Document:

EXHIBIT 4.1
-----------

PHAZAR CORP
2006 INCENTIVE STOCK OPTION PLAN

1.   Purposes of this Plan
The purposes of this Phazar Corp Incentive Stock Option Plan are to attract and
retain the best available personnel, to provide additional incentive to the
Employees of the Company and its Subsidiaries, to promote the success of the
Company's business and to enable the Employees to share in the growth and
prosperity of the Company by providing them with an opportunity to purchase
stock in the Company.
Options granted hereunder may be either Incentive Stock Options or Non-Statutory
Stock Options, at the discretion of the Board and as reflected in the terms of
the written stock option agreement.

Definitions
As used herein, the following definitions shall apply:
     (a)   "Board" shall mean the Board of Directors of the Company.
     (b)   "Code" shall mean the Internal Revenue Code of 1986, as amended.
     (c)   "Common Stock" shall mean the Common Stock of the Company, without
par value.
     (d)   "Company" shall mean Phazar Corp, a Delaware corporation.
     (e)   "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4 of this Plan, if one is appointed.
     (f)   "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment or service as
an Employee by or to the Company or any Parent or Subsidiary of the Company
which now exists or is hereafter organized or acquired by or acquires the
Company. Continuous Employment shall not be considered interrupted in the case
of sick leave, military leave or any other leave of absence approved by the
Board or in the event of transfers between locations of the Company or between
the Company, its Parent, any of its Subsidiaries or its successors.
     (g)   "Disinterested Person" shall mean a director who is a "disinterested
person," as such term is defined pursuant to Rule 16b-3(c)(2)(i) promulgated
pursuant to the Exchange Act and any applicable releases and opinions or the
Securities and Exchange Commission.
     (h)   "Employee" shall mean any person, including officers and directors,
employed by the Company, its Parent, any of its Subsidiaries or its successors;
or, for purposes of eligibility for Nonstatutory Stock Options, any person
employed by the Company, including officers and directors, or any consultant to,
or director of, the Company, or any Parent or Subsidiary of the Company, whether
or not such consultant or director is an employee of such entities.
     (i)   "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor legislation.
     (j)   "Incentive Stock Option" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
     (k)   "Nonstatutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.
     (l)   "Option" shall mean a stock option granted pursuant to this Plan.
     (m)   "Option Agreement" shall mean a written agreement in such form or
forms as the Board (subject to the terms and conditions of this Plan) may from
time to time approve, evidencing an Option.
     (n)   "Optioned Stock" shall mean the Common Stock subject to an Option.

                                     4.1-1
<PAGE>
     (o)   "Optionee" shall mean an Employee who is granted an Option.
     (p)   "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Sections 425(e) and (g) of the Code.
     (q)   "Plan" shall mean this 1986 Stock Option Plan.
     (r)   "Registration Date" shall mean the effective date of the first
registration statement which is filed by the Company and declared effective
pursuant to Section 12(g) of the Exchange Act, with respect to any class of the
Company's securities.
     (s)   "Share" or "Shares" shall mean the Common Stock, as adjusted in
accordance with Section 11 of this Plan.
     (t)   "Stock Purchase Agreement" shall mean an agreement in such form or
forms as the Board (subject to the terms and conditions of this Plan) may from
time to time approve, which is to be executed as a condition of purchasing
Optioned Stock upon exercise of an Option.
     (u)   "Subsidiary" shall mean a subsidiary corporation, whether now or
hereafter existing, as defined in Sections 425(f) and (g) of the Code. 3. Stock
Subject to this Plan Subject to the provisions of Section 11 of this Plan, the
maximum aggregate number of Shares which may be optioned and sold under this
Plan is TwoHundred and Fifty Thousand (250,000) Shares. The Shares may be
authorized, but unissued or reacquired Shares other than reacquired shares
delivered pursuant to Section 7(c) hereof as payment of consideration in the
exercise of an option. If an Option should expire or become unexercisable for
any reason without having been exercised in full, the unpurchased Shares shall,
unless this Plan shall have been terminated, return to this Plan and become
available for other Options under this Plan.

4.   Administration of this Plan
     (a)   Procedure This Plan shall be administered by the Board. The Board
           ---------
may appoint a Committee consisting of two (2) or more members of the Board (or
such greater number as is required to qualify for the exemption from the
provisions of Section 16(b) of the Exchange Act provided by Rule 16b-3
promulgated pursuant to the Exchange Act) to administer this Plan on behalf of
the Board, subject to such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the size of the Committee and
appoint additional members of the Board thereto, remove members (with or without
cause) and appoint new members of the Board in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and,
thereafter, directly administer this Plan. Members of the Board or Committee who
are either eligible for Options or have been granted Options may vote on any
matters affecting the administration of this Plan or the grant of Options
pursuant to this Plan, except that no such member shall act upon the granting of
an Option to such person nor shall any such members presence at a meeting of the
Board of Directors establish the existence of a quorum at any meeting of the
Board or the Committee during which action is taken with respect to the granting
of an Option to him.
     (b)   Procedure After Registration Date Notwithstanding the provisions of
           ---------------------------------
subsection (a), after the Registration Date this Plan shall be administered
either by: (i) the full Board, provided that at all times each member of the
Board is a Disinterested Person; or (ii) a Committee which at all times consists
solely of Board members who are Disinterested Persons. After the Registration
Date, the Board shall take all action necessary to administer this Plan in
accordance with the then-effective provisions of Rule 16b-3 promulgated under

                                     4.1-2
<PAGE>
the Exchange Act, provided that any amendment to this Plan required for
compliance with such provisions shall be made in accordance with Section 13 of
this Plan.
     (c)   Powers of the Board and/or Committee Subject to the provisions of
           ------------------------------------
this Plan, the Committee or the Board, as appropriate, shall have the authority,
in its discretion: (i) to grant Incentive Stock Options and Nonstatutory Stock
Options; (ii) to determine, upon review of relevant information and in
accordance with Section 7 of this Plan, the fair market value per Share; (iii)
to determine the exercise price of the Options, which exercise price and type of
consideration shall be determined in accordance with Section 7 of this Plan;
(iv) to determine the Employees to whom, and the time or times at which, Options
shall be granted, and the number of Shares to be subject to each Option; (v) to
prescribe, amend and rescind rules and regulations relating to this Plan; (vi)
to determine the terms and provisions of each Option Agreement and each Stock
Purchase Agreement (each of which need not be identical with the terms of other
Option Agreements and Stock Purchase Agreements) and, with the consent of the
holder thereof, to modify or amend each Option Agreement and Stock Purchase
Agreement; (vii) to determine whether a stock repurchase agreement or other
agreement will be required to be executed by any Employee as a condition to the
exercise of an Option, and to determine the terms and provisions of any such
agreement (which need not be identical with the terms of any other such
agreement) and, with the consent of the Optionee, to amend any such agreement;
(viii) to interpret this Plan, the Option Agreements, the Stock Purchase
Agreements or any agreement entered into with respect to the grant or exercise
of Options; (ix) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted by
the Board or to take such other actions as may be necessary or appropriate with
respect to the Company's rights pursuant to Options or agreements relating to
the grant or exercise thereof; and (x) to make such other determinations and
establish such other procedures as it deems necessary or advisable for the
administration of this Plan.
     (d)   Effect of the Board's or Committee's Decision All decisions,
           ---------------------------------------------
determinations and interpretations of the Board or the Committee shall be final
and binding on all Optionees and any other holders of Options.
5.   Eligibility
Incentive Stock Options may be granted only to Employees. An Employee who has
been granted an Incentive Stock Option may, if such Employee is otherwise
eligible, be granted additional Incentiv Stock Options.
6.   Term of Plan
This Plan shall become effective upon the earlier to occur of its adoption by
the Board or its approval by vote of a majority of the outstanding shares of the
Company's capital stock entitled to vote on the adoption of this Plan.  This
Plan shall continue in effect for a term of ten (10) years unless sooner
terminated in accordance with the terms and provisions of this Plan.
7.   Option Price & Consideration
     (a)   Exercise Price The exercise price per Share for the Shares to be
           --------------
issued pursuant to the exercise of an Option shall be such price as is
determined by the Board; provided, however, that such price shall in no event be
                         --------  -------
less than eighty-five percent (85%) with respect to Nonstatutory Stock Options,
and one hundred percent (100%) with respect to Incentive Stock Options, of the
fair market value per Share on the date of grant. In the case of an Option

                                     4.1-3
<PAGE>
granted to an Employee who, at the time the Option is granted, owns stock (as
determined under Section 425(d) of the Code) constituting more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or its Parent or Subsidiaries, the exercise price per Share shall be no less
than one hundred ten percent (110%) of the fair market value per Share on the
date of grant.
     (b)   Fair Market Value The fair market value per Share on the date of
           -----------------
grant shall be determined by the Board in its sole discretion, exercised in good
faith; provided, however, that where there is a public market for the Common
       --------  -------
Stock, the fair market value per Share shall be the average of the closing bid
and asked prices of the Common Stock on the date of grant, as reported in The
                                                                          ---
Wall Street Journal (or, if not so reported, as otherwise reported by the
-------------------
National Association of Securities Dealers Automated Quotations ("NASDAQ")
System), or, in the event the Common Stock is listed on a stock exchange or on
the NASDAQ System, the fair market value per Share shall be the closing price on
the exchange or on the NASDAQ System as of the date of grant of the Option, as
reported in The Wall Street Journal.
            -----------------------
     (c)   Payment of Consideration The consideration to be paid for the
           ------------------------
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board and may consist entirely of cash, check, Shares
held by the Optionee for the requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes which have a fair market
value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, or any combination of such
methods of payment. Subject to subparagraphs (i) and (ii) hereto, utilization of
Shares as the method of payment may be completed by the tender of Shares then
held by the Optionee. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration is deemed to be such as may be reasonably expected to benefit the
Company.
     (i)   If the consideration for the exercise of an Option is the surrender
of previously acquired and owned Shares, the Optionee will be required to make
representations and warranties satisfactory to the Company regarding his title
to the Shares used to effect the purchase, including, without limitation,
representations and warranties that the Optionee has good and marketable title
to such Shares free and clear of any and all liens, encumbrances, charges,
equities, claims, security interests, options or restrictions and has full power
to deliver such Shares without obtaining the consent or approval of any person
or governmental authority other than those which have already given consent or
approval in a form satisfactory to the Company. The value of the Shares used to
effect the purchase shall be the fair market value of those Shares as determined
by the Board in its sole discretion, exercised in good faith.
     (ii)  If an Optionee is permitted to exercise an Option by delivering
shares of the Company's Common Stock, the option agreement covering such Option
may include provisions authorizing the Optionee to exercise the Option, in whole
or in part, by delivering whole shares of the Company's Common Stock previously
owned by such Optionee (whether or not acquired through the prior exercise of a
stock option) having a fair market value equal to the option price. Shares of
the Company's Common Stock so delivered or withheld shall be valued at their

                                     4.1-4
<PAGE>
fair market value on the date of exercise of the Option, as determined by the
Committee and/or the Board, as appropriate. Any balance of the exercise price
shall be paid in cash or by check or a promissory note, each in accordance with
the terms of this Section 7.
8.   Options
     (a)   Terms & Provisions of Options As provided in Section 4 of this Plan
           -----------------------------
and subject to any limitations specified herein, the Board and/or Committee
shall have the authority to determine the terms and provisions of any Option
granted under this Plan or any agreement required to be executed in connection
with the grant or exercise of an Option. Each Option granted pursuant to this
Plan shall be evidenced by an Option Agreement. Options granted pursuant to this
Plan are conditioned upon the Company obtaining any required permit or order
from appropriate governmental agencies authorizing the Company to issue such
Options and Shares issuable upon exercise thereof.
     (b)   Term of Option The term of each Option may be up to ten (10) years
           --------------
from the date of grant thereof as determined by the Board upon the grant of the
Option and specified in the Option Agreement, except that the term of an Option
granted to an Employee who, at the time the Option is granted, owns stock
comprising more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or its Parent or Subsidiaries, shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.
     (c)   Exercise of Option
     (i)   Procedure for Exercise; Rights as a Shareholder. Any Option shall
           -----------------------------------------------
be exercisable at such times, in such installments and under such conditions as
may be determined by the Board and specified in the Option Agreement, including
performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of this Plan.
     An Option may be exercised in accordance with the provisions of this Plan
as to all or any portion of the Shares then exercisable under an Option, from
time to time during the term of the Option. An Option may not be exercised for a
fraction of a Share.
     An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company at its principal business office in
accordance with the terms of the Option Agreement by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company, accompanied by an executed
Stock Purchase Agreement and any other agreements required by the terms of this
Plan and/or the Option Agreement. Full payment may consist of such consideration
and method of payment allowable under Section 7 of this Plan. Until the Option
is properly exercised in accordance with the terms of this paragraph, no right
to vote or receive dividends or any other rights as a stockholder exist with
respect to the Optioned Stock. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the Option is
exercised, except as provided in Section 11 of this Plan.
     As soon as practicable after any proper exercise of an Option in
accordance with the provisions of this Plan, the Company shall, without transfer
or issue tax to the Optionee, deliver to the Optionee at the principal executive
office of the Company or such other place as shall be mutually agreed upon
between the Company and the Optionee, a certificate or certificates representing
the Shares for which the Option shall have been exercised. The time of issuance
and delivery of the certificate(s) representing the Shares for which the Option

                                     4.1-5
<PAGE>
shall have been exercised may be postponed by the Company for such period as may
be required by the Company, with reasonable diligence, to comply with any
applicable listing requirements of any national or regional securities exchange
or any law or regulation applicable to the issuance or delivery of such Shares.
No Option may be exercised unless this Plan has been duly approved by the
shareholders of the Company in accordance with applicable law. Notwithstanding
anything to the contrary herein, the terms of a Stock Purchase Agreement
required to be executed and delivered in connection with the exercise of an
Option may require the certificate or certificates representing the Shares
purchased upon exercise of an Option to be delivered and deposited with the
Company as security for the Optionee's faithful performance of the terms of his
Stock Purchase Agreement.
     Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of this
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
     (ii) Termination of Status as an Employee If an Optionee ceases to serve as
          ------------------------------------
an Employee for any reason other than death or permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) and thereby terminates his
Continuous Status as an Employee, such Optionee shall have the right to exercise
the Option at any time within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Board at the time of granting
the Option), following the date such Optionee ceases his Continuous Status as an
Employee of the Company to the extent that such Optionee was entitled to
exercise the Option at the date of such termination; provided, however, that no
                                                     --------  -------
Option shall be exercisable after the expiration of the term set forth in the
Option Agreement. To the extent that such Optionee was not entitled to exercise
the Option at the date of such termination, or if such Optionee does not
exercise such Option (which such Optionee was entitled to exercise) within the
time specified herein, the Option shall terminate.
     (iii) Death or Disability of Optionee If an Optionee ceases to serve as
           -------------------------------
an Employee due to death or permanent and total disability (within the meaning
of Section 22(e)(3) of the Code) and thereby terminates his Continuous Status as
an Employee, the Option may be exercised at any time within six (6) months
following the date of death or termination of employment due to disability, in
the case of death, by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, or, in the case of
disability, by the Optionee, but in any case only to the extent the Optionee was
entitled to exercise the Option at the date of his termination of employment by
death or disability; provided, however, that no Option shall be exercisable
                     --------  -------
after the expiration of the Option term set forth in the Option Agreement. To
the extent that such Optionee was not entitled to exercise such Option at the
date of his termination of employment by death or disability or if such Option
is not exercised (to the extent it could be exercised) within the time specified
herein, the Option shall terminate.
     (iv)  Extension of Time to Exercise Notwithstanding anything to the
           -----------------------------
contrary in this Section 8, the Board may at any time and from time to time
prior to the termination of a Nonstatutory Stock Option, with the consent of the
Optionee, extend the period of time during which the Optionee may exercise his
Nonstatutory Stock Option following the date the Optionee ceases such Optionee's

                                     4.1-6
<PAGE>
Continuous Status as an Employee; provided, however, that (1) the maximum period
                                  --------  -------
of time during which a Nonstatutory Stock Option shall be exercisable following
such termination date shall not exceed an aggregate of six (6) months, (2) the
Nonstatutory Stock Option shall not become exercisable after the expiration of
the term of such Option as set forth in the Option Agreement as a result of such
extension, and (3) notwithstanding any extension of time during which the
Nonstatutory Stock Option may be exercised, such Option, unless otherwise
amended by the Board, shall only be exercisable to the extent to which the
Optionee was entitled to exercise it on the date Optionee ceased Continuous
Status as an Employee. To the extent that such Optionee was not entitled to
exercise the Option at the date of such termination, or if such Optionee does
not exercise an Option which Optionee was entitled to exercise within the time
specified herein, the Option shall terminate.
9.   Limit on Value of Optioned Stock
No Incentive Stock Option may be granted to an Employee if, as a result of such
grant, the aggregate fair market value (determined at the time an Incentive
Stock Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year under all incentive stock option plans of the Company, its Parents or its
Subsidiaries, if any, exceeds One Hundred Thousand Dollars ($100,000).
10.  Non-Transferability of Options
Options granted under this Plan may not be sold, pledged, assigned,
hypothecated, gifted, transferred or disposed of in any manner, either
voluntarily or involuntarily by operation of law, other than by will or by the
laws of descent or distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee.
11.  Adjustments Upon Changes in Capitalization or Merger
     (a)   Subject to any required action by the shareholders of the Company,
the number of Shares covered by each outstanding Option, and the number of
Shares which have been authorized for issuance under this Plan but as to which
no Options have yet been granted or which have been returned to this Plan upon
cancellation or expiration of an Option or repurchase of shares from an Optionee
upon termination of employment or service, as well as the exercise or purchase
price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, combination or
reclassification of the Common Stock, or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company (other than stock bonuses to Employees, including, without limitation,
officers and directors); provided, however, that the conversion of any
                         --------  -------
convertible securities of the Company shall not be deemed to have been effected
without the receipt of consideration. Such adjustment shall be made by the
Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to this Plan or an Option.
     (b)   In the event of the merger, consolidation or reorganization of the
Company with or into another corporation as a result of which the Company is not
the surviving corporation or as a result of which the outstanding Shares are
exchanged for or converted into cash or property or securities not of the
Company, the Board may (i) make provision for the assumption of all outstanding

                                     4.1-7
<PAGE>
Options by the successor corporation or a Parent or a Subsidiary thereof, or
(ii) declare that outstanding Options shall terminate as of a date fixed by the
Board which is at least thirty (30) days after the notice thereof to the
Optionee, unless such thirty (30) day period is waived by the Optionee. In the
event of a dissolution or liquidation of the Company or the sale of all or
substantially all of the assets of the Company, the Company's outstanding
Options shall terminate as to an Optionee upon termination of Continuous Status
as an Employee.
     (c)   No fractional shares of Common Stock shall be issuable on account
of any action described in this Section, and the aggregate number of shares into
which Shares then covered by the Option, when changed as the result of such
action, shall be reduced to the largest number of whole shares resulting from
such action, unless the Board, in its sole discretion, shall determine to issue
scrip certificates in respect to any fractional shares, which scrip
certificates, in such event, shall be in a form and have such terms and
conditions as the Board in its discretion shall prescribe.
12.  Time of Granting Options
The date of grant of an Option shall be the date on which the Board makes the
determination granting such Option; provided, however, that if the Board
                                    --------  -------
determines that such grant shall be as of some future date, the date of grant
shall be such future date. Notice of the determination shall be given to each
Employee to whom an Option is so granted within a reasonable time after the date
of such grant.
13.  Amendment & Termination of this Plan
(a)  Amendment & Termination The Board may amend or terminate this Plan from
     -----------------------
time to time in such respects as the Board may deem advisable and shall make any
amendments which may be required so that Options intended to be Incentive Stock
Options shall at all times continue to be Incentive Stock Options for the
purpose of the Code, except that, without approval of the holders of a majority
of the outstanding shares of the Company's capital stock, no such revision or
amendment shall:
     (i)   Increase the number of Shares subject to this Plan, other than in
connection with an adjustment under Section 11 of this Plan;
     (ii)  Materially change the designation of the class of Employees eligible
to be granted Options;
     (iii) Remove the administration of this Plan from the Board (other than to
the Committee);
     (iv)  Materially increase the benefits accruing to participants under this
Plan; or
     (v)   Extend the term of this Plan.
(b)  Effect of Amendment or Termination Except as otherwise provided in Section
     ----------------------------------
11, any amendment or termination of this Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if this Plan
had not been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Company, which agreement must be in writing and signed by the
Optionee and the Company.
14.  Conditions Upon Issuance of Shares
     (a)   Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
applicable state securities laws, the rules and regulations promulgated

