agreement or in the
assets  which  Franchisee  has  acquired  as a  result  of this  Agreement,  the
Principal  Shareholders  or  Franchisee,  as  the  case  may  be,  shall  notify
Franchisor of that desire,  in writing,  thirty (30) days before announcing that
fact publicly or engaging the services of a broker or sales agent.

       12.7 (a) If at any time any of the Principal  Shareholders or Franchisee,
as the case may be,  obtains  from a third  party or third  parties  a bona fide
offer (the "Offer") in writing for the purchase of all or  substantially  all of
the Interests of the Principal  Shareholders  in Franchisee,  or of Franchisee's
Interest in this  Agreement or in the assets which  Franchisee has acquired as a
result of this Agreement,  the Principal  Shareholders or Franchisee  shall give
notice  (the  "Selling  Notice")  to  Franchisor   stating  that  the  Principal
Shareholders  or  Franchisee,  as the  case may be,  have  received  the  Offer,
identifying  the  prospective  purchaser  by name and  address,  specifying  the
proposed purchase price and attaching a true and complete copy of the Offer.

               (b) Franchisor  shall have an option to purchase (the  "Option"),
exercisable within a period of forty-five (45) days after receipt of the Selling
Notice (the "Option Period"),  such Interests at the price and on the conditions
set forth in the Offer, except that Franchisor shall not be obligated to pay any
finder's or broker's fee, and if the Offer provides for payment of consideration
other  than  cash,  or  if  the  Offer  involves  certain  intangible  benefits,
Franchisor may elect to purchase such Interests by offering a reasonable  dollar
value substitute including,  at Franchisor's option, cash or the common stock or
other  securities  of  the  Franchisor  or  any  combination   thereof  for  the
non-cash/intangible benefits part of the Offer.

                                      F-19
<PAGE>

               (c) The Option shall be exercisable  by Franchisor  delivering to
the Principal Shareholders or Franchisee,  as the case may be, within the Option
Period,  a notice  (i)  stating  that the  Option is being  exercised,  and (ii)
specifying  the time,  date and place at which such  purchase and sale will take
place, which date shall be within forty-five (45) days after Franchisor delivers

such notice.  Franchisee shall provide  Franchisor  access to and copies of such
information and  documentation  Franchisor shall request regarding the purchase.
The  forty-five  (45)  day  limitation  described  at the  end of the  preceding
sentence  shall not apply if at the end of said  forty-five  (45) day period the
only issue which  prevents  completion  of the  purchase and sale is the need to
effect  transfers  of the  applicable  liquor  licenses.  In the event of such a
delay,  the purchase  and sale shall take place  within seven (7) business  days
after those liquor licenses have been transferred.

               (d) If the Option is not exercised, the Principal Shareholders or
Franchisee,  as the case may be, may sell the  Interests in or of  Franchisee to
the third party which made the Offer,  on  conditions  no more  favorable to the
third-party offerer than those set forth in the Offer,  provided that Franchisor
approves the proposed  transferee in  accordance  with the criteria set forth in
Appendix B and provided  further  that such sale takes place within  ninety (90)
days after the expiration of the Option  Period.  The ninety (90) day limitation
described in the preceding sentence shall not apply if at the end of said ninety
(90) day period the issue which prevents  completion of the purchase and sale is
either the need to effect transfers of the applicable liquor licenses or consent
or approval of the transaction by a state or federal  regulatory  agency. In the
event of such a delay,  the  purchase and sale shall take place within seven (7)
business days after those issues have been resolved or waived by Franchisor.

               (e) If the Option is not exercised, the Principal Shareholders or
Franchisee,  as the case may be, shall immediately  notify Franchisor in writing
of any  change  in the terms of an  Offer.  Any  change in the terms of an Offer
shall cause it to be deemed a new Offer, conferring upon Franchisor a new Option
pursuant to this  Subsection  12.7;  the Option  Period with  respect to the new
Option  shall be  deemed to  commence  on the day on which  Franchisor  receives
written notice of a change in the terms of the original Offer. Provided however,
in such an instance,  Franchisor  shall provide  Franchisee its response  within
fifteen  (15) days  after  Franchisor's  receipt of all of the  modified  terms,
unless such  changes are deemed  material  by  Franchisor  and in such an event,
Franchisor  shall have a forty-five  (45) day period within which to review said
changes.

       12.8 (a)  Franchisee  understands  and  acknowledges  that the rights and
duties  set  forth  in this  Agreement  are  personal  to  Franchisee  and  that
Franchisor has entered into this Agreement in reliance on the business skill and
financial capability of Franchisee, and the business skill, financial capability
and  personal  character  of each  Principal  Shareholder.  Except as  otherwise
provided  in this  Section  12, the  Principal  Shareholders  shall at all times
retain control of Franchisee.  Except as otherwise  provided in this Section 12,
no Transfer of any part of  Franchisee's  Interest in this  Agreement  or in the
Restaurant, and no Transfer of any Interest of any Principal Shareholder,  shall
be completed  except in accordance  with this  Subsection  12.8. In the event of
such a proposed Transfer of any part of Franchisee's  Interest in this Agreement
or in the Restaurant, or of any Interest of any Principal Shareholder, the party
or parties  desiring to effect such  Transfer  shall give  Franchisor  notice in
writing of the  proposed  Transfer,  which  notice  shall set forth the name and

                                      F-20

<PAGE>

address of the proposed transferee, its financial condition, including a copy of
its financial  statement  dated not more than ninety (90) days prior to the date
of said notice, and all the terms and conditions of the proposed Transfer.  Upon
receiving such notice, Franchisor may (i) approve the Transfer, or (ii) withhold
its consent to the Transfer.  Franchisor  shall,  within forty-five (45) days of
receiving such notice and all of the information  required  therein,  advise the
party or parties  desiring to effect the  Transfer  whether it (1)  approves the
Transfer,  or (2) withholds its consent to the Transfer,  giving the reasons for
such  disapproval.  Failure  of  Franchisor  to so advise  said party or parties
within that  forty-five (45) day period shall be deemed to be an approval of the
proposed Transfer. Appendix B sets forth the criteria for obtaining Franchisor's
consent to a proposed Transfer.

               (b) In the event that Franchisor  approves the Transfer,  and the
Transfer is not completed within ninety (90) days of the later of (i) expiration
of the  forty-five  (45) day  notice  period,  or (ii)  delivery  of  notice  of
Franchisor's  approval of the proposed  Transfer,  Franchisor's  approval of the
proposed Transfer shall automatically be revoked. The ninety (90) day limitation
described in the preceding sentence shall not apply if at the end of said ninety
(90) day period the only issue which prevents  completion of the Transfer is the
need to effect transfers of the applicable liquor licenses. In the event of such
a delay,  the Transfer  shall take place  within  seven (7) business  days after
those liquor licenses have been transferred. Any subsequent proposal to complete
the  proposed  Transfer  shall be subject to  Franchisor's  right of approval as
provided herein.  The party which desires to effect the proposed  Transfer shall
immediately  notify  Franchisor  in  writing  of any  change  in the  terms of a
Transfer.  Any change in the terms of a Transfer prior to closing shall cause it
to be  deemed  a  new  Transfer,  revoking  any  approval  previously  given  by
Franchisor and conferring  upon Franchisor a new right to approve such Transfer,
which  shall be  deemed  to  commence  on the day on which  Franchisor  receives
written notice of such changes in terms.

       12.9 In  connection  with any  request  for  Franchisor's  approval  of a
proposed  Transfer  pursuant to this  Section  12, the  parties to the  proposed
Transfer shall pay Franchisor a nonaccountable  fee to defray the actual cost of
review and the administrative and professional  expenses related to the proposed
Transfer and the preparation and execution of documents and agreements,  up to a
maximum of two thousand five hundred dollars ($2,500).

                                      F-21

<PAGE>

13.    CONFIDENTIALITY; RESTRICTIONS

       13.1 Franchisee and its Principal Shareholders  acknowledge that over the
term of  this  Agreement  they  are to  receive  proprietary  information  which
Franchisor has developed over time at great expense,  including, but not limited
to, information regarding the System,  methods of site selection,  marketing and
public relations  methods,  product analysis and selection,  and service methods
and skills  relating to the  development  and  operation  of  restaurants.  They
further  acknowledge  that  this  information,   which  includes,   but  is  not
necessarily limited to, that contained in the Manuals, is not generally known in
the industry and is beyond their own present skills and experience,  and that to
develop  it  themselves  would  be  expensive,  time  consuming  and  difficult.
Franchisee  and  its  Principal   Shareholders   further  acknowledge  that  the
Franchisor's  information provides a competitive  advantage and will be valuable
to them in the development of their  business,  and that gaining access to it is
therefore  a  primary  reason  why  they  are  entering  into  this   Agreement.
Accordingly,  Franchisee and its Principal  Shareholders agree that Franchisor's
information,  as described above,  which may or may not be "trade secrets" under
prevailing judicial  interpretations or statutes,  is private and valuable,  and
constitutes trade secrets belonging to Franchisor. Accordingly, in consideration
of  Franchisor's  confidential  disclosure  to  them  of  these  trade  secrets,
Franchisee  and  Principal   Shareholders  agree  as  follows  (subject  to  the
provisions  of the  Development  Agreement  and any  other  franchise  agreement
between Franchisor and Franchisee):

               (a) During the term of this Agreement, neither Franchisee nor any
       Principal Shareholder,  for so long as such Principal Shareholder owns an
       Interest  in  Franchisee,  may,  without  the prior  written  consent  of
       Franchisor, directly or indirectly engage in, or acquire any financial or
       beneficial    interest   (including   any   interest   in   corporations,
       partnerships,  trusts, unincorporated associations or joint ventures) in,
       advise,  help,  guarantee loans or make loans to, any restaurant business
       whose  menu or  method  of  operation  is  similar  to that  employed  by
       restaurant  units  within the System  which is either (i)  located in the
       Territory,  as defined in the Development Agreement,  (ii) located in the
       Area of Dominant  Influence (as defined and established from time to time
       by Arbitron Ratings Company) of any restaurant  developed pursuant to the
       Development Agreement, (iii) located within a five (5) mile radius of any
       restaurant  unit within the System,  or (iv)  determined  by  Franchisor,
       exercising  reasonable good faith judgment,  to be a direct competitor of
       the System.