                                     4.1-8
<PAGE>
thereunder, and the requirement of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
     (b)   As a condition to the exercise of an Option, the Board may require
the person exercising such Option to execute an agreement with, and/or may
require the person exercising such Option to make any representation and
warranty to, the Company as may in the judgment of counsel to the Company be
required under applicable law or regulation, including but not limited to a
representation and warranty that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
appropriate under any of the aforementioned relevant provisions of law.
15.  Reservation of Shares
The Company, during the term of this Plan, at all times shall reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of this Plan.
     The Company, during the term of this Plan, shall use diligent efforts to
seek to obtain from appropriate regulatory agencies any requisite authorization
in order to issue and sell such number of Shares as shall be sufficient to
satisfy the requirements of this Plan. The inability of the Company to obtain
the requisite authorization(s) deemed by the Company's counsel to be necessary
for the lawful issuance and sale of any Shares hereunder, or the inability of
the Company to confirm to its satisfaction that any issuance and sale of any
Shares hereunder will meet applicable legal requirements, shall relieve the
Company of any liability in respect to the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
16.  Stock Option and Stock Purchase Agreements
Options shall be evidenced by written stock option agreements in such form or
forms as the Board shall approve from time to time. Upon the exercise of an
Option, the Optionee shall sign and deliver to the Company at the Company's
option, (i) a Stock Purchase Agreement
(if required to be executed and delivered to the Company by an Optionee as a
condition to the exercise of an Option) in such form or forms as the Board shall
approve from time to time, and/or (ii) an investment representation statement
acceptable to the Company.
17.  Shareholder Approval
Continuance of this Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months before or after the date this Plan is adopted
by the Board. If such shareholder approval is obtained at a duly held
shareholders' meeting, it may be obtained by the affirmative vote of the holders
of a majority of the outstanding shares of the Company entitled to vote thereon.
All Options granted prior to shareholder approval of this Plan are subject to
such approval, and if such approval is not obtained within twelve (12) months
before or after the date this Plan is adopted by the Board all such Options
shall expire and shall be of no further force or effect.
18.  Taxes Fees, Expenses & Withholding of Taxes
     (a)   The Company shall pay all original issue and transfer taxes (but not
income taxes, if any) with respect to the grant of Options and/or the issue and
transfer of Shares pursuant to the exercise thereof, and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use diligent efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.
     (b)   The grant of Options hereunder and the issuance of Shares pursuant
to the exercise thereof is conditioned upon the Company's reservation of the
right to withhold, in accordance with any applicable law, from any compensation

                                     4.1-9
<PAGE>
payable to the Optionee any taxes required to be withheld by federal, state or
local law as a result of the grant or exercise of such Option or the sale of the
Shares issued upon exercise thereof. To the extent that compensation or other
amounts, if any, payable to the Optionee are insufficient to pay any taxes
required to be so withheld, the Company may, in its sole discretion, require the
Optionee, as a condition of the exercise of an Option, to pay in cash to the
Company an amount sufficient to cover such tax liability or otherwise to make
adequate provision for the Company's satisfaction of its withholding obligations
under federal and state law.
     (c)   The Board or any Committee may, in its discretion and upon such terms
and conditions as it may deem appropriate (including the applicable
safe-harbor provisions of SEC Rule 16b-3 and interpretations thereof by the
staff of the Securities and Exchange Commission) provide any or all holders of
outstanding option grants under this Plan with the election (a "Withholding
Election") to have the Company withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such options, one or more of such shares
with an aggregate fair market value equal to the designated percentage (any
multiple of 5% specified by the optionee) of the Federal and State income taxes
("Taxes") incurred in connection with the acquisition of such Shares. In lieu of
such direct withholding, one or more optionees may also be granted the right to
deliver shares of Common Stock to the Company in satisfaction of such Taxes. The
withheld or delivered shares shall be valued at the Fair Market Value on the
applicable determination date for such Taxes (the "Tax Date") or such other date
required by the applicable safe-harbor provisions of SEC Rule 16b-3.
Notwithstanding the foregoing, Optionees subject to the short-swing profit
limitations of Section 16 of the Exchange Act shall have the right to elect to
deliver previously owned stock or make a Withholding Election: (a) six months or
more prior to the Tax Date and/or (b) prior to the Tax Date and within a "window
period": specified in Rule 16(b)-3(e)(iii) promulgated pursuant to the Exchange
Act.
18.  Liability of Company
The Company, its Parent or any Subsidiary which is in existence or hereafter
comes into existence shall not be liable to an Optionee or other person if it is
determined for any reason by the Internal Revenue Service or any court having
jurisdiction that any Options intended to be Incentive Stock Options granted
hereunder do not qualify as incentive stock options within the meaning of
Section 422 of the Code.
19.  Information to Optionee
The Company shall provide without charge at least annually to each Optionee
during the period his Option is outstanding a balance sheet and income statement
of the Company. In the event that the Company provides annual reports or
periodic reports to its shareholders during the period in which an Optionee's
Option is outstanding, the Company shall provide to each Optionee a copy of each
such report.
20.  Notices
Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon personal delivery or upon deposit in the United
States mail, as first class, registered or certified mail, with postage and fees
prepaid and addressed (i) if to the Company, at its principal place of business,
attention: Secretary, or (ii) if to the Optionee at his address as set forth on
the signature page of his Option Agreement, or at such other address as either
party may from time to time designate in writing to other. It shall be the
obligation of each Optionee and each transferee holding Shares purchased upon
exercise of an Option to provide the Secretary of the Company, by letter mailed
as provided hereinabove, with written notice of his direct mailing address.

                                     4.1-10
<PAGE>
21.  No Enlargement of Employee Rights This Plan is purely voluntary on the part
of the Company, and the continuance of this Plan shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment or service of any Employee.
Nothing contained in this Plan shall be deemed to give any Employee the right to
be retained in the employ or service of the Company, its Parent, Subsidiary or a
successor corporation, or to interfere with the right of the Company or any such
corporations to discharge or retire any Employee at any time with or without
cause and with or without notice. No Employee shall have any right to or
interest in Options authorized hereunder prior to the grant thereof to such
Employee, and upon such grant such Employee shall have only such rights and
interests as are expressly provided herein, subject, however, to all applicable
provisions of the Company's Articles of Incorporation, as the same may be
amended from time to time.
23.  Legends on Certificates
     (a)   Federal Law Unless an appropriate registration statement is filed
           -----------
pursuant to the Securities Act of 1933, as amended, with respect to the Options
and Shares issuable under this Plan, each document or certificate representing
such Options or Shares shall be endorsed thereon with a legend substantially as
follows:
"THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."

     (b)   Texas Legend If required by the Texas Securities Commissioner, each
           ------------
document or certificate representing the Options or Shares issuable under this
Plan shall be endorsed thereon with a legend substantially as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS OPTION AND THE
SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION, OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE TEXAS SECURITIES COMMISSIONER OF THE STATE OF TEXAS, EXCEPT AS
PERMITTED IN THE COMMISSIONER'S RULES."

     (c)   Additional Legends Each document or certificate representing the
           ------------------
Options or Shares issuable under this Plan shall also contain legends as may be
required under applicable blue sky laws or by any Stock Purchase Agreement or
other agreement the execution of which is a condition to the exercise of an
Option under this Plan.
24.  Availability of Plan
A copy of this Plan shall be delivered to the Secretary of the Company and shall
be shown by him to any eligible person making reasonable inquiry concerning it.
25.  Compliance with Exchange Act Rule 16b-3
With respect to persons subject to Section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3, promulgated pursuant to the Exchange Act, or its successors. To the
extent any provision of this Plan or action by the Board or any Committee fails
so to comply, it shall be deemed null and void to the extent permitted by law
and deemed advisable by the Board or any Committee.

                                     4.1-11
<PAGE>
26.  Invalid Provisions
In the event that any provision of this Plan is found to be invalid or otherwise
unenforceable under any applicable law, such invalidity or unenforceability
shall not be construed as rendering any other provisions contained herein as
invalid or unenforceable, and all such other provisions shall be given full
force and effect to the same extent as though the invalid or unenforceable
provision was not contained herein.
27.  Applicable Law
This Plan shall be governed by and construed in accordance with the laws of the
State of Texas.

                                     4.1-12ASSIGNMENT AND ASSUMPTION OF LEASE AND GUARANTY

      THIS  ASSIGNMENT  AND  ASSUMPTION  OF  LEASE  AND  GUARANTY
("Assignment") effective as of this 29th day of December, 2006 by
and   between  AEI  FUND  MANAGEMENT  XVII,  INC.,  a   Minnesota
corporation,  ("Assignor")  and AEI INCOME  &  GROWTH  FUND  XXII
LIMITED  PARTNERSHIP,  a Minnesota limited  partnership  and  AEI
INCOME  &  GROWTH  FUND  26  LLC, a  Delaware  limited  liability
company,   as   tenants   in   common   (together,   collectively
"Assignee").

                            RECITALS

      WHEREAS,  Assignor  is the owner of certain  real  property
located  at 1516 South Washington Street, City of Crawfordsville,
Montgomery  County,  Indiana as more  particularly  described  on
EXHIBIT  A  attached  hereto  and  incorporated  herein  by  this
reference (the "Property")).

      WHEREAS, Assignor has leased the Property to Apple  Indiana
II  LLC,  a Delaware limited liability company ("Apple Indiana"),
pursuant to that certain Lease Agreement dated September 21, 2006
(the "Lease"); and

      WHEREAS,  Apple  American Group LLC.,  a  Delaware  limited
liability company ("Guarantor") has executed a Guaranty of  Lease
dated September 21, 2006 (the "Guaranty"); and

     WHEREAS, in connection with Assignor's conveyance of its fee
simple  interest  in  the  Property to Assignee,  as  tenants  in
common,  Assignor desires to assign its right, title and interest
in  and to the Lease and the Guaranty to AEI Income & Growth Fund
XXII  Limited  Partnership, an undivided  sixty  percent  (60.0%)
interest as a tenant in common; and AEI Income & Growth  Fund  26
LLC,  an undivided forty percent (40.0%) interest as a tenant  in
common,  and  Assignee desires to assume Assignor's right,  title
and interest in and to the Lease and the Guaranty;

      NOW,  THEREFORE,  for good and valuable consideration,  the
receipt and sufficiency of which is hereby acknowledged, Assignor
and Assignee agree as follows:

      1.    ASSIGNMENT.  Assignor hereby gives, grants, bargains,
sells,  conveys,  transfers  and sets  over  unto  Assignee,  its
successors  and assigns, as of the date first above written  (the
"Effective Date"), all of Assignor's right, title and interest in
and to the Lease and the Guaranty.

      2.    ACCEPTANCE  OF  ASSIGNMENT AND ASSUMPTION.   Assignee
hereby  accepts the foregoing assignment, and hereby assumes  and
agrees  to  be bound by and perform all of Assignor's obligations
and  liabilities to be performed and/or occurring under the Lease
or  the  Guaranty  on  or  after the Effective  Date,  including,
without  limitation,  the  obligations  for  return  of  security
deposits as provided in the Lease or the Guaranty and/or required
by  law,  and  any  and all obligations for any and  all  leasing
commissions, brokerage fees and similar payments which become due
and   payable  after  the  Effective  Date,  including,   without
limitation, any and all leasing commissions, brokerage  fees  and
similar payments which become due and payable in connection  with
the exercise of any option or right under the Lease.

      3.    INDEMNIFICATION.   (a)  Assignor  hereby  indemnifies
Assignee,  and  agrees to defend and hold harmless Assignee  from
and  against  any  and all liability, loss, damage  and  expense,
including  without limitation reasonable attorneys'  fees,  which
Assignee  may or shall incur under the Lease or the  Guaranty  by
reason  of  any  failure or alleged failure of Assignor  to  have
complied  with  or to have performed, before the Effective  Date,
the  obligations  of the landlord thereunder  which  were  to  be
performed before the Effective Date.

           (b)   Assignee hereby indemnifies Assignor, and agrees
to defend and hold harmless Assignor from and against any and all
liability, loss, damage and expense, including without limitation
reasonable  attorneys' fees, which Assignor may  or  shall  incur
under  the  Lease  or the Guaranty by reason of  any  failure  or
alleged  failure  of Assignee to comply with or  perform,  on  or
after  the  Effective Date, all the obligations of  the  landlord
thereunder  which are to be performed on or after  the  Effective
Date.

      4.    SUCCESSORS AND ASSIGNS.  The terms and conditions  of
this  Agreement  shall be binding upon and  shall  inure  to  the
benefit of the parties hereto and their respective successors and
assigns.

      5.   RETAINED RIGHTS.  Assignee hereby agrees that Assignor
may, at Assignor's election and expense, proceed at law or equity
to collect any delinquent rents accruing under the Lease prior to
the  Effective Date.  Assignor hereby agrees that Assignee  shall
have no obligation to collect any rent due prior to the Effective
Date  under  the  Lease; provided, however,  that  in  the  event
Assignee  is  paid  rent from a tenant that has  delinquent  rent
accruing  prior  to the Effective Date, and such  payment  is  in
excess  of current rent due and payable under the Lease  and  any
collection costs incurred by Assignee to collect such rents, then
Assignee agrees to pay such excess amount to Assignor as soon  as
reasonably practicable after the date of receipt by Assignee.

     6.    MISCELLANEOUS.  This Assignment shall be governed  and
construed  in accordance with the laws of the State  of  Indiana.
This  Agreement may be executed in several counterparts, each  of
which  shall  be  deemed an original, and all of  which  together
shall constitute one and the same instrument.

     IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment as of the date and year first above written.

"ASSIGNOR"               AEI FUND MANAGEMENT XVII, INC.
                         a Minnesota corporation

                         By:  /s/ Robert P Johnson
                         Name:    Robert P Johnson
                         Title:   President

STATE OF MINNESOTA       )
                         ) ss.
COUNTY OF RAMSEY         )

The  foregoing  was  acknowledged before  me  this  29th  day  of
December,  2006,  by Robert P. Johnson, in his  capacity  as  the
President   of  AEI  Fund  Management  XVII,  Inc.,  a  Minnesota
corporation,  who  acknowledged the execution  of  the  foregoing
instrument  to be the voluntary act and deed of said  corporation
by authority of its board of directors on behalf of the company.

[Seal]                    /s/ Jennifer L Dingmann
                          Print Name:  Jennifer L Dingmann
                          My Commission Expires: 1/31/2010

"ASSIGNEE"                AEI INCOME & GROWTH FUND XXII
                          LIMITED PARNTERSHIP,
                          a Minnesota limited partnership

                          By:  AEI Fund Management XXI, Inc.,
                               a   Minnesota  corporation,   its
                               Corporate General Partner

                          By:  /s/ Robert P Johnson
                          Name:    Robert P Johnson
                          Title:   President

STATE OF MINNESOTA       )
                         ) ss.
COUNTY OF RAMSEY         )

The  foregoing  was  acknowledged before  me  this  29th  day  of
December,  2006,  by Robert P. Johnson, in his  capacity  as  the
President   of  AEI  Fund  Management  XXI,  Inc.,  a   Minnesota
corporation, the corporate General Partner of AEI Income & Growth
Fund  XXII  Limited Partnership, a Minnesota limited  partnership
("Partnership"), who acknowledged the execution of the  foregoing
instrument  to be the voluntary act and deed of said  corporation
by  authority  of  its  board  of  directors  on  behalf  of  the
Partnership.

[Seal]                        /s/ Jennifer L Dingmann
                              Print Name:  Jennifer L Dingmann
                              My Commission Expires: 1/31/2010

                           AEI INCOME & GROWTH FUND 26 LLC,
                           a Delaware limited liability company

                           By:  AEI Fund Management XXI, Inc.,
                                a   Minnesota  corporation,   its
                                Managing Member

                           By: /s/ Robert P Johnson
                           Name:   Robert P Johnson
                           Title:  President

STATE OF MINNESOTA       )
                         ) ss.
COUNTY OF RAMSEY         )

The  foregoing  was  acknowledged before  me  this  29th  day  of
December,  2006,  by Robert P. Johnson, in his  capacity  as  the
President   of  AEI  Fund  Management  XXI,  Inc.,  a   Minnesota
corporation, the Managing Member of AEI Income & Growth  Fund  26
LLC,  a  Delaware  limited  liability  company,  ("Company")  who
acknowledged the execution of the foregoing instrument to be  the
voluntary  act and deed of said corporation by authority  of  its
board of directors on behalf of the Company.

[Seal]                      /s/ Jennifer L Dingmann
                            Print Name:  Jennifer L Dingmann
                            My Commission Expires: 1/31/2010

                            EXHIBIT A

                       (Legal Description)

PARCEL 1:

Part  of  the Northwest Quarter of Section 8, Township 18  North,
Range  4  West, in Montgomery County, Indiana, more  particularly
described as follows:

Commencing  at  the  Northwest corner of said  Northwest  Quarter
Section; thence along the West line thereof, South 00 degrees  26
minutes  24  seconds East (assumed bearing) 1179.37 feet;  thence
North 89 degrees 33 minutes 36 seconds East to the Easterly right-
of-way  of U.S. 231 46.19 feet to the POINT OF BEGINNING of  this
description;  thence North 00 degrees 17 minutes 20 seconds  West
on  and along said Easterly right-of-way 41.38 feet to the  point
of  curvature  of a tangent curve to the right,  from  which  the
radius  point of said curve bears North 89 degrees 42 minutes  40
seconds  East  914.93 feet; thence on and along said right-of-way
Northerly  along said curve an arc distance of 252.49 feet  to  a
point on said curve, said point being North 74 degrees 28 minutes
36  seconds  West  914.93  feet from said  radius  point;  thence
leaving  said  right-of-way line South 75 degrees 33  minutes  28
seconds  East 79.71 feet; thence North 14 degrees 26  minutes  32
seconds  East 62.16 feet; thence South 82 degrees 33  minutes  30
seconds  East 16.10 feet; thence South 72 degrees 33  minutes  30
seconds  East 58.14 feet; thence South 83 degrees 26  minutes  31
seconds  East 49.09 feet; thence South 08 degrees 59  minutes  15
seconds  East 91.19 feet to the point of curvature of  a  tangent
curve  to  the right, from which the radius point of  said  curve
bears  South  81 degrees 00 minutes 45 seconds West 515.50  feet;
thence  Southerly  along said curve on an arc distance  of  36.11
feet  to a point on said curve, said point being North 85 degrees
01 minutes 34 seconds East 515.50 feet from said radius point, to
the point of curvature of a reverse curve to the left, from which
the  radius point of said curve bears North 85 degrees 01 minutes
34  seconds East 19.50 feet; thence Southerly, Southeasterly, and
Easterly  along  said curve an arc distance of 28.94  feet  to  a
point on said curve, said point being South 00 degrees 00 minutes
00  seconds East 19.50 feet from said radius point; thence  North
90 degrees 00 minutes 00 seconds East 77.54 feet; thence South 29
degrees  32 minutes 35 seconds West 184.24 feet; thence South  89
degrees  34 minutes 00 seconds West 270.81 feet to the  POINT  OF
BEGINNING  of this description, containing 1.931 acres,  more  or
less.