               (b)  Neither   Franchisee,   for  two  (2)  years  following  the
       termination of this Agreement, nor any Principal Shareholder, for two (2)
       years  following  the  termination  of all of  his  or  her  Interest  in
       Franchisee or the termination of this Agreement,  whichever occurs first,
       may  directly  or  indirectly  engage in, or  acquire  any  financial  or
       beneficial    interest   (including   any   interest   in   corporations,
       partnerships,  trusts, unincorporated associations or joint ventures) in,
       advise,  help,  guarantee loans or make loans to, any restaurant business
       whose  menu or  method  of  operation  is  similar  to that  employed  by
       restaurant  units  within the System  which is located  either (i) in the
       Territory,  as defined in the Development Agreement,  (ii) in the Area of
       Dominant  Influence  (as  defined  and  established  from time to time by
       Arbitron  Ratings  Company) of any restaurant  developed  pursuant to the
       Development  Agreement,  (iii)  within  a five  (5)  mile  radius  of any
       restaurant  unit within the System,  or (iv) within any area for which an
       active,  currently  binding  development  agreement  has been  granted by
       Franchisor to another franchisee as of the date of the termination.

                                      F-22
<PAGE>

               (c) Neither  Franchisee nor any Shareholder shall at any time (i)
       appropriate or use the trade secrets  incorporated in the System,  or any
       portion  thereof,  in any  restaurant  business  which is not  within the
       System,  (ii) disclose or reveal any portion of the System to any person,
       other than to Franchisee's  Restaurant  employees as an incident of their
       training,  (iii)  acquire  any  right  to use any  name,  mark  or  other
       intellectual property right which is or may be granted by this Agreement,
       except  in  connection  with the  operation  of the  Restaurant,  or (iv)
       communicate, divulge or use for the benefit of any other person or entity
       any  confidential  information,  knowledge  or  know-how  concerning  the
       methods of development or operation of a restaurant utilizing the System,
       which may be  communicated by Franchisor in connection with the franchise
       granted hereunder.

       13.2 Franchisee and Principal  Shareholders  agree that the provisions of
this Section 13 are and have been a primary  inducement  to  Franchisor to enter
into this Agreement, and that in the event of breach thereof Franchisor would be
irreparably injured and would be without adequate remedy at law.  Therefore,  in
the event of a breach,  or a  threatened  or  attempted  breach,  of any of such
provisions Franchisor shall be entitled, in addition to any other remedies which
it may have  hereunder or at law or in equity  (including the right to terminate
this Agreement),  to a preliminary and/or permanent  injunction and a decree for
specific performance of the terms hereof without the necessity of showing actual
or  threatened  damage,  and without  being  required to furnish a bond or other
security.

       13.3 The restrictions contained in Subsection 13.1(a) and (b) above shall
not apply to  ownership of less than two percent (2%) of the shares of a company
whose  shares are listed and traded on a national  securities  exchange  if such
shares are owned for investment only, and are not owned by an officer, director,
employee, or consultant of such publicly traded company.

       13.4 If any court or other tribunal having  jurisdiction to determine the
validity  or  enforceability  of this  Section  13  determines  that it would be
invalid or unenforceable as written,  then the provisions hereof shall be deemed
to be modified or limited to such extent or in such manner as necessary for such
provisions to be valid and enforceable to the greatest extent possible.

                                      F-23

<PAGE>

       13.5 Franchisee  shall require the General  Manager,  the Kitchen Manager
and each of its Restaurant  managers to execute a  confidentiality  agreement in
the form attached  hereto as Appendix C.  Franchisee  shall be  responsible  for
compliance of its employees with the agreements identified in this Subsection.

14.      INSPECTIONS

       14.1 Franchisor  shall have the right at any time, and from time to time,
to have its representatives enter the Restaurant premises without notice for the
purpose of inspecting the condition  thereof and the operation of the Restaurant
in order to determine  whether  Franchisee is in compliance  with the standards,
specifications, requirements and instructions contained in this Agreement and in
the Manuals,  and for any other reasonable  purpose connected with the operation
of the Restaurant.

       14.2 Without limiting the generality of Subsection 14.1, a representative
of Franchisor  shall be present in the Restaurant to consult with  Franchisee or
its General Manager once each calendar  quarter and, at least  semi-annually,  a
representative  shall  conduct an  inspection/  consultation  at the  Restaurant
(which  may be  conducted  with or  without  notice).  During  such  inspection,
Franchisor's  representative  will inspect the condition of the  Restaurant  and
observe   procedures  and  operations  at  the   Restaurant.   Also  during  the
inspection/consultation,  Franchisor's representative will meet with the General
Manager and such other Restaurant  employees as Franchisor's  representative may
designate,  for the purpose of  evaluating  the  condition  and operation of the
Restaurant  and seeking to maintain or achieve  compliance  with the  standards,
specifications, requirements and instructions contained in this Agreement and in
the Manuals.

       14.3 Without  limiting the  generality of Subsection  14.1,  Franchisor's
representatives  shall have the right at all times during normal  business hours
to confer with Restaurant  employees and customers,  and to inspect Franchisee's
books,  records  and tax  returns,  or such  portions  thereof as pertain to the
operation of the  Restaurant.  All such books,  records and tax returns shall be
kept and  maintained  at the principal  executive  offices of Franchisee or such
other place as may be agreed upon by the parties in writing.  If any  inspection
reveals that the gross sales  reported in any report or statement  are less than
the actual gross sales ascertained by such inspection, then the Franchisee shall
immediately pay Franchisor the additional  amount of fees owing by reason of the
understatement  of gross sales  previously  reported,  together with interest as
provided  in  Subsection  9.2.  In  the  event  that  any  report  or  statement
understates  gross  sales by more than three  percent  (3%) of the actual  gross
sales ascertained by Franchisor's  inspection,  Franchisee shall, in addition to
making the payment provided for in the immediately  preceding sentence,  pay and
reimburse  Franchisor for any and all expenses  incurred in connection  with its
inspection, including, but not limited to, reasonable accounting and legal fees.
Such payments  shall be without  prejudice to any other rights or remedies which
Franchisor may have under this Agreement or otherwise. If any inspection reveals
that the gross sales  reported in any report or  statement  are greater than the
actual gross sales ascertained by such inspection,  and that Franchisee  thereby
has  made an  overpayment  of  fees,  the  amount  of the  overpayment  (without
interest) shall be offset against future fees owing by Franchisee to Franchisor.

                                      F-24
<PAGE>

       14.4 Franchisee  shall maintain an accurate stock register.  In the event
that the beneficial  ownership of Franchisee's stock differs in any respect from
record ownership,  Franchisee also shall maintain a list of the names, addresses
and interests of all beneficial  owners of its stock.  Franchisee  shall produce
its  stock  register,  and  any  list  of  beneficial  owners  certified  by the
corporation's  secretary to be correct,  at its principal executive offices upon
ten (10) days prior written request by Franchisor.  Franchisor's representatives
shall have the right to examine the stock  register  and any list of  beneficial
owners,  and to reproduce all or any part thereof.  Further,  upon ten (10) days
written notice,  Franchisor may request a copy of the list of  stockholders  and
owners of beneficial  interests to be forwarded to it at Franchisor's  principal
office.

15.    RELATIONSHIP OF PARTIES AND INDEMNIFICATION

       15.1 Franchisee is not, and shall not represent or hold itself out as, an
agent, legal  representative,  joint venturer,  partner,  employee or servant of
Franchisor  for any purpose  whatsoever  and,  where  permitted by law to do so,
shall file a  business  certificate  to such  effect  with the proper  recording
authorities.  Franchisee is an  independent  contractor and is not authorized to
make  any  contract,   agreement,   warranty  or  representation  on  behalf  of
Franchisor,  or to create  any  obligation,  express  or  implied,  on behalf of
Franchisor.  Franchisee  agrees  that  Franchisor  does not  have any  fiduciary
obligation  to  Franchisee.   Franchisee  shall  not  use  the  name  Applebee's
Neighborhood  Grill & Bar (other than in  connection  with the  operation of the
Restaurant), or Applebee's International,  Inc., or any similar words as part of
or in association  with any trade name of any business entity which is, directly
or indirectly, associated with Franchisee.

       15.2  Franchisee  shall  indemnify and hold harmless  Franchisor  and its
officers, directors, employees, agents, affiliates,  successors and assigns from
and  against (a) any and all claims  based  upon,  arising out of, or in any way
related  to the  operation  or  condition  of any  part  of  the  Restaurant  or
Restaurant  premises,   the  conduct  of  business  thereat,  the  ownership  or
possession of real or personal property,  and any negligent act,  misfeasance or
nonfeasance by Franchisee or any of its agents, contractors, servants, employees
or licensees  (including,  without limitation,  the performance by Franchisee of
any act required by, or performed pursuant to, any provision of this Agreement),
and (b) any and all fees (including reasonable attorneys' fees), costs and other
expenses  incurred  by or on behalf of  Franchisor  in the  investigation  of or
defense against any and all such claims.

       15.3 In addition to, and not in  limitation  of, any  subsection  hereof,
Franchisee specifically covenants, represents and warrants that Franchisee is in
compliance in all material respects with all federal, state, municipal and local
laws governing the  generation,  use or disposal of hazardous waste or hazardous
materials,  and any and all other laws designed to protect the  environment  and
that:

               (a)  There  have  been no  past,  and  there  are no  current  or
       anticipated,  releases or substantial threats of a release of a hazardous
       substance,  pollutant or contaminant  from or onto the Restaurant or real
       property  upon which the  Restaurant  is located and  referred to in this
       Agreement ("Premises") which is or may be subject to regulation under the
       Comprehensive Environmental Response,  Compensation and Liability Act (42
       U.S.C. 9601, et seq.) or other laws designed to protect the environment;

                                      F-25
<PAGE>

               (b) The Premises have not previously been used, are not now being
       used and are not  contemplated to be used for the treatment,  collection,
       storage or disposal of any refuse or objectionable waste so as to require
       a permit or approval from the Environmental Protection Agency pursuant to
       the Hazardous and Solid Waste  Amendments of 1984 (96 Stat.  3221) or any
       other  federal,  state,  county  or  municipal  agency  charged  with the
       responsibility of protecting the environment;

               (c) The Premises have not previously been used, are not now being
       used,  and  are  not   contemplated  to  be  used,  for  the  generation,
       transportation, treatment, storage or disposal of any hazardous waste;

               (d) No portion of the Premises are located on or over a "sanitary
       landfill"   or  an  "open  dump"  within  the  meaning  of  the  Resource
       Conservation and Recovery Act (42 U.S.C. 6941 et seq.), as amended by the
       Hazardous and Solid Waste Amendments of 1984 (96 Stat. 3221);

               (e) No asbestos fibers or materials or polychlorinated  biphenyls
       (PCB's) are on or in the Premises;

               (f) There have not been,  nor are there  presently  pending,  any
       federal or state  enforcement  actions  against the Premises,  nor is the
       Franchisee  or  its  Landlord,   if  any,   subject  to  any  outstanding
       administrative   orders  which  require  ongoing  compliance  efforts  in
       connection with compliance with laws designed to protect the environment;

               (g) The  Franchisee  has not entered into any consent  decrees or
       administrative   consent   orders  with  any  agency   charged  with  the
       responsibility of protecting the environment;

               (h) There  have not been any  notices  of  violation  sent to the
       Franchisee under the Citizens Suit Provisions of any statute;

               (i) The Franchisee has not received any request for  information,
       notice  or  demand   letters  for   administrative   inquiries  from  any
       governmental entity with regard to its environmental practices;

               (j) The Franchisee has maintained all required records under each
       and every applicable environmental statute and is in full compliance with
       all environmental  permits issued to it by any governmental or regulatory
       agency;

               (k) The  Franchisee  maintains all  insurance  policies as may be
       required by any applicable law governing the environment;

               (l) The Franchisee has no reason to believe that any operation of
       equipment  on or at the  Premises  may be the cause of a future  spill or
       release of a pollutant;

               (m) The  Franchisee  has not in the  past,  nor is it  presently,
       generating, transporting or disposing of a hazardous substance as defined
       by Section 9601(12) of CERCLA; and

               (n) The Franchisor shall have the right, at Franchisee's expense,
       to  require  an  environmental  audit of the  Premises  from a company or
       companies satisfactory to Franchisor.

                                      F-26
<PAGE>

16.    INSURANCE

       16.1  Franchisee  shall  procure  before the  commencement  of Restaurant
operations,  and shall  maintain in full force and effect during the entire term
of this Agreement, at its sole cost and expense, an insurance policy or policies
protecting  Franchisee and Franchisor and their respective  officers,  directors
and employees against any and all claims, loss, liability or expense whatsoever,
arising out of or in connection with the condition,  operation, use or occupancy
of the  Restaurant or Restaurant  Premises.  Franchisee  shall procure  workers'
compensation  coverage for each of its employees no later than the first date of
such employee's employment. Franchisee shall also insure the Restaurant building
and other  improvements,  equipment,  signs,  interior and exterior decor items,
furnishings and fixtures, and any additions thereto, in accordance with standard
fire and  extended  coverage  insurance  policies  then in  effect  for  similar
businesses.  Franchisor  shall  be named as an  additional  insured  in all such
policies, workers' compensation excepted, and the certificate or certificates of
insurance  shall  state  that the  policy or  policies  shall not be  subject to
cancellation  or  alteration  without at least  thirty  (30) days prior  written
notice to Franchisor.  Such policy or policies shall be written by a responsible
insurance company or companies satisfactory to Franchisor,  and shall be in such
form and contain such limits of liability as shall be satisfactory to Franchisor
from time to time. In any event,  such policy or policies shall include at least
the following:

      KIND OF INSURANCE                       MINIMUM LIMITS OF LIABILITY

      Workers' Compensation                   Statutory

      Employer's Liability                    $500,000 bodily injury by accident
                                              $500,000 bodily injury by disease

      General Public Liability,               $1,000,000 each person,
      including Product Liability,            $1,000,000 each incident
      Injury and Liquor Liability             $2,000,000 aggregate

      Fire and Extended Coverage              Full replacement value

      Umbrella Liability Insurance            $10,000,000

Franchisee  shall,  upon  request,  exhibit  certificates  of such  insurance to
Franchisor.  The insurance afforded by the policy or policies  respecting public
liability  shall not be limited in any way by reason of any insurance  which may
be maintained by Franchisor.

       16.2 Within sixty (60) days after the execution of this Agreement, but in
no event later than the day before the Restaurant opens for business, Franchisee
shall submit to  Franchisor  for  approval  certificates  of  insurance  showing
compliance  with  the  requirements  of  Subsection  16.1.  Notwithstanding  the
foregoing,  Franchisee  shall submit to Franchisor for approval  certificates of
insurance  showing  compliance with the worker's  compensation  requirements set
forth in Subsection  16.1 prior to the training of any Franchisee  employee at a
Restaurant  operated  by  Franchisor.  Maintenance  of  such  insurance  and the
performance  by  Franchisee of its  obligations  under this Section 16 shall not
relieve  Franchisee  of  liability  under  the  indemnity   provisions  of  this
Agreement, and shall not limit such liability.

                                      F-27
<PAGE>

       16.3 Should Franchisee,  for any reason,  fail to procure or maintain the
insurance  coverage  required by this Section,  then  Franchisor  shall have the
right and authority to immediately procure such insurance coverage and to charge
the cost thereof to  Franchisee,  which amounts shall be paid  immediately  upon
notice and shall be subject to charges for late payments in the manner set forth
in Subsection 9.2.

       16.4 No later than thirty  (30) days  following  Franchisee's  receipt of
same,  Franchisee  shall  submit  to  Franchisor  a copy of any  written  report
relating to the condition of the  Restaurant  premises,  or any aspect  thereof,
prepared  by an  insurer or  prospective  insurer  or by a  representative  of a
federal,  state or local  government  agency,  provided  that if any such report
contains comments or information which could materially and detrimentally affect
the  Restaurant,  such report shall be submitted to Franchisor  within three (3)
days following Franchisee's receipt thereof.

17.    DEBTS AND TAXES

       Franchisee  shall  pay  or  cause  to  be  paid  promptly  when  due  all
obligations incurred,  directly or indirectly, in connection with the Restaurant
and its operation,  including, without limitation, (a) all taxes and assessments
that  may  be  assessed  against  the  Restaurant   land,   building  and  other
improvements,  equipment,  fixtures, signs, furnishings, and other property; (b)
all liens and encumbrances of every kind and character created or placed upon or
against any of said property,  and; (c) all accounts and other  indebtedness  of
every kind and  character  incurred by or on behalf of Franchisee in the conduct
of the Restaurant business.  Notwithstanding the foregoing,  Franchisee will not
be in default of this Agreement as a result of a non-payment or  non-performance
of the  foregoing  so long as it disputes  said debt or lien and is, in the sole
opinion of  Franchisor,  validly and in good faith pursuing a resolution of said
claim or lien  and has  reserved  sufficient  sums to pay the  debt/claim  as is
agreed to by Franchisor.

                                      F-28
<PAGE>

18.      TRADE NAMES, SERVICE MARKS AND TRADEMARKS

       18.1 Franchisee  acknowledges  the sole and exclusive right of Franchisor
(except for rights  granted under existing and future  franchise  agreements) to
use  Franchisor's  trade names,  service marks and trademarks in connection with
the products and services to which they are or may be applied by Franchisor, and
represents,  warrants and agrees that  Franchisee  shall not,  either during the
term of this  Agreement,  or after the expiration or other  termination  hereof,
directly or indirectly,  contest or aid in contesting the validity, ownership or
use thereof by  Franchisor,  or take any action  whatsoever in derogation of the
rights claimed herein by Franchisor.