LESS  AND  EXCEPT  the real property conveyed by  Apple  American
Limited  Partnership of Indiana, an Indiana limited  partnership,
to  the  State of Indiana by Warranty Deed recorded on  June  15,
2000 in Deed Record 307, page 49 in the Office of the Recorder of
Montgomery County, Indiana.

PARCEL 2:

Non-exclusive easement as set out in that certain Declaration  of
Easements and Restrictions recorded July 9, 1996, in Deed  Record
294,  page  371,  in  the  Office of the Recorder  of  Montgomery
County, Indiana.

TAX KEY #:          023-25032-00
PROPERTY ADDRESS:   1516 South Washington Street
                    Crawfordsville, IN  47933

                              LEASE

                             BETWEEN

                  AEI FUND MANAGEMENT XVII, INC

                          as Landlord,

                    and APPLE INDIANA II LLC

                            as Tenant

                 Dated as of September 21, 2006

                    (Crawfordsville, Indiana)

                        TABLE OF CONTENTS

                                                             Page

1.  BASIC PROVISIONS                                            1
2.  LEASING AGREEMENT; TERM                                     1
3.  RENT                                                        3
4.  TAXES                                                       5
5.  ENVIRONMENTAL MATTERS                                       6
6.  COMPLIANCE WITH REQUIREMENTS                                8
7.  COVENANT AGAINST LIENS                                      9
8.  USE AND ENJOYMENT                                           9
9.  TENANT'S PROPERTY; LIEN WAIVER                             12
10. ALTERATIONS; MAINTENANCE AND REPAIR                        13
11. CONDEMNATION AND CASUALTY DAMAGE                           14
12. INSURANCE                                                  17
13. ASSIGNMENT AND SUBLETTING                                  19
14. INDEMNIFICATION                                            21
15. DEFAULT; REMEDIES                                          23
16. SURRENDER OF PREMISES                                      27
17. SUBORDINATION AND ATTORNMENT                               28
18. ESTOPPEL CERTIFICATES                                      29
19. NOTICES                                                    30
20. LEASEHOLD FINANCING                                        30
21. RIGHT OF FIRST REFUSAL                                     31
22. [INTENTIONALLY OMITTED]                                    32
23. GUARANTY                                                   32
24. MISCELLANEOUS                                              33

                              LEASE

     THIS LEASE ("LEASE") dated September 21, 2006 ("EFFECTIVE
DATE"), is made and entered into by and between AEI FUND
MANAGEMENT XVII, INC., a Minnesota corporation ("LANDLORD"), and
APPLE INDIANA II LLC, a Delaware limited liability company
("TENANT").

                      1.   BASIC PROVISIONS

   1.1. Premises Address:          1516 S. Washington Street
                                   Crawfordsville, IN  47933
   1.2. Landlord Name and Address: AEI Fund Management XVII, Inc.
                                   1300 Wells Fargo Place
                                   30 Seventh Street East
                                   St. Paul, Minnesota  55101

   1.3. Tenant Name and Address:   Apple Indiana II LLC
                                   6200 Oak Tree Boulevard, Suite
                                   250
                                   Independence, OH 44131
                                   Attn:  Chief Financial Officer
   1.4. Lease Date:                September 21, 2006
   1.5. Term:                      Twenty (20) Lease Years
   1.6. Options to Extend:         Four (4) periods of five (5)
                                   Lease Years each
   1.7. Exhibits:                  Exhibit A - Land Legal
                                   Description
                                   Exhibit B - Landlord Agreement
                                   Exhibit C - Memorandum of Lease
                                   Exhibit D - Guaranty of Lease
                                   Exhibit E - Subordination, Non-
                                   Disturbance and
                                   Attornment Agreement

                  2.   LEASING AGREEMENT; TERM

     2.1. LEASING AGREEMENT.  Landlord leases to Tenant and Tenant
leases from Landlord upon and subject to the terms and conditions
set  forth  in  this  Lease  certain real  estate  consisting  of
approximately 1.4 acres of land, as legally described in attached
Exhibit  A, together with all easements, rights and appurtenances
thereto, including, but not limited to all of Landlord's  rights,
if  any,  to  use  any common areas, parking, access  drives  and
sidewalks  in any center of which the real estate may be  a  part
(the   "LAND").   The  Land  is  commonly  known  as  1516  South
Washington  Street, Crawfordsville, ("CITY"), Montgomery  County,
Indiana.   The  Land,  together with  the  restaurant  and  other
related  improvements now or hereafter thereon  ("IMPROVEMENTS"),
are  referred  to in this Lease as the "PREMISES."  The  Premises
are  leased  subject to all restrictions, covenants, encumbrances
and other matters of record on the date of this Lease.

2.2. TERM.  The term of this Lease ("TERM") shall commence
("COMMENCEMENT DATE") on the Effective Date and, unless extended
or earlier terminated as provided herein, shall expire
("EXPIRATION DATE") at midnight on the last day of the twentieth
(20th) "Lease Year" thereafter.  "LEASE YEAR" shall mean and
refer to that period of twelve (12) full consecutive calendar
months beginning with the first full calendar month of the Term
and each subsequent period of twelve (12) consecutive calendar
months during the Term, provided that if the Term commences on
other than the first day of a calendar month, then the initial
fractional month of the Term plus the next succeeding twelve (12)
full calendar months shall constitute the first Lease Year of the
Term and PROVIDED, FURTHER, that if this Lease is terminated
prior to the Expiration Date, the last Lease Year may contain
less than twelve (12) full calendar months.

2.3. EXTENSION OF THE TERM.  Provided that this Lease is in full
force and effect and no Event of Default has occurred and is
continuing, Tenant shall have the option to extend the Term for
up to four (4) successive periods of five (5) Lease Years each
upon all of the provisions of this Lease, which extension options
shall automatically be deemed exercised two hundred seventy (270)
days prior to the then current Expiration Date without the
requirement for any further notice; PROVIDED, HOWEVER, that
Tenant shall have the right to terminate this Lease (and void any
such automatic extension and all remaining extension options)
effective as of any then current Expiration Date by giving
written notice thereof to Landlord not less than two hundred
seventy (270) days before such then current Expiration Date; and
provided, further, that this Lease shall not be automatically
extended (and Tenant shall be deemed to have given written notice
of non-renewal) if on the date which is two hundred seventy (270)
days prior to the then current Expiration Date an Event of
Default has occurred and is continuing, and in such event this
Lease shall terminate on the then current Expiration Date.  If
and each time this Lease is so extended, the word "TERM" shall be
deemed to include the five (5) year extension period with respect
to which the option has been exercised and the term "EXPIRATION
DATE" shall mean the last day of such five (5) year extension
period.

2.4. PREMISES LEASED "AS-IS".  LANDLORD HEREBY LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE PREMISES "AS IS," AND
TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
PREMISES, INCLUDING WITHOUT LIMITATION ANY WARRANTY OR
REPRESENTATION AS TO ITS FITNESS FOR USE, PURPOSE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, OR AS TO
VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION,
MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION ,
IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE
BY TENANT.  TENANT ACKNOWLEDGES THAT THE PREMISES ARE OF ITS
SELECTION AND TO ITS SPECIFICATIONS, AND THAT THE PREMISES HAVE
BEEN INSPECTED BY TENANT AND ARE SATISFACTORY TO IT.  IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE PREMISES OF ANY
NATURE, WHETHER PATENT OR LATENT, LANDLORD SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, STRICT LIABILITY IN TORT).  THE PROVISIONS OF THIS
SECTION 2.4 HAVE BEEN NEGOTIATED, AND THE FOREGOING PROVISIONS
ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
OF THE PREMISES, ARISING PURSUANT TO STATUTE, JUDICIAL DECISION,
THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW, RULE, REGULATION OR
ORDER NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
Tenant acknowledges and agrees that Tenant has examined the title
to the Premises prior to the execution and delivery of this Lease
and has found such title to be satisfactory for the purposes
contemplated by this Lease.

2.5. TRUE LEASE.  Landlord and Tenant intend for this Lease to be
a   true  lease  and  not  a  transaction  creating  a  financing
arrangement.   Each  party  shall take all  reasonable  steps  to
reflect  the  transaction represented hereby  in  all  applicable
books, records and reports (including, without limitation, income
tax  filings) in a manner consistent with "true lease"  treatment
rather than "financing" treatment.

2.6. NON-TERMINABLE.  Except as and to the extent expressly set
forth in Section 2.3 (with respect to non-renewal of this Lease)
and in Article 11 of this Lease, Tenant shall have no right to
terminate this Lease.  Tenant shall remain obligated under this
Lease in accordance with its terms and shall not take any action
to terminate, rescind or avoid this Lease, notwithstanding any
bankruptcy, insolvency, reorganization, liquidation, dissolution
or other proceeding affecting Landlord or any action with respect
to this Lease which may be taken by any trustee, receiver or
liquidator or by any court.

                            3.   RENT

     3.1. BASE RENT.  Tenant shall pay to Landlord as annual base rent
("BASE  RENT") the amount set forth in column (b) below  for  the
corresponding Lease Years set forth in column (a) below:

(a) Lease Year   (b) Annual Base Rent (c)    Monthly Base Rent

1-5                  $223,222.00           $18,601.83
6-10                 $239,963.65           $19,996.97
11-15                $257,960.92           $21,496.74
16-20                $277,307.99           $23,109.00
21-25*               $298,106.09           $24,842.17
26-30**              $320,464.05           $26,705.34
31-35***             $344,498.85           $28,708.24
36-40****            $370,336.27           $30,861.36

[an asterisk (*) indicates an extension period; the number of
asterisks corresponds to the RESPECTIVE extension period.]

     Base Rent shall be paid to Landlord in monthly installments
("MONTHLY BASE RENT") in the respective amounts set forth in
column (c) above in advance on the first day of each month for
which the same is due during the Term.  Rent for any partial
month shall be prorated on a per diem basis.

     3.2.  PAYMENT.  All charges and costs payable by  Tenant  to
Landlord  or  any  other third party pursuant to  this  Lease  in
addition  to  Base  Rent shall be considered  "ADDITIONAL  RENT".
Base   Rent  and  Additional  Rent  are  sometimes  referred   to
collectively   as  "RENT."   Except  as  otherwise   specifically
provided  in  this  Lease, all Rent shall be paid  by  Tenant  to
Landlord without notice, demand, offset, abatement, reduction  or
deduction  by check payable to Landlord and sent to  Landlord  at
the  address  indicated in Section 1.2 or to such  other  person,
entity  or  place as Landlord may from time to time designate  by
notice  to  Tenant.  If required by Landlord, Tenant  shall  make
payments  of  Monthly Base Rent to Landlord by wire  transfer  in
immediately available federal funds to such account in such  bank
as  Landlord may designate from time to time upon not  less  than
thirty  (30) days' notice to Tenant, which account shall  be  the
same account to which Tenant and/or Tenant's affiliates who lease
other  properties from Landlord named herein (or its  affiliates)
wire transfer payments of Monthly Base Rent for at least nine (9)
other  properties.   Monthly Base Rent for the  period  from  and
including  the Commencement Date through and including  the  last
day of the first full calendar month of the Term shall be paid in
advance on the Commencement Date.

3.3. LATE PAYMENTS.  If Tenant shall fail to make payment of any
installment of Base Rent or any Additional Rent payable to
Landlord (rather than to a third party) within ten (10) days
after the date when each such payment is due, Tenant shall pay to
Landlord interest at a rate equal to the Default Rate (as
hereinafter defined) on the amount unpaid computed from the date
such payment of Base Rent or Additional Rent was due to and
including the date of payment thereof (but only with respect to
amounts payable directly to Landlord or that are not otherwise
subject to an interest or similar charge that will be treated as
Base Rent or Additional Rent hereunder).  Further, if any
installment of Monthly Base Rent is not paid within fifteen (15)
days after the date the same is due, Tenant shall pay to
Landlord, on demand, as Additional Rent, a late charge (the "LATE
CHARGE") equal to four percent (4%) of such overdue installment
of Monthly Base Rent.

3.4. NET LEASE.  This is a net lease and Base Rent, Additional
Rent and, except as otherwise expressly set forth herein, all
other sums payable hereunder by Tenant shall be paid without
defense (other than defense of prior payment), notice, demand,
setoff, counterclaim, recoupment, abatement, suspension,
deferment, diminution, deduction or reduction.  During the Term
of this Lease, Tenant shall be obligated to pay and shall be
liable for all costs and expenses associated with or arising from
the use, operation, maintenance, repair or improvements of the
Premises (regardless of whether such costs and expenses are
charged or imposed against Landlord or Tenant).

                           4.   TAXES

     4.1. As used in this Lease, the term "PREMISES TAXES" shall mean
all  real  estate, personal property, ad valorem and other  taxes
and  assessments, general and special, and all other governmental
charges  levied, assessed or imposed on or with  respect  to  the
Premises  or  which  arise  from  the  ownership,  leasing,  use,
occupancy  or  possession of all or any portion of the  Premises.
Without  limitation  of the foregoing, it is hereby  specifically
agreed  that  "Premises  Taxes"  include  all  taxes  and   other
governmental charges assessed or levied (i) on or with respect to
any  Base Rent or Additional Rent payable under this Lease,  (ii)
with respect to any period prior to or during the Term, and (iii)
any interest, penalties, fines and other amounts charged for late
payment or non-payment of any Premises Taxes. Notwithstanding the
foregoing,  Premises Taxes shall not include  (A)  any  taxes  or
assessments  imposed on or with respect to Tenant's Property  (as
defined in Section 9.1), (B) any income, franchise or other taxes
measured  by Landlord's income or profit from the Premises  on  a
net  basis, other than any sales, use, rent, occupancy or similar
taxes on or with respect to Base Rent or Additional Rent, or  (C)
any gifts, estate or other transfer taxes imposed on Landlord.

     4.2. PAYMENT.

          (a)  Tenant shall pay Premises Taxes to the appropriate
     governmental  authority before delinquency  and  before  any
     interest, penalties or fines may be charged with respect thereto
     and  shall deliver a copy of all paid tax bills to  Landlord
     promptly upon request.

(b)  If any Premises Taxes relate to a fiscal period which is
partly within and partly outside of the period for which Tenant
is responsible, the amount thereof shall be prorated so that
Tenant will be responsible for that portion which relates to the
period prior to and after the Commencement Date and through the
Expiration Date and Landlord will be responsible for the portion
after the Expiration Date.
(c)  Any refunds (including any accrued interest) of Premises
Taxes applicable to the period prior to and during the Term shall
be the property of Tenant and to the extent received by Landlord
shall be paid over to Tenant promptly after receipt thereof.  Any
refund of Premises Taxes shall be deemed a reduction of
Additional Rent hereunder.

     4.3. CONTEST.  Subject to the provisions hereof, Tenant, at its
own  expense, may contest Premises Taxes in any manner  permitted
by  law, in Tenant's name, and, whenever necessary, in Landlord's
name  and  Landlord  will  cooperate at Tenant's  sole  cost  and
expense with Tenant and execute any documents reasonably required
for  such purpose.  Any such contest shall be conducted by Tenant
in  good  faith and at its sole cost and expense, by  appropriate
proceedings  which shall operate during the pendency  thereof  to
prevent  (i)  the collection of, or other realization  upon,  the
Premises Taxes so contested, (ii) the sale, forfeiture or loss of
the Premises, any Base Rent or any Additional Rent to satisfy the
same, (iii) any interference with the use or occupancy of any  of
the  Premises, and (iv) any interference with the payment of  any
Base  Rent  or the portion of any Additional Rent that  does  not
represent  the Premises Taxes being contested under this  Section
4.3.  In no event shall Tenant pursue any contest with respect to
any  Premises  Taxes in any manner that exposes Landlord  to  (a)
criminal liability, penalty or sanction, (b) any civil liability,
penalty  or  sanction  for which Tenant has not  made  provisions
reasonably  acceptable  to Landlord, or  (c)  defeasance  of  its
interest  the  Premises.  Tenant agrees that  each  such  contest
shall  be  diligently prosecuted to a final  conclusion.   Tenant
shall pay and save Landlord harmless from and against any and all
losses,   judgments,   decrees  and  costs  (including,   without
limitation, attorneys' fees and expenses) in connection with  any
such contest and shall, promptly after the final determination of
such contest, fully pay and discharge the amounts which shall  be
levied,  assessed,  charged or imposed or  be  determined  to  be
payable  therein  or in connection therewith, together  with  all
penalties,  fines,  interest, costs and expenses  thereof  or  in
connection therewith.

                   5.   ENVIRONMENTAL MATTERS

     5.1. DEFINITIONS.  For purposes of this Lease the following terms
shall have the following meanings:

          (a)  "ENVIRONMENTAL LAWS" - all present and future laws,
     statutes, rules, regulations, orders and other requirements of
     any  federal,  state, local or other governmental  authority
     relating  to  the environment, environmental  protection  or
     regulation, the emission, disposal or discharge or the actual or
     threatened  release into the environment  of  pollutants  or
     contaminants  or to any Hazardous Substance or HS  Activity.
     Without limitation of the foregoing, Environmental Laws include
     each of the following, as enacted as of the date hereof or as
     hereafter amended:  the Comprehensive Environmental Response,
     Compensation and Liability Act of 1980, 42 U.S.C.  9601,  et
     seq.; the Resource Conversation and Recovery Act of 1976, 42
     U.S.C.   6901, et seq.; the Toxic Substance Control Act,  15
     U.S.C.  2601, et seq.; the Water Pollution Control Act (also
     knows as the Clean Water Act), 33 U.S.C.  1251, et seq.; the
     Clean  Air  Act, 42 U.S.C.  7401, et seq.; and the Hazardous
     Materials Transportation Act, 49 U.S.C.  5101, et seq., and any
     similar state laws.

(b)  "HAZARDOUS SUBSTANCE" - any substance defined or classified
in any Environmental Laws as a toxic or hazardous chemical,
waste, material or substance, or as a pollutant or contaminant
(including, without limitation, petroleum or any by-product or
fractions thereof, lead, asbestos and asbestos containing
materials, polychlorinated byphenyls and radioactive or explosive
materials); and any substance which if present requires
investigation or remediation under any Environmental Law or
results in liability thereunder for exposure thereto or discharge
thereof.

(c)  "HS ACTIVITY" - the generation, manufacture, handling,
transportation, usage, treatment, release, discharge, removal,
storage or disposal of any Hazardous Substance.

     5.2. TENANT OBLIGATIONS.

          (a)  On or after the Commencement Date, Tenant (i) shall not
     conduct or knowingly permit any HS Activity in, on or from the
     Premises or knowingly allow any Hazardous Substances on  the
     Premises, in each case, in violation of any Environmental Laws,
     and (ii) shall comply or cause compliance with all Environmental
     Laws applicable to Tenant's use or occupancy of the Premises, and
     shall cause the Premises to comply with all Environmental Laws;
     in each case specifically including, but not limited to, any
     condition existing on the Commencement Date, except to the extent
     such violation results from, or compliance is required as  a
     result of, any act of Landlord or any act or omission of any
     other  person  other than Tenant and its members,  managers,
     affiliates,  officers,  directors,  employees,  contractors,
     representatives, agents, assignees or subtenants (collectively,
     "TENANT'S  PARTIES") (the obligations of  Tenant  under  the
     preceding clauses (i) and (ii) are called "Tenant's Compliance
     Obligation"). Tenant shall promptly give notice to Landlord if
     Tenant becomes aware of any action, claim, suit or proceeding
     relating to a violation or alleged violation of any Environmental
     Laws filed or threatened against Tenant or the Premises.  If, at
     any time during the Term, Hazardous Substances shall exist in or
     on the Premises to which Tenant's Compliance Obligation applies,
     then Tenant shall, or shall cause responsible third parties to,
     promptly commence and diligently implement all investigation,
     site monitoring, containment, cleanup, removal, restoration or
     other  remedial  work  of any kind or nature  (collectively,
     "Remedial Work") to the extent required by Environmental Laws,
     and in compliance with all Environmental Laws, all at Tenant's
     sole cost and expense.