       18.2  The  right  granted  to  Franchisee  under  this  Agreement  to use
Franchisor's  trade names,  service marks and  trademarks is  nonexclusive,  and
Franchisor, in its sole discretion, subject only to the limitations contained in
Subsection 1.4 of this Agreement, has the right to grant other rights in, to and
under those names and marks in addition to those rights already granted,  and to
develop  and  grant  rights  in other  names  and  marks on any such  terms  and
conditions  as  Franchisor  deems  appropriate.  The rights  granted  under this
Agreement  do not  include  any right or  authority  of any kind  whatsoever  to
pre-package or sell pre-packaged food products,  under any of Franchisor's names
or marks, or any menu items approved for sale at the Restaurant,  whether at the
Restaurant or at any other location.

       18.3 Franchisee  understands and  acknowledges and agrees that Franchisor
has the  unrestricted  right,  subject  only  to the  limitations  contained  in
Subsection 1.4 of this Agreement,  to engage,  directly and indirectly,  through
its  employees,   representatives,   licenses,   assigns,  agents,   affiliates,
subsidiaries  and  others,  at  wholesale,  retail,  and  otherwise,  in (a) the
production, distribution and sale of products under the names and marks licensed
hereunder  or other  names  or  marks,  (b) the use,  in  connection  with  such
production,  distribution  and sale,  of any and all  trademarks,  trade  names,
service marks, logos, insignia,  slogans,  emblems,  symbols,  designs and other
identifying  characteristics  as may be developed or used, from time to time, by
Franchisor  with  respect to the System or  otherwise,  and (c) the  production,
distribution  and sale of products  through  another  restaurant or  restaurants
which do not  utilize  the  System or the  Applebee's  Neighborhood  Grill & Bar
service mark and which otherwise compete or might compete with the Restaurant.

       18.4 Nothing  contained in this  Agreement  shall be construed to vest in
Franchisee any right,  title or interest in or to any of  Franchisor's  names or
marks, the goodwill now or hereafter associated  therewith,  or any right in the
design of any  restaurant  building or premises,  or the decor or trade-dress of
the Restaurant,  other than the rights and license  expressly granted herein for
the term hereof.  Any and all goodwill  associated  with or identified by any of
Franchisor's  names or marks shall inure directly and exclusively to the benefit
of  Franchisor,  including,  without  limitation,  any goodwill  resulting  from
operation and promotion of the Restaurant,  provided that this Subsection  shall
not  be  construed  to  entitle   Franchisor  to  receive  any  portion  of  the
consideration paid to Franchisee and/or any Principal Shareholder as a result of
a Transfer of an Interest pursuant to Section 12 hereof.

       18.5 Franchisee shall adopt and use Franchisor's  names and marks only in
a manner expressly approved by Franchisor, and shall not use any of Franchisor's
names or marks in connection  with any  statement or material  which may, in the
judgment of Franchisor, be in bad taste or inconsistent with Franchisor's public
image, or tend to bring disparagement, ridicule or scorn upon Franchisor, any of
Franchisor's names or marks, or the goodwill  associated  therewith.  Franchisee
shall not adopt, use or register as its corporate name (by filling a certificate
or articles of  incorporation or otherwise) any trade or business name, style or
design which includes, or is similar to, any of Franchisor's trademarks, service
marks, trade names, logos, insignia, slogans, emblems, symbols, designs or other
identifying characteristics.

       18.6 Franchisor  shall have the right, at any time and from time to time,
upon notice to Franchisee,  to make additions to,  deletions from and changes in
any of  Franchisor's  names or marks,  or all of them,  all of which  additions,
deletions  and changes  shall be made in good faith,  on a reasonable  basis and
with a view toward the overall best interests of the System. Franchisor will use
its best  efforts  to  protect  and  preserve  the  integrity  and  validity  of
Franchisor's  names  and  marks,  including  the  taking  of  actions  deemed by
Franchisor to be appropriate in the event of any apparent infringement of any of
Franchisor's names or marks.

                                      F-29

<PAGE>

       18.7 (a) Franchisor shall hold Franchisee  harmless from any liability or
expense (but excluding  consequential  damages) resulting from infringement of a
third party's  service  mark,  trade name or trademark by  Franchisor's  service
mark,  Applebee's  Neighborhood  Grill  & Bar,  or by any  other  service  mark,
trademark or trade name of Franchisor  which  Franchisor shall designate as part
of the System. This hold-harmless  indemnity shall not apply to any unauthorized
use by Franchisee of any such service mark, trade name or trademark.

               (b) Franchisee agrees to notify Franchisor promptly in writing of
any  suit  or  claim  for  infringement   which  is  within  the  scope  of  the
hold-harmless  indemnity set forth in this Subsection 18.7. Subject to the terms
and conditions of this Subsection 18.7,  Franchisor shall have the sole right to
defend or settle any such suit or claim of infringement at Franchisor's expense.
Franchisee,  at Franchisee's expense,  shall have the right to be represented by
counsel.  Franchisor  shall,  however,  retain control of any negotiations  with
respect  to such claim or of any  litigation  involving  such  suit.  Franchisee
agrees to cooperate with Franchisor and to assist Franchisor whenever reasonably
requested by Franchisor,  at  Franchisor's  expense,  in the defense of any such
infringement  suit or claim.  Franchisee  shall not enter into any settlement of
any such claim or suit or conduct any settlement  negotiations  relative thereto
without the prior approval of Franchisor in writing and, if Franchisee  does so,
the hold-harmless indemnity set forth in this Subsection 18.7 shall be deemed to
have been waived and released in all respects.

                                      F-30
<PAGE>

       18.8 Franchisor  represents that it is the sole owner of the service mark
Applebee's  Neighborhood  Grill & Bar. In the event that Franchisee is precluded
from operating the Restaurant because Franchisor  determines that a third person
has acquired rights under the law of any state in such mark,  which so precludes
Franchisee,  Franchisor  agrees (a) to repay to Franchisee the initial franchise
fee  paid by  Franchisee  with  respect  to the  Restaurant,  and (b) to  assist
Franchisee,  at Franchisee's  request,  in locating an alternative  site for the
Restaurant.

19.    EXPIRATION AND TERMINATION;
       OPTION TO PURCHASE RESTAURANT; ATTORNEYS' FEES

       19.1  Franchisor  shall  have  the  right  to  terminate  this  Agreement
immediately  upon  written  notice to  Franchisee  stating  the  reason for such
termination:

               (a)  in  the  event  of  any  breach  or  default  of  any of the
       provisions  of  Subsection  9.1,  Sections 12 or 13,  Subsection  14.1 or
       Section 23;

               (b) if a petition in bankruptcy,  an arrangement  for the benefit
       of creditors, or a petition for reorganization is filed by Franchisee, or
       is filed against  Franchisee  and not  dismissed  within ninety (90) days
       from the filing thereof,  or if Franchisee  shall make any assignment for
       the benefit of  creditors,  or if a receiver or trustee is appointed  for
       Franchisee  and  is  not  dismissed  within  ninety  (90)  days  of  such
       appointment;

               (c) if Franchisee  ceases to operate the  Restaurant  without the
       prior  written  consent of Franchisor or loses its right to possession of
       the Restaurant premises;  provided however, this provision will not apply
       if  Franchisee  ceases to operate  the  Restaurant  or loses its right to
       possession  of the  Restaurant  premises  by reason of Force  Majeure and
       Franchisee   complies  with  the  requirements  of  Section  24  of  this
       Agreement;

               (d) if Franchisor discovers that Franchisee has made any material
       misrepresentation  or omitted any material fact in the information  which
       was furnished to Franchisor in connection with this Agreement;

               (e) if any part of this Agreement relating to the payment of fees
       to Franchisor,  or the  preservation of any of Franchisor's  trade names,
       service marks,  trademarks,  trade secrets or secret formulae licensed or
       disclosed   hereunder   is,   for  any   reason,   declared   invalid  or
       unenforceable; or

               (f) if Franchisee or any Principal Shareholder is convicted of or
       pleads  nolo  contendere  to  a  felony  or  any  crime  involving  moral
       turpitude.

       If  Franchisee  defaults in the  performance  or observance of any of its
other  obligations  hereunder,  and such default continues for a period of sixty
(60) days after written notice to Franchisee specifying such default, Franchisor
shall have the right to terminate  this  Agreement upon thirty (30) days written
notice to Franchisee. If Franchisee defaults in the performance or observance of
the same  obligation  two (2) or more times  within a twelve (12) month  period,
Franchisor  shall have the right to terminate  this Agreement  immediately  upon
commission of the second act of default, upon thirty (30) days written notice to
Franchisee  stating the reason for such  termination,  without allowance for any
curative period.

       The  foregoing  provisions  of this  Subsection  19.1 are  subject to the
provisions  of any local  statutes or  regulations  which limit the grounds upon
which Franchisor may terminate this Agreement,  or which require that Franchisor
give Franchisee  additional  prior written notice of termination and opportunity
to cure any default.

                                      F-31
<PAGE>

       In the event of  termination  by reason of  Franchisee's  failure after a
good faith effort to obtain the  necessary  state or local  liquor  licenses (as
required  in  Section  23),  Franchisor  shall  refund  to  Franchisee,  without
interest,  the franchise fee payment referred to in Subsection 9.1(a),  less any
expenses  incurred and damages  sustained by Franchisor  in connection  with its
performance  hereunder prior to the date of such  termination.  Franchisor shall
also  repay  the  initial  franchise  fee  in  the  circumstances  described  in
Subsection  18.8  hereof.  In the event of  termination  for any  other  reason,
Franchisor  shall have no  obligation  to refund any amount  previously  paid by
Franchisee, and Franchisee shall be obligated to promptly pay all sums which are
then due Franchisor.

       19.2 Upon the termination of this Agreement by Franchisor, Franchisee may
not remove any property from the Restaurant  premises for thirty (30) days after
the  termination.  Upon the expiration or earlier  termination of this Agreement
for any reason:

               (a)  Franchisee  shall  immediately  discontinue  its  use of the
       System  and  its  use  of  Franchisor's   trade  names,   service  marks,
       trademarks, logos, insignia, slogans, emblems, symbols, designs and other
       identifying characteristics;

               (b) if the Restaurant  premises are owned by Franchisee or leased
       from a third party,  Franchisee shall, upon demand by Franchisor,  remove
       (at  Franchisee's  expense)  Franchisor's  trade  names,  service  marks,
       trademarks,  logos,  insignia,  slogans,  sign facia,  emblems,  symbols,
       designs and other  identifying  characteristics  from all  premises,  and
       paint all premises  and other  improvements  maintained  pursuant to this
       Agreement  a  design  and  color  which  is  basically   different   from
       Franchisor's  authorized  design and color.  If Franchisee  shall fail to
       make or cause to be made any such  removal or  repainting  within  thirty
       (30) days after written notice,  then Franchisor  shall have the right to
       enter  upon the  Restaurant  premises,  without  being  deemed  guilty of
       trespass  or  any  tort  (or  Franchisee  shall  cause  Franchisor  to be
       permitted  on the  premises as  necessary),  and make or cause to be made
       such removal,  alterations  and repainting at the  reasonable  expense of
       Franchisee,  which expense Franchisee shall pay to Franchisor immediately
       upon demand; and

               (c) Franchisee  shall not  thereafter  use any  trademark,  trade
       name, service mark, logo, insignia,  slogan,  emblem,  symbol,  design or
       other  identifying  characteristic  that  is in any way  associated  with
       Franchisor or similar to those  associated  with  Franchisor,  or use any
       food or proprietary  menu item,  recipe or method of food  preparation or
       operate or do business under any name or in any manner that might tend to
       give the public the  impression  that  Franchisee is or was a licensee or
       franchisee of, or otherwise associated with, Franchisor.

       19.3 In the event that any party to this  Agreement  initiates  any legal
proceeding to construe or enforce any of the terms, conditions and/or provisions
of this Agreement, including, but not limited to, its termination provisions and
its  provisions  requiring  Franchisee  to make certain  payments to  Franchisor
incident  to the  operation  of the  Restaurant,  or to obtain  damages or other
relief to which any such party may be entitled by virtue of this Agreement,  the
prevailing  party or parties shall be paid its  reasonable  attorneys'  fees and
expenses  by the other party or parties.  If  Franchisee  fails to comply with a
written notice of termination  sent by Franchisor and a court later upholds such
termination of this Agreement,  Franchisee's  operation of the Restaurant,  from
and  after  the date of  termination  stated in such  notice,  shall  constitute
willful  trademark  infringement  and  unfair  competition  by  Franchisee,  and
Franchisee  shall be  liable  to  Franchisor  for  damages  resulting  from such
infringement  in  addition  to any fees paid or  payable  hereunder,  including,
without   limitation,   any  profits   which   Franchisee   derived   from  such
post-termination operation of the Restaurant.

                                      F-32
<PAGE>

       19.4 (a) With respect to Restaurant premises owned by Franchisee,  in the
event of termination of this Agreement,  Franchisor  shall have, for thirty (30)
days after the  termination is effective,  an option,  exercisable  upon written
notice to  Franchisee  within such thirty (30) day period,  to elect to purchase
the  Restaurant  premises from  Franchisee for the fair market value of the land
and buildings, furnishings and equipment located therein.

               (b) In addition to the option described  above,  Franchisor shall
have an option,  exercisable  upon  written  notice to  Franchisee,  to elect to
purchase  the  Restaurant  premises  from  Franchisee  upon  expiration  of this
Agreement for the fair market value of the land and buildings,  furnishings, and
equipment  located  therein  subject  to  Franchisee's  option  to  operate  the
Restaurant for an additional  term under  Subsection  1.3 hereof.  If Franchisee
does not notify  Franchisor,  pursuant to Subsection 1.3 hereof,  of a desire to
operate the Restaurant for an additional term, then Franchisor shall provide the
written notice described in the preceding sentence within thirty (30) days after
the latest date by which  Franchisee  is required  by  Subsection  1.3 to advise
Franchisor of such a desire; if Franchisee does notify Franchisor of a desire to
operate the Restaurant for an additional  term and  Franchisor  determines  that
Franchisee is not eligible to do so, Franchisor shall provide the written notice
described  in the  preceding  sentence  within  thirty  (30) days of its written
notice to Franchisee  that  Franchisee is not eligible to operate the Restaurant
for such additional term. With respect to the option to purchase upon expiration
of this  Agreement,  this  option  shall not apply if prior to thirty  (30) days
before  said  expiration,  Franchisee  enters  into an  agreement  to sell  such
Restaurant  premises  to a third  party  upon the  expiration  of the  Franchise
Agreement,  provided that Franchisee's  agreement with the purchaser  includes a
covenant by the  purchaser,  which is expressly  enforceable  by Franchisor as a
third-party  beneficiary  thereof,  pursuant to which the purchaser agrees that,
for a period of twelve (12) months after the expiration of this  Agreement,  the
purchaser shall not use such premises for the operation of a restaurant business
whose menu or method of  operation  is similar to that  employed  by  restaurant
units within the System.

               (c) If  Franchisee  receives  approval to operate the  Restaurant
premises  for an  additional  term in  accordance  with  Subsection  1.3 hereof,
Franchisee  will be  required  to execute the  then-existing  form of  franchise
agreement,  which shall contain an option to obtain  assignment of  Franchisee's
lease with a third party and/or to purchase  certain  property,  exercisable  by
Franchisor upon  termination  thereof,  and an option to purchase the Restaurant
premises,  exercisable  by Franchisor  upon  expiration of the  additional  term
(subject to any then-existing rights to renew of Franchisee). Such options shall
be substantially similar to the provisions described in this Subsection 19.4.

               (d) If the parties  cannot agree on the  purchase  price or other
terms of purchase within thirty (30) days following Franchisor's exercise of its
option  pursuant to Subsection  19.4(a) and (b), the price or disputed  terms of
purchase shall be determined by three (3) appraisers,  with each party selecting
one (1) appraiser  and the two (2)  appraisers,  so chosen,  selecting the third
appraiser.  In the event of such an  appraisal,  each  party  shall bear its own
legal  and  other  costs  and  shall  split  equally  the  appraisal  fees.  The
appraisers'  determination  of the price and other  disputed  terms of  purchase
shall be final and binding.

                                     F-33
<PAGE>

               (e) If Franchisor  elects to exercise its option to purchase upon
termination  of this  Agreement,  the purchase price shall be paid within thirty
(30)  days of the  determination  of the  purchase  price  and  other  terms  of
purchase.  If  Franchisor  elects  to  exercise  its  option  to  purchase  upon
expiration  of this  Agreement,  the purchase  price shall be paid within thirty
(30) days of the later of (a) the  determination of the purchase price and other
terms of purchase,  or (b) expiration of this Agreement.  If the Franchisor does
not elect to  exercise  its option to  purchase  the  Restaurant  premises,  the
Franchisee may sell such premises to a third party,  provided that  Franchisee's
agreement  with the  purchaser  includes a covenant by the  purchaser,  which is
expressly  enforceable  by  Franchisor  as a  third-party  beneficiary  thereof,
pursuant to which the  purchaser  agrees that it shall not use such premises for
the  operation  of a  restaurant  business  whose menu or method of operation is
similar to that employed by  restaurant  units within the System for a period of
twelve (12) months after the termination or expiration of this Agreement.

               (f) If the  Restaurant  premises are leased by Franchisee  from a
third party, such lease must allow Franchisee to assign the lease to Franchisor.
Upon  termination  of this  Agreement for any reason,  Franchisor has the right,
exercisable  upon written  notice to  Franchisee  within  thirty (30) days after
termination  is  effective,  to require  Franchisee  to assign all  Franchisee's
rights  and  obligations  under  the  lease  to  Franchisor  and to  immediately
surrender  possession  of the  premises,  including  all fixtures and  leasehold
improvements,  to  Franchisor.  The lessor may not impose any  assignment fee or
other  similar  charge on  Franchisor in  connection  with such  assignment.  If
Franchisor  exercises that right,  it has an additional  right,  to be exercised
within thirty (30) days after taking possession of the premises, to purchase all
of Franchisee's equipment,  signs, decor items, furnishings,  supplies and other
products and materials at their  then-fair  market value.  If the parties cannot
agree on the  price,  the price  will be  determined  in the manner set forth in
connection with  Franchisee-owned  Restaurant premises. If Franchisor elects not
to purchase the items mentioned  above,  Franchisee  shall, at Franchisee's  own
expense and under Franchisor's  supervision remove those items from the premises
within  ten  (10)  days  after  such  final  election,  or ten (10)  days  after
expiration of the option period,  whichever is earlier.  If Franchisee  fails to
remove all such property from the premises within such period,  Franchisor shall
be  entitled  to do  so,  or to  authorize  a  third  party  to do  so,  all  at
Franchisee's expense.