(b)  Tenant agrees to indemnify, defend and hold harmless
Landlord, any Landlord Lender and their respective managers,
partners, members, officers, directors, shareholders, employees
and agents ("LANDLORD INDEMNITEES") from and against any and all
claims, demands, actions, liabilities, damages, assessments,
losses, fines, penalties, costs and expenses, including
remediation, clean-up and detoxification costs and reasonable
attorneys' fees, arising from or related to any breach or
violation by Tenant of its obligations set forth in Section
5.2(a).  The provisions of Section 5.2 shall survive the
expiration or termination of this Lease.
(c)  Upon Landlord's request, at any time after the occurrence
and during the continuance of an Event of Default or at such
other time as Landlord has reasonable grounds to believe that
Tenant is in violation of Tenant's Compliance Obligation, Tenant
shall cause an inspection or audit of the Premises by an
environmental engineer or other appropriate consultant reasonably
approved by Landlord to determine the presence or absence of
Hazardous Substances on the Premises.  If Tenant fails to
effectuate the commencement of such inspection or audit within
thirty (30) days after such request or fails to deliver a written
report of such inspection or audit to Landlord within sixty (60)
days after such request, Landlord may order the same, and Tenant
hereby grants to Landlord and its respective employees,
contractors and agents access to the Premises upon prior
reasonable notice to undertake such inspection or audit, provided
that such inspection or audit does not interfere with the conduct
of Tenant's business on the Premises, Landlord provides Tenant
certificates of insurance naming Tenant as an additional insured
and containing such types of insurance and limits as Tenant
reasonably requires, Landlord promptly repairs any damage caused
by such testing and restores the Premises to the condition in
which it existed immediately prior to such damage at Landlord's
sole cost and expense, and Landlord shall indemnify Tenant if and
to the extent required under Section 14.2 hereof for all loss,
cost, damage, liens, claims, liabilities or expenses (including,
but not limited to, reasonable attorneys' fees, court costs and
disbursements) incurred by Tenant arising from or by reason of
such inspection or audit.  The cost of such inspection or audit
shall be paid (i) by Tenant if such inspection or audit shall
confirm a violation of Tenant's Compliance Obligation or (ii) by
Landlord if such inspection or audit does not confirm a violation
of Tenant's Compliance Obligation.
(d)  Landlord and Tenant expressly agree that, notwithstanding
anything to the contrary set forth in this Lease (including, but
not limited to, the provisions of Section 14.1 hereof), except in
the case of Tenant's obligations expressly set forth under
Sections 5.2(a), (b) and (c) hereof, Tenant shall have no
obligation under this Lease (i) to defend, indemnify or hold
harmless Landlord or Landlord Indemnitees with respect to any
Hazardous Substance, Environmental Laws or HS Activity, (ii) to
engage any environmental engineer or appropriate consultant with
respect to any Hazardous Substance, Environmental Laws or HS
Activity, (iii) to conduct any audit or inspection of the
Premises with respect to any Hazardous Substance, Environmental
Laws or HS Activity, (iv) to comply or cause compliance with any
Environmental Laws, or (v) to perform or cause performance of any
Remedial Work with respect to any Hazardous Substance,
Environmental Laws or HS Activity.

     5.3. LANDLORD OBLIGATIONS.  On or after the Commencement Date,
Landlord shall not conduct any HS Activity on, about or from  the
Premises.   Landlord  shall promptly give  notice  to  Tenant  if
Landlord  becomes aware of any action, claim, suit or  proceeding
relating to a violation or alleged violation of any Environmental
Laws  filed or threatened against Landlord or the Premises or  if
Landlord  has received notice or has actual knowledge of  any  HS
Activity on the Premises caused by a person other than Tenant  or
any Tenant Party.

                6.   COMPLIANCE WITH REQUIREMENTS

     6.1. COMPLIANCE WITH LAW.  During the Term, Tenant shall comply,
and  shall cause the Premises to comply, in all material respects
with  and  shall  correct any violation of  any  laws,  statutes,
ordinances  and  other legal and insurance requirements,  whether
now or hereafter in force, applicable to the Premises or Tenant's
use  or  occupancy of the Premises, including without limitation,
the  Occupational Safety and Health Act, as amended ("OSHA"), the
Americans with Disabilities Act of 1990, as amended ("ADA"), and,
subject  to  Section 5.2, all Environmental Laws.   Tenant  shall
procure,  maintain and comply, and shall cause  the  Premises  to
comply,  with any and all permits, approvals, licenses and  other
governmental   authorizations  required  for  the   lawful   use,
operation, maintenance and any "Alteration" (hereinafter defined)
of the Premises.

6.2. COMPLIANCE WITH PERMITTED ENCUMBRANCES.  Tenant agrees that
with respect to all easements, conditions, covenants,
restrictions, encumbrances or agreements now affecting the
Premises or which are hereafter created by or consented to by
Tenant (collectively, the "PERMITTED ENCUMBRANCES"), Tenant shall
observe, perform and comply with, and cause the Premises to
comply with, and carry out and perform all of the obligations
therein which are to be observed and performed by the owner or
any occupant of the Premises thereunder, and shall pay all
assessments, fees, costs and expenses required to be paid by the
owner or any occupant of the Premises thereunder.

                   7.   COVENANT AGAINST LIENS

     7.1.  LIENS.  Tenant shall not cause, suffer or  permit  any
mechanic's, materialmen's judgment or other lien ("LIEN")  to  be
filed  against the Premises (other than any Lien arising  due  to
any  act  or  omission of Landlord or its agents); provided  that
nothing  herein  shall be deemed to limit the  rights  of  Tenant
Lender  under  Section 20.2 hereof.  If any Lien shall  be  filed
against  all or any portion of the Premises (other than any  Lien
arising  due  to any act or omission of Landlord or its  agents),
(i)  Tenant shall give notice thereof to Landlord within ten (10)
business days after the date on which Tenant first becomes  aware
of  the filing of any such Lien, and (ii) within forty-five  (45)
days after first becoming aware of such filing, (but in any event
before  any enforcement action to foreclose is taken with respect
to  such Lien), Tenant, at its sole cost and expense, shall cause
the  Lien  to  be  discharged of record or  bonded  over  by  any
statutory bonding procedure sufficient to prevent foreclosure  or
other  enforcement of such Lien, and shall deliver notice thereof
to  Landlord,  failing which Landlord shall have the  right,  but
shall   not   be   obligated,  to  discharge  the  Lien   without
investigating  the  validity  or amount  thereof.   Tenant  shall
reimburse Landlord on demand for any reasonable amounts  so  paid
or  incurred  by  Landlord,  including  reasonable  expenses  and
attorneys' fees incurred in connection therewith.

Notice is hereby given that Landlord shall not be liable for any
labor, services or materials furnished or to be furnished to
Tenant, or to anyone holding any of the Premises through or under
Tenant, and that no mechanic's, materialman's or other Liens for
any such labor, services or materials shall attach to or affect
the interest of Landlord in and to any of the Premises.

                     8.   USE AND ENJOYMENT

     8.1. USE.

          (a)  Unless otherwise approved in writing by Landlord, during the
     Term the Premises shall be used only for the operation of an
     Applebee's Restaurant, including without limitation, ancillary
     carry-out food service and the sale of beer, wine and  other
     alcoholic beverages, or, if a change in use is requested  by
     Franchisor, any other restaurant which may be affiliated with or
     franchised by Franchisor.  The Premises shall be attractive in
     appearance and Tenant shall conduct its business in a lawful and
     reputable manner.  Tenant shall not commit waste on the Premises
     and shall not occupy or use the Premises or permit the same to be
     used or occupied for any purpose or in any manner that violates
     any applicable legal or governmental requirement.

(b)  Tenant shall continuously operate a business pursuant to
Section 8.1(a) from the Premises during the Term of this Lease;
provided, however, that Tenant may temporarily cease its
operations at the Premises for (i) restoration, alteration and
repair obligations pursuant to the terms of its Franchise
Agreement; (ii) the performance of Alterations permitted under
this Lease; or (iii) as a result of any emergency, casualty or
event of force majeure.
(c)  All garbage, trash and refuse generated from the operation
of the business conducted on the Premises shall be placed in
appropriate garbage receptacles and, at Tenant's sole cost and
expense, removed from the Premises with sufficient frequency so
as to avoid any accumulation thereof outside of such receptacles.

     8.2. EXTERIOR SIGNS, AWNINGS AND CANOPIES.  Tenant, at its sole
cost  and  expense, may at any time and from time to time  during
the  Term  install, alter, and/or replace any  and  all  exterior
signs,  awnings and/or canopies as Tenant may determine, so  long
as  they  are  in  compliance with all applicable  laws  and  all
Permitted  Encumbrances.  Tenant, at its sole cost  and  expense,
shall  obtain  all necessary permits for all signs,  awnings  and
canopies  on  the Premises and shall maintain the  same  in  good
condition and repair.

8.3. UTILITIES.  Tenant shall arrange and contract, in its name,
for and pay when due all charges for water, gas, electricity,
cable TV, telephone, trash removal, scavenger service and other
utility services used or consumed on the Premises by Tenant or
its agents during the Term, all of which shall be separately
metered and billed to Tenant.

8.4. QUIET ENJOYMENT.  Landlord covenants with Tenant that
Tenant, upon paying Rent to Landlord and performing Tenant's
other covenants in this Lease, shall and may peaceably and
quietly have, hold, occupy, possess and enjoy the Premises during
the Term without any interference from Landlord or anyone
claiming by, through or under Landlord.
8.5. SIGNAGE RIGHTS, PARKING, ACCESS, EASEMENTS.  Landlord
covenants with Tenant that Landlord shall not engage in any
action, or grant any rights which affect parking at the Premises,
access to the Premises, means of ingress and egress to and from
the Premises, visibility to or from the Premises, Tenant's
signage at the Premises or rights to the roof of the Premises,
any telecommunications equipment or utilities which service the
Premises, Tenant's air rights and any other rights to which
Tenant may be entitled pursuant to any easement agreements or
similar agreements affecting the Premises without Tenant's prior
written consent, which may be granted or withheld in Tenant's
sole discretion but shall not be unreasonably withheld if such
action will not materially adversely affect the conduct of
Tenant's business at the Premises.  Landlord agrees to deliver to
Tenant copies of any notices Landlord receives with respect to
the aforementioned rights.  Landlord agrees that so long as no
Event of Default shall have occurred and be continuing, upon
request by Tenant (and only after all documentation reasonably
required to consummate the relevant transaction shall have been
provided to Landlord), Landlord shall (i) enter into, modify or
grant such easements, covenants, waivers, approvals or
restrictions for utilities, parking or other matters as Tenant
may desire for the operation of the Premises (including, without
limitation, consenting to site and common area changes affecting
access, parking, tenant mix and the like and approving uses or
users of the other properties in the vicinity of the Premises
which Tenant reasonably believes will have a positive impact on
its business at the Premises) (collectively, "Easements"), or
(ii) dedicate or transfer, minor non-essential unimproved
portions of the Premises for road, highway or other public
purposes to the extent such dedications or transfers are
consistent with commercially reasonable development or operation
of the Premises or, in Tenant's reasonable judgment, will have a
positive impact on its business at the Premises (the
"Dedications"); provided, that Landlord shall be obligated to
take such action only if (A) any such Easements or Dedications do
not adversely affect the value of the Premises (other than to a
de minimis extent), do not unreasonably render the use of the
Premises dependent upon any other property or unreasonably
condition the use of the Premises upon the use of any other
property, and do not adversely affect (other than to a de minimis
extent) the use, or visibility of, or access to, the Premises,
(B) Tenant advises Landlord of the amount of the consideration,
if any, being paid for such Easements or Dedications and that
Tenant considers such consideration, if any, to be fair under the
circumstance and that such consideration, if any, shall be paid
to Landlord, (C) Tenant acknowledges in writing that for so long
as this Lease is in effect, Tenant will perform all obligations,
if any, of Landlord under the applicable instrument and Tenant
will remain obligated under this Lease and AAG (if the Guaranty
is then in effect) acknowledges in writing that AAG will remain
obligated under the Guaranty, in each case in accordance with
their respective terms, and (D) Tenant pays all out-of-pocket
costs and expenses incurred by Landlord in connection with said
Easements or Dedications including, without limitation reasonable
attorneys' fees.  Subject to the foregoing clauses (A) through
(D), Landlord shall cooperate with Tenant's efforts to enter into
any Dedications or Easements.

     If Tenant shall submit a request to Landlord for Landlord's
cooperation in connection with any such Easement or Dedication
which requires Landlord's approval or execution of any document,
Landlord shall (x) approve such Easement or Dedication, and
execute and deliver to Tenant all documents required in
connection therewith, within ten (10) days of receiving Tenant's
request for approval, or (y) disapprove Tenant's request in a
written notice with a detailed explanation of its objections
delivered to Tenant within ten (10) days of receiving Tenant's
request for approval.  If Landlord fails to respond within such
ten (10) day period, Tenant's request with respect to such
Easement or Dedication shall be deemed to be approved by Landlord
hereunder and Tenant is hereby authorized and empowered to
execute and deliver on behalf of Landlord, as Landlord's attorney-
in-fact, all instruments and documents required in connection
therewith.

     If Landlord timely disapproves of a Tenant request under
this Section 8.5, then Tenant may elect, by delivering written
notice to Landlord, to resolve the matter by expedited
arbitration in accordance with this paragraph.  Landlord and
Tenant shall mutually select a single arbitrator within ten (10)
days after delivery of Tenant's notice of arbitration hereunder.
If the parties cannot agree upon an arbitrator within such
period, then either party may request that a qualified arbitrator
be appointed by the office of the American Arbitration
Association located nearest to the Premises.  Following selection
or appointment, the arbitrator shall meet jointly with
representatives of Landlord and Tenant within twenty (20) days to
consider the parties' positions on the disputed issue and the
arbitrator shall render a written decision within two (2)
business days following such meeting.  The decision of the
arbitrator shall be final, binding on the parties and
nonappealable.  The arbitration shall otherwise be conducted in
accordance with the American Arbitration Association's rules for
expedited dispute resolution in effect at the time.  The non-
prevailing party in any such arbitration shall pay the
arbitrator's fee and expenses.

     8.6. WARRANTIES, GUARANTIES AND INDEMNITIES.  Landlord assigns to
Tenant,  without recourse or warranty whatsoever, all warranties,
guaranties  and  indemnities, express  or  implied,  and  similar
rights  which Landlord may have against any manufacturer,  seller
(other than the Seller under the Purchase and Sale Agreement from
whom  Landlord  acquired the Premises), engineer,  contractor  or
builder  with respect to the Premises, including, but not limited
to,  any  rights and remedies existing under contract or pursuant
to  the Uniform Commercial Code (collectively, the "guaranties").
Such  assignment shall remain in effect during the Term. Landlord
hereby  agrees  to execute and deliver at Tenant's  expense  such
further  documents,  including powers of  attorney  (which  shall
contain indemnity agreements from Tenant to Landlord which  shall
be  in  form reasonably satisfactory to Landlord), as Tenant  may
reasonably request in order that Tenant may have the full benefit
of  the  assignment  of guaranties effected  or  intended  to  be
effected  by  this  Section  8.6.   Upon  the  occurrence  of   a
termination  of  this  Lease, the guaranties shall  automatically
revert to Landlord.

               9.   TENANT'S PROPERTY; LIEN WAIVER

     9.1. TENANT'S PROPERTY.  Landlord agrees that all (i) fixtures,
furniture,  furnishings, equipment (other  than  floor  and  wall
coverings,  fixtures  which  are  "built-ins"  or  constitute  an
integral  part  of  the Building, the walk-in cooler,  heat,  air
conditioning and ventilation systems, electrical, mechanical  and
plumbing  systems, all of which are owned by and are the property
of   Landlord),  Kitchen  Equipment  (as  hereinafter   defined),
inventory, merchandise, goods, chattels, trade fixtures, signage,
appliances  display  cases, supplies, tools, machinery,  security
systems,  computer software or other personal property of  Tenant
(including, without limitation, trade fixtures in, on, around  or
affixed to the Premises), (ii)  fixtures, furniture, furnishings,
equipment, supplies, tools, machinery, security systems, computer
software, signage and other personal property (including, without
limitation,  trade  fixtures in, on, around  or  affixed  to  the
Premises) which display the name, trade name, trademark,  service
mark,  logo,  insignia, slogan, emblem or  symbol  of  Applebee's
International  Inc.'s  ("Franchisor") or of Tenant  ("Distinctive
Property"),  and  (iii)  all  licenses,  permits,  approvals  and
authorizations, if any, which are required in connection with the
operation  of  Tenant's business, including, without  limitation,
all  liquor  licenses,  at  any  time  located  on  the  Premises
(collectively, "Tenant's Property"), shall be and  at  all  times
remain the property of Tenant regardless of whether the same  (x)
is affixed to the Improvements on the Land or the manner in which
the  same is affixed (unless permanently affixed) or (y) may  now
or  hereafter be regarded as a fixture or as property of Landlord
by  operation of law or otherwise, unless, however, such fixtures
and equipment cannot be removed without substantial damage to any
Improvements which cannot be easily repaired.  As used herein the
term  "Kitchen  Equipment"  shall  include,  without  limitation,
kitchen   fixtures  (except  for  sanitary  plumbing   fixtures),
counters, stainless steel equipment, ranges, ovens, display cases
and  refrigeration  equipment  (excluding  the  walk-in  cooler).
Tenant  shall  have the right at any time and from time  to  time
during  the  Term and, subject to the provisions of Section  16.2
below,  within  fifteen (15) days after the end of  the  Term  to
remove any Tenant's Property from the Premises.

9.2. WAIVER OF LANDLORD'S LIEN.  Tenant contemplates financing
from time to time some or all of Tenant's Property with a lender
or vendor ("TE LENDER") who will require a security interest
therein (those items of Tenant's Property which are subject to
such security interest being referred to collectively as
"FINANCED PERSONALTY").  Landlord hereby disclaims and waives any
and all liens or right which Landlord may have to claim a lien
against the Tenant's Property for nonpayment of Rent or otherwise
and agrees to execute and deliver promptly upon request a waiver
with respect thereto.

            10.  ALTERATIONS; MAINTENANCE AND REPAIR

     10.1.     ALTERATIONS.

          (a)  ALTERATIONS.  For purposes of this Lease, any physical
     improvement, addition, enhancement or change with respect to all
     or any portion of the Premises is referred to as an "ALTERATION."
     Tenant or Franchisor shall have the right at any time and from
     time to time during the Term to make or cause to be made any
     Alteration in or to the Premises (i) without Landlord's consent,
     if such Alteration consists of the demolition of the Building and
     reconstruction of a new prototypical building so long as:  (A)
     the new building is constructed in compliance with applicable
     codes and Permitted Exceptions, (B) Tenant continues to pay Rent,
     (C) construction is completed within nine (9) months following
     demolition of the Building, subject to extension  for  force
     majeure  events, (D) Landlord has approved  in  advance  the
     construction budget (which shall include a contingency) for the
     new building, such approval not to be unreasonably withheld,
     delayed or conditioned, and (E) either (y) in the case where the
     Guaranty is in full force and effect prior to demolition Tenant
     has provided Landlord with a commercially reasonable completion
     bond for the project or such other assurance of performance as
     Landlord may reasonably accept, or (z) prior to demolition the
     Tenant deposits with Landlord cash (the "Deposit") sufficient to
     construct the building and improvement pursuant to the approved
     budget,  with  the Deposit being disbursed pursuant  to  the
     Landlord's then current construction disbursement procedures;
     (ii) without Landlord's consent, if such Alteration is performed
     in  order  to  comply with any of Tenant's  agreements  with
     Franchisor and such Alteration does not adversely affect any
     structural component of the Building, and (iii) in the case of
     any  Alteration other than those permitted under clause (ii)
     above, with Landlord's prior consent, which consent shall not be
     unreasonably withheld provided that such Alteration does not (A)
     diminish the value of the Premises (including, by way of example
     only, but without limitation, by diminishing the utility of the
     Improvements for use as a restaurant or diminishing the useful
     life of the Improvements, except to a de minimis extent, or (B)
     adversely affect any structural component of the Building.  Every
     Alteration shall be made in accordance with all applicable laws,
     legal requirements and the Permitted Encumbrances.  If Tenant
     shall submit a request to Landlord for Landlord's approval of an
     Alteration which requires Landlord's approval, Landlord shall (x)
     approve such Alteration proposed by Tenant within twenty-one (21)
     days of receiving Tenant's proposal and request for approval or
     (y)  disapprove Tenant's proposal in writing with a detailed
     explanation of its objections within twenty-one (21) days of
     receiving Tenant's proposal and request for approval.  If  Tenant
     submits a proposal to Landlord and Landlord disapproves such
     proposal within the twenty-one (21) day time period, Tenant may
     submit  another proposal with modifications thereto made  in
     response to Landlord's objections and Landlord shall so approve
     or disapprove same within seven (7) days after submission of such
     modified proposal.  If Landlord does not approve or disapprove
     any proposal or modified proposal in writing with a detailed
     explanation of its objections within the applicable seven (7)  or
     twenty-one (21) day period, Tenant may submit to Landlord  a
     reminder notice, which shall state that Landlord's failure to
     disapprove the applicable proposal within seven (7) days after
     receipt of such reminder notice shall be deemed to constitute
     Landlord's approval thereof.  If Landlord does not disapprove
     such proposal or modified proposal in writing with a detailed
     explanation of Landlord's objections to Tenant's modifications
     within seven (7) days after receipt of Tenant's reminder notice,
     Landlord  shall  be deemed to have approved the  Alterations
     proposed by Tenant.

          (b)  In connection with any Alteration:  (i) the Alterations to
     be made will be constructed using materials of a quality and
     workmanship at least as good as the original work; (ii) all such
     Alterations shall be performed in a good and workmanlike manner,
     and shall be performed diligently in a commercially reasonable
     time period subject to force majeure in compliance with all laws,
     legal requirements and the terms of all Permitted Encumbrances;
     (iii) all work done in connection with any such Alteration shall
     comply in all material respects with all requirements of any
     insurance policies in effect with respect to the Premises (the
     "INSURANCE REQUIREMENTS"); (iv) Tenant shall pay when due all
     costs and expenses of any such Alteration, and shall discharge
     all liens filed against any of the Premises arising out of the
     same;  (v) Tenant shall procure and pay for all permits  and
     licenses required in connection with any such Alteration; (vi)
     all such Alterations shall be the property of Landlord and shall
     be  subject  to this Lease (except for any Alteration  which
     constitutes Tenant's Property); and (vii) all Alterations shall
     be  made  under the supervision of an architect or  engineer
     selected  by  Tenant  and  in  accordance  with  plans   and
     specifications which shall be submitted to Landlord prior to the
     commencement of the Alterations; provided, however, Landlord
     shall have no right to approve such architect, engineer, plans or
     specifications, except as expressly set forth in Section 10.1(a).

     10.2.     MAINTENANCE AND REPAIR.  During the Term, Tenant at its
sole  cost and expense, agrees to make all necessary repairs  and
replacements to the Improvements as often as required to keep and
maintain  the  Premises  in good and safe condition  and  repair.
Notwithstanding   any   provision  to  the   contrary,   Tenant's
obligations  under  this  Section shall not  include  making  any
repair  or  improvement necessitated by the act of Landlord,  its
agents,  employees or servants.  If Tenant shall default  in  its
obligations  under this Section 10.2, Landlord may, after  thirty
(30)  days  written  notice to Tenant and failure  by  Tenant  to
perform   any   necessary  repairs  and   replacements   to   the
Improvements  within  such  thirty (30)  day  period,  enter  the
Premises to commence such repairs or replacement.  All reasonable
sums  incurred by Landlord in connection with any such repair  or
replacement  shall constitute Additional Rent payable  by  Tenant
under  this Lease and shall be paid by Tenant to Landlord  within
ten  (10) days of Tenant's receipt of a detailed invoice for such
charges.

              11.  CONDEMNATION AND CASUALTY DAMAGE

     11.1.     SUBSTANTIAL TAKING.  If all or substantially all of the
Premises  is taken or appropriated for any public or quasi-public
use  or  purpose by any lawful power or authority by the exercise
of  the  right of eminent domain or by virtue of condemnation  or
other similar proceedings, including a deed given in lieu thereof
("Taking"), other than a temporary Taking for a period of one (1)
year  or  less,  this  Lease  shall  terminate  as  of  the  date
possession is required by the condemning authority and  Rent  and
all  other charges and costs payable hereunder shall be  adjusted
and paid to the effective date of termination.

     11.2.     OTHER TAKING.

          (a)  If there shall be a Taking, other than a temporary Taking
     for a period of one (1) year or less, of (i) a portion of the
     Building, (ii) twenty percent (20%) or more of the parking area
     of the Premises, or (iii) any material part of a driveway or
     roadway necessary for access to the Premises, and in Tenant's
     reasonable judgment such Taking under clauses (i), (ii) or (iii),
     would render the Premises (or the remainder thereof) unsuitable
     for the conduct of Tenant's business, Tenant shall have the right
     to terminate this Lease as of the date possession is required by
     the condemning authority by giving notice to that effect  to
     Landlord within sixty (60) days after notice to Tenant of the
     date such possession is required.  In such event, Rent and all
     other charges and costs payable hereunder shall be adjusted and
     paid to the effective date of termination.

(b)  If only a portion of the Premises is subject to a Taking and
Tenant is not entitled to or shall not exercise its right to
terminate this Lease pursuant to Section 11.2(a), this Lease
shall continue in full force and effect, and there shall be no
abatement or reduction of Rent payable hereunder.  Tenant shall
make any and all repairs and restorations to the remainder of the
Premises to the extent necessary to render the same a complete
architectural unit suitable for Tenant's use.

     11.3.     COMPENSATION.  (a) In the event that all or any portion
of the Premises is subject to a Taking, Landlord and Tenant shall
cooperate  to  maximize  the amount  of  the  recovery  from  the
condemning   authority.  If  the  recovery  from  the  condemning
authority  is  paid into a common fund or paid only to  Landlord,
such  recovery shall be allocated as follows and in the following
priority:  (i) so long as no Event of Default shall have occurred
and be continuing, to Tenant for the cost of any repairs required
pursuant  to Section 11.2(b), subject, however, to the provisions
of  Section  11.3(b)  hereof;  (ii)  to  Landlord,  that  portion
allocable to Land which is taken; (iii) to Landlord, that portion
allocable  to Improvements which are taken; (iv) to Tenant,  that
portion allocable to Tenant's Property or Tenant's relocation and
moving    expenses;   and   (v)   to   Landlord,   the   balance.
Notwithstanding  the  foregoing, all proceeds  from  a  temporary
Taking  shall  be  (A)  paid  to Tenant  if  this  Lease  is  not
terminated  and  (B)  equitably allocated  between  Landlord  and
Tenant as of the date of termination if this Lease is terminated.
The  provisions of this Section shall survive any termination  of
this Lease pursuant to Sections 11.1 or 11.2(a).

          (b)  If the proceeds from a Taking, and the estimated costs of
     repairs to be performed by Tenant pursuant to Section 11.2(b),
     exceeds One Hundred Twenty-five Thousand Dollars ($125,000.00),
     then  such  proceeds shall be held by Landlord or Landlord's
     Lender, and Landlord shall cause the proceeds to be paid out from
     time to time to Tenant as the work progresses, subject to each of
     the following conditions:

           (i)  Each request for payment shall be made on not less than ten
          (10) business days' prior notice to Landlord, and shall be
          accompanied by an officer's certificate stating (A) that no Event
          of Default exists under this Lease and (B) that the sum requested
          is validly required to reimburse Tenant for payments by Tenant to
          complete the repair work, or is validly due to the contractor,
          subcontractors, materialmen, laborers, engineers, architects or
          other persons rendering services or materials for the work
          (giving a brief description of such services and materials).  At
          the time of disbursement, no Event of Default shall have occurred
          and be continuing.

(ii) Each request for payment shall be accompanied by waivers of
lien reasonably satisfactory to Landlord covering that part of
the work for which payment or reimbursement has been made as of
the date shown on the current request.
(iii)     Landlord shall release to Tenant the amount requested
by Tenant, subject to the amount retained by Landlord in
accordance with subsection (iv) below, within ten (10) business
days of Tenant's satisfaction of the items set forth in
subsection (i) and (ii) above. Disbursements shall be made not
more frequently than once every thirty (30) days.
(iv) Except and to the extent that Tenant is already retaining a
like amount from its contractors, Landlord (or Landlord Lender)
may retain ten percent (10%) of the proceeds as retainage until
the repairs and restoration are substantially complete.
(v)  Proceeds held by Landlord in accordance with this Section
shall be held in an interest bearing account and any interest
earned on the proceeds shall be a part of the proceeds, and shall
be disbursed in accordance with this Lease. Landlord shall take
any interest earned into account for purposes of determining its
federal income tax liability, if any, and shall pay any income
taxes thereon.

     11.4.     CASUALTY DAMAGE.

          (a)  If the Improvements or any portion thereof are damaged or
     destroyed by fire or other casualty ("CASUALTY"), and this Lease
     is  not terminated pursuant to Section 11.4(b) below, Tenant
     shall, promptly and diligently repair such damage and restore the
     Improvements as nearly as possible to the condition which existed
     prior to the occurrence of such Casualty or to any comparable or
     improved condition consistent with Tenant's or Franchisor's then-
     current store design and this Lease shall remain in full force
     and  effect  and Tenant shall continue to pay Rent.   Tenant
     promptly shall commence and diligently pursue to completion the
     repair, restoration and replacement of the damaged or destroyed
     Improvements, due allowance being made for time needed to obtain
     permits, adjust insurance and for delay on account of events of
     force majeure.  Such repair, restoration and replacement shall be
     performed  in  accordance with all  applicable  laws,  legal
     requirements  and Permitted Encumbrances.  Tenant  shall  be
     responsible  for the repair or replacement of  any  Tenant's
     Property damaged by such Casualty.  As used in this Lease the
     word  "destroyed" shall mean completely destroyed above  the
     foundation, or so substantially damaged as to require demolition
     to the foundation, or such other severity of damage as may be
     established  or  imposed by applicable governmental  law  or
     ordinance which, if suffered, would constitute total destruction
     or  require  demolition before repair or reconstruction  may
     commence.

(b)  If the Improvements or any portion thereof is damaged or
destroyed (i) during the last two (2) Lease Years of the Term (or
the Term as then extended) to the extent of twenty-five percent
(25%) or more of the replacement value thereof (exclusive of the
foundation) immediately prior to such Casualty; or (ii) by a
cause or peril which is not covered by the property insurance
required to be carried pursuant to Section 12.1(b) (excluding any
cause or peril arising from any act of Tenant or any of its
members, managers, officers, directors, employees, contractors,
agents, representatives, subtenants or assignees) or other
insurance which is then customarily being carried by a
commercially reasonable prudent operator of a facility similar to
the Premises; then Tenant shall have the right to terminate this
Lease by giving notice to that effect ("Termination Notice") to
Landlord within one hundred twenty (120) days after the
occurrence of the Casualty, in which event termination shall be
effective as of the date of such Casualty if the Building is
destroyed and otherwise as of the date Tenant vacates the
Premises following such Casualty.

(c)  If this Lease is terminated pursuant to this Section 11.4,
Rent and all other charges and costs payable hereunder shall be
adjusted and paid to the effective date of termination, and all
proceeds of any insurance with respect to the Premises (exclusive
of Tenant's Property, which shall be paid to Tenant) shall be
paid to Landlord.
                         12.  INSURANCE

     12.1.     BY TENANT.  Tenant, at its sole cost and expense, shall
obtain  and maintain (or cause to be obtained and maintained,  as
the case may be) the following insurance during the Term:

          (a)  Commercial general public liability insurance with limits of
     not less than Five Million and No/100 Dollars ($5,000,000.00) per
     occurrence.

(b)  All-risk property insurance covering all Improvements
constituting part of the Premises, including the Building, all
Alterations and other improvements (excluding Tenant's Property),
in an amount not less than one hundred percent (100%) of the
replacement cost thereof, including (i) ordinance or law coverage
including any amounts necessary to replace the undamaged portion
of the Building, to cover cost increases arising from changes in
building codes or other ordinances or laws and to cover costs of
debris removal, and (ii) boiler and machinery coverage;
(c)  Property insurance covering Tenant's Property in such
amounts as Tenant deems necessary or desirable;
(d)  A liquor liability policy with limits of not less than Five
Million and No/100 Dollars ($5,000,000.00) per occurrence and
Five Million and No/100 Dollars ($5,000,000.00) in the aggregate;
(e)  Workers' compensation and employer's liability insurance as
required by applicable law;
(f)  Insurance against loss or damage from explosion of any steam
or pressure boilers or similar apparatus located in or about the
Improvements in an amount not less than the actual replacement
cost of the Improvements and equipment located within the
Improvements;
(g)  If any portion of the improvements is located in an area
designated by the Federal Emergency Management Association as
having special flood and mud slide hazards, flood insurance in
the maximum available amount; and
(h)  Loss of rent insurance in amounts sufficient to compensate
Landlord for all Base Rent, Additional Rent and other amounts
payable hereunder for a period of not less than twelve (12)
months, the amount of such coverage to be adjusted annually to
reflect the Base Rent, Additional Rent and other amounts payable
during the succeeding twelve (12) month period.

     12.2.     GENERAL REQUIREMENTS.  All insurance (and renewals
thereof)  required by this Article shall be issued by responsible
insurance  carriers authorized to do business  in  the  State  in
which  the Premises is located and having a claims paying ability
rating  of  not  less  than  "A-" by  Standard  &  Poor's  Rating
Services,  a  division of The McGraw-Hill Companies,  Inc.   Each
policy (and any renewal thereof) shall expressly provide that  it
shall  not  be cancelled or changed without at least thirty  (30)
days'  prior  written  notice to all  parties  insured  or  named
therein.   The  insurance described in Sections 12.1(a)  and  (d)
shall  include  Landlord  and  Landlord's  Lender,  if  any,   as
additional  insureds.   The  insurance  provided  under  Sections
12.1(b), (f) and (g) shall name Landlord each Landlord Lender  as
a loss payee with respect to any losses, and any proceeds paid to
Landlord  thereunder shall be held and disbursed by  Landlord  on
the  same  terms as those set forth in Section 11.3 (except  that
proceeds  from  losses  of  less  than  One  Hundred  Twenty-five
Thousand  Dollars  ($125,000) shall be paid to  Tenant;  provided
that no Event of Default has occurred and is continuing).  In the
event  of  any  Tenant financing, the interest  of  Landlord  and
Landlord's Lender, if any, under the property insurance described
in  Sections 12.1(b), (f) and (g) shall be senior to the interest
of  any  Tenant  Lender.  All of the insurance required  by  this
Article  shall be primary and noncontributing with any  insurance
which  may be carried by the Landlord, shall afford coverage  for
all  claims based on any act, omission, event or condition  which
occurs or arises during the policy period, and may be obtained by
endorsement  on  blanket  policy(ies) of  insurance  carried  and
maintained  by  Tenant.  Upon issuance and each renewal  thereof,
Tenant  shall  deliver  to  Landlord a  certificate  thereof  and
reasonable evidence of paid premium, failing which Landlord shall
have  the  right from time to time after no less  than  ten  (10)
days' notice (except that if any insurance required under Section
12.1  has  lapsed, no prior notice shall be necessary) to  effect
such  insurance  for no more than one (1) year and  all  premiums
paid  by  Landlord  shall be reimbursed by  Tenant  upon  written
demand.   The  amount of insurance coverage required in  Sections
12.1(a) and (d) above each shall be subject to increase from time
to  time (but not more frequently than once every five (5) years)
and  upon  not  less than ninety (90) days prior notice  therefor
from  Landlord  to  Tenant;  provided that  (y)  such  additional
coverage is comparable and not more than that commonly carried by
owners of similar properties in the metropolitan vicinity of  the
Premises,  and  (z)  such  additional coverage  is  available  at
commercially reasonable rates.  Landlord shall have  no  interest
in  any  insurance proceeds Tenant receives for Tenant's Property
and  Landlord  shall sign all documents which  are  necessary  or
appropriate  in connection with the settlement of  any  claim  or
loss by Tenant with respect to Tenant's Property.

12.3.     MUTUAL WAIVER OF SUBROGATION.  Tenant agrees to have
all policies of fire and extended coverage insurance now or
hereafter carried by it with respect to the Improvements endorsed
with a clause substantially as follows:  "This insurance shall
not be invalidated should the insured waive in writing prior to a
loss any or all rights of recovery against any party for loss
occurring to the property described herein."  The obligation to
obtain such an endorsement shall be subject to the availability
thereof at commercially reasonable rates.  Landlord and Tenant
hereby waive all claims for recovery from each other for any loss
or damage to it or any of its property insured under valid and
collectible insurance policies to the extent of the proceeds
collected under such insurance policies.

                 13.  ASSIGNMENT AND SUBLETTING

     13.1.     CONSENT REQUIRED.  Except as provided in Section 13.2
below  and Tenant financing pursuant to Article 20 below,  Tenant
shall  not sell, encumber, assign or transfer this Lease  or  any
interest  herein,  nor  sublet all or any part  of  the  Premises
without the prior written consent of Landlord which shall not  be
unreasonably  withheld, conditioned or delayed so  long  as  such
proposed  assignee  or  subtenant is  a  capable  operator  of  a
restaurant   facility   and   has  a  financial   condition   and
creditworthiness sufficient to meet the financial obligations  of
Tenant  under  this  Lease.  With respect  to  an  assignment  or
subletting   for  which  Landlord's  consent  is  required,   the
following provisions shall apply:

               (i)  there shall be submitted to Landlord current financial
          information and information regarding the business reputation and
          experience regarding the proposed assignee/sublessee;

(ii) the business reputation and experience of the proposed
assignee or sublessee (or the principals or owners thereof) shall
meet or exceed generally acceptable commercial standards for like
properties;
(iii)     in the case of an assignment, the proposed assignee
shall agree in writing to assume and abide by all terms and
provisions of this Lease from and after the date of such
assignment; and
(iv) no Event of Default shall have occurred and be continuing.
Landlord agrees to respond within twenty (20) days after receipt
of Tenant's written request for Landlord's consent (together with
the information specified above and other information reasonably
requested by Landlord) to a proposed assignment or sublet and
submission of the financial information and business
qualifications of the proposed assignee/sublessee pursuant to
clauses (i) and (ii) above.  Any disapproval shall be explained
in writing.  If Landlord fails to respond or explain its
disapproval by the expiration of said twenty (20) day period,
Tenant may give to Landlord a reminder notice stating that
Landlord's failure to respond within ten (10) days after receipt
of such reminder notice shall be deemed to constitute Landlord's
approval of the transaction in question, and if Landlord shall
fail to respond or explain its disapproval within ten (10) days
after receipt of such reminder notice, the transaction which is
the subject of Tenant's notice to Landlord shall be deemed
approved.  Consent by Landlord to any assignment or subletting
shall not waive the necessity for consent to any subsequent
assignment or subletting for which Landlord's consent is required
by this Section.