       19.5  In addition to the provisions contained in Subsection 19.4 hereof:

                                      F-34
<PAGE>

               (a) With respect to Restaurant  premises owned by Franchisee,  in
       the event of termination of this Agreement and  Franchisor's  exercise of
       its option to purchase the  Restaurant  premises  pursuant to  Subsection
       19.4(a)  hereof,  Franchisee  shall  have,  for ten (10)  days  after its
       receipt  of written  notice of  Franchisor's  election  to  purchase,  an
       option,  exercisable  upon written  notice to  Franchisor,  to lease said
       premises to Franchisor,  pursuant to a lease which provides for rental at
       a rate not in excess of six  percent  (6%) of gross  sales and triple net
       terms.  Said lease  shall  provide  for a lease term of at least ten (10)
       years with two (2) five (5)-year options to renew, and for primary annual
       rent of not in excess of the number derived from  multiplying six percent
       (6%) times the gross sales reported by Franchisee to Franchisor for which
       Franchisee  has paid a royalty fee for the next  preceding  calendar year
       times eighty percent (80%).

               (b) In addition to the option described  above,  Franchisee shall
       have an option,  exercisable upon written notice to Franchisor,  to elect
       to lease the Restaurant  premises to Franchisor  upon  expiration of this
       Agreement  and  Franchisor's  exercise  of its  option  to  purchase  the
       Restaurant  premises pursuant to Subsection  19.4(b) hereof,  pursuant to
       the same  terms  set  forth  in  Subsection  19.5(a)  above,  subject  to
       Franchisee's  option to operate the  Restaurant  for an  additional  term
       under   Subsection  1.3  hereof.   If  (i)  Franchisee  does  not  notify
       Franchisor, pursuant to Subsection 1.3 hereof, of a desire to operate the
       Restaurant  for an  additional  term,  or  (ii)  Franchisee  does  notify
       Franchisor of a desire to operate the Restaurant  for an additional  term
       and Franchisor  determines  that Franchisee is not eligible to do so, and
       Franchisor exercises its option to purchase the Restaurant premises, then
       Franchisee  shall provide the written  notice  described in the preceding
       sentence  within  ten (10) days after its  receipt  of written  notice of
       Franchisor's  election to  purchase.  With respect to the option to lease
       upon expiration of this  Agreement,  this option shall not apply if prior
       to thirty  (30) days before said  expiration,  Franchisee  enters into an
       agreement  to sell such  Restaurant  premises  to a third  party upon the

       expiration  of  the  Franchise  Agreement,   provided  that  Franchisee's
       agreement with the purchaser includes a covenant by the purchaser,  which
       is expressly  enforceable  by  Franchisor  as a  third-party  beneficiary
       thereof,  pursuant to which the purchaser agrees, at Franchisor's option,
       either to lease said premises to  Franchisor  upon the terms set forth in
       Subsection  19.5(a), or that for a period of twelve (12) months after the
       expiration of this  Agreement,  the purchaser shall not use such premises
       for the  operation  of a  restaurant  business  whose  menu or  method of
       operation  is similar to that  employed by  restaurant  units  within the
       System.

                                      F-35
<PAGE>

               (c) If  Franchisee  receives  approval to operate the  Restaurant
       premises for an additional term in accordance with Subsection 1.3 hereof,
       Franchisee  will  be  required  to  execute  the  then-existing  form  of
       franchise agreement which shall contain an option to obtain assignment of
       Franchisee's  lease with a third party and/or to lease certain  property,
       exercisable  by Franchisor  upon  termination  thereof,  and an option to
       lease the Restaurant premises,  exercisable by Franchisor upon expiration
       of the additional term (subject to any  then-existing  rights to renew of
       Franchisee).   Such  options  shall  be  substantially   similar  to  the
       provisions described in this Subsection 19.5.

20.    NO WAIVER OF DEFAULT

       20.1 The waiver by any party to this  Agreement of any breach or default,
or series of breaches or defaults, of any term, covenant or condition herein, or
of any same or  similar  term,  covenant  or  condition  contained  in any other
agreement between Franchisor and any franchisee, shall not be deemed a waiver of
any  subsequent or  continuing  breach or default of the same or any other term,
covenant or condition  contained in this  Agreement,  or in any other  agreement
between Franchisor and any franchisee.

       20.2 All rights and remedies of the parties  hereto  shall be  cumulative
and not  alternative,  in addition to and not  exclusive  of any other rights or
remedies  which are  provided  for herein or which may be available at law or in
equity in case of any breach,  failure or default or threatened breach,  failure
or default of any term, provision or condition of this Agreement. The rights and
remedies of the parties hereto shall be continuing and shall not be exhausted by
any one (1) or more uses thereof,  and may be exercised at any time or from time
to time as often as may be expedient;  and any option or election to enforce any
such  right or  remedy  may be  exercised  or taken at any time and from time to
time.  The  expiration  or  earlier  termination  of this  Agreement  shall  not
discharge or release Franchisee or any Principal  Shareholder from any liability
or obligation then accrued, or any liability or obligation continuing beyond, or
arising out of, the expiration or earlier termination of the Agreement.

                                      F-36
<PAGE>

21.    CONSTRUCTION, SEVERABILITY, GOVERNING LAW AND JURISDICTION

       21.1 If any part of this  Agreement  shall  for any  reason  be  declared
invalid,  unenforceable  or impaired in any way, the  validity of the  remaining
portions  shall  remain in full  force and effect as if the  Agreement  had been
executed with such invalid  portion  eliminated,  and it is hereby  declared the
intention of the parties that they would have executed the remaining  portion of
this  Agreement  without  including  therein  any such  portions  which might be
declared invalid;  provided however,  that in the event any part hereof relating
to the payment of fees to Franchisor, or the preservation of any of Franchisor's
trade  names,  service  marks,  trademarks,  trade  secrets  or secret  formulae
licensed  or  disclosed   hereunder  is  for  any  reason  declared  invalid  or
unenforceable,  then Franchisor shall have the right to terminate this Agreement
upon written  notice to Franchisee.  If any clause or provision  herein would be
deemed  invalid or  unenforceable  as  written,  it shall be deemed  modified or
limited  to such  extent or in such  manner as may be  necessary  to render  the
clause or provision  valid and  enforceable to the greatest  extent  possible in
light of the  interest of the  parties  expressed  in that clause or  provision,
subject to the provisions of the preceding sentence.

       21.2 FRANCHISEE AND PRINCIPAL  SHAREHOLDERS  ACKNOWLEDGE  THAT FRANCHISOR
MAY  GRANT  NUMEROUS  FRANCHISES  THROUGHOUT  THE  UNITED  STATES  ON TERMS  AND
CONDITIONS  SIMILAR  TO THOSE  SET  FORTH IN THIS  AGREEMENT,  AND THAT IT IS OF
MUTUAL BENEFIT TO FRANCHISEE AND PRINCIPAL  SHAREHOLDERS  AND TO FRANCHISOR THAT
THESE TERMS AND  CONDITIONS  BE UNIFORMLY  INTERPRETED.  THEREFORE,  THE PARTIES
AGREE THAT TO THE EXTENT THAT THE LAW OF THE STATE OF KANSAS  DOES NOT  CONFLICT
WITH LOCAL FRANCHISE STATUTES, RULES AND REGULATIONS,  KANSAS LAW SHALL APPLY TO
THE  CONSTRUCTION  OF THIS AGREEMENT AND SHALL GOVERN ALL QUESTIONS  WHICH ARISE
WITH REFERENCE HERETO; PROVIDED HOWEVER, THAT PROVISIONS OF KANSAS LAW REGARDING
CONFLICTS OF LAW SHALL NOT APPLY HERETO.

       21.3 THE PARTIES AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT
OF OR RELATING TO THIS  AGREEMENT  OR THE  PERFORMANCE  THEREOF  WHICH CANNOT BE
AMICABLY SETTLED, EXCEPT AS OTHERWISE PROVIDED HEREIN, MAY, AT THE OPTION OF THE
CLAIMANT, BE RESOLVED BY A PROCEEDING IN A COURT IN JOHNSON COUNTY,  KANSAS, AND
FRANCHISEE AND PRINCIPAL  SHAREHOLDERS EACH IRREVOCABLY  ACCEPT THE JURISDICTION
OF THE  COURTS OF THE STATE OF KANSAS AND THE  FEDERAL  COURTS  SERVING  JOHNSON
COUNTY, KANSAS FOR SUCH CLAIMS, CONTROVERSIES OR DISPUTES.

       The parties agree that service of process in any  proceeding  arising out
of or relating to this  Agreement or the  performance  thereof may be made as to
Franchisee and any Principal Shareholder by serving a person of suitable age and
discretion  (such as the  person in  charge of the  office)  at the  address  of
Franchisee  specified  in this  Agreement  and as to  Franchisor  by serving the
president or a  vice-president  of Franchisor at the address of Franchisor or by
serving Franchisor's registered agent.

22.    INTERFERENCE WITH EMPLOYMENT RELATIONS

       During the term of this  Agreement,  neither  Franchisor  nor  Franchisee
shall employ or seek to employ in a managerial  position (i.e., in a position at
a pay  grade  at or  above  that of  Assistant  Restaurant  Manager  or  Kitchen
Manager),  directly or  indirectly,  any person who is at the time or was at any
time  during the prior six (6) months  employed by the other party or any of its
subsidiaries  or affiliates,  or by any  franchisee in the System.  This section
shall not be violated if, at the time Franchisor or Franchisee  employs or seeks

                                      F-37
<PAGE>

to employ such  person,  such  former  employer  has given its written  consent.
Notwithstanding  any other  provision  of this  Agreement,  the  parties  hereto
acknowledge  that if this Section is  violated,  such former  employer  shall be
entitled to liquidated damages equal to three (3) times the annual salary of the
employee involved, plus reimbursement of all costs and attorneys' fees incurred.
In addition to the rights granted to the parties hereto, the parties acknowledge
and agree that any  franchisee  from which an employee was hired by either party
to this  Agreement in violation of the terms of this Section  shall be deemed to
be a third-party  beneficiary of this provision and may sue and recover  against
the offending party the liquidated  damages herein set forth;  provided however,
the failure by  Franchisee  to enforce this Section  shall not be deemed to be a
violation of this Section.