     13.2.      PERMITTED TRANSFER.  Tenant shall have the right,
without any cost, fee or payment to Landlord (other than  as  set
forth  in  Section  13.4 below), to sublet  any  portion  of  the
Premises,  or  to transfer and assign Tenant's right,  title  and
interest in this Lease, without Landlord's prior written consent,
to  the  following  persons and entities in the following  events
(each,   a   "PERMITTED  TRANSFER"):   (i)   to   Franchisor   or
Franchisor's  affiliate; (ii) to another licensed  franchisee  of
Franchisor; (iii) to a parent, subsidiary, affiliate or  division
of  Tenant,  Apple American Group LLC ("AAG") or their respective
investors;   (iv)  to  any  entity  that  acquires,  by   merger,
consolidation  or  otherwise, all or  substantially  all  of  the
ownership  interests in and control of, Tenant or  AAG  (provided
that  no  Event of Default shall have occurred and be continuing)
or  of  Franchisor;  or (v) to any entity that  acquires  all  or
substantially  all of Tenant's assets (excluding the  Distinctive
Property)  or  AAG's assets (provided that no  Event  of  Default
shall  have  occurred and be continuing).  A direct  or  indirect
transfer  of  all or any interest in AAG shall not  be  deemed  a
sale,  encumbrance, assignment or transfer of this Lease  or  any
interest herein.  A direct or indirect transfer by AAG of all  or
any  interest  in Tenant shall not be deemed a sale, encumbrance,
assignment  or  transfer of this Lease or any  interest  therein;
provided, that the transferee is a party to whom, if the lessee's
interest  in  this  Lease were transferred to  such  party,  such
transfer would constitute a Permitted Transfer.  For purposes  of
this Section 13.2, references to Tenant, Franchisor and AAG shall
be deemed to include their respective successors and assigns.

13.3.     GENERAL PROVISIONS.  In the case of any sublease or
assignment of this Lease, Tenant shall submit an executed copy of
the sublease or assignment instrument to Landlord.
Notwithstanding anything to the contrary which may be provided in
this Lease, (a) the Tenant making any assignment or sublease
shall not be released from any liability under this Lease as a
result of any assignment or sublease made pursuant to Section
13.1, and (b) the Tenant assigning all of its right, title and
interest under this Lease (and any predecessor Tenant that has
not theretofore been released) shall be released from all future
liability under this Lease in connection with any assignment of
all of such assigning Tenant's right, title and interest in this
Lease described in subsections (i), (ii), (iv) and (v) of Section
13.2, provided that (i) the assignee of an assignment or transfer
described in subsections (i), (ii), and (v) of Section 13.2
assumes all obligations under this Lease pursuant to an
assignment and assumption agreement in the form attached as
Schedule 1 to the Guaranty attached as Exhibit D hereto, and (ii)
if the Tenant making the assignment is not the originally named
Tenant hereunder, such assigning Tenant (and any predecessor
Tenant that has not theretofore been released) shall not be
released in the case of an assignment or transfer of such
assigning Tenant's right, title and interest in this Lease to (X)
any entity that acquires, by merger, consolidation or otherwise,
all or substantially all of the ownership interests in and
control of, such assigning Tenant pursuant to subsection (iv) of
Section 13.2 above other than with respect to Franchisor or
Franchisor's affiliate, or  (Y) any entity that acquires all or
substantially all of such assigning Tenant's assets pursuant to
subsection (v) of Section 13.2 above, unless the assignee or
transferor will directly or indirectly hold, after giving effect
to such assignment or transfer, all or substantially all of the
assets of the originally named Tenant hereunder.  Landlord shall
not be entitled to any consideration in connection with any
assignment or sublet.  Unless expressly released pursuant to the
provisions of this Section 13.3, a Tenant which assigns,
subleases or otherwise transfers its interest in this Lease or
the Premises shall remain fully liable for all of the
obligations, duties and liabilities of the Tenant under this
Lease following any such assignment, sublease or other transfer.

13.4.     COSTS AND FEES.  Tenant shall not be obligated to
reimburse Landlord for any cost, fee or payment incurred by
Landlord or Landlord's Lender in connection with any requests for
approval of an assignment of this Lease or any sublease of the
Premises other than reasonable costs and expenses incurred by
Landlord and Landlord Lender (including, without limitation,
reasonable attorneys' fees and disbursements); provided, however,
that if the assigning Tenant is Franchisor, a Franchisor
affiliate or an authorized franchisee of Franchisor (other than
the originally named Tenant hereunder), no such cost, fee or
payment shall be due or payable by such entity.

                      14.  INDEMNIFICATION

     14.1.     INDEMNIFICATION OF LANDLORD.

             (i)  TENANT AGREES TO DEFEND, PAY, PROTECT, INDEMNIFY, SAVE AND
          HOLD HARMLESS LANDLORD AND LANDLORD'S INDEMNITEES (AS DEFINED IN
          SECTION 5.2(B) ABOVE) FROM AND AGAINST ANY AND ALL LIABILITIES,
          LOSSES, DAMAGES, PENALTIES, COSTS, EXPENSES (INCLUDING, WITHOUT
          LIMITATION, REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS), CAUSES
          OF ACTION, SUITS, CLAIMS, DEMANDS OR JUDGMENTS OF ANY NATURE
          WHATSOEVER, HOWSOEVER CAUSED, ARISING OR ALLEGED TO ARISE FROM
          THE PREMISES OR THE USE, NON-USE, OCCUPANCY, CONDITION,
          CONSTRUCTION, MAINTENANCE, REPAIR OR REBUILDING OF THE PREMISES,
          ANY BREACH OF THIS LEASE ON THE PART OF TENANT OR LANDLORD'S
          ENFORCEMENT OF THE PROVISIONS OF THIS LEASE, AND ANY INJURY TO OR
          DEATH OF ANY PERSON OR PERSONS OR ANY LOSS OF OR DAMAGE TO ANY
          PROPERTY, REAL OR PERSONAL, IN ANY MANNER ARISING THEREFROM,
          CONNECTED THEREWITH OR OCCURRING THEREON, AND ANY CLAIMS,
          DEMANDS, CAUSES OF ACTION, SUITS OR JUDGMENTS BY THIRD PARTIES
          RESULTING FROM VIOLATIONS OR ALLEGED VIOLATIONS BY TENANT OR ANY
          SUBTENANT OF ANY PROVISION OF THIS LEASE, ANY LEGAL REQUIREMENT,
          ANY OTHER LEASE OR AGREEMENT RELATING TO THE PREMISES, OR ANY
          OTHER CONTRACT OR AGREEMENT TO WHICH TENANT OR ANY SUBTENANT IS A
          PARTY, WHETHER OR NOT LANDLORD OR LANDLORD'S LENDER HAS OR SHOULD
          HAVE KNOWLEDGE OR NOTICE OF THE DEFECT OR CONDITIONS, IF ANY,
          CAUSING OR CONTRIBUTING TO SAID INJURY, DEATH, LOSS, DAMAGE,
          LIABILITY, PENALTY, COST, EXPENSE, CAUSE OF ACTION, SUIT, DEMAND,
          JUDGMENT OR OTHER CLAIM; EXCEPT TO THE EXTENT THAT ANY SUCH
          LIABILITY, LOSS, DAMAGE, PENALTY, COST, EXPENSE, CAUSE OF ACTION,
          SUIT, CLAIM, DEMAND OR JUDGMENT IS THE RESULT OF THE WILLFUL
          MISCONDUCT OR NEGLIGENCE OF LANDLORD OR ANY LANDLORD INDEMNITEE.
          IN CASE ANY ACTION OR PROCEEDING IS BROUGHT AGAINST LANDLORD OR
          ANY LANDLORD'S INDEMNITEE BY REASON OF ANY SUCH CLAIM AGAINST
          WHICH TENANT HAS AGREED TO DEFEND, PAY, PROTECT, INDEMNIFY, SAVE
          AND HOLD HARMLESS PURSUANT TO THE PRECEDING SENTENCE, TENANT
          COVENANTS UPON NOTICE FROM LANDLORD OR ANY LANDLORD'S INDEMNITEE
          TO RESIST SUCH ACTION OR PROCEEDING AND DEFEND LANDLORD AND
          LANDLORD'S INDEMNITEE IN SUCH ACTION OR PROCEEDING, WITH THE
          EXPENSES OF SUCH DEFENSE PAID BY TENANT, AND LANDLORD WILL
          COOPERATE AND ASSIST IN THE DEFENSE OF SUCH ACTION OR PROCEEDING
          IF REASONABLY REQUESTED SO TO DO BY TENANT.

(ii) The obligations of Tenant under this Section 14.1 shall
survive the termination or expiration of this Lease.

     14.2.     INDEMNIFICATION OF TENANT.

            (i)  LANDLORD AGREES TO DEFEND, PAY, PROTECT, INDEMNIFY, SAVE AND
          HOLD HARMLESS TENANT, ANY TENANT LENDER, AND THEIR RESPECTIVE
          MEMBERS AND ITS AND THEIR RESPECTIVE MEMBERS, MANAGERS, OFFICERS,
          EMPLOYEES, DIRECTORS, SHAREHOLDERS AND AGENTS  ("TENANT
          INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES,
          DAMAGES, PENALTIES, COSTS, EXPENSES (INCLUDING, WITHOUT
          LIMITATION, REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS), CAUSES
          OF ACTION, SUITS, CLAIMS, DEMANDS OR JUDGMENTS OF ANY NATURE
          WHATSOEVER, HOWSOEVER CAUSED, ARISING OR ALLEGED TO ARISE FROM
          ANY BREACH OF THIS LEASE ON THE PART OF THE LANDLORD OR TENANT'S
          ENFORCEMENT OF THE PROVISIONS OF THIS LEASE, AND ANY INJURY TO OR
          DEATH OF ANY PERSON OR PERSONS OR ANY LOSS OF OR DAMAGE TO ANY
          PROPERTY, REAL OR PERSONAL, IN ANY MANNER ARISING FROM OR
          CONNECTED WITH LANDLORD'S BREACH OF THIS LEASE OR TENANT'S
          ENFORCEMENT OF THE PROVISIONS OF THIS LEASE OR OCCURRING ON THE
          PREMISES TO THE EXTENT CAUSED BY THE WILLFUL MISCONDUCT OR
          NEGLIGENCE OF LANDLORD OR ANY LANDLORD INDEMNITEE.  IN CASE ANY
          ACTION OR PROCEEDING IS BROUGHT AGAINST TENANT OR TENANT'S
          INDEMNITEE BY REASON OF ANY SUCH CLAIM AGAINST WHICH LANDLORD HAS
          AGREED TO DEFEND, PAY, PROTECT, INDEMNIFY, SAVE AND HOLD HARMLESS
          PURSUANT TO THE PRECEDING SENTENCE, LANDLORD COVENANTS UPON
          NOTICE FROM TENANT OR TENANT'S INDEMNITEE TO RESIST SUCH ACTION
          OR PROCEEDING AND DEFEND TENANT AND TENANT'S INDEMNITEE IN SUCH
          ACTION OR PROCEEDING, WITH THE EXPENSES OF SUCH DEFENSE PAID BY
          LANDLORD, AND TENANT WILL COOPERATE AND ASSIST IN THE DEFENSE OF
          SUCH ACTION OR PROCEEDING IF REASONABLY REQUESTED SO TO DO BY
          LANDLORD.

(ii) The obligations of Landlord under this Section 14.2 shall
survive the termination or expiration of this Lease.

                     15.  DEFAULT; REMEDIES

     15.1.      DEFAULT  BY TENANT.  Each of the following  shall
constitute an Event of Default (herein so called) by Tenant under
this Lease:

               (i)  Tenant fails to pay any installment of Base Rent in full
          under this Lease within five (5) days after notice from Landlord
          that such payment was not received when due;

(ii) Tenant fails to pay any installment of Additional Rent in
full under this Lease within ten (10) days after notice from
Landlord that such payment was not received when due;
(iii)     Tenant fails to observe or perform any other provision
of this Lease required to be observed or performed by Tenant and
does not cure such failure within thirty (30) days after notice
thereof from Landlord; provided, that if such default is not
capable of being cured within thirty (30) days and Tenant
promptly commences such cure, said thirty (30) day period shall
be extended so long as Tenant diligently and continuously pursues
such cure;
(iv) Tenant or any guarantor of Tenant's obligations under this
Lease (a "Guarantor") makes a general assignment for the benefit
of creditors;
(v)  A receiver or trustee of Tenant or any Guarantor or any of
their respective assets is appointed by entry of an order by a
court of competent jurisdiction and the same is not vacated,
discharged or dismissed within sixty (60) days thereafter;
(vi) A petition for relief is filed by Tenant or any Guarantor
under any bankruptcy or insolvency law seeking a plan of
reorganization or arrangement under any law relating to
bankruptcy, or any such petition is filed against Tenant or any
Guarantor and same is not dismissed, discharged or vacated within
sixty (60) days thereafter;
(vii)     The interest of Tenant in the Premises is sold under
execution or other legal process;
(viii)    Tenant fails to maintain any insurance required under
Section 12.1 of this Lease within five (5) days after notice from
Landlord of such failure; or
(ix) Tenant assigns this Lease or subleases any portion of the
Premises in violation of Section 13 of this Lease.

     15.2.     LANDLORD'S REMEDIES.

          (a)  Upon the occurrence of an Event of Default under Section
     15.1, Landlord shall have the following rights and remedies,
     subject to the rights of Franchisor or Tenant Lender under the
     provisions of Section 15.3 and Section 20.2:

           (i)  To terminate this Lease and Tenant's right of possession of
          the Premises by giving notice of such election to Tenant, in
          which event (A) Tenant shall immediately surrender possession
          thereof to Landlord, failing which Landlord may re-enter and take
          possession of the Premises and expel or remove Tenant and any
          other occupant(s) thereof in accordance with applicable law
          ("Reentry"), and (B) Tenant shall have no further claim thereon
          or hereunder;

(ii) To terminate Tenant's right of possession of the Premises
without terminating this Lease by giving notice of such election
to Tenant, in which event (A) Tenant shall immediately surrender
possession thereof to Landlord, failing which Landlord may
exercise the right of Reentry, and (B) Landlord shall have the
right to occupy the Premises for and on account of Tenant and to
collect any unpaid rentals and other charges which have or may
thereafter become due and payable;
(iii)     To exercise the rights described in clause (ii) above
and thereafter elect to terminate this Lease and all of Tenant's
rights in or to the Premises by giving notice of such election to
Tenant; or
(iv) To exercise any other right or remedy now or hereafter
existing by law or in equity.

          (b)  If Landlord reenters the Premises under clause (a)(ii)
     above,  such reentry or any action, in unlawful detainer  or
     otherwise, to obtain possession of the Premises shall not be
     deemed to be an election by Landlord to terminate this Lease, or
     Tenant's  liability to pay rent or other charges  thereafter
     accruing, or Tenant's liability for damages under any provisions
     hereof, unless Landlord elects to terminate this Lease by written
     notice to that effect given to Tenant.  Tenant covenants that the
     service  by Landlord of any notice pursuant to the  unlawful
     detainer statutes of the State in which the Premises is located
     and the surrender of possession pursuant to such notice shall not
     be deemed to be a termination of this Lease, unless Landlord
     elects to the contrary by written notice to that effect given to
     Tenant at the time of or after the service of any such statutory
     notice.  If Landlord reenters or takes possession of the Premises
     as  aforesaid, Landlord shall have the right, subject to the
     provisions of this Lease, including without limitation,  the
     provisions of Section 16.2, to remove therefrom all or any part
     of the personal property located therein and may dispose of or
     place the same in storage at a public warehouse at the expense
     and risk of Tenant; provided, however, that Landlord shall not be
     obligated to remove and/or dispose of any such personal property.

(c)  If Landlord elects to reenter the Premises under clause
(a)(ii) above and takes possession of the Premises, Landlord may,
but except to the extent required by applicable law or court
order, shall not be obligated to, relet the Premises for a term,
rate and upon such other provisions as Landlord deems
appropriate.  If Landlord so reenters and takes possession of the
Premises, Landlord may decorate, repair and alter the Premises to
the extent Landlord deems appropriate for purposes of such
reletting.  If Landlord is unable to so relet the Premises, then
Tenant shall pay to Landlord monthly on the first day of each
month during the period that Tenant's right to possession is
terminated, a sum equal to the Rent due under this Lease for that
month.  If the Premises are relet, Landlord shall apply the rents
therefrom first to payment of Landlord's expenses incurred by
reason of Tenant's default, second, to payment of Landlord's
expenses of reletting, including without limitation, brokerage
fees and reasonable attorneys' fees, and third, to payment of
Rent due from Tenant under this Lease.  All sums expended and
concessions granted to any new tenant shall be amortized on a
straight -line basis over the term of the new lease and Tenant's
liability therefor shall be limited to that portion attributable
to the unexpired term of this Lease.  If the sums received from
such reletting are insufficient to satisfy the payment of Rent
due from Tenant under this Lease for any month, Tenant shall
remain liable for the deficiency.  If the sums received from such
reletting exceed the Rent otherwise due from Tenant for any
month, Tenant shall have no rights thereto except that such
excess amounts shall be applied against Rent subsequently due
under this Lease.  No such reletting by Landlord shall be
considered to be (A) for Landlord's own account unless and until
Landlord notifies Tenant that this Lease has been terminated, and
(B) an acceptance of Tenant's surrender of the Premises unless
and until Landlord so notifies Tenant.
(d)  In the event of any termination of this Lease or
repossession of any of the Premises after the occurrence of an
Event of Default, Tenant shall pay to Landlord Base Rent,
Additional Rent and all other sums required to be paid by Tenant
to and including the date of such termination or repossession
and, thereafter, Tenant shall, until the end of what would have
been the Term in the absence of such termination or repossession,
and whether or not any of the Premises shall have been relet, be
liable to Landlord for and shall pay to Landlord as liquidated
and agreed current damages:  (i) Base Rent, Additional Rent and
all other sums which would be payable under this Lease by Tenant
in the absence of such termination or repossession, less (ii) the
net proceeds, if any, of any reletting pursuant to Section
15.2(c), after deducting from such proceeds all of Landlord's
reasonable expenses in connection with such reletting (including
without limitation, all reasonable repossession costs, brokerage
commissions, legal expenses, attorneys' fees, costs of Alteration
and expenses of preparation for reletting).  Tenant hereby agrees
to be and remain liable for all sums aforesaid and Landlord may
recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the
recovery of such damages.  Nothing herein contained shall be
deemed to require Landlord to wait to begin such action or other
legal proceedings until the date when the Term would have expired
had there been no such Event of Default.
(e)  At any time after such termination of this Lease pursuant to
Section 15.2(a)(i) or pursuant to law, whether or not Landlord
shall have recovered any amounts under Section 15.2(c) or
15.2(d), Landlord, at its option, shall be entitled to recover
from Tenant and Tenant shall pay to Landlord, on demand, as and
for liquidated and agreed final damages for Tenant's default, (i)
the amount by which the Base Rent and all Additional Rent
reserved hereunder for the unexpired portion of the Term demised
herein as if the Lease had not expired or been terminated exceeds
the then fair and reasonable rental value of the Premises for the
same period, discounted to present worth at the prime rate (as
defined in Section 24.6), minus any such monthly deficiencies
previously recovered from Tenant for such unexpired portion of
the Term demised herein under Section 15.2(c), plus (ii) all
reasonable legal fees and other costs and expenses incurred by
Landlord as a result of Tenant's default under this Lease and the
exercise of any rights and remedies hereunder.
(f)  If any statute or rule of law governing a proceeding in
which such liquidated final damages provided for in Section
15.2(e) are to be proved shall validly limit the amount thereof
to an amount less than the amount above agreed upon, Landlord
shall be entitled to the maximum amount allowable under such
statute or rule of law.
(g)  Mention in this Lease of any particular remedy shall not
preclude Landlord from any other remedy at law or in equity.  No
right or remedy conferred upon or reserved to Landlord in this
Lease is intended to be exclusive of any other right or remedy;
and each and every right and remedy shall be cumulative and in
addition to any other right or remedy contained in this Lease.
No delay or failure by Landlord or Tenant to enforce its rights
under this Lease shall be construed as a waiver, modification or
relinquishment thereof.  Tenant waives any rights of redemption
granted by any laws if Tenant is evicted or dispossessed, or if
Landlord obtains possession of the Premises by reason of the
violation by Tenant of any of the terms of this Lease.

     15.3.     FRANCHISOR RIGHTS.

          (a)  Landlord agrees to send a copy of any notice of default
     required or permitted to be given to Tenant under this Lease
     simultaneously to Franchisor at the last address for Franchisor
     furnished to Landlord by Franchisor in writing; provided, that
     the failure to send such notice shall not limit Tenant's default
     or Landlord's remedies with respect thereto, or make Landlord
     liable for any damages. If Franchisor has received timely notice
     of such default, (provided, that the failure to send such notice
     shall not limit Tenant's default or Landlord's remedies with
     respect thereto or impose any liability upon Landlord therefor),
     Landlord agrees and consents to the curing of any default of
     Tenant hereunder by Franchisor, provided that such cure is made
     by  Franchisor within the time set forth in Section 15.1 for
     Tenant's cure (provided, that Franchisor shall have an additional
     fifteen (15) days to cure a default under Sections 15.1(i) and
     (ii), so long as Franchisor notifies Landlord within the cure
     periods set forth in such Sections that Franchisor will cure such
     defaults).  If Franchisor elects to cure any Tenant  default
     hereunder,  Franchisor shall give notice to that  effect  to
     Landlord and Tenant simultaneously with such cure.

(b)  Notwithstanding anything to the contrary stated herein, if
an Event of Default has occurred (including the expiration of any
applicable cure period), Landlord agrees to give notice thereof
to Franchisor ("TERMINATION NOTICE") and Landlord will not
terminate the Lease (as permitted hereunder) on account of such
Event of Default for a period of thirty (30) days, during which
time Franchisor shall have the right to lease the Premises upon
the same terms and conditions as this Lease, such election to be
made by notice to that effect ("FRANCHISOR NOTICE") from
Franchisor to Landlord prior to the end of said 30-day period.
If Franchisor exercises such right by giving the Franchisor
Notice to Landlord by the time and in the manner set forth in the
immediately preceding sentence, then (i) Franchisor and Landlord
shall promptly execute and deliver a written instrument to that
effect; (ii) Franchisor shall become the tenant under this Lease
with all of the rights and obligations of tenant commencing upon,
first accruing and effective only from and after the date of the
Franchisor Notice; provided, that Tenant shall not dispute such
action by Franchisor and shall acknowledge its approval of such
action by Franchisor; (iii) Franchisor shall have no liability,
responsibility or obligation to pay or otherwise cure any default
of Tenant existing prior the effective date of exercise by
Franchisor of its rights in this subsection; provided, that if
Franchisor has received notice from Landlord of any Event of
Default of Tenant under Sections 15.1(i) or (ii), Franchisor
shall pay any Rent due and payable by Tenant accruing after the
date Franchisor receives notice of any such Event of Default; and
(iv) nothing contained herein shall restrict, limit, terminate,
waive or otherwise affect Landlord's rights against Tenant or any
guarantor on account of Tenant's default.  If Franchisor fails to
exercise such right on or before the expiration of said thirty
(30) day period, Landlord may pursue any rights and remedies that
it may have against Tenant on account of Tenant's Event of
Default hereunder.  Nothing contained in this Section shall be
deemed to obligate Franchisor to assume this Lease, to become the
tenant hereunder or to take possession of the Premises.
(c)  In the event that Franchisor becomes the tenant under this
Lease pursuant to the provisions of subsection (b) or an
assignment under Section 13.2 above, Franchisor shall have the
right at any time thereafter upon prior notice to, but without
the prior consent of Landlord, to assign this Lease and all of
its right, title and interest as Tenant hereunder to an
authorized franchisee of Franchisor.  In the event of such an
assignment, Franchisor shall be released from all liabilities and
obligations of Tenant first accruing from and after the effective
date of said assignment provided that such assignee franchisee
assumes in writing the obligations of Tenant under this Lease and
a copy thereof is furnished to Landlord.

                   16.  SURRENDER OF PREMISES

     16.1.     CONDITION.  Upon the expiration or earlier termination
of  this Lease or the termination of Tenant's right of possession
of  the  Premises  only, Tenant shall surrender the  Premises  to
Landlord in a clean, safe, good and tenantable condition, free of
debris  and  with all "grease traps" and similar devices  cleaned
and  in  good working condition, ordinary wear and tear  and,  if
this  Lease is terminated pursuant to Section 11.4(b), damage  by
Casualty  excepted.  All building apparatus and equipment  (other
than  Tenant's  Property) then located on the  Premises  and  all
Alterations  and other improvements to the Premises  made  during
the  Term,  whether  by Tenant or others,  shall  remain  on  the
Premises  and  shall be considered part of the Premises.   Tenant
shall  deliver  all keys therefor to Landlord at the  place  then
fixed  for  the payment of Rent and shall make known to  Landlord
the  combination for all locks on safes, cabinets and  vaults  in
the Premises.

16.2.     REMOVAL OF TENANT'S PROPERTY.  Upon the expiration or
earlier termination of this Lease or the termination of Tenant's
right of possession of the Premises only, Tenant shall have the
right, at its sole cost and expense, for a period of fifteen (15)
days thereafter to remove Tenant's Property, Distinctive Property
and the Financed Personalty, respectively, from the Premises,
provided that Tenant shall pay to Landlord Rent due under Article
3 hereof for the actual number of days which elapse during such
fifteen (15) day period until the Tenant's Property, Distinctive
Property and the Financed Personalty, as applicable, are removed
from the Premises.  If and to the extent that Tenant fails to
remove any of such property by the expiration of said fifteen
(15) day period, Landlord agrees that Tenant Lender, TE Lender
and Franchisor each shall have the right for a period of forty
(45) days thereafter to remove the same from the Premises,
provided, that Tenant shall pay to Landlord Rent due hereunder
for the actual number of days which elapse until Tenant Lender,
TE Lender or Franchisor remove the same from the Premises during
such forty five (45) day period.  If and to the extent that any
such property remains on the Premises on the sixtieth (60th) day
after such termination, the same shall be deemed abandoned, and
at Landlord's option shall become the property of Landlord and
may be sold or disposed of as Landlord may determine; provided,
however, that Landlord shall not use, suffer or permit the use of
any Distinctive Property unless the attributes or features
thereof associated with Tenant or Franchisor are removed or
obliterated.  Any and all damage to the Building caused by or
resulting from the removal of Tenant's Property, Distinctive
Property or Financed Personalty shall promptly be repaired at no
cost or expense to Landlord and Tenant shall be liable for such
cost and expense unless such repairs are made by Tenant,
Franchisor or TE Lender, as the case may be.

                17.  SUBORDINATION AND ATTORNMENT

     17.1.     SUBORDINATION.  This Lease and the rights of Tenant
hereunder  are expressly subject and subordinate to the  lien  of
any  mortgage or deed of trust constituting a lien on  Landlord's
fee  interest  in  the  Premises ("LANDLORD  MORTGAGE")  and  any
renewals,    extensions,   modifications,   consolidations    and
replacements thereof, which now or hereafter affect  all  or  any
portion  of  the  Premises (except to the extent  that  any  such
instrument expressly provides that this Lease is superior to it);
provided  that  the  holder of the Landlord  Mortgage  ("LANDLORD
LENDER") agrees in writing not to disturb Tenant, Tenant's  right
to  possession and use of the Premises and Tenant's rights  under
this  Lease  so  long as there shall be no Event  of  Default  on
behalf  of Tenant hereunder. Tenant agrees to execute and deliver
to  Landlord and any Landlord Lender at any time and from time to
time  all  such  documents reasonably requested  by  Landlord  or
Landlord's Lender, which are reasonably acceptable to Tenant  and
Tenant's   Lender,  to  confirm  or  effect  such   subordination
including, without limitation, an SNDA substantially in the  form
attached  as Exhibit E, together with such changes as Lender  may
reasonably require; provided that such Landlord Lender agrees  to
recognize  this Lease and the rights of Tenant set  forth  herein
for  so  long as there shall be no Event of Default on behalf  of
Tenant hereunder.  Notwithstanding any foreclosure or sale  under
any Landlord Mortgage (or transfer by deed in lieu thereof), this
Lease  shall  remain in full force and effect in accordance  with
its terms.  Landlord and any Landlord Lender shall execute within
ten (10) days after request any documentation reasonably required
by   any  TE  Lender  or  Tenant  Lender,  which  are  reasonably
acceptable  to Landlord and any Landlord Lender, to  confirm  the
priority   of  such  lender's  interests.   Notwithstanding   the
provisions  of  this  Section 17.1, the holder  of  any  Landlord
Mortgage  to  which  this Lease is subject and subordinate  shall
have  the  right, at its sole option, at any time, to subordinate
and  subject the Landlord Mortgage, in whole or in part, to  this
Lease  by  recording  a unilateral declaration  to  such  effect.
Tenant hereby agrees that any Landlord Lender shall not be  bound
to  the  terms of any material modification or amendment of  this
Lease  entered  into  after the date of such  Landlord  Mortgage,
unless  such  Landlord  Lender has  consented  to  such  material
modification or amendment.  Tenant hereby agrees that  after  the
date  of such Landlord Mortgage, Tenant shall not pay to Landlord
any  installment of Base Rent more than one (1) month in  advance
of  the due date thereof, unless Landlord Lender shall consent to
such prepayment.

     17.2.     ATTORNMENT.  In the event of the foreclosure of any
Landlord  Mortgage  by voluntary agreement or otherwise,  or  the
commencement  of  any judicial action seeking  such  foreclosure,
Tenant will become the tenant of and attorn to and recognize such
Landlord  Lender or purchaser in foreclosure as Tenant's landlord
under  this Lease without change in the provisions of this Lease.
Upon  request by such successor in interest, Tenant will  execute
and  deliver an instrument confirming such attornment, which will
recognize  this Lease and the rights of Tenant set  forth  herein
and  shall  provide  that such successor  in  interest  will  not
disturb Tenant in its use of the Premises in accordance with this
Lease  unless  there is an Event of Default continuing  hereunder
and such successor in interest would be entitled to exercise such
remedy under Section 15.2 hereof.

                   18.  ESTOPPEL CERTIFICATES

     18.1.     ESTOPPEL CERTIFICATES.  Within fifteen (15) days after
written request from Landlord or Tenant to the other, such  other
party shall execute and deliver an estoppel certificate signed by
an  officer  of such party and certifying: the Commencement  Date
and  expiration date of the Term; the date to which Rent has been
paid;  the amount of Rent then being paid; that this Lease is  in
full  force  and  effect and has not been  modified,  amended  or
assigned   (or,   if  modified,  stating  the  nature   of   such
modification  and certifying that this Lease, as so modified,  is
in  full force and effect); that to such party's knowledge  there
are  no defaults by the other party under this Lease, nor to such
party's knowledge any existing condition upon which the giving of
notice  or lapse of time or both would constitute a default  (or,
if  such exist, stating the nature thereof); that such party  has
received  no notice from any insurance company of any defects  or
inadequacies of the Premises; that such party has no  options  or
rights  other  than as set forth in this Lease;  and  such  other
factual  matters as the requesting party may reasonably  request.
Failure  to deliver such statement within said fifteen  (15)  day
period shall be conclusive upon the party to whom the request was
directed  that  this Lease is in full force and  effect,  without
modification except as may be represented by the requesting party
in  the  draft estoppel presented, that to such party's knowledge
there   are  no  uncured  defaults  in  the  requesting   party's
performance, and that all other statements required to be made in
the estoppel letter are conclusively made.

                          19.  NOTICES

     19.1.     NOTICES.  All notices required or permitted to be given
under this Lease shall be in writing and shall be deemed given on
the  date  when  personally delivered or, if  earlier,  the  next
business day if sent by recognized overnight air courier, or  two
(2)  business days (or, if earlier, when actually received) after
being  deposited  in  the  United States Mail,  postage  prepaid,
properly addressed, certified mail, return receipt requested,  as
follows:

TO LANDLORD:              At the address set forth in Section
                          1.2,

     With a copy to:      Winthrop & Weinstine P.A.
                          225 South Sixth Street
                          Suite 350
                          Minneapolis, Minnesota  55402
                          Attention:     Jeffrey L. Leclerc

     And a copy to:       AEI Fund Management, Inc.
                          1300 Wells Fargo Place
                          30 Seventh Street East
                          St. Paul, MN 55101
                          Attention: Lease Management Department

TO TENANT                 At the address set forth in Section
                          1.3,
                          Attention:  Chief Financial Officer

     With a copy to:      Peter B. Loughman, Esq.
                          155 North Michigan Avenue, Suite 600
                          Chicago, Illinois 60601

TO FRANCHISOR:            Applebee's International, Inc.
                          4551 West 107th Street, Suite 100
                          Overland Park, Kansas 66207
                          Attention:  General Counsel

Each entity or person entitled to receive notice or a copy
thereof pursuant to this Lease ("Addressee") at any time and from
time to time may change its address for notice purposes by giving
notice of such change to all other Addressees in any manner
specified above at least fifteen (15) days before such change of
address is to become effective.

                    20.  LEASEHOLD FINANCING

     20.1.     LEASEHOLD FINANCING.  Tenant shall have the right at
any  time  and from time to time during the Term with notice  to,
but  without  the  consent or approval of Landlord,  to  grant  a
mortgage  or  other security interest ("LEASEHOLD  MORTGAGE")  in
Tenant's  interest  in this Lease (the leasehold  estate  created
hereby),  and  all of Tenant's Property, all upon  the  condition
that  all rights acquired under any such Leasehold Mortgage shall
be  subject  to each and all of the covenants, conditions,  terms
and  restrictions  set  forth  in  this  Lease.  Tenant  Lender's
foreclosure  on  the Leasehold Mortgage shall not terminate  this
Lease  or  affect  any  of the covenants, conditions,  terms  and
restrictions set forth in this Lease as obligations of Tenant.

20.2.     TENANT LENDER.  If Landlord is provided written notice
of a Leasehold Mortgage and the name and address for notice of
the holder of a Leasehold Mortgage (the "TENANT LENDER"), then
the rights of such Tenant Lender shall include the following,
which shall be binding on Landlord (and any Landlord Lender).
Upon recordation of the Leasehold Mortgage and for so long
thereafter as the Leasehold Mortgage remains unsatisfied:  (i)
Landlord agrees to deliver a copy of any notice of default given
to Tenant under this Lease simultaneously to Tenant Lender at its
last address furnished to Landlord in writing; provided, that the
failure to send such notice shall not limit Tenant's default or
Landlord's remedies against Tenant with respect thereto (other
than such remedies as would prevent the exercise of Tenant
Lender's rights under this Section 20.2), or impose any liability
upon Landlord for any damages therefrom; (ii) Landlord agrees
that Tenant Lender shall have the right, but shall not be
obligated, to cure any default of Tenant hereunder, provided that
such cure is made by Tenant Lender within the time provided to
Tenant pursuant to Section 15.1 (provided, that such Tenant
Lender shall have an additional fifteen (15) days to cure a
default under Sections 15.1(i) and 15.1(ii), so long as Tenant
Lender notifies Landlord within the cure periods set forth in
such Sections that it will cure such defaults); (iii) if Tenant
Lender elects to cure any default of Tenant hereunder, (A) Tenant
Lender shall give notice to that effect to Landlord and Tenant
simultaneously with such cure, and (B) Landlord consents to and
shall accept such cure with the same force and effect as if made
by Tenant; (iv) Landlord and Tenant each agree not to cancel or
surrender this Lease (other than due to a default by a party
which was not cured within the applicable cure period after
notice was given to Tenant and Tenant Lender) or amend the
provisions of this Lease without the prior written consent of
Tenant Lender, which consent shall not be unreasonably withheld
or delayed; and (v) if Landlord terminates the Lease due to an
Event of Default which Tenant Lender is unable to cure (e.g.,
Tenant bankruptcy), and Tenant Lender elects by written notice to
Landlord within forty-five (45) days thereafter to continue this
Lease, Landlord agrees to enter into a new lease with Tenant
Lender on the same terms and conditions as set forth in this
Lease for the balance of the original Term, including any
remaining extension options, provided, that the Tenant Lender
shall pay to Landlord at the time of the execution and delivery
of the new lease all sums which would at the time of the
execution and delivery of the new lease be due pursuant to this
Lease but for such termination, and shall agree in writing to
cure and shall cure all other defaults of Tenant capable of being
cured by Tenant Lender then existing under this Lease within a
reasonable period of time after entering into such new Lease.
Landlord agrees promptly to execute and deliver such documents as
Tenant Lender reasonably may request which are reasonably
acceptable to Landlord and any Landlord Lender to evidence the
provisions of this Section 20.2, including the Landlord Agreement
in the form attached hereto as Exhibit B.

                   21.  RIGHT OF FIRST REFUSAL

     21.1.     RIGHT OF FIRST REFUSAL TO PURCHASE.

          (a)   If at any time after the first anniversary of the
     Commencement Date Landlord shall receive a bona fide written
     offer to purchase the Premises from a third party which is not
     affiliated with Landlord, which offer Landlord is willing to
     accept ("OUTSIDE CONTRACT"), Landlord shall give written notice
     ("SALE NOTICE") thereof, together with a copy of such Outside
     Contract, to Tenant.  Tenant shall have a right of first refusal
     ("REFUSAL RIGHT") to purchase the Premises that is the subject of
     the Outside Contract in accordance with the terms and provisions
     thereof.  If Tenant desires to exercise the Refusal Right, Tenant
     shall deliver written notice to that effect to Landlord within
     twenty  (20) days after receipt of the Sale Notice ("REFUSAL
     PERIOD").  If Tenant exercises the Refusal Right by the time and
     in the manner set forth in this subsection, Landlord and Tenant
     shall  promptly execute a contract which includes  the  same
     material terms and conditions as the Outside Contract ("SALE
     CONTRACT") and Tenant shall deposit when due any earnest money
     deposit required thereunder.  If Tenant does not execute a Sale
     Contract within fifteen (15) days after Tenant's receipt of such
     Sale Contract from Landlord, signed on behalf of Landlord, or if
     Tenant defaults in its obligations under such Sale Contract, then
     Landlord shall be free to consummate the sale pursuant to the
     Outside Contract (or another contract on substantially similar
     terms and conditions).

(b)  If Tenant does not exercise the Refusal Right by the time
and in the manner set forth in subsection (a) above, then (i) the
Refusal Right shall remain in full force and effect, but not with
respect to the proposed sale pursuant to the Outside Contract,
and (ii) Landlord shall be free to consummate the sale pursuant
to the Outside Contract.  If within one hundred eighty (180) days
after the expiration of the Refusal Period Landlord does not
consummate the sale pursuant to the Outside Contract, the Refusal
Right shall again be applicable, and Landlord shall not
thereafter sell the Premises pursuant to the Outside Contract
without first offering Tenant the Refusal Right pursuant to this
Section 21.1.
(c)  The rights granted to Tenant under this Section 21 shall not
survive the expiration or termination of this Lease.
(d)  The provisions of this Section 21 shall not apply and Tenant
shall not have any Refusal Right (i) with respect to the sale,
conveyance, assignment or other transfer (A) to any person
controlling, controlled by, or under common control with Landlord
or any of its direct or indirect owners, (B) by gift, descent or
devise, or (C) to any sale (or conveyance in lieu thereof) by
foreclosure or enforcement of a lien or security interest, or
(ii) at any time that an Event of Default has occurred and is
continuing.  Any conveyance of the Premises to Tenant pursuant to
this Section 21 shall be "as-is" with respect to the physical
condition of the Premises.