23.    LIQUOR LICENSE

       The  grant of the  rights  which are the  subject  of this  Agreement  is
expressly  conditioned upon the ability of the Franchisee to obtain and maintain
any and all required state and/or local  licenses  permitting the sale of liquor
by the drink on the Restaurant  premises,  and Franchisee agrees to use its best
efforts to obtain such licenses.  In the event  Franchisee  fails,  after a good
faith effort,  to obtain any and all such required  liquor licenses prior to the
date on which the Restaurant is otherwise  ready to open for business,  then, at
the option of the  Franchisor,  this  Agreement may be  terminated  forthwith by
Franchisor upon written notice to Franchisee,  in which event,  Franchisor shall
refund to  Franchisee,  without  interest,  the  initial  franchise  fee payment
referred to in Subsection 9.1, less any expenses  incurred and damages sustained
by Franchisor in connection with its performance  hereunder prior to the date of
such termination.  After obtaining the necessary state or local liquor licenses,
Franchisee  shall  thereafter  comply with all applicable  laws and  regulations
relating to the sale of liquor on the Restaurant premises. If, during any twelve
(12) month period  during the term of this  Agreement,  Franchisee is prohibited
for any reason from  selling  liquor on the  Restaurant  premises  for more than
thirty (30) days because of a violation or  violations  of state or local liquor
laws,  then  at the  option  of  Franchisor  this  Agreement  may be  terminated
forthwith by Franchisor upon written notice to Franchisee.

24.    FORCE MAJEURE

       24.1 As used in this  Agreement,  the term "Force Majeure" shall mean any
act of God, strike, lock-out or other industrial  disturbance,  war (declared or
undeclared),  riot, epidemic,  fire or other catastrophe,  act of any government
and any other  similar  cause  not  within  the  control  of the party  affected
thereby.

                                      F-38
<PAGE>

       24.2  If the  performance  of any  obligation  by any  party  under  this
Agreement is prevented  or delayed by reason of Force  Majeure,  which cannot be
overcome by use of normal commercial measures,  the parties shall be relieved of
their  respective  obligations  to  the  extent  the  parties  are  respectively
necessarily  prevented or delayed in such performance  during the period of such
Force  Majeure.  The party  whose  performance  is affected by an event of Force
Majeure  shall give prompt notice of such Force Majeure event to the other party
by  facsimile,  telephone or telegram (in each case to be confirmed in writing),
setting forth the nature  thereof and an estimate as to its duration,  and shall
be liable for  failure to give such  timely  notice only to the extent of damage
actually caused.

       24.3  Notwithstanding  the provisions of this Section 24, if, as a result
of  an  event  of  Force  Majeure  (including  condemnation  proceedings),   the
Franchisee  ceases to operate the Restaurant or loses the right to possession of
the Restaurant  premises,  Franchisee  shall apply within thirty (30) days after
the  event of  Force  Majeure  for  Franchisor's  approval  to  relocate  and/or
reconstruct the Restaurant. If relocation is necessary, Franchisor agrees to use
its reasonable  efforts to assist  Franchisee in locating an alternative site in
the same  general  area where  Franchisee  can operate a  Restaurant  within the
System for the balance of the term of the Franchise Agreement.  If Franchisor so
assists  Franchisee,  Franchisee  shall reimburse  Franchisor for its reasonable
out-of-pocket  expenses incurred as a result thereof.  (This provision shall not
be  construed  to  prevent  Franchisee  from  receiving  the full  amount of any
condemnation  award  of  damages  relating  to the  closing  of the  Restaurant;
provided  however,  that if  Franchisor  or an  affiliate  is the  lessor of the
Restaurant  premises,  Franchisee  specifically waives and releases any claim it
may have for the value of any building,  fixtures and other  improvements on the
premises, whether or not installed or paid for by the Franchisee, and Franchisee
agrees  to  subordinate  any  claim it may have to  Franchisor's  claim for such
improvements.)  Selection of an alternative location will be subject to the site
approval  procedures set forth in Section 5 of the Development  Agreement.  Once
Franchisee has obtained Franchisor's approval to relocate and/or reconstruct the
Restaurant,  Franchisee must diligently pursue relocation and/or  reconstruction
until the Restaurant is reopened for business.

25.    MISCELLANEOUS

       25.1 All notices and other  communications  required or  permitted  to be
given  hereunder  shall be deemed given when  delivered in person,  by overnight
courier  service,  facsimile  transmission  or mailed by registered or certified
mail  addressed to the  recipient  at the address set forth  below,  unless that
party shall have given written notice of change of address to the sending party,
in which event the new address so specified shall be used.

       FRANCHISOR:         Applebee's International, Inc.
                           4551 W. 107th Street, Suite 100
                           Overland Park, Kansas  66207
                           Attention:  President

       FRANCHISEE:

       PRINCIPAL SHAREHOLDERS:

                                      F-39
<PAGE>

       25.2 All terms  used in this  Agreement,  regardless  of the  number  and
gender in which they are used,  shall be deemed  and  construed  to include  any
other number, singular or plural, and any other gender,  masculine,  feminine or
neuter,  as the context or sense of this  Agreement may require,  the same as if
such words had been written in this Agreement themselves.  The headings inserted
in this  Agreement  are for  reference  purposes  only and shall not  affect the
construction of this Agreement or limit the generality of any of its provisions.
The term  "business  day"  means any day other  than  Saturday,  Sunday,  or the
following   national   holidays:   New  Year's  Day,  Martin  Luther  King  Day,
Washington's Birthday,  Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving and Christmas.

       25.3 Franchisee shall, at its own cost and expense,  promptly comply with
all  laws,  ordinances,  orders,  rules,  regulations  and  requirements  of all
federal,   state  and  municipal   governments  and   appropriate   departments,
commissions,  boards and offices thereof. Without limiting the generality of the
foregoing, Franchisee shall abide by all applicable rules and regulations of any
public health department.

       25.4 In the event that  Franchisor has leased the Restaurant  premises to
Franchisee  pursuant to a written lease  agreement (the  "Lease"),  the Lease is
hereby incorporated in this Agreement by reference,  and any failure on the part
of  Franchisee  (Lessee  therein)  to  perform,  fulfill or  observe  any of the
covenants,  conditions or agreements  contained in the Lease shall  constitute a
material breach of this Agreement. It is expressly understood,  acknowledged and
agreed by Franchisee that any termination of the Lease shall result in automatic
and  immediate  termination  of this  Agreement  without  additional  notice  to
Franchisee.

       25.5 This Agreement and the documents  referred to herein  constitute the
entire  agreement  between the parties,  superseding  and  canceling any and all
prior   and   contemporaneous   agreements,   understandings,   representations,
inducements and statements,  oral or written,  of the parties in connection with
the subject matter hereof. FRANCHISEE EXPRESSLY ACKNOWLEDGES THAT IT HAS ENTERED
INTO THIS FRANCHISE  AGREEMENT AS A RESULT OF ITS OWN INDEPENDENT  INVESTIGATION
AND  AFTER  CONSULTATION  WITH  ITS OWN  ATTORNEY,  AND NOT AS A  RESULT  OF ANY
REPRESENTATIONS  OF  FRANCHISOR,  ITS AGENTS,  OFFICERS OR EMPLOYEES,  EXCEPT AS
CONTAINED HEREIN AND IN FRANCHISOR'S  FRANCHISE  OFFERING  CIRCULAR,  HERETOFORE
MADE AVAILABLE TO FRANCHISEE.

       25.6 Except as expressly  authorized herein, no amendment or modification
of this Agreement shall be binding unless executed in writing both by Franchisor
and by Franchisee and Principal Shareholders.

26.    ACKNOWLEDGMENTS

       Franchisee and Principal Shareholders acknowledge that:

                                      F-40
<PAGE>

               (a)  Franchisee has received a copy of this Agreement and has had
       an opportunity to consult with its attorney with respect thereto at least
       five (5) business days prior to execution of this Agreement;

               (b) No  representation  has  been  made by  Franchisor  as to the
       future profitability of the Restaurant;

               (c) Prior to the execution of this Agreement,  Franchisee has had
       ample opportunity to contact Franchisor's existing  franchisees,  if any,
       and to  investigate  all  statements  made by Franchisor  relating to the
       System;

               (d) This Agreement establishes the right to construct and operate
       a Restaurant only at the location specified in Subsection 1.1 hereof; and

               (e) Franchisor is the sole owner of the service marks  identified
       in  this  Agreement,  and  of  the  goodwill  associated  therewith,  and
       Franchisee  acquires no right, title or interest in those names and marks
       other  than the right to use them only in the  manner  and to the  extent
       prescribed and approved by Franchisor.

IN WITNESS  WHEREOF,  the undersigned have entered into this Agreement as of the
date first above written.