                  22.  [INTENTIONALLY OMITTED]

23.  GUARANTY

     23.1.     Simultaneously with the execution of this Lease, Tenant
shall  cause to be delivered to Landlord a guaranty in  the  form
attached hereto as Exhibit D (the "GUARANTY"), pursuant to  which
AAG shall guaranty Tenant's obligations hereunder.

                       24.  MISCELLANEOUS

     24.1.     LANDLORD'S INTERESTS.

          (a)  The term "LANDLORD" as used herein shall mean only the owner
     or  owners, at the time in question, of the fee title to the
     Premises.  In the event of an assignment or transfer of this
     Lease by Landlord for other than security purposes, Landlord
     shall cause its assignee or transferee to assume the provisions
     of  this  Lease  and Landlord shall deliver notice  of  such
     assignment or transfer and a copy of the effective instrument of
     transfer to Tenant.  Tenant shall be entitled to continue to pay
     rent and give all notices to Landlord until Tenant has received
     the  foregoing from Landlord.  From and after a sale of  the
     Premises, Landlord shall be released from all liability toward
     Tenant arising from this Lease because of any act, occurrence or
     omission of Landlord's successors occurring after the transfer of
     Landlord's interest in this Lease, provided Landlord's purchaser
     or assignee expressly assumes Landlord's duties and covenants
     under this Lease.  Nothing herein shall be deemed to relieve
     Landlord of any liability for its acts, omissions or obligations
     occurring or accruing up to and including the date  of  such
     transfer.

(b)  Anything contained herein to the contrary notwithstanding,
any claim based on or in respect of any liability of Landlord
under this Lease shall be enforced only against Landlord's
interest in the Premises and shall not be enforced against
Landlord individually or personally.
(c)  Landlord shall have the right to sell, assign or transfer
its interest in the Premises without any prior notice to or
consent of Tenant, subject to compliance with the provisions of
Section 21 of this Lease, if applicable.

     24.2.     SEVERABILITY.  If any provision of this Lease or the
application  thereof  to  any person  or  circumstance  shall  be
invalid  or unenforceable under applicable law, such event  shall
not  affect,  impair  or  render  invalid  or  unenforceable  the
remainder  or  any other provision of this Lease,  nor  shall  it
affect  the application of any provision of this Lease  to  other
persons or circumstances.

24.3.     ENTIRE AGREEMENT.  This Lease and the Exhibits attached
hereto set forth the entire agreement between Landlord and Tenant
concerning the Premises and there is no other agreement, oral or
written, between them other than this Lease.  This Lease
supersedes and revokes all previous negotiations, arrangements,
letters of intent, offers to lease, lease proposals and
information conveyed, whether orally or in writing, between the
parties or their respective representatives.

24.4.     TIME.  Time is of the essence of this Lease and the
performance of all obligations under this Lease.

24.5.     BINDING EFFECT.  This Lease shall be binding upon and
inure to the benefit of Landlord, Tenant and their respective
successors and assigns.

24.6.     DEFAULT RATE.  All amounts owing to one party from the
other party under this Lease for which a date of payment is not
expressly fixed shall be paid within ten (10) days after the date
the party to whom such amount is payable delivers to the other
party appropriate statements of account.  As used in this Lease,
the words "DEFAULT RATE" shall mean interest at the rate of four
percent (4%) per annum in excess of the "prime rate" from time to
time announced in The Wall Street Journal or if such publication
ceases to publish a prime rate then as announced by a comparable
publication.  The Default Rate of interest shall be computed from
the date on which any payment is due from either party to the
other through and including the date paid.

24.7.     FORCE MAJEURE.  Neither Landlord nor Tenant shall be
considered in default of any of the terms, covenants and
conditions of this Lease on its part to be performed, if it fails
to timely perform same and such failure is due in whole or in
part to any strike, lockout, labor trouble (whether legal or
illegal), civil disorder, restrictive governmental laws and
regulations, riots, insurrections, war, accidents, casualties,
acts of God, acts caused directly or indirectly by the other
party hereto (or such party's agent, employees or invitees) or
any other cause beyond its control.  A party shall be entitled to
an extension of time equal to one (1) day for each day of delay
due to force majeure.  The foregoing shall not apply to, excuse
or be invoked to justify any delay in the payment of Rent or any
other sum of money due from one party payable to the other party.

24.8.     NO WAIVER.  No provision of this Lease shall be deemed
to have been waived by either party unless such waiver is in
writing signed by such party.

24.9.     CAPTIONS.  The captions and headings in this Lease are
inserted only as a matter of convenience and do not define,
limit, expand or describe the scope or intent of such provisions.

24.10.    SURVIVAL.  The following obligations of Landlord and
Tenant shall survive the expiration or earlier termination of
this Lease:  (a) any obligation permitted in this Lease to be
performed after the end of the Term; (b) any obligation not
reasonably susceptible of performance prior to the end of the
Term; and (c) any other obligation expressly stated to survive
termination.

24.11.    APPLICABLE LAW.  This Lease and the rights and
obligations of Landlord and Tenant hereunder shall be governed by
and construed in accordance with the laws and judicial decisions
in effect in the State in which the Premises are located.

24.12.    AMENDMENT.  No amendment to the provisions of this
Lease shall be effective or enforceable unless made in writing
and signed by Landlord and Tenant.

24.13.    APPROVALS; CONSENTS.  Every approval and consent
provided for in this Lease shall be made in writing.

24.14.    RIGHTS AND REMEDIES.  All rights and remedies granted
or referred to in this Lease shall be distinct, separate and
cumulative and none shall exclude any other right or remedy of
either party set forth in this Lease or available at law or in
equity.

24.15.    HOLDOVER.  If Tenant retains possession of the Premises
after the expiration of the Term without the express written
consent of Landlord, the monthly Base Rent payable by Tenant for
each month of the period of such holding over shall be an amount
equal to one hundred twenty-five percent (125%) of the monthly
Base Rent in effect immediately preceding such holdover period;
provided, however, that no payment of such increased monthly Rent
by Tenant shall be deemed to extend or renew the Term.  In the
event that Landlord gives written consent to Tenant to remain in
occupancy beyond the expiration of the Term, such occupancy shall
be construed to be a renewal of this Lease for a month-to-month
tenancy upon all of the terms and conditions set forth in this
Lease, except that, unless otherwise provided in Landlord's
consent, monthly Base Rent payable by Tenant for any such period
of holdover tenancy shall be at the rate equal to one hundred
percent (100%) of the monthly Base Rent in effect immediately
preceding such holdover period.

24.16.    MEMORANDUM.  Landlord and Tenant agree to complete,
execute, deliver and record in the county in which the Premises
are located a short form memorandum of this Lease substantially
in the form and substance attached hereto as Exhibit C
("MEMORANDUM").  Tenant shall pay all fees, taxes, costs and
expenses to record the Memorandum.

24.17.    NO THIRD-PARTY RIGHTS.  The terms and provisions of
this Lease shall not be deemed to confer any rights upon, nor
obligate Landlord or Tenant to, any person or entity other than
the parties hereto, except for any Landlord Lender, Tenant
Lender, TE Lender and Franchisor if and to the extent
specifically provided herein.

24.18.    LANDLORD AND FRANCHISOR ACCESS.  Upon not less than
twenty-four (24) hours' prior notice (except in the case of an
emergency), Landlord may enter upon the Premises during Tenant's
non-peak business hours for purposes of inspection and showing
the Premises to prospective purchasers or lenders.  When entering
the Premises, Landlord, its agents, employees and/or contractors
(a) shall identify themselves to Tenant's personnel immediately
upon entering the Premises, and (b) shall not, in any way,
materially or unreasonably affect, interrupt or interfere with
Tenant's use, business or operations on the Premises or obstruct
the visibility of or access to the Premises.  Landlord and Tenant
(i) acknowledge that Franchisor, its personnel and agents have
the right to enter upon the Premises for certain purposes under
the Franchise Agreement, and (ii) agree not to interfere with or
prevent such entry by Franchisor, its personnel and agents.

     24.19.    DUE AUTHORITY.

          (a)  Landlord represents and warrants to Tenant as follows:  (i)
     that Landlord is a corporation created, validly existing and in
     good standing under Minnesota law; (ii) that Landlord has full
     right, power and authority to enter into and to perform  its
     obligations under this Lease and that no consent or approval of
     any third parties is necessary in order to do so or that all such
     consents and approvals have been obtained; and (iii) that this
     Lease, when signed by Landlord, is a legal, valid and binding
     obligation of Landlord enforceable in accordance with its terms.

(b)  Tenant represents and warrants to Landlord as follows:  (i)
that Tenant is a limited liability company created, validly
existing and in good standing under Delaware law; (ii) that
Tenant has full right, power and authority to enter into and to
perform its obligations under this Lease and that, except as
otherwise specifically provided herein, no consent or approval of
any third parties is necessary in order to do so; and (iii) that
this Lease, when signed by Tenant, is a legal, valid and binding
obligation of Tenant enforceable in accordance with its terms.

     24.20.    RELATIONSHIP OF PARTIES.  Nothing contained in this
Lease  shall  be  deemed  to constitute a  partnership  or  joint
venture  between  Landlord  and  Tenant.   The  relationship   of
Landlord  and Tenant shall only be deemed to be one  of  landlord
and tenant.

24.21.    PREPARATION AND SIGNING OF LEASE.  This Lease has been
negotiated and reviewed by Landlord, Tenant and their respective
attorneys and/or professional advisors, all of whom intend and
believe this Lease to be the product of all of their joint
efforts, that it contains the entire agreement between Landlord
and Tenant and as such should not and shall not be interpreted or
construed in favor of or against either Landlord or Tenant merely
because of the efforts of one party or the other in preparing
this Lease.  The submission of this Lease for review or execution
does not constitute a reservation of or option for the rights
conferred herein.  This Lease shall become effective only if and
when executed and delivered by both Landlord and Tenant.

24.22.    BROKER.  Landlord and Tenant each warrant and represent
to the other that it has not dealt with any real estate broker,
salesperson or finder in connection with this Lease.  Landlord
and Tenant each agree to indemnify, defend and hold the other
party harmless from and against any and all liabilities and
claims for commissions and fees arising out of a breach of its
representation and warranty set forth herein.

24.23.    SEPARABILITY.  Each and every covenant and agreement of
Tenant contained in this Lease is, and shall be construed to be,
a separate and independent covenant and agreement, and the breach
of any covenant or agreement by Landlord shall not discharge or
relieve Tenant from its obligation to perform the same.

24.24.    MULTIPLE COUNTERPARTS.  To facilitate execution, this
Lease may be executed in as many counterparts as may be
convenient or required.  It shall not be necessary that the
signature or acknowledgment of, or on behalf of, each party, or
that the signature of all persons required to bind any party, or
the acknowledgment of such party, appear on each counterpart.
All counterparts shall collectively constitute a single
instrument.  It shall not be necessary in making proof of this
Lease to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the
respective acknowledgments of, each of the parties hereto.  Any
signature or acknowledgment page to any counterpart may be
detached from such counterpart without impairing the legal effect
of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having
attached to it additional signature or acknowledgment pages.

24.25.    BUSINESS DAYS.  All references to "business days"
contained herein are references to normal working business days,
i.e., Monday through Friday of each calendar week, exclusive of
federal and national bank holidays.  In the event that any event
hereunder is to occur, or a time period is to expire, on a date
which is not a business day, such event shall occur or such time
period shall expire on the next succeeding business day.

24.26.    INTERPRETATION.  When the context in which words are
used in this Lease indicates that such is the intent, words in
the singular number shall include the plural and vice versa, and
words in the masculine gender shall include the feminine and
neuter genders and vice versa.  Further, references to "person"
or "persons" in this Lease shall mean and include any natural
person and any corporation, partnership, joint venture, limited
liability company, trust or other entity whatsoever.  As used
herein, the term "including" shall mean "including, but not
limited to".

24.27.    NO MERGER OF TITLE.  There shall be no merger of this
Lease nor of the leasehold estate created by this Lease with the
fee estate in or ownership of any of the Premises by reason of
the fact that the same person, corporation, firm or other entity
may acquire or hold or own, directly or indirectly, (a) this
Lease or the leasehold estate created by this Lease or any
interest in this Lease or in such leasehold estate and (b) the
fee estate or ownership of any of the Premises or any interest in
such fee estate or ownership.  No such merger shall occur unless
and until all persons, corporations, firms and other entities
having any interest in (i) this Lease or the leasehold estate
created by this Lease and (ii) the fee estate in or ownership of
the Premises or any part thereof sought to be merged shall join
in a written instrument effecting such merger and shall duly
record the same.

24.28.    FINANCIAL REPORTING.  During the Term of this Lease,
Tenant will deliver or cause to be delivered to Landlord the
following financial information at the following times, all of
which shall be reasonably true and correct:

          (a)  During any twelve (12) month period and at Landlord's
     request but in no event more that two (2) times per year, unless
     such  request  is required in order for Landlord  to  obtain
     financing and in such event, when reasonably necessary, within
     thirty (30) days of said request, the most recent quarterly and
     year-to-date consolidated balance sheets and income and cash flow
     statements for the Tenant and for AAG and the accompanying unit
     level profit and loss statements for each Premises for  that
     period; and

(b)  Within one hundred and twenty (120) days after the end of
each fiscal year of Tenant and AAG, annual consolidated balance
sheets and income and cash flow statements for the Tenant and for
AAG for the immediately preceding fiscal year, all in reasonable
detail and prepared in accordance with generally accepted
accounting principles, consistently applied, including unit level
profit and loss statements for that period for the Premises.
          The annual financial statements which are to be
     delivered as provided above shall have been prepared and
     certified by an independent certified public accountant.
     All other financial statements to be delivered pursuant to
     this Section 24.28 shall be un-audited and certified to
     Landlord to be reasonably true and correct by the Tenant's
     controller or other officer.  Landlord shall have the
     right, upon reasonable advance notice, to meet with
     appropriate officers of Tenant and AAG to discuss their
     respective affairs and finances and the financial
     information delivered pursuant hereto.

     24.29.    MULTIPLE PERSONS OR ENTITIES.  In the event that either
party  shall consist of more than one person or entity,  (i)  the
obligations of such multiple persons or entities shall  be  joint
and  several,  and  (ii)  the first  notice  with  respect  to  a
particular matter received by the other party from any one of the
multiple persons or entities shall be final and binding  on  both
parties,  unless  the  party with multiple  persons  or  entities
previously has designated one among them as the representative of
all,  in which event only a notice from such representative shall
be final and binding on both parties.

           [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Landlord and Tenant have executed this
Lease as of the day and year first above written.

     LANDLORD:                AEI FUND MANAGEMENT XVII, INC.,
                              a Minnesota corporation

                              By: /s/ Robert P Johnson
                                      Robert P. Johnson
                                      President

     TENANT:                  APPLE INDIANA II LLC,
                              a Delaware limited liability
                              company

                              By:  /s/ Lorin M Cortina
                                       Lorin M. Cortina
                                       Executive Vice President

STATE OF MINNESOTA       )
                    ) SS.
COUNTY OF HENNEPIN       )

     I, Jennifer L Schriner, a Notary Public in and for said
County, in the State aforesaid, DO HEREBY CERTIFY, that ROBERT P.
JOHNSON personally known to me to be the President of AEI FUND
MANAGEMENT XVII, INC., a Minnesota corporation  ("Company"), and
personally known to me to be the same person whose name is
subscribed to the foregoing instrument as such President,
appeared before me this day in person and acknowledged that
she/he signed and delivered the said instrument as her/his own
free and voluntary act, and as the free and voluntary act and
deed of said Company, for the uses and purposes therein set
forth.

     GIVEN under my hand and Notarial Seal this 19th day of
September, 2006.

                                   /s/ Jennifer L Schriner
                                          Notary Public

STATE OF ILLINOIS        )
                    ) SS.
COUNTY OF COOK                )

     I, Belinda Loza, a Notary Public in and for said
County, in the State aforesaid, DO HEREBY CERTIFY, that LORIN M.
CORTINA, personally known to me to be the Executive Vice
President of APPLE INDIANA II LLC, a Delaware limited liability
company ("Company"), and personally known to me to be the same
person whose name is subscribed to the foregoing instrument as
such Executive Vice President, appeared before me this day in
person and acknowledged that he signed and delivered the said
instrument as his own free and voluntary act, and as the free and
voluntary act and deed of said Company, for the uses and purposes
therein set forth.

     GIVEN under my hand and Notarial Seal this 21st day of
September, 2006.

[SEAL]                         /s/ Belinda Loza
                                   Notary Public

                            EXHIBIT A

                     Land Legal Description

PARCEL 1:

Part  of  the Northwest Quarter of Section 8, Township 18  North,
Range  4  West, in Montgomery County, Indiana, more  particularly
described as follows:

Commencing  at  the  Northwest corner of said  Northwest  Quarter
Section; thence along the West line thereof, South 00 degrees  26
minutes  24  seconds East (assumed bearing) 1179.37 feet;  thence
North 89 degrees 33 minutes 36 seconds East to the Easterly right-
of-way  of U.S. 231 46.19 feet to the POINT OF BEGINNING of  this
description;  thence North 00 degrees 17 minutes 20 seconds  West
on  and along said Easterly right-of-way 41.38 feet to the  point
of  curvature  of a tangent curve to the right,  from  which  the
radius  point of said curve bears North 89 degrees 42 minutes  40
seconds  East  914.93 feet; thence on and along said right-of-way
Northerly  along said curve an arc distance of 252.49 feet  to  a
point on said curve, said point being North 74 degrees 28 minutes
36  seconds  West  914.93  feet from said  radius  point;  thence
leaving  said  right-of-way line South 75 degrees 33  minutes  28
seconds  East 79.71 feet; thence North 14 degrees 26  minutes  32
seconds  East 62.16 feet; thence South 82 degrees 33  minutes  30
seconds  East 16.10 feet; thence South 72 degrees 33  minutes  30
seconds  East 58.14 feet; thence South 83 degrees 26  minutes  31
seconds  East 49.09 feet; thence South 08 degrees 59  minutes  15
seconds  East 91.19 feet to the point of curvature of  a  tangent
curve  to  the right, from which the radius point of  said  curve
bears  South  81 degrees 00 minutes 45 seconds West 515.50  feet;
thence  Southerly  along said curve on an arc distance  of  36.11
feet  to a point on said curve, said point being North 85 degrees
01 minutes 34 seconds East 515.50 feet from said radius point, to
the point of curvature of a reverse curve to the left, from which
the  radius point of said curve bears North 85 degrees 01 minutes
34  seconds East 19.50 feet; thence Southerly, Southeasterly, and
Easterly  along  said curve an arc distance of 28.94  feet  to  a
point on said curve, said point being South 00 degrees 00 minutes
00  seconds East 19.50 feet from said radius point; thence  North
90 degrees 00 minutes 00 seconds East 77.54 feet; thence South 29
degrees  32 minutes 35 seconds West 184.24 feet; thence South  89
degrees  34 minutes 00 seconds West 270.81 feet to the  POINT  OF
BEGINNING  of this description, containing 1.931 acres,  more  or
less.

LESS  AND  EXCEPT  the real property conveyed by  Apple  American
Limited  Partnership of Indiana, an Indiana limited  partnership,
to  the  State of Indiana by Warranty Deed recorded on  June  15,
2000 in Deed Record 307, page 49 in the Office of the Recorder of
Montgomery County, Indiana.

PARCEL 2:

Non-exclusive easement as set out in that certain Declaration  of
Easements and Restrictions recorded July 9, 1996, in Deed  Record
294,  page  371,  in  the  Office of the Recorder  of  Montgomery
County, Indiana.

TAX KEY #:          023-25032-00
PROPERTY ADDRESS:   1516 South Washington Street
                    Crawfordsville, IN  47933

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]