                                                 FRANCHISOR:
ATTEST:                                          APPLEBEE'S INTERNATIONAL, INC.
      --------------------------------

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

                                                 FRANCHISEE:

ATTEST:
      ---------------------------------

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

                                      F-41
<PAGE>

                                                 PRINCIPAL SHAREHOLDER(S):

Witness                                          Name:
                                                     ---------------------------

Witness                                          Name:
                                                     ---------------------------

Witness                                          Name:
                                                     ---------------------------

                                      F-42

<PAGE>

                        EXHIBIT 1 TO FRANCHISE AGREEMENT

                                   ROYALTY FEE

       The monthly  royalty fee to be paid by  Franchisee  shall be four percent
(4%) of each  calendar  month's  gross  sales;  provided  however,  on and after
January 1, 2003,  Franchisor may, in its sole  discretion,  increase the monthly
royalty fee to five percent (5%) of each calendar month's gross sales.

                                      F-43
<PAGE>

                        APPENDIX A TO FRANCHISE AGREEMENT
                        STATEMENT OF OWNERSHIP INTERESTS

                                          Percent of Issued
                                           and Outstanding
Shareholder                             Shares of Franchisee

                                      F-44

<PAGE>

                        APPENDIX B TO FRANCHISE AGREEMENT
                  REVIEW AND CONSENT WITH RESPECT TO TRANSFERS

         In  determining  whether to grant or to withhold  consent to a proposed
Transfer,  Franchisor shall consider all of the facts and circumstances which it
views as relevant in the particular instance, including, but not limited to, any
of the following:  (i) work experience and aptitude of Proposed New Owner and/or
proposed new  management  (a proposed  transferee  of a Principal  Shareholder's
Interest  and/or a proposed  transferee  of this  Agreement  is  referred  to as
"Proposed New Owner");  (ii) financial  background and condition of Proposed New
Owner,  and  actual  and pro forma  financial  condition  of  Franchisee;  (iii)
character and reputation of Proposed New Owner;  (iv)  conflicting  interests of
Proposed New Owner; (v) the terms and conditions of Proposed New Owner's rights,
if the  proposed  Transfer is a pledge or  hypothecation;  (vi) the  adequacy of
Franchisee's operation of any Restaurant and compliance with the System and this
Agreement; and (vii) such other criteria and conditions as Franchisor shall then
consider relevant in the case of an application for a new franchise to operate a
restaurant  unit within the System by an  applicant  that is not then  currently
doing  so.  Franchisor's  consent  also may be  conditioned  upon  execution  by
Proposed New Owner of an agreement  whereby  Proposed  New Owner  assumes  full,
unconditional,  joint and several  liability for, and agrees to perform from the
date of such  Transfer,  all  obligations,  covenants and  agreements  contained
herein to the same extent as if it had been an original  party to this Agreement
and may also  require  Franchisee  and  Principal  Shareholders,  including  the
proposed  Transferor(s),  to execute a general release which releases Franchisor
from any claims they may have had or then have against Franchisor.  In the event
Proposed New Owner is a  partnership  (including,  but not limited to, a limited
partnership), Proposed New Owner will also be required to execute an addendum to
the  Agreement  which amends the  references  to  Franchisee  and its  Principal
Shareholders to include the partnership  approved by Franchisor and Proposed New
Owner's  general  partner(s)  and  the  principal  shareholders  of the  general
partner(s),  if the general  partner(s)  is a  corporation.  This  addendum will
contain a provision  including in the definition of "Transfer"  the  withdrawal,
removal or  voluntary/involuntary  dissolution  (if  applicable)  of the general
partner(s) or the substitution or addition of a new general partner.  Franchisee
or Principal  Shareholders,  as the case may be, shall provide  Franchisor  with
such  information as it may require in connection with a request for approval of
a proposed Transfer.

                                      F-45
<PAGE>

                        APPENDIX C TO FRANCHISE AGREEMENT
                            CONFIDENTIALITY AGREEMENT

         THIS   AGREEMENT  is  made  this  ________  day  of   ________________,
20_______,   by   and   between    _______________________________________,    a
_____________  corporation  ("Developer"),  and  __________________________,  an
individual employed by Developer ("Employee").

WITNESSETH:

         WHEREAS, APPLEBEE'S INTERNATIONAL,  INC. ("Applebee's") is the owner of
all  rights in and to a unique  system  for the  development  and  operation  of
restaurants (the "System"),  which includes proprietary rights in valuable trade
names,  service  marks and  trademarks,  including  the service mark  Applebee's
Neighborhood  Grill & Bar and variations of such mark, designs and color schemes
for restaurant premises, signs, equipment, procedures and formulae for preparing
food and  beverage  products,  specifications  for  certain  food  and  beverage
products,  inventory methods,  operating methods,  financial control concepts, a
training facility and teaching techniques;

         WHEREAS,  Developer  is the  owner of the  exclusive  right to  develop
restaurants  franchised by Applebee's  which utilize the System  ("Restaurants")
for the period  and in the  territory  described  in the  Development  Agreement
between Applebee's and Developer (the "Development Agreement"); and

         WHEREAS,   Developer   acknowledges  that  Applebee's   information  as
described above was developed over time at great expense, is not generally known
in the industry and is beyond Developer's own present skills and experience, and
that to develop it itself would be expensive, time-consuming and difficult, that
it provides a  competitive  advantage  and will be valuable to  Developer in the
development  of its  business,  and that  gaining  access to it was  therefore a
primary reason why Developer entered into the Development Agreement; and

         WHEREAS,  in  consideration  of Applebee's  confidential  disclosure to
Developer of these trade  secrets,  Developer  has agreed to be obligated by the
terms of Development  Agreement to execute,  with each employee of Developer who
will have  supervisory  authority over the development or operation of more than
one  Restaurant  in the  Territory  described in the  Development  Agreement,  a
written   agreement   protecting   Applebee's  trade  secrets  and  confidential
information entrusted to Employee;

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

         (1) The  parties  acknowledge  and agree  that  Employee  is or will be
employed in a supervisory or managerial  capacity and in such capacity will have
access  to  information  and  materials  which   constitute  trade  secrets  and
confidential and proprietary  information.  The parties further  acknowledge and
agree that any actual or potential direct or indirect  competitor of Applebee's,
or of any of its  franchisees,  shall not have access to such trade  secrets and
confidential information.

                                      F-46
<PAGE>

         (2) The parties  acknowledge  and agree that the System  includes trade
secrets and confidential  information which Applebee's has revealed to Developer
in  confidence,  and that  protection  of said trade  secrets  and  confidential
information and protection of Applebee's  against unfair competition from others
who  enjoy  or who  have had  access  to said  trade  secrets  and  confidential
information  are essential for the  maintenance of goodwill and special value of
the System.

         (3)  Employee  agrees  that  he or  she  shall  not  at  any  time  (i)
appropriate or use the trade secrets  incorporated in the System, or any portion
thereof,  for use in any business which is not within the System;  (ii) disclose
or reveal any  portion of the System to any  person,  other than to  Developer's
employees as an incident of their  training;  (iii) acquire any right to use, or
to license or franchise the use of any name, mark or other intellectual property
right which is or may be granted by any franchise  agreement between  Applebee's
and Developer; or (iv) communicate,  divulge or use for the benefit of any other
person or entity any confidential information,  knowledge or know-how concerning
the  methods  of  development  or  operation  of  a  Restaurant   which  may  be
communicated  to  Employee  or of which  Employee  may be  apprised by virtue of
Employee's  employment by Developer.  Employee  shall divulge such  confidential
information  only to such of Developer's  other employees as must have access to
that  information  in order to operate a Restaurant  or to develop a prospective
site for a Restaurant. Any and information,  knowledge and know-how,  including,
without limitation, drawings, materials, equipment,  specifications,  techniques
and other data,  which Applebee's  designates as  confidential,  shall be deemed
confidential for purposes of this Agreement.

         (4)  Employee  further  acknowledges  and  agrees  that  the  Franchise
Operations  Manual and any other materials or manuals provided or made available
to Developer by Applebee's (collectively, the "Manuals"), described in Section 5
of the applicable  franchise  agreement  between  Applebee's and Developer,  are
loaned by Applebee's to Developer for limited purposes only, remain the property
of  Applebee's,  and may not be  reproduced,  in whole or in part,  without  the
written consent of Applebee's.

         (5) Employee agrees to surrender to Developer or to Applebee's each and
every copy of the  Manuals and any other  information  or material in his or her
possession  or control upon  request,  upon  termination  of  employment or upon
completion  of the use for which said Manuals or other  information  or material
may have been furnished to Employee.

         (6) The parties agree that in the event of a breach of this  Agreement,
Applebee's would be irreparably  injured and would be without an adequate remedy
at law. Therefore,  in the event of a breach or a threatened or attempted breach
of any of the  provisions  hereof,  Applebee's  shall be entitled to enforce the
provisions of this  Agreement as a third-party  beneficiary  hereof and shall be
entitled,  in addition to any other  remedies which it may have hereunder at law
or in equity (including the right to terminate the Development Agreement),  to a
temporary and/or permanent  injunction and a decree for specific  performance of
the terms hereof without the necessity of showing  actual or threatened  damage,
and without being required to furnish a bond or other security.

                                      F-47
<PAGE>

         (7) If any court or other tribunal having jurisdiction to determine the
validity or enforceability of this Agreement determines that it would be invalid
or  unenforceable  as  written,  the  provisions  hereof  shall be  deemed to be
modified  or  limited  to such  extent  or in such  manner  necessary  for  such
provisions to be valid and enforceable to the greatest extent possible.

         IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first above written.

DEVELOPER                                     EMPLOYEE

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

                                      F-48

